DEF 14A of Merck & Co., Inc.
Filed Apr 9, 2025 · FY20240001193125-25-076859
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Notice of Annual Meeting of Shareholders To Shareholders: You are invited to the Annual Meeting of Shareholders of Merck & Co., Inc., Rahway, NJ, U.S.A. (the “Company”) on Tuesday, May 27, 2025, at 9:00 a.m. (Eastern Time) via Webcast at www.virtualshareholdermeeting.com/MRK2025 (the “2025 Annual Meeting”). The purposes of the meeting are to: 1. Elect the 13 Director nominees named in this proxy statement; 2. Consider and act upon a proposal to approve, by non-binding advisory vote, the compensation of our Named Executive Officers; 3. Consider and act upon a proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2025; 4. Consider and act upon a shareholder proposal regarding a human rights impact assessment, if properly presented at the meeting; 5. Consider and act upon a shareholder proposal regarding a tax transparency report, if properly presented at the meeting; 6. Consider and act upon a shareholder proposal to revisit DEI goals in executive pay incentives, if properly presented at the meeting; 7. Consider and act upon a shareholder proposal regarding a report on civil liberties in advertising services, if properly presented at the meeting; and 8. Transact such other business as may properly come before the meeting. By order of the Board of Directors, Kelly E. W. Grez Corporate Secretary Vote Right Away—Advance voting methods and deadlines We encourage all shareholders of record to read this proxy statement with care and vote right away using any of the following methods, even if they intend to attend the 2025 Annual Meeting. In all cases, have your proxy card or voting instruction form in hand and follow the instructions.
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| | BY INTERNET* | www.proxyvote.com | | | BY PHONE* | In the U.S. or Canada dial toll-free 1-800-690-6903 | | | BY QR CODE | Scan this QR code with your mobile device to be directed to www.proxyvote.com | | | BY MAIL** | Cast your ballot, sign your proxy card and send in our prepaid envelope |
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Only shareholders listed on the Company’s records at the close of business on March 28, 2025 are entitled to vote. The Company began distributing its Notice of Internet Availability of Proxy Materials, proxy statement, the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 10-K”) and proxy card/voting instruction form, as applicable, to shareholders and to employee benefit and stock purchase plan participants on April 9, 2025. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 27, 2025: The Notice of Annual Meeting of Shareholders, proxy statement and the 2024 Annual Report on Form 10-K are available free of charge at www.proxyvote.com. The principal executive offices of the Company are located at 126 East Lincoln Avenue, Rahway, N.J. 07065 U.S.A. * The telephone and internet voting facilities will close at 11:59 p.m. Eastern Time on May 26, 2025. ** You will need the 16-digit control number included on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials. If your shares are held in a stock brokerage account or by a bank or other nominee, your ability to vote by telephone or over the internet depends on your broker’s voting process. Please follow the directions provided to you by your broker, bank, or nominee.
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Dear Fellow Shareholders, Across our Company, 2024 was another year of significant advancement, innovation, and focus on patient delivery. I am inspired by our progress in developing and delivering transformative human and animal health medicines and vaccines to help save and improve lives around the world. We have continued to execute on our strategic priorities, launching important new products that bring clinical value to patients. We have also advanced key clinical programs in our robust early- and late-phase pipeline, while expanding and diversifying through business development when science and value align. And, we have continued to grow our footprint in the United States and beyond, reflecting substantial long-term investments in manufacturing and research and development. Our Company has allocated over $12 billion toward U.S. capital investment since 2018, and we expect to invest over $9 billion more by the end of 2028, which will create more jobs in the U.S. We are anchored by a robust set of commercial products addressing important medical needs, and I am pleased that we’re rapidly moving to a future with a much more diversified portfolio. Today, we have 20 new potential growth drivers, almost all of which have blockbuster potential. Over the past three years, the number of candidates in late-phase development has nearly tripled across a broad range of therapeutic areas and new modalities. Based on this progress, we now see over $50 billion of potential revenue opportunities from our late-stage pipeline alone by the mid-2030s. Our science-led strategy is working, and our team is moving with speed and rigor to deliver value for patients, society, and all of our stakeholders. In oncology, we have diversified our pipeline and are well positioned to maintain our leadership in this critical and competitive area. In 2024, we marked 10 years since KEYTRUDA became the first anti-PD-1 therapy approved in the U.S. Globally, more than 2.6 million patients have been prescribed KEYTRUDA, and that number continues to grow. To date, the U.S. Food and Drug Administration (FDA) has approved KEYTRUDA for 41 indications across 18 types of cancer. Our studies of KEYTRUDA-based regimens in earlier-stage cancers have supported nine indications, with four Phase 3 studies in earlier settings demonstrating a significant overall survival benefit. Importantly, our Biologics License Application (BLA) for subcutaneous
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| “ | Over the past three years, the number of candidates in late-phase development has nearly tripled across a broad range of therapeutic | | | areas and new modalities.” |
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pembrolizumab and berahyaluronidase alfa is under review with the FDA. If approved, it has the potential to improve the patient experience while increasing access and saving time for patients and health care providers compared to intravenous administration. We also continue to make progress across our broad oncology portfolio and comprehensive pipeline of antibody-drug conjugates (ADCs), precision targeted small molecules, T-cell engagers, as well as the individualized neoantigen therapy through our collaboration with Moderna. WELIREG, our HIF-2 alpha inhibitor approved in the U.S., recently gained its first approvals in China and Europe. In addition, the FDA granted Breakthrough Therapy designation to sacituzumab tirumotecan (sac-TMT), our investigational TROP-2-directed ADC being developed through a collaboration with Kelun-Biotech, for the treatment of certain patients with previously treated advanced non-small cell lung cancer. The treatment of cardiometabolic diseases is another area we are seeing significant momentum and long-term potential. During 2024, we successfully launched WINREVAIR, a first-in-class activin signaling inhibitor for the treatment of adults with pulmonary arterial hypertension. WINREVAIR has achieved several important regulatory milestones and is now approved in more than 40 countries globally. The clinical development program for WINREVAIR continues to yield important data, including positive results from the Phase 3 ZENITH trial, which was stopped early due to overwhelming efficacy at the interim analysis, and supports the potential of WINREVAIR to be practice-changing in the management of this progressive and debilitating disease. In addition, our investigational oral PCSK9 inhibitor, enlicitide decanoate for the treatment of hypercholesterolemia, is being evaluated in multiple Phase 3 trials with anticipated readouts for some of the trials in 2025. Of note, despite widely available statin treatments, millions of people globally are not able to lower their low-density lipoprotein (LDL) cholesterol to guideline-recommended levels, leaving them at risk for cardiac events. Vaccines play a critical role in global public health, helping to prevent a variety of infectious diseases. In vaccines and infectious diseases, we achieved several clinical, regulatory and commercial milestones. For example, the FDA accepted the BLA for clesrovimab, an investigational prophylactic long-acting monoclonal antibody designed to protect infants from respiratory syncytial virus (RSV) during their first RSV season. RSV is a leading cause of infant hospitalizations in the U.S. If approved, clesrovimab has the potential to be the first and only immunization designed to protect healthy and certain at-risk infants with the same single dose regardless of weight for the duration of their first RSV season. In addition, we continue to build on our proud legacy of developing important innovations for both the treatment and prevention of HIV infection. We recently announced
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positive results from two Phase 3 trials evaluating the once-daily, oral combination of doravirine and islatravir in adults with HIV infection who are virologically suppressed on different antiretroviral therapy regimens. Additionally, we are encouraged by the combination of lenacapavir and islatravir, through our collaboration with Gilead currently in Phase 3 studies, and MK-8527 as a potentially important once-monthly oral option for pre-exposure prophylaxis (PrEP), which we expect to advance to Phase 3 in 2025. Though we experienced challenging market dynamics for GARDASIL and GARDASIL 9 in China, we believe this market continues to represent a potential long-term opportunity for the vaccine, especially following approval for the use of GARDASIL in males ages 9-26 in China. Demand for GARDASIL and GARDASIL 9 remains robust in other major regions, and we expect strong growth in those regions in the future. We take pride in the role GARDASIL and GARDASIL 9 are playing globally in helping to protect males and females 9 to 45 years of age from certain human papillomavirus (HPV)-related cancers and diseases. And in pneumococcal disease, we are excited by the promising launch of CAPVAXIVE in the U.S. and its early progress with global approvals. Reinforcing our confidence in its potential, in 2024, the U.S. Centers for Disease Control’s Advisory Committee on Immunization Practices recommended CAPVAXIVE for adults ages 50 and older. In addition, we see important opportunities in both immunology and ophthalmology. We are conducting Phase 3 studies of tulisokibart, a potential first-in-class treatment for Crohn’s disease and ulcerative colitis. And following our acquisition of EyeBio, we have initiated a Phase 3 study of MK-3000 in patients with diabetic macular edema and intend to evaluate it in patients with neovascular age-related macular degeneration as well. Our Animal Health business achieved another year of strong performance driven by our Companion Animal and Livestock portfolios. We also acquired the aqua business of Elanco Animal Health, helping establish our Company as a leader in this important production animal category. We are well positioned in Animal Health to continue to drive above-market growth in 2025, driven by new launches including the injectable formulation of BRAVECTO and a next- generation dermatology product in the Companion Animal segment. Beyond the 2025 launches, a strong Livestock and Companion Animal pipeline positions Animal Health for future growth opportunities. Business development remains a priority and a key component of our strategy to augment, complement, and diversify our pipeline. In 2024, we executed over 70 external licenses, collaborations, and acquisitions. These include our acquisition of the bispecific antibody MK-1045, with potential applications in both oncology and immunology, from Curon Biopharmaceutical, and our exclusive global licenses with LaNova Medicines and Hansoh Pharma, for MK-2010, an investigational anti-PD-1/VEGF bispecific antibody, and MK-4082, an oral GLP-1 receptor agonist, respectively. Since 2021, we have invested approximately $40 billion in establishing an increasingly diverse pipeline that spans multiple therapeutic areas and modalities targeting a wide range of disease indications. For more than 130 years, our Company has been dedicated to operating responsibly. Expanding and enabling access to our medicines and vaccines for the hundreds of millions of people around the world who depend on us is both a great responsibility and a profound privilege. In 2024, we reached nearly half a billion people globally with our medicines and vaccines through commercial channels, clinical trials, voluntary licensing, and product donations. We continue to donate medicines and vaccines through our U.S. patient assistance program, as well as disaster relief and humanitarian aid initiatives, aimed at supporting underserved populations worldwide. As we navigate 2025, I have more confidence than ever in our ability to deliver sustainable, long-term value. Fueled by our relentless focus on leading-edge science, we will continue to keep patients at the center of everything we do and deliver innovative solutions that address some of the world’s most serious global health challenges, while also creating value for our shareholders. Thank you for your confidence and support of our Company. We encourage you to participate in the Annual Meeting by exercising your right to vote.
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| | “ | Fueled by our rentless focus on leading-edge science, we will continue to keep patients at the center of everything we do and deliver innovative solutions that address some of the world’s most serious global health challenges. ” | | Robert M. Davis Chairman, Chief Executive Officer and President | | |
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A Message from the Independent Lead Director Dear Fellow Shareholders, On behalf of the Board, I would like to thank you for your investment and support. We are committed to representing our shareholders through dedicated, independent oversight, and it is my privilege to serve as Lead Director. Board Oversight As you read in the letter from our Chairman and CEO, Robert M. Davis, in 2024, the Company continued to make progress to develop and deliver transformative human and animal health medicines and vaccines to help save and improve lives around the world. The Board remained focused on ensuring management delivers on its responsibilities to drive sustainable, long-term value, drawing on our unique experiences to do so. At meetings, the Board engages the Company’s senior leaders in robust discussions about corporate strategy, risks, and opportunities, providing guidance, and monitoring implementation in areas such as research and development, capital allocation, operating results, human capital management, and global manufacturing. Board Refreshment As a Board, we are committed to ensuring that we have the collective skills, experience, and perspectives that, taken together, can provide effective oversight with respect to the Company’s current and future global business and strategic initiatives, opportunities, and challenges. We also look to balance fresh perspectives with the insights of longer-tenured directors. Six independent Directors have joined the Board since 2020, including most recently, Surendralal “Lal” Karsanbhai, who joined our Board in January 2025. As President and CEO of Emerson Electric, Lal brings to the Board extensive business and operational expertise with a strong global perspective. Our annual self-evaluation process helps us identify ways to continue to enhance the overall effectiveness of the Board and its committees. It also gives us the opportunity to discuss other important topics through feedback from each of our Directors that is then considered by the full Board. Among other things, Directors provide feedback on Board composition, the Board’s leadership and structure, and the level and quality of Director contributions. Shareholder Engagement Regular engagement with our shareholders is important so that we may better understand your perspectives. In 2024, the Company continued its robust and proactive shareholder engagement program. I personally participated in several engagements together with members of management, and I appreciated the opportunity to share the Board’s perspective and hear directly from shareholders on their priorities. Topics included corporate strategy, capital allocation, risk oversight, and board composition. The Board discussed feedback received from investors as part of these engagements, and this feedback has helped shape the Company’s policies, practices, and disclosures. Once again, we appreciate your investment in the Company and support for the Board. We remain committed to serving you and the patients around the world that depend on the Company’s life-saving work.
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| | Thomas H. Glocer Independent Lead Director April 9, 2025 |
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Contents
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| Proxy Summary | 6 | | Corporate Governance | 11 | | Governance Highlights | 11 | | Board Leadership Structure | 12 | | Board Meetings and Committees | 14 | | Board’s Role in Strategic Planning | 16 | | Risk Oversight | 18 | | Board Succession Planning, Criteria for Board Membership, and Director Nomination Process | 21 | | Nominee Skills Matrix | 22 | | Management Succession Planning | 23 | | Annual Board Evaluation | 23 | | Shareholder Engagement and Feedback | 24 | | Shareholder Communications with the Board | 25 | | Sustainability Is Aligned With and Supports Our Company’s Strategy | 26 | | Political Contributions and Lobbying Expenditure Oversight and Disclosure | 27 | | Independence of Directors | 27 | | Related Person Transactions | 28 | | Compensation Consultants | 29 | | Stock Ownership Information | 30 | | Stock Ownership of Directors and Officers | 30 | | Insider Trading Policy | 31 | | Hedging and Pledging | 31 | | Stock Ownership of Certain Beneficial Owners | 31 | | Proposal 1. Election of Directors | 32 | | Nominees for Director | 33 | | Director Compensation | 40 | | Schedule of Director Fees | 40 | | Proposal 2. Non-Binding Advisory Vote to Approve the Compensation of Our Named Executive Officers | 42 | | Compensation Discussion and Analysis | 43 | | Executive Summary | 44 | | Executive Compensation Overview | 45 | | Peer Groups | 47 | | Detailed Discussion and Analysis | 48 | | The Elements of 2024 Compensation | 51 | | Compensation Risk Assessment | 60 | | Compensation and Management Development Committee Report | 60 |
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| Summary Compensation Table | 61 | | CEO Pay Ratio | 64 | | Pay Versus Performance | 65 | | Grants of Plan-Based Awards | 70 | | Outstanding Equity Awards | 72 | | Option Exercises and Stock Vested | 74 | | Pension Benefits | 75 | | Nonqualified Deferred Compensation | 77 | | Potential Payments Upon Termination or a Change in Control | 78 | | Proposal 3. Ratification of Appointment of Independent Registered Public Accounting Firm for 2025 | 84 | | Audit Committee’s Report | 85 | | Pre-Approval Policy for Services of Independent Registered Public Accounting Firm | 85 | | Fees for Services Provided by the Independent Registered Public Accounting Firm | 86 | | Shareholder Proposals | 87 | | Questions and Answers About the 2025 Annual Meeting and Voting | 94 | | Shareholder Proposals and Director Nominations for the 2026 Annual Meeting of Shareholders | 98 | | Forward-Looking Statements | 99 | | Other Matters | 99 | | Appendix A — Non-GAAP Income and Non-GAAP EPS | 100 | | Appendix B — Explanation of Adjustments to Non-GAAP Results for Incentive Plans | 102 |
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| | | Annual Base Salary $(1) | Target Annual Incentive % | Target Long-Term Incentive $ | Target TDC Increase %(2) | | | 2024 NEOs | | | | | | | Robert M. Davis Chairman, Chief Executive Officer, and President | $1,615,000 | 150% | $15,500,000 | +11.4% | | | | ............................................................................................................................................................................. | | | | | | Caroline Litchfield Executive Vice President and Chief Financial Officer | 1,170,000 | 100 | 4,250,000 | +1.4 | | | | ............................................................................................................................................................................. | | | | | | Richard R. DeLuca, Jr. Executive Vice President and President, Merck Animal Health | 962,000 | 100 | 3,200,000 | +1.5 | | | | ............................................................................................................................................................................. | | | | | | Betty Larson Executive Vice President and Chief Human Resource Officer | 800,000 | 100(3) | 2,650,000(4) | —(5) | | | | ............................................................................................................................................................................. | | | | | | Dean Li, M.D., Ph.D. Executive Vice President and President, Merck Research Laboratories | 1,456,000 | 100 | 5,600,000 | +1.3 |
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| (2) Target Total Direct Compensation (“TDC”) is defined as the sum of annual base salary, target annual incentive, and target long-term incentive. This column reflects the increase in Target TDC from 2023 to 2024. |
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| (3) Ms. Larson’s target annual incentive was prorated based on her hire date of April 1, 2024. |
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| (4) Per the terms of Ms. Larson’s offer letter, in addition to her annual long term incentive (“LTI”) award, she also received a restricted stock unit (“RSU”) grant of $4,400,000 and a stock option grant of $1,500,000, as a part of her sign-on award (the majority of which replaced forfeited equity at her prior company and the balance of the award provided a critical incentive for Ms. Larson to accept our offer of employment to join the Company’s executive leadership team). |
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| • | be committed to building sound, long-term Company growth. |
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| Corporate Governance Compensation Consultants | ÷ ÷ ÷ ÷ | 29 |
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| • | competitive market data with respect to the compensation of the CEO and other senior executive compensation; |
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| • | design and setting of performance goals in the variable incentive plans; |
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| • | target TDC and payouts under the Executive Incentive Plan for the CEO; |
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| • | preparation of public filings related to executive compensation, including the CD&A, CEO pay ratio, Pay versus Performance disclosure, and the accompanying tables and footnotes; and |
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| • | LTI plan utilization. |
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| (1) The shares shown in this column include the following shares that our current Directors and executive officers have the right to acquire within 60 days after March 1, 2025: (1) through the exercise of vested stock options: Mr. Davis — 571,039, Mr. DeLuca — 287,290, Ms. Larson — 29,882, Dr. Li — 250,278, and Ms. Litchfield — 270,066, and all Directors and executive officers as a group — 2,095,662; and (2) pursuant to the vesting of RSUs: Ms. Larson — 11,350, and the Directors and executive officers as a group — 13,877. In addition, this column reflects the equivalent shares of common stock held by the Trustee of the Merck U.S. Savings Plan, for the accounts of individuals as follows: Mr. DeLuca — 1,266 shares, and all Directors and executive officers as a group — 1,321 shares. |
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| (2) This column reflects phantom shares denominated in Company common stock under the plan for Deferred Payment of Director Compensation. |
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| Stock Ownership Information Insider Trading Policy | ÷ ÷ ÷ ÷ | 31 |
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Insider Trading Policy The Company has adopted an insider trading policy governing the purchase, sale, and other dispositions of its securities by its directors, officers, employees, and the Company itself, that it believes is reasonably designed to promote compliance with insider trading laws, rules and regulations, and any applicable listing standards. A copy of the insider trading policy was filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Hedging and Pledging As part of our insider trading policy, our Company prohibits Directors and management level employees, including officers, from engaging in short sales, derivative transactions, hedging transactions, and pledging of Company securities. Stock Ownership of Certain Beneficial Owners The table below reflects the number of shares beneficially owned by persons or entities known to us to own more than 5% of the outstanding shares of the Company’s common stock as of the dates indicated in the footnotes below. Information is based on a review of the most recently available filings made with the SEC on Schedule 13G. Applicable percentage ownership is based on 2,521,758,443 shares of the Company’s common stock issued and outstanding as of March 3, 2025, and is rounded.
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| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | | The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355 | 253,257,639 (1) | 10.04% | | BlackRock, Inc. 55 East 52nd Street, New York, NY 10055 | 201,836,434 (2) | 8.00% |
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| (1) As reported on Amendment No. 10 to Schedule 13G (the “Vanguard filing”) filed with the SEC on March 6, 2025. According to the Vanguard filing, of the 253,257,639 shares of Company common stock beneficially owned by The Vanguard Group (“Vanguard”) as of February 28, 2025, Vanguard has the shared power to vote or direct the vote with respect to 3,361,317 shares, sole power to dispose or to direct the disposition of 240,747,499 shares, and shared power to dispose or to direct the disposition of 12,510,140 shares. |
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| (2) As reported on Amendment No. 14 to Schedule 13G (the “BlackRock filing”) filed with the SEC on January 26, 2024, which is the most recently filed Schedule 13G with respect to the Company. According to the BlackRock filing, of the 201,836,434 shares of Company common stock beneficially owned by BlackRock, Inc. (“BlackRock”) as of December 31, 2023, BlackRock has the sole power to vote or direct the vote with respect to 182,531,000 shares and sole power to dispose or to direct the disposition of 201,836,434 shares. |
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| 32 | | | | | | Proposal 1 Election of Directors |
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The Board has recommended 13 nominees for election as Directors at the 2025 Annual Meeting: Mr. Douglas M. Baker, Jr., Ms. Mary Ellen Coe, Ms. Pamela J. Craig, Mr. Robert M. Davis, Mr. Thomas H. Glocer, Mr. Surendralal L. Karsanbhai, Dr. Risa J. Lavizzo-Mourey, Dr. Stephen L. Mayo, Dr. Paul B. Rothman, Ms. Patricia F. Russo, Dr. Christine E. Seidman, Mr. Inge G. Thulin, and Ms. Kathy J. Warden. All nominees, other than Mr. Davis, our Chairman and Chief Executive Officer, satisfy the New York Stock Exchange independence requirements. All Director nominees currently serve on the Board and were elected by the shareholders at the 2024 Annual Meeting of Shareholders, except for Mr. Karsanbhai, who was elected for the first time as of January 1, 2025. In addition, all Director nominees meet the Board’s criteria for membership and were recommended by the Governance Committee, and approved by the Board, for election by shareholders at the 2025 Annual Meeting. All of them hold, or have held, senior leadership positions in large, complex organizations, including multi-national corporations, medical or academic institutions, or charitable organizations. In these positions, our Director nominees have demonstrated their leadership, intellect, and analytical skills and have gained deep experience in core disciplines significant to their oversight responsibilities at the Company. Their varied roles and experiences reflect a variety of perspectives, skills, and expertise to address the Company’s current and anticipated needs as the Company’s opportunities and challenges evolve. If elected, each nominee will serve until the 2026 Annual Meeting of Shareholders or until a successor has been duly elected and qualified, subject to their earlier resignation, death, or removal. Any Director nominee who does not receive a majority of the votes cast with respect to his or her election will not be re-elected as a Director of the Company. However, under the New Jersey Business Corporation Act, incumbent Directors who are not re-elected in an uncontested election because of a failure to receive a majority of the votes cast in favor of their re-election will be “held over” and continue as Directors of the Company until they resign, or their successors are elected at the next election of directors. Our Incumbent Director Resignation Policy, included in the Policies of the Board, provides that an incumbent Director who is not re-elected must promptly submit a resignation. The Governance Committee will evaluate whether to accept such resignation and make a recommendation to the full Board. The Board must act on the recommendation no later than 90 days following certification of the shareholder vote and publicly disclose its decision and rationale. If any Director nominee becomes unavailable for election (which we do not expect), votes will be cast for such substitute Director nominee or nominees as may be designated by the Board, unless the Board reduces its size. There are no family relationships among the Company’s executive officers and Directors. Provided below is biographical information for each Director nominee, including key experience, qualifications, and skills such Director nominee contributes to the Board in light of our current needs and business priorities.
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| FOR | | The Board of Directors recommends that the shareholders vote FOR the election of each of the Director Nominees. |
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| Proposal 1 Election of Directors | ÷ ÷ ÷ ÷ | 33 |
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Nominees for Director
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| Douglas M. Baker, Jr. Independent | | | Age: 66 | | | Director Since: 2022 | | | Committees: | | | | | | Audit | Research |
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| Experience | | Mr. Baker has wide-ranging expertise in corporate governance and general and organizational management, including a deep understanding of global marketing, sales, and operations of public companies. Mr. Baker is a Founding Partner of E2SG Partners, a company that invests in environmentally sustainable technologies. Previously, Mr. Baker was Chairman & Chief Executive Officer of Ecolab Inc., a provider of water and hygiene services and technologies for the food, hospitality, industrial, and energy markets. Mr. Baker is also a member of the Board of Target Corporation and served as their Lead Independent Director from 2015 to 2021. This directorship as well as his previous directorship at U.S. Bancorp provide him with deep experience on governance issues facing large public companies. |
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| Career Highlights | | E2SG Partners • Founding Partner (2022-present) Ecolab Inc. • Executive Chairman (2021-2022) • Chairman and Chief Executive Officer (2006-2020) • Chief Executive Officer (2004-2006) | | Other Public Directorships | | Current • Target Corporation (2013-present) Former • Ecolab Inc. (2006-2022) • U.S. Bancorp (2008-2018) |
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| Mary Ellen Coe Independent | | | Age: 58 | | | Director Since: 2019 | | | Committees: | | | | | | C&MD | Research |
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| Experience | | Ms. Coe has a deep understanding of the digital, media, and technology landscape, as well as global strategy and operations, based on her experience as the Chief Business Officer at YouTube Inc. as well as her experience at Google Inc. At YouTube, Ms. Coe leads all global business operations, business development, and partnerships across product and content licensing and distribution, support operations, and YouTube’s monetization, including advertising and subscription revenue. At Google, Ms. Coe served as the President of Google Customer Solutions, overseeing the global ads business for mid-market and small businesses, serving millions of customers and thousands of partners worldwide. She also has extensive marketing and sales expertise from her leadership position at McKinsey and other global marketing consulting firms. |
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| Career Highlights | | YouTube Inc. • Chief Business Officer (2022-present) Google Inc. • President, Google Customer Solutions (2017-2022) • Vice President, Go-to-Market Vice President, Go-to-Market Operations and Strategy (2012-2017) | | Other Public Directorships | | Current • None Former • Whole Foods Market, Inc. (2016-2017) |
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| 34 | ç ç ç ç | Proposal 1 Election of Directors |
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| Pamela J. Craig Independent | | | Age: 68 | | | Director Since: 2015 | | | Committees: | | | | | | Audit (Chair) | Governance |
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| Experience | | Ms. Craig has extensive finance, management, operational, technology, and international business expertise, including her history of accomplishment and executive ability as Chief Financial Officer of Accenture plc. In addition, her directorships at other public companies, including her service as chair of the Audit Committee and as a member of the Information Technology Committee of Corning Incorporated, and as chair of the Technology Committee and a member of the Compensation and Talent Committee of Progressive Insurance as well as her previous service as a member of the Audit Committee and Chair of the Compensation & Talent Committee of 3M Company, provide her with valuable experience on governance issues facing public companies. |
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| Career Highlights | | Accenture plc, global management consulting, technology services, and outsourcing company • Chief Financial Officer (2006-2013) • Senior Vice President, Finance (2004-2006) • Group Director, Business Operations and Services (2003-2004) • Managing Partner, Global Business Operations (2001-2003) | | Other Public Directorships | | Current • Progressive Insurance (2018-present) • Corning Incorporated (2021-present) Former • 3M Company (2019-2023) • Akamai Technologies, Inc. (2011-2019) • Wal-Mart Stores, Inc. (2013-2017) |
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| Robert M. Davis Management | | Age: 58 | | Director Since: 2021 |
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| Experience | | Mr. Davis, Merck’s Chairman, Chief Executive Officer, and President, has extensive management, financial, and operational expertise. Previously, Mr. Davis served as Merck’s President, with responsibility for Merck’s operating divisions, Human Health, Animal Health, Manufacturing, and Merck Research Laboratories. Prior to that, he served as Merck’s Chief Financial Officer and Executive Vice President, Global Services, with broad responsibilities, including with respect to finance, risk management, real estate operations, corporate strategy, business development, information technology, and procurement. In addition, Mr. Davis’s service on the board of directors of Duke Energy, including his roles as Chair of the Finance & Risk Management Committee and member of the Corporate Governance Committee, has provided him with valuable experience on governance issues facing public companies. |
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| Career Highlights | | Merck & Co., Inc. • Chairman (2022-present) • Chief Executive Officer and President (2021-present) • Chief Financial Officer and Executive Vice President, Global Services (2016-2021) • Chief Financial Officer and Executive Vice President (2014-2016) Baxter International, Inc. • Corporate Vice President and President, Medical Products (2010-2014) • Corporate Vice President and Chief Financial Officer (2006-2010) • Corporate Vice President and Treasurer (2004-2006) | | Other Public Directorships | | Current • Duke Energy (2018-present) Former • C.R. Bard (2015-2017) |
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| Proposal 1 Election of Directors | ÷ ÷ ÷ ÷ | 35 |
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| Thomas H. Glocer Independent Lead Director | | | Age: 65 | | | Director Since: 2007 | | | Committees: | | | | | | C&MD | Governance (Chair) |
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| Experience | | Mr. Glocer has extensive management, operational, technology, and international business expertise. This includes Mr. Glocer’s history of accomplishment and executive ability as CEO and a Director of Thomson Reuters Corporation, a news and information provider for businesses and professionals. In addition, his directorships at other public companies, including his service as Lead Director and as a member of the Governance Committee at Morgan Stanley, provide him with valuable experience on governance issues facing public companies. |
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| Career Highlights | | Angelic Ventures LP, a family office investing in early-stage technology and data companies • Founder and Managing Partner (2012-present) Thomson Reuters Corporation, multi-national media and information firm • Chief Executive Officer (2008-2011) • Chief Executive Officer, Reuters Group PLC (2001-2008) | | Other Public Directorships | | Current • Morgan Stanley (2013-present) • Publicis Groupe (2016-present) Former • None |
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| Surendralal L. Karsanbhai Independent | | | Age: 55 | | | Director Since: 2025 | | | Committees: | | | | | | Audit | Governance |
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| Experience | | Mr. Karsanbhai has broad experience in global business leadership as President and Chief Executive Officer of Emerson Electric Co., a global technology and software company that provides innovative solutions for customers in a wide range of markets around the world. Mr. Karsanbhai has extensive expertise in strategy, technologies, manufacturing, and business development in diverse markets globally, as evident in varied leadership positions he’s held since joining Emerson in 1995. These positions include lead for Emerson’s Automation Solutions business, where he elevated Emerson’s software profile and digital transformation business, and President of Emerson’s Fisher regulator technologies, a global business including nine manufacturing plants. In addition, Mr. Karsanbhai currently serves as the Deputy Chair of the Federal Reserve Bank of St. Louis, is fluent in Portuguese, French, and English, and has lived and worked in Europe, Africa, and North America. |
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| Career Highlights | | Emerson Electric Co. • President and Chief Executive Officer (2021-present) • Executive President, Emerson Automation Solutions (2018-2021) | | Other Public Directorships | | Current • Emerson Electric Co. (2021-present) Former • None |
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| 36 | ç ç ç ç | Proposal 1 Election of Directors |
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| Risa J. Lavizzo-Mourey, M.D. Independent | | | Age: 70 | | | Director Since: 2020 | | | Committees: | | | | | | C&MD | Research |
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| Experience | | Dr. Lavizzo-Mourey has extensive health policy experience, serving as Robert Wood Johnson Foundation Population Health and Health Equity Professor Emerita and formerly as President and Chief Executive Officer of Robert Wood Johnson Foundation, the nation’s largest healthcare-focused philanthropic organization. Her role at Robert Wood Johnson Foundation provided her with deep management, strategic, human capital, and talent development expertise. In addition, her directorships at other public companies, including her service as Lead Director and Chair of the Governance Committee of GE Healthcare Technologies, Inc., provide her with extensive experience on corporate governance matters. Dr. Lavizzo-Mourey was elected to the National Academy of Medicine, American Academy of Arts and Sciences and The American Philosophical Society. |
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| Career Highlights | | University of Pennsylvania • Robert Wood Johnson Foundation Population Health and Health Equity Professor Emerita (2021-present) • Penn Integrates Knowledge Professor of Health Equity and Health Policy (2018-2021) Robert Wood Johnson Foundation • President Emerita (2017-present) • President and Chief Executive Officer (2003-2017) • Senior Vice President and Director (2001-2002) | | Other Public Directorships | | Current • GE HealthCare Technologies, Inc. (2023-present) • Intel Corporation (2018-present)(1) Former • Better Therapeutics (2021-2023) • General Electric Company (2017-2023) • Hess Corporation (2004-2020) |
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| Stephen L. Mayo, Ph.D. Independent | | | Age: 63 | | | Director Since: 2021 | | | Committees: | | | | | | Audit | Research |
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| Experience | | Dr. Mayo has extensive scientific experience relevant to the biopharmaceutical industry, including being the Bren Professor of Biology and Chemistry, Merkin Institute Professor and former Chair of the Division of Biology and Biological Engineering at the California Institute of Technology (“Caltech”) and co-founder of Xencor, a public antibody engineering company. In addition, in his role as the former Vice Provost at Caltech, Dr. Mayo oversaw Caltech’s technology licensing program. Elected to the National Academy of Sciences in 2004 for his pioneering contributions in the field of protein design, Dr. Mayo has also served as a presidential appointee on the National Science Foundation’s National Science Board and as an elected board member for the American Association for the Advancement of Science. Dr. Mayo also serves as a member of the board of directors of Sarepta Therapeutics, Inc. and Allogene Therapeutics, Inc. |
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| Career Highlights | | California Institute of Technology • Merkin Institute Professor (2021-present) • Bren Professor of Biology and Chemistry (2007–present) • Chair, Division of Biology and Biological Engineering (2010–2020) • Vice Provost for Research (2007–2010) Howard Hughes Medical Institute, non-profit medical research organization • Investigator (1994–2007) | | Other Public Directorships | | Current • Allogene Therapeutics (2021-present) • Sarepta Therapeutics (2021-present) Former • None |
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| (1) Dr. Lavizzo-Mourey will be retiring from the Board of Directors of Intel Corporation as of May 6, 2025. |
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| Proposal 1 Election of Directors | ÷ ÷ ÷ ÷ | 37 |
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| Paul B. Rothman, M.D. Independent | | | Age: 67 | | | Director Since: 2015 | | | Committees: | | | | | | Audit | Research (Chair) |
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| Experience | | Dr. Rothman has extensive expertise in patient care, science and medicine relevant to the pharmaceutical industry, including through his past experiences as (a) the CEO of Johns Hopkins Medicine and the Dean of Medical Faculty and Vice President for Medicine, The Johns Hopkins University, and (b) Dean and Head of Internal Medicine at Carver College of Medicine at the University of Iowa. His vast operational and management experience leading a large-scale medical organization provide him with a deep understanding of the complexities of the U.S. healthcare delivery system and policy environment. In addition, Dr. Rothman’s directorship at Labcorp, including his service as Chair of the Quality & Compliance Committee, provides him with additional experience on corporate governance matters and risk oversight. |
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| Career Highlights | | Johns Hopkins University • Dean of the Medical Faculty and Vice President for Medicine (2012-2022) Johns Hopkins Medicine • Chief Executive Officer (2012-2022) Carver College of Medicine at the University of Iowa • Dean (2008-2012) • Head of Internal Medicine (2004-2008) | | Other Public Directorships | | Current • Labcorp (2023-present) Former • None |
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| Patricia F. Russo Independent | | | Age: 72 | | | Director Since: 1995(1) | | | Committees: | | | | | | C&MD (Chair) | Governance |
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| Experience | | Ms. Russo has extensive management, operational, international business and financial expertise, as well as a broad understanding of the technology industry, which includes her career achievements during her tenure as CEO and Director of Alcatel-Lucent and Lucent Technologies Inc. In addition, her directorships at other public companies, including her roles as the Non-executive Chair of Hewlett Packard Enterprise Company and Chair of the Governance and Corporate Responsibility Committee of General Motors, provide her with deep experience on governance issues facing large public companies. |
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| Career Highlights | | Hewlett Packard Enterprise Company, technology company • Non-executive Chair (2015-present) Alcatel-Lucent, global telecommunications equipment company • Chief Executive Officer and Director (2006-2008) • Chairman, Lucent Technologies Inc. (2003-2006) • President and Chief Executive Officer, Lucent Technologies Inc. (2002-2006) | | Other Public Directorships | | Current • General Motors Company (2009-present), Independent Lead Director (2010-2014; 2021-present) • Hewlett Packard Enterprise Company (2015-present), Non-executive Chair (2015-present) • KKR Management Inc. (the managing partner of KKR & Co., L.P.) (2011-present) Former • Arconic, Inc. (2016-2018) formerly Alcoa, Inc. (2008-2016) |
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| (1) Ms. Russo was on the Board of Directors of Schering-Plough Corporation from 1995 until 2009 when the Company became Merck & Co., Inc. |
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| 38 | ç ç ç ç | Proposal 1 Election of Directors |
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| Christine E. Seidman, M.D. Independent | | | Age: 72 | | | Director Since: 2020 | | | Committees: | | | | | | Audit | Research |
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| Experience | | Dr. Seidman has extensive scientific experience relevant to the biopharmaceutical industry. She also has managerial experience relevant to scientific research, including through her role leading the Seidman Laboratory, a research laboratory focusing on integrating clinical medicine and molecular technologies to define disease-causing gene mutations and genetic variations that increase disease risk. The recipient of many honors, Dr. Seidman was elected to the American Society for Clinical Investigation, the National Academy of Sciences, American Academy of Arts and Sciences, and the National Academy of Medicine. Awards • The Ray C. Fish Award for Scientific Achievement (2020) • American Heart Association Medal for Genomic and Precision Medicine (2019) • Vanderbilt Prize in Biomedical Sciences (2019) |
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| Career Highlights | | Harvard Medical School/Brigham and Women’s Hospital (Harvard University) • Thomas W. Smith Professor of Medicine and Genetics (2005-present) • Professor of Genetics and Medicine (1998-2005) • Professor of Medicine (1997-1998) Howard Hughes Medical Institute, non-profit medical research organization • Investigator (1994-present) Brigham and Women’s Hospital • Director, Cardiovascular Genetics Center (1992-present) • Attending Physician, Cardiovascular Division (1987-present) | | Other Public Directorships | | Current • None Former • None |
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| Inge G. Thulin Independent | | | Age: 71 | | | Director Since: 2018 | | | Committees: | | | | | | C&MD | Governance |
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| Experience | | Mr. Thulin has extensive management, operational, technology, and international business expertise, as demonstrated by a track record of success leading 3M Company. Mr. Thulin possesses broad industry experience drawn from 3M’s diverse businesses, commitment to research and strong life sciences division. He also brings valuable insight into driving innovation, based on his experience with new product development and manufacturing. In addition, his previous directorships at other public companies provide him with deep experience on governance issues facing large public companies. |
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| Career Highlights | | 3M Company, global technology company • Executive Chairman (2018-2019) • Chairman, President and Chief Executive Officer (2012-2018) • President and Chief Executive Officer (2012) • Executive Vice President and Chief Operating Officer (2011-2012) • Executive Vice President, International Operations (2004-2011) | | Other Public Directorships | | Current • None Former • 3M Company (2012-2019) • Chevron Corporation (2015-2019) • |
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| Proposal 1 Election of Directors | ÷ ÷ ÷ ÷ | 39 |
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| Kathy J. Warden Independent | | | Age: 53 | | | Director Since: 2020 | | | Committees: | | | | | | C&MD | Governance |
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| Experience | | Ms. Warden has broad experience in operational leadership as Chair, CEO and President of Northrop Grumman Corporation, an innovative company using science, technology, and engineering to create and deliver products and services. Ms. Warden has extensive expertise in strategy, performance, and business development in government and commercial markets, as well as cybersecurity expertise. Prior to joining Northrop Grumman, Ms. Warden held leadership roles at General Dynamics and General Electric. In addition, Ms. Warden is a former chair of the board of the Richmond Federal Reserve Bank. |
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| Career Highlights | | Northrop Grumman Corporation, global security company • Chair, Chief Executive Officer and President (2019-present) • President and Chief Operating Officer (2018) • Corporate Vice President and President, Mission System Sector (2016-2017) • Corporate Vice President and President, Information Systems Sector (2013-2015) • Vice President, Cyber Intelligence Division (2011-2012) | | Other Public Directorships | | Current • Northrop Grumman Corporation (2018-present) Former • None |
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| 40 | ç ç ç ç |
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Director Compensation Our non-employee Directors receive cash compensation, as well as cash-settled equity compensation in the form of deferred stock units, for their Board service. During 2024, non-employee Directors were compensated for their Board service as shown in the chart below. Schedule of Director Fees
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| Compensation Element(1) | Director Compensation Program | | Annual Retainer | $120,000 | | Annual Mandatory Deferral | $220,000 credit to Director’s Company common stock account under the Plan for Deferred Payment of Directors’ Compensation | | Committee Chair Retainer | $35,000 for the Audit Committee(2) | | | $25,000 for the Governance Committee(3) | | | $25,000 for the C&MD Committee(4) | | | $25,000 for the Research Committee(4) | | Audit Committee Member Retainer | $10,000(2) | | Lead Director Retainer | $50,000(3) |
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| Director Compensation 2024 Director Compensation | ÷ ÷ ÷ ÷ | 41 |
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| | Director Compensation for Fiscal Year Ended December 31, 2024 | | | | Name(1) | Fees Earned or Paid in Cash ($) | All Other Compensation(2) ($) | Total ($) | | Douglas M. Baker, Jr. | $130,000 | $220,000 | $350,000 | | Mary Ellen Coe | 120,000 | 220,000 | 340,000 | | Pamela J. Craig | 153,750 | 250,000 | 403,750 | | Thomas H. Glocer | 191,250 | 245,000 | 436,250 | | Risa J. Lavizzo-Mourey, M.D. | 120,000 | 241,000 | 361,000 | | Stephen L. Mayo, Ph. D. | 130,000 | 220,000 | 350,000 | | Paul B. Rothman, M.D. | 153,750 | 260,000 | 413,750 | | Patricia F. Russo | 143,750 | 220,000 | 363,750 | | Christine E. Seidman, M.D. | 130,000 | 245,000 | 375,000 | | Inge G. Thulin | 120,000 | 220,000 | 340,000 | | Kathy J. Warden | 130,000 | 220,000 | 350,000 | | Peter C. Wendell(3) | 48,791 | 30,000 | 78,791 |
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| PSU Performance (2022-2024)(2) |
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| We do… | | We do not... | | | | Utilize a Relative Total Shareholder Return metric in the Performance Share Unit (PSU) program to align the payout with long-term stock performance and shareholder experience | | Allow Directors and management employees, including officers, to engage in transactions involving short sales, derivative transactions, hedging, or pledging of Company securities Grant stock options with an exercise price less than fair market value Re-price underwater stock options without shareholder approval Pay tax gross-ups on any payments made in connection with a change in control event | | | Monitor LTI program share utilization regularly relative to industry standards and our primary and supplemental peer groups | | | | | Conduct annual competitive benchmarking to ensure executive officer compensation is aligned to market | | | | | Include caps on annual cash incentive and PSU program payouts and thresholds below which no payouts are earned | | | | | Offer limited perquisites that are supported by business interests | | | | | Retain an independent compensation consultant that reports directly to the C&MD Committee | | | | | Maintain robust stock ownership requirements and share retention policies | | | | | Maintain a rigorous incentive recoupment (i.e., clawback) policy that exceeds the NYSE listing requirements | | | | | Conduct assessments to identify and mitigate risk in our compensation programs | | | | | Provide dividend equivalents only on earned Restricted Stock Units (“RSUs”) and PSUs | | | | | Require double-trigger vesting of equity in the event of a change in control (i.e., there must be both a change in control and an involuntary termination) | | | | | Avoid employment agreements | | |
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| Compensation Discussion and Analysis Peer Groups | ÷ ÷ ÷ ÷ | 47 |
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Peer Groups Primary Peer Group Individual executive officer compensation levels and opportunities are compared to a peer group of large multinational pharmaceutical companies approved by the C&MD Committee that participate in a pharmaceutical industry compensation survey conducted by Willis Towers Watson, an independent consulting firm. In setting compensation levels for 2024, the C&MD Committee reviewed the survey results for the following peer companies that the Company competes with to attract talented, high-performing executives (the “primary peer group”). The C&MD Committee regularly reviews segmented information focused on the companies in the primary peer group that are headquartered in the U.S. because practices outside the U.S. can differ based on the geographic region.
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| Primary Peer Group Companies AbbVie Amgen AstraZeneca Bristol-Myers Squibb Eli Lilly Gilead Sciences GlaxoSmithKline Johnson & Johnson Novartis Pfizer Roche Holding AG Sanofi All numbers are as of 12/31/2024 | |
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Supplemental Peer Group In addition to the primary peer group described above, we also use a supplemental peer group consisting of the companies that comprise the Dow Jones Industrial Average (excluding the financial services companies) as a secondary reference for CEO compensation and for other compensation-related practices (for example, share usage and dilution, change in control policy design, and stock ownership and retention guidelines). The Company is a member of the Dow Jones Industrial Average, and we believe this group provides insight into practices among companies of similar scale and complexity that operate across a variety of industries, providing us with a broader view of market pay, policies, and practices.
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| Supplemental Peer Group Companies(1) | | | | 3M Amgen Apple Boeing Caterpillar Chevron Cisco Systems Coca-Cola Dow Home Depot Honeywell IBM Intel | Johnson & Johnson McDonald’s Microsoft Nike Procter & Gamble salesforce.com UnitedHealth Group Verizon Visa Walgreens Walmart Walt Disney | | | All numbers are as of 12/31/2024 | | | | (1) Reflects Dow Jones Industrial Average companies (excluding the financial services companies) as of the beginning of 2024. | | |
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Our overarching strategy is to position our executives’ target TDC at the median, on average, with variability by individual executive based on scope and complexity of role, market availability of proven talent, experience, leadership, sustained performance over time, potential for advancement as part of succession planning, and other unique factors that may exist from time to time. This median target compensation philosophy ensures that actual realized compensation varies above or below market levels based on attainment of longer-term goals and changes in shareholder value, and overall costs and share dilution are reasonable and sustainable relative to market practices.
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| 48 | ç ç ç ç | Compensation Discussion and Analysis Detailed Discussion and Analysis |
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Detailed Discussion and Analysis Additional information regarding our 2024 NEOs and the material elements of their compensation, as reported in the Summary Compensation table on page 61, is described below(1).
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| | Compensation Decisions for 2024 | | | Robert M. Davis Chairman, Chief Executive Officer, and President | • Maintained base salary rate • Maintained annual incentive target percentage • Increased LTI target by $2,000,000 • Change resulted in a 11.4% increase in target TDC | | | Age: 58 | | | | Tenure: 11 Years | | | | | Compensation Decisions for 2024 | | | Caroline Litchfield Executive Vice President and Chief Financial Officer | • Increased base salary by $45,000 • Maintained annual incentive target percentage • Maintained LTI target • Change resulted in a 1.4% increase in target TDC | | | Age: 56 | | | | Tenure: 34 Years | | |
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| (1) Compensation shown for each executive is rounded to the nearest dollar and age/tenure is rounded to the nearest year. |
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| Compensation Discussion and Analysis Detailed Discussion and Analysis | ÷ ÷ ÷ ÷ | 49 |
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| | Compensation Decisions for 2024 | | | Richard R. DeLuca, Jr. Executive Vice President and President, Merck Animal Health | • Increased base salary by $37,000 • Maintained annual incentive target percentage • Maintained LTI target • Change resulted in a 1.5% increase in target TDC • Issued a $3,000,000 LTI retention award, subject to vesting conditions(1) | | | Age: 62 | | | | Tenure: 13 Years | | |
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| | Compensation Decisions for 2024 | | | Betty Larson Executive Vice President and Chief Human Resources Officer(2) | • Set base salary at $800,000 • Set annual incentive target at 100%(3) • Set LTI target at $2,650,000 • Issued a $725,000 cash sign-on bonus and $5,900,000 in equity sign-on grants(4) | | | Age: 49 | | | | Tenure: 1 Year | | |
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| (1) Mr. DeLuca received a $3,000,000 retention LTI grant that will vest on April 30, 2027, subject to his continued employment. Please see page 57 for additional details. |
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| (3) Ms. Larson’s target annual incentive was prorated based on her hire date of April 1, 2024. |
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| (4) Per the terms of Ms. Larson’s offer letter, in addition to her annual LTI award, she also received an RSU grant of $4,400,000 and a stock option grant of $1,500,000, as a part of her sign-on award (the majority of which replaced forfeited equity at her prior company and the balance of the award provided a critical incentive for Ms. Larson to accept our offer of employment to join the Company’s executive leadership team). |
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| What We Reward | How We Link Pay To Performance | How We Pay | | • Top and bottom-line performance that meets or exceeds the Board approved annual and long-term operating plans • Pipeline accomplishments that advance our position as an industry-leading biopharmaceutical company • Achievement of strategic sustainability priorities that focus on greater access to health and on the engagement and inclusion of employees • Decision-making that yields long-term value creation for shareholders • Executing on our growth strategy by consistently seeking opportunities that complement or supplement our broad portfolio in key areas, including Oncology, Vaccines, Cardiometabolic, Immunology, Infectious Diseases, and Animal Health | • Inclusion of key financial and non-financial metrics in our annual cash incentive plan to ensure executives are rewarded for top and bottom-line performance, pipeline advancement that leads to longer-term revenue opportunities, and metrics focusing on driving sustainable business outcomes • LTIs comprised of a mix of performance share units and stock options, linking a substantial amount of pay opportunity to long-term company performance and increased shareholder value • Majority of total target pay opportunity is at-risk and tied to company performance and/or long-term stock value | • Overall target total pay opportunity, as well as each pay element, is assessed for competitiveness relative to primary and/or supplemental peer groups, which include similarly-sized pharmaceutical peers and Dow Jones Industrial Average companies, excluding financial services companies • Competitive positioning is targeted to median of market; actual positioning varies based on a variety of factors, including scope and complexity of role, years of experience, demonstrated performance over time, and other factors |
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| (1) Rounded based on full year LTI and annual incentive targets (excluding one-time special awards). |
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| The C&MD Committee must balance the need to deliver a competitive level of base salary with ensuring the appropriate mix of fixed to variable compensation for each NEO. The table shows adjustments made to base salaries in 2024. All annual base salary increases were based on the Company’s U.S. salary increase budget for all employees, including the NEOs. | Named Executive Officer | Annual Base Salary Increase % | New Base Salary(1) | | | Davis | No change | $1,615,000 | | | Litchfield | 4.0% | 1,170,000 | | | DeLuca | 4.0 | 962,000 | | | Larson(2) | — | 800,000 | | | Li | 4.0 | 1,456,000 | | | (1) Reflects base salary as of December 31, 2024. (2) Ms. Larson was hired on April 1, 2024. | | | | Annual Cash Incentive | | | | | The NEOs participate in the Executive Incentive Plan (“EIP”). Award amounts under the EIP are determined based upon achievement of Company performance measures as reflected by the Company Scorecard. The overall EIP award cannot exceed 200% of the annual incentive target for the executive. The maximum award amount for each NEO for 2024, excluding the impact of the Company Scorecard, is listed in the Grants of Plan-Based Awards table on page 70. | Named Executive Officer | 2023 Target Annual Incentive % of Base Salary(1) | 2024 Target Annual Incentive % of Base Salary(1) | | | Davis | 150% | 150% | | | Litchfield | 100 | 100 | | | DeLuca | 100 | 100 | | | Larson(2) | — | 100 | | | Li | 100 | 100 | | | (1) Reflects annual incentive targets as of December 31 of the applicable year. (2) Ms. Larson’s target annual incentive was prorated based on her hire date of April 1, 2024. | | |
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2024 Company Scorecard Our Company Scorecard helps translate our strategic priorities into operational terms that enable tracking and measurement of our progress and performance against annual operating goals and critically important strategic drivers of long-term value creation, including goals tied to our research and development pipeline — each of which is measured in the context of compliance, health, safety, and environmental outcomes. The Company Scorecard may be adjusted based on an evaluation of these outcomes, recognizing the importance they play in driving the Company’s values and a culture of integrity. For 2024, no such adjustment was applied. Revenue and Pre-Tax Income are equally weighted at 35%, each based on the C&MD Committee’s belief that they are the key financial measures of our success during the year. The Pipeline goals are collectively weighted at 20% and are designed to ensure we are focused on internal and external early discovery opportunities, late-stage clinical development progression, and regulatory filings and approvals. Finally, our Sustainability metrics are collectively weighted at 10%. The target, threshold, and maximum Revenue and Pre-Tax Income goals are set in relation to the Board-approved annual operating plan and the expectations of management. Each year, the Pipeline goals are recommended by the President of Merck Research Laboratories, reviewed by the Research Committee, and approved by the C&MD Committee. The Sustainability metrics are recommended by the Company’s Global Market Access, Sustainability, and Human Resources teams and approved by the C&MD Committee. Failure to achieve threshold performance on any of the metrics would result in forfeiture of the entire opportunity for that metric. If the combined results of the four metrics do not total at least 50, there would be no payout. The overall results of the Company Scorecard are calibrated so individuals may receive between 50% and 200% of their target award opportunity established for the annual performance period. Pre-determined adjustments are applied to Revenue and Pre-Tax Income results using a consistent framework of adjustments to our reported financial results for incentive program purposes approved by the C&MD Committee to accurately reflect the operating performance of our business. For further explanation of these pre-determined adjustments, please refer to Appendix B on page 102. The 2024 Company Scorecard results are summarized below. 2024 Company Scorecard(1)
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Revenue: Consistent with the Scorecard design and the metric as defined at the beginning of the performance period, reported revenue of $64.17B was adjusted to $64.41B to exclude the effect of certain business development transactions as well as the impact of currency exchange rates (versus currency exchange rates budgeted in the annual operating plan). We exceeded our internal Revenue target of $64.00B due to performance in oncology and virology, partially offset by below target performance in vaccines. Pre-Tax Income: Consistent with the Scorecard design and the metric as defined at the beginning of the performance period, non-GAAP pre-tax income of $23.39B was adjusted to $26.15B to exclude the effect of certain business development transactions as well as the impact of currency exchange rates (versus currency exchange rates budgeted in the annual operating plan). We exceeded our internal Pre-Tax Income target of $25.70B due to the sales strength that was achieved coupled with our continued discipline in expense management. Sustainability: Our Sustainability metrics measure our ability to deliver meaningful progress in enabling access to health for people around the world, as well as the engagement and inclusion of our employees. Through our supply commitments to Gavi and UNICEF, innovative insurance solutions, collaborations aimed at increasing the capacity of hospital systems for cancer diagnosis and care, and expanding channels through which people can access vaccines through local organizations, we expanded the number of people who now have the option to access medicines and vaccines. The engagement and inclusion of our employees, which is measured through employee surveys, is also critically important. Named Executive Officer 2024 Annual Incentive Payouts The table below shows the 2024 annual cash incentives paid to the NEOs. The “Final Award” for each NEO is reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation table.
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| | | Target | | | | | Named Executive Officer | Annual Base Salary (as of 12/31/24) ($) | Annual Incentive (%) | Annual Incentive ($) | Company Scorecard Result (%) | Final Award ($) | | Davis | $1,615,000 | 150% | $2,422,500 | 114% | $2,761,650 | | Litchfield | 1,170,000 | 100 | 1,170,000 | 114 | 1,333,800 | | DeLuca | 962,000 | 100 | 962,000 | 114 | 1,096,680 | | Larson(1) | 800,000 | 100 | 601,093 | 114 | 685,246 | | Li | 1,456,000 | 100 | 1,456,000 | 114 | 1,659,840 |
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| (1) Ms. Larson’s target annual incentive for 2024 was prorated based on her hire date of April 1, 2024. |
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Long-Term Equity Incentives The long-term incentive program, consisting of a mix of PSUs and stock options, provides our NEOs with the opportunity to own Company common stock, directly linking a substantial portion of their compensation to the returns realized by our shareholders. We use these two vehicles to ensure that our LTI program remains balanced, sustainable, and supportive of its objectives over a multi-year period. 2024 Equity Award Mix
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| | Performance Share Units | | | PSUs link realized compensation to the achievement of critical financial objectives and align executives’ interests with those of our shareholders. The earned award varies based on results versus pre-determined performance goals, as well as long-term returns to shareholders as measured by relative stock price performance and dividend yield. |
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| | Stock Options Stock options align our executives’ interests with the interests of our shareholders because options only have financial value to the recipient if the price of our common stock at the time of exercise exceeds the stock price on the date of grant. As a result, we believe stock option grants encourage executives to focus on behaviors and initiatives that support sustained long-term stock price appreciation, which benefits all shareholders. |
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Current LTI Grant Practices All grants to executive officers are made under the Merck & Co., Inc. 2019 Stock Incentive Plan (“Incentive Stock Plan”) and approved by the C&MD Committee and, in the case of our CEO, recommended by the C&MD Committee and approved by the independent members of the Board of Directors. Annual PSU grants (with a three-year performance period) are generally made on the last business day in March and annual stock option grants are made on the third business day following the announcement of our first quarter earnings. We may also selectively grant PSUs, stock options, and RSUs to executive officers on the third business day following the announcement of quarterly earnings, generally as part of a new hire sign-on or for retention purposes. These dates were chosen to ensure that grants are made shortly after we have released information about our financial performance to the public and therefore during a period in which there is no material nonpublic information about our Company. The C&MD Committee reserves the right to change the date when grants are made, in view of its responsibility to consider all facts and circumstances to ensure that grants are consistent with our compensation philosophy and objectives. Stock options are granted at no less than fair market value on a fixed date or date of a particular event, with all required approvals obtained in advance of or on the actual grant date. Fair market value is the closing price of a share of Merck common stock on the grant date. The re-pricing of stock options is not permitted under the Incentive Stock Plan without prior shareholder approval. 2024 LTI Grant Values The 2024 annual LTI grant values for the CEO and other NEOs, as compared to the prior year, are shown in the following table. The number of shares associated with each award is set forth in the Grants of Plan-Based Awards table on page 70. The LTI grant value for Mr. Davis was increased by the Board based on a review of his performance and the competitive positioning of his compensation relative to the primary and supplemental peer groups. Consistent with our compensation strategy that supports a pay-for-performance culture, the Board intends to continue to adjust Mr. Davis’s compensation, and when appropriate, increase it to ensure it remains competitive to these peer groups and aligned with the Board’s assessment of his business performance and leadership.
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| (1) Grant values shown above will be different from the values shown in the Summary Compensation and Grants of Plan-Based Awards tables based on the fair value on grant date in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”) and SEC disclosure rules, which consider factors other than share price. |
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| (2) Mr. DeLuca received a $3,000,000 retention LTI grant that will vest on April 30, 2027, subject to his continued employment. Please see page 57 for additional details. |
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| (3) Ms. Larson was hired on April 1, 2024, and, under the terms of her offer letter, in addition to her annual LTI award, she also received an RSU grant of $4,400,000 and a stock option grant of $1,500,000, as a part of her sign-on award (the majority of which replaced forfeited equity at her prior company and the balance of the award provided a critical incentive for Ms. Larson to accept our offer of employment to join the Company’s executive leadership team). |
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| (2) Ms. Larson was hired on April 1, 2024, and she did not receive a 2022 PSU grant. |
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Additional information regarding the payouts under the 2022-2024 PSU performance period is provided in the Option Exercises and Stock Vested table on page 74. To accurately reflect the operating performance of our business, the C&MD Committee approved a consistent framework of adjustments to our reported financial results for incentive program purposes. For further explanation of these adjustments and our GAAP versus non-GAAP results, please refer to Appendices A and B on pages 100 and 102, respectively. Retention Action In recognition of the strategic importance of the Animal Health business and the dynamic nature of its industry, the C&MD Committee approved a $3,000,000 retention LTI grant for Mr. DeLuca. Given Mr. DeLuca’s extensive industry experience and strong general management and leadership skills, management believes he is a vital asset to our organization and critical to driving our strategic goals forward. The LTI grant was issued on April 30, 2024, in the form of 100% RSUs, vesting in its entirety at the end of a three-year period on April 30, 2027, subject to his continued employment. Other Employee Benefits Similar to the Company’s other salaried, U.S.-based employees, the NEOs participate in a variety of retirement, health and welfare, and paid time-off benefits designed to enable us to attract and retain our workforce in a highly competitive market. Pension and savings plans help employees save and prepare financially for retirement. Health and welfare and paid time-off benefits help ensure that we have a healthy, productive, and focused workforce. Additionally, senior management employees, including the NEOs, are provided a limited number of other benefits, which the C&MD Committee believes are reasonable, appropriate, and consistent with our executive compensation philosophy. These benefits, which are described in more detail below, are reflected in the “All Other Compensation” column of the Summary Compensation table.
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Other Compensation Practices Stock Ownership Requirements The C&MD Committee recognizes the critical role that executive stock ownership has in aligning the interests of management with those of shareholders. As such, we maintain a formal stock ownership policy that requires the CEO and other senior executives to hold a certain amount of Company common stock for so long as they remain in office. The amount of Company common stock an executive is required to hold is based on a designated multiple of the executive’s base salary. Until the designated multiple of base salary is reached, executives are required to retain in stock a percentage of the after-tax net proceeds associated with stock option exercises and/or PSU and RSU settlements (100% for the CEO and 75% for the other NEOs). In calculating the attainment of our stock ownership requirements, we exclude (1) unexercised stock options and (2) unvested PSUs and RSUs. The following table sets forth the stock ownership requirements and current stock ownership status as a multiple of base salary for the CEO and other NEOs as of February 28, 2025.
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Return of Incentive Compensation (“Clawback Policy”) The C&MD Committee has adopted a clawback policy, in compliance with Rule 10D-1 of the Securities Exchange Act of 1934 and Section 303A.14 of the New York Stock Exchange Listed Company Manual (the “Dodd-Frank Clawback Policy”). In addition to the Dodd-Frank Clawback Policy, executives are also subject to the recoupment of incentive-based cash compensation, equity-based compensation (both time-based and performance-based), and any proceeds or earnings received in respect to such compensation, where the C&MD Committee determines that (a) the executive engaged in misconduct, or failed to reasonably supervise an employee who engaged in misconduct, that resulted in (i) a material violation of a written Company policy relating to the research, development, manufacturing, sales, or marketing of the Company’s products or (ii) conduct detrimental to the Company, including the Company’s overall goodwill or reputation to the Company, and (b) a significant negative impact on the Company’s financial operating results or reputation occurred. Hedging and Pledging As part of our insider trading policy, the Company has a policy against the hedging and pledging of Company securities that is applicable to our Directors and management-level employees, including officers. See page 31 of this proxy statement under Hedging and Pledging for more information. Tax Deductibility of Compensation In light of the repeal of the performance-based compensation exemption under Section 162(m) of the Internal Revenue Code, the C&MD Committee may authorize compensation that is not deductible if it is determined to be appropriate and in the best interests of the Company and our shareholders. Equity Award Granting Policy We do not grant stock options in anticipation of, or immediately following, the release of material nonpublic information that is likely to result in changes to the price of our common stock, such as a significant positive or negative earnings announcement, nor do we time the public release of such information based on stock option grant dates. For additional information about our grant policy, see page 55 of this proxy statement under Current LTI Grant Practices . While we do not grant stock options in anticipation of, or immediately following, the release of material nonpublic information about our Company, the SEC has adopted Item 402(x) of Regulation S-K, which requires companies to disclose certain information in the event stock options were granted within four business days before or one business day after the filing of a 10-Q or 10-K, or the filing or furnishing of an 8-K that discloses material nonpublic information. As disclosed in the Grants of Plan-Based Awards table on page 70, and consistent with prior practice as described earlier, we granted stock options to our NEOs on April 30, 2024, which grant was three business days following our 8-K disclosure of Q1 2024 earnings. We subsequently filed our Q1 2024 10-Q on May 3, 2024, and as such, the following tabular disclosure of our 2024 stock options grants is required by Item 402(x).
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| (1) See the Grants of Plan-Based Awards on page 70. |
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| Name and Principal Position | Year | Salary ($) (1) | Bonus ($) | Stock Awards ($) (2) | Option Awards ($) (3) | Non-Equity Incentive Plan Compensation ($) (4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (5) | All Other Compensation ($) (6) | Total ($) | | Robert M. Davis Chairman, Chief Executive Officer and President | 2024 | $1,623,874 | $0 | $13,077,541 | $4,650,010 | $2,761,650 | $511,878(7) | $561,112 | $23,186,064 | | | 2023 | 1,603,091 | 0 | 9,997,585 | 4,050,000 | 3,585,300 | 651,163(8) | 386,148 | 20,273,287 | | | 2022 | 1,538,613 | 0 | 8,868,587 | 3,524,995 | 4,125,150 | 180,259(9) | 412,490 | 18,650,093 | | Caroline Litchfield Executive Vice President and Chief Financial Officer | 2024 | 1,166,044 | 0 | 3,585,716 | 1,275,008 | 1,333,800 | 0(10) | 147,210 | 7,507,778 | | | 2023 | 1,093,063 | 0 | 3,147,375 | 1,275,003 | 1,665,000 | 792,534(11) | 327,410 | 8,300,385 | | | 2022 | 959,959 | 0 | 2,075,595 | 824,999 | 1,735,500 | 0(12) | 326,605 | 5,922,657 | | Richard R. DeLuca, Jr. Executive Vice President and President, Merck Animal Health | 2024 | 958,747 | 0 | 5,699,835 | 960,000 | 1,096,680 | 268,758(13) | 114,511 | 9,098,531 | | | 2023 | 910,027 | 0 | 2,369,846 | 959,999 | 1,369,000 | 470,087(14) | 118,931 | 6,197,890 | | | 2022 | 840,522 | 0 | 2,264,301 | 899,993 | 1,513,000 | 0(15) | 101,011 | 5,618,828 | | Betty Larson Executive Vice President and Chief Human Resources Officer | 2024 | 604,396 | 725,000 | 6,635,712(16) | 2,295,014(17) | 685,246 | 32,106 | 280,323 | 11,257,796 | | | 2023(18) | — | — | — | — | — | — | — | — | | | 2022(18) | — | — | — | — | — | — | — | — | | Dean Li, M.D., Ph.D. Executive Vice President and President, Merck Research Laboratories | 2024 | 1,451,077 | 0 | 4,724,760 | 1,680,000 | 1,659,840 | 400,472 | 170,183 | 10,086,332 | | | 2023 | 1,368,819 | 0 | 4,147,202 | 1,679,999 | 2,072,000 | 339,249 | 172,146 | 9,779,414 | | | 2022 | 1,095,055 | 0 | 2,943,574 | 1,169,998 | 2,225,000 | 210,204 | 122,233 | 7,766,063 |
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| For more information about deferred amounts, see the Nonqualified Deferred Compensation table and related footnotes on page 77. |
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| For more information on the awards granted during 2024, see the Grants of Plan-Based Awards table and related narrative and footnotes beginning on page 70. |
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| For more information on stock options granted during 2024, see the Grants of Plan-Based Awards table and related narrative and footnotes beginning on page 70. |
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| (4) Represents amounts paid under the EIP. For more information, see the Grants of Plan-Based Awards table and related narrative and footnotes beginning on page 70. Amounts shown are not reduced to reflect the NEOs’ elections, if any, to defer receipt of awards into the Merck Deferral Program. For more information, see the Nonqualified Deferred Compensation table and related notes and narrative on page 77. |
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| Summary Compensation Table | ÷ ÷ ÷ ÷ | 63 |
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| 66 | ç ç ç ç | Pay Versus Performance Pay Versus Performance Table |
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| | Summary Compensation Table Total for CEO (Davis) | Summary Compensation Table Total for CEO (Frazier) | Compensation Actually Paid to CEO (Davis) (6) | Compensation Actually Paid to CEO (Frazier) (6) | Average Summary Compensation Table Total for Non-CEO NEOs | Average Compensation Actually Paid to Non-CEO NEOs (6) | Value of Initial Fixed $100 Investment Based on | | | | | Fiscal Year | | | | | | | Total Shareholder Return (7) | Peer Group Total Shareholder Return (8) | GAAP Net Income ($000’s) | Non-GAAP EPS (9) | | 2024 (1) | $23,186,064 | — | $14,725,823 | — | $9,487,609 | $6,989,318 | $133.61 | $153.72 | $17,117,000 | $7.65 | | 2023 (2) | 20,273,287 | — | 26,701,326 | — | 7,629,512 | 9,360,664 | 142.53 | 142.00 | 365,000 | 1.51 | | 2022 (3) | 18,650,093 | — | 52,474,235 | — | 8,406,647 | 22,341,814 | 141.12 | 138.11 | 14,519,000 | 7.48 | | 2021 (4) | 13,722,121 | 15,196,920 | 14,390,893 | 13,328,924 | 6,709,905 | 7,004,950 | 94.47 | 130.44 | 12,345,000 | 5.37 | | 2020 (5) | — | 22,088,429 | — | 10,578,487 | 6,041,722 | 3,582,756 | 92.79 | 106.53 | 4,519,000 | 2.97 |
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| Pay Versus Performance Pay Versus Performance Table | ÷ ÷ ÷ ÷ | 67 |
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| | Summary Compensation Table Total Compensation | Value of Pension Benefits Deducted from SCT (1) | Value of Equity Deducted from SCT | Value of Pension Benefits Per CAP Definition (2) | Fair Value of Equity Compensation Granted in Current Year (3) | Year-Over-Year Change in Fair Value of Unvested Equity (4) | Change in Fair Value of Equity that Vested During the Year (5) | Value of Dividends Accrued or Paid on Stock Awards (6) | Compensation Actually Paid | | CEO (Davis) | | | | | | | | | | | 2024 | $23,186,064 | $511,878 | $17,727,551 | $321,870 | $10,065,366 | $(2,204,776) | $555,545 | $1,041,183 | $14,725,823 | | 2023 | 20,273,287 | 651,163 | 14,047,586 | 271,130 | 18,028,095 | (97,780) | 1,522,952 | 1,402,391 | 26,701,326 | | 2022 | 18,650,093 | 180,259 | 12,393,581 | 280,085 | 26,824,642 | 14,171,478 | 3,931,065 | 1,190,712 | 52,474,235 | | 2021 | 13,722,121 | 235,640 | 9,084,579 | 265,823 | 10,649,030 | (669,339) | (661,118) | 404,596 | 14,390,893 | | CEO (Frazier) | | | | | | | | | | | 2021 | 15,196,920 | — | 10,615,096 | 418,183 | 12,443,073 | (2,633,787) | (2,435,189) | 954,819 | 13,328,924 | | 2020 | 22,088,429 | 2,288,641 | 15,502,597 | 379,037 | 17,150,711 | (5,340,113) | (7,290,425) | 1,382,086 | 10,578,487 | | Average Non-CEO NEOs | | | | | | | | | | | 2024 | 9,487,609 | 175,334 | 6,714,011 | 130,394 | 4,223,773 | (520,745) | 281,388 | 276,243 | 6,989,318 | | 2023 | 7,629,512 | 479,834 | 4,253,332 | 152,186 | 5,458,528 | (43,471) | 475,952 | 421,122 | 9,360,664 | | 2022 | 8,406,647 | 42,041 | 5,514,804 | 122,447 | 9,133,936 | 6,336,440 | 3,346,846 | 552,343 | 22,341,814 | | 2021 | 6,709,905 | 107,732 | 4,261,734 | 122,147 | 4,829,729 | (247,588) | (208,749) | 168,972 | 7,004,950 | | 2020 | 6,041,722 | 498,315 | 3,518,845 | 157,683 | 3,892,938 | (1,222,908) | (1,583,911) | 314,391 | 3,582,756 |
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| 68 | ç ç ç ç | Pay Versus Performance Pay Versus Performance Table |
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| Pay Versus Performance Pay Versus Performance Table | ÷ ÷ ÷ ÷ | 69 |
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| (3) For more information on RSUs, see the narrative to this Grants of Plan-Based Awards table on page 71. |
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| Grants of Plan-Based Awards Narrative Information Relating to the Grants of Plan-Based Awards Table | ÷ ÷ ÷ ÷ | 71 |
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| Outstanding Equity Awards | ÷ ÷ ÷ ÷ | 73 |
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| (1) This column represents the values realized upon stock option exercises during 2024, which were calculated based on the difference between the market price of Company common stock at the time of exercise and the exercise price of the option. |
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| 76 | ç ç ç ç | Pension Benefits |
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The NEOs participate in both U.S. defined benefit plans, as do other U.S.-based Merck Sharp & Dohme LLC salaried employees. Benefits payable under the Qualified Plan and the SRP are based on several formulas. Beginning in 2013, a Cash Balance formula was added to replace the Final Average Pay (“FAP”) formula. Employees eligible for U.S. benefits on December 31, 2012, receive transition benefits, which provide the greater of the benefit under the Cash Balance and FAP formulas through December 31, 2019, or the date the participant terminates employment or loses retirement plan eligibility, if earlier. Mr. DeLuca is the only NEO eligible for transition benefits. Final Average Pay Formula: For service prior to January 1, 2013, benefits are calculated and shown as a single life annuity normally payable at age 65 (normal retirement date or “NRD”). The amount equals: * Limited to 31.25 Final Average Pay. The average of a participant’s highest five consecutive calendar years of Total Pay for the 10 years before the earlier of:
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| • | Termination of employment, or |
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| • | December 31, 2019, if eligible for the transition provisions. |
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Cash Balance Formula: For service starting January 1, 2013, benefits are calculated and shown as an account balance that grows with annual pay credits according to the following schedule:
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| Age + Cash Balance Service at 12/31 | | Percent of Total Pay credited to Account Balance | | At Least | Less Than | | | — | 40 | 4.5% | | 40 | 50 | 5.5% | | 50 | 60 | 6.5% | | 60 | 70 | 8.0% | | 70 | — | 10.0% |
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The account balance also earns interest credits every year at the annual rate of the change in the Consumer Price Index plus 3% (and not less than 3.3%). The account balance is the sum of annual pay credits and interest credits. Total Pay is generally base salary and EIP for both the FAP and Cash Balance formulas for the NEOs. Vesting. A participant is generally vested after three years of vesting service. All NEOs are vested, except for Ms. Larson, who will become vested on April 1, 2027. A participant who is vested and terminates employment can commence receiving a reduced pension benefit after attaining age 55. FAP benefits are reduced on an actuarial basis. Participants who only have vested benefits under the Cash Balance formula can commence payment of their Qualified Plan benefit immediately upon termination. Early Retirement Subsidies. Under the FAP formula, a participant who is age 55 with at least 10 years of credited service is entitled to early retirement subsidies. Under this provision, unreduced benefits may begin at age 62 and benefits that begin before 62 are only reduced by 3% per year. As of December 31, 2024, Mr. DeLuca is retirement eligible under the Qualified Plan and the SRP (i.e., at least age 55 and having completed at least 10 years of Credited Service). SRP Benefits. The Qualified Plan benefits are limited by the Internal Revenue Code. The SRP is an unfunded plan maintained to provide benefits according to the formulas described above without regard to those limits. The SRP also may include benefits based on compensation deferred into the Merck Deferral Program. Forms of Benefit. In the Qualified Plan and in the SRP for accruals prior to 2005, a participant generally can choose from several annuity options or a lump sum. SRP accruals post-2004 are payable in a lump sum or installments of 5 to 10 years. All forms of benefit are actuarially equivalent to the single life annuity.
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| ÷ ÷ ÷ ÷ | 77 |
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Nonqualified Deferred Compensation The following table shows the executive contributions, earnings, and account balances for the NEOs in the Merck Deferral Program, an unfunded, nonqualified, unsecured deferred compensation plan. The Merck Deferral Program allows participants who are executive officers to defer all or a portion of annual bonus and/or up to 50% of base salary, subject to certain limitations. Nonqualified Deferred Compensation for Fiscal Year Ended December 31, 2024
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| Name | Executive Contributions in 2024 ($) | Registrant Contributions in 2024 ($)(1) | Aggregate Earnings in 2024 ($)(2) | Aggregate Withdrawals/ Distributions in 2024 ($) | Aggregate Balance at 12/31/24 ($)(3) | | Davis | $0 | $218,488 | $205,885 | 0 | $1,942,258 | | Litchfield | 0 | 111,583 | 49,029 | 0 | 471,131 | | DeLuca | 297,138 | 88,986 | 995,726 | 0 | 6,259,485 | | Larson | 0 | 9,398 | (148) | 0 | 9,250 | | Li | 0 | 142,653 | 149,644 | 0 | 817,990 |
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| (1) The amounts disclosed in this column represent the Company’s annual 4.5% credit of eligible pay in excess of the IRS limit to the NEOs’ accounts under the Merck Deferral Program. These amounts are included within the amount disclosed in the “All Other Compensation” column of the Summary Compensation table for each applicable NEO for 2024. |
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| (2) This column represents dividends earned plus changes in market and account value (investment earnings or losses) for the period of January 1, 2024 to December 31, 2024. |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| (3) This column includes deferred compensation earned in earlier years which was disclosed as “Salary,” “Non-Equity Incentive Plan Compensation”, or “All Other Compensation” in the Summary Compensation table of prior proxy statements as follows: Mr. Davis, $242,730 for 2023 and $182,890 for 2022; Ms. Litchfield, $112,315 for 2023 and $82,660 for 2022; Dr. Li, $146,717 for 2023 and $98,508 for 2022; and Mr. DeLuca, $94,081 for 2023. Although Mr. DeLuca was not an NEO for 2022 and his 2022 compensation information was not disclosed in prior proxy statements, pursuant to SEC rules, his 2022 compensation information is included in the Summary Compensation table in this year’s proxy, and the balance listed for him in this column includes a Company credit of $77,286 for 2022. |
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Merck Deferral Program Investments. Account balances may be invested in phantom investments selected by the executive from an array of investment options that mirrors the funds in the Merck U.S. Savings Plan. Distributions. When participants elect to defer amounts into the Merck Deferral Program, they also elect when the amounts ultimately will be distributed to them. Distributions may either be made in a specific year (regardless of whether employment has then ended) or at a time that begins at or after the executive’s employment has ended. Distributions can be made in a lump sum or up to 15 annual installments. Distributions from the Company common stock fund are made in shares, with cash payable for any partial share.
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| 78 | ç ç ç ç |
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Potential Payments Upon Termination or a Change in Control The section below describes the payments and benefits that may be made to the NEOs upon termination from employment, including in connection with a change in control (as defined below). For payments that may be made to the NEOs upon retirement, see the Pension Benefits table and related narrative beginning on page 75. Merck & Co., Inc. U.S. Separation Benefits Plan, as amended (the “Separation Plan”) The Separation Plan provides severance pay and benefits to certain eligible employees, including the NEOs, whose employment is terminated due to organizational changes, including discontinuance of operations, location closings, corporate restructuring, or a work force reduction. For the NEOs, the following severance pay and benefits are payable under the Separation Plan:
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| • | A cash lump sum severance payment, the amount which, for the NEOs, is determined as follows: |
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| Years of Continuous Service at Separation Date | Severance Pay (base salary in weeks) | | Less than 1 year | 26 | | 1-4 years | 40 | | 5 years or more | 40 plus 2 additional weeks for each year of continuous service beyond 4 years (maximum 78 total) |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| • | Continued participation in the Company’s medical, dental, and basic life insurance plans at active-employee rates for 26 to 78 weeks (determined based on years of continuous service); |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| • | Outplacement services for up to 12 months; and |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| • | Continued eligibility for the financial and tax planning allowance for the calendar year in which separation occurs. |
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To be eligible for the severance pay and benefits described above, a general release of claims is required, as well as compliance with applicable restrictive covenants. Effects of Termination on Other Awards or Under Other Benefit Plans The NEOs may be eligible for additional payments and benefits upon termination from employment as described below.
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| • | Executive Incentive Plan Awards. The NEOs may be eligible for payments in lieu of EIP bonus payouts as follows: |
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| Termination occurs following the end of the performance year | Termination occurs between January 1 and June 30 of the performance year | Termination occurs after June 30 and before December 31 of the performance year | | Eligibility for Pay in Lieu of EIP Eligibility determined in accordance with same terms and conditions as other employees participating in the EIP | Eligibility for Pay in Lieu of EIP Eligible for special payment if NEO is retirement eligible | Eligibility for Pay in Lieu of EIP Eligible for special payment | | Determination of Amount of Pay in Lieu of EIP Amount determined in accordance with same terms and conditions as other employees participating in the EIP | Determination of Amount of Pay in Lieu of EIP Amount of the special payment is based on the NEO’s target award and the number of months worked in the performance year | Determination of Amount of Pay in Lieu of EIP Amount of the special payment is based on the NEO’s target award and the number of months worked in the performance year |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| Potential Payments Upon Termination or a Change in Control Merck & Co., Inc. U.S. Separation Benefits Plan, as amended (the “Separation Plan”) | ÷ ÷ ÷ ÷ | 79 |
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| 80 | ç ç ç ç | Potential Payments Upon Termination or a Change in Control Individual Agreements and Arrangements |
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| Potential Payments Upon Termination or a Change in Control Effects of Change in Control under Change in Control, Equity, and Other Benefit Plans | ÷ ÷ ÷ ÷ | 81 |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| 82 | ç ç ç ç | Potential Payments Upon Termination or a Change in Control Effects of Change in Control under Change in Control, Equity, and Other Benefit Plans |
Effects of Change in Control under Other Benefit Plans
| Potential Payments Upon Termination or a Change in Control Effects of Change in Control under Change in Control, Equity, and Other Benefit Plans | ÷ ÷ ÷ ÷ | 83 |