SECURITIES AND EXCHANGE COMMISSION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☑þ Filed by a Party other than the Registrant ☐
Check the appropriate box:
| | | | | | | | | | | | | | |
☐ | | Preliminary Proxy Statement |
☐ | | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☑ | | Definitive Proxy Statement |
☐ | | Definitive Additional Materials |
☐ | | Soliciting Material Pursuant to §240.14a-12 |
|
Becton, Dickinson and Company |
(Name of Registrant as Specified In Its Charter) |
| | | | |
|
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
|
Payment of Filing Fee (Check the appropriate box): |
☑ | | No fee required. |
☐ | | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| | (1) |
| | (1) | | Title of each class of securities to which transaction applies: |
| | | | |
| | | | |
| | |
| | (2) | | | Aggregate number of securities to which transaction applies: |
| | | | |
| | | | |
| | |
| | (3) | | | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| | | | |
| | | | |
| | |
| | (4) | | | Proposed maximum aggregate value of transaction: |
| | | | |
| | | | |
| | |
| | (5) | | | Total fee paid: |
| | | | |
| | | | |
| | |
| | ☐ | | Fee paid previously with preliminary materials. |
| |
☐ | | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| | (1) |
| | (1) | | Amount Previously Paid: |
| | | | |
| | | | |
| | |
| | (2) | | | Form, Schedule or Registration Statement No.: |
| | | | |
| | | | |
| | |
| | (3) | | | Filing Party: |
| | | | |
| | | | |
| | |
| | (4) | | | Date Filed: |
| | | | |
| | | | |
Becton, Dickinson and Company
Franklin Lakes, New Jersey 07417-1880
December
14, 201717, 2020
Dear Fellow Shareholders:
You
We are cordially invitedpleased to invite you to attend the 20182021 Annual Meeting of Shareholders of Becton, Dickinson and Company (“BD”) to be held on Tuesday, January 26, 2021 at 1:00 p.m. EST on Tuesday, January 23, 2018 atEastern Time (the “2021 Annual Meeting”). Due to ongoing public health concerns regarding the Four Seasons HotelCOVID-19 pandemic and for the health and well-being of our shareholders, directors, management and associates, the BD Board of Directors has directed that the 2021 Annual Meeting be held as a “virtual meeting” via the Internet. You will be able to attend the 2021 Annual Meeting virtually and vote and submit questions by visiting www.virtualshareholdermeeting.com/BDX2021.
As of the date of this letter, a state of emergency is in effect in the State of New
York, 57 East 57th Street,Jersey relating to the COVID-19 pandemic. BD is permitted to hold a virtual meeting of shareholders under New
York,Jersey law so long as a state of emergency remains in effect. In the event that the state of emergency is lifted prior to the date fixed for the 2021 Annual Meeting and it is not, therefore, then legally permissible to hold a completely virtual annual meeting under New
York.Jersey law, we will announce alternative arrangements for the 2021 Annual Meeting as promptly as practicable. Any such change will be announced via press release and website posting, as well as the filing of additional proxy materials with the Securities and Exchange Commission.
The accompanying notice of meeting and proxy statement describe the matters to be acted upon at the meeting. We also will report on matters of interest to BD shareholders.
Your vote is important.
We hope that you will be able to attend the virtual 2021 Annual Meeting. Whether or not you plan to attend,
the Annual Meeting in person, we encourage you to vote soit is important that your shares
will be represented and
voted atvoted. Please read the
meeting. You mayinstructions in the proxy materials on how to vote by
proxy on the Internet or by telephone, or by completing and mailing the enclosed proxy card in the return envelope provided. You may also vote in person at the Annual Meeting.proxy.
Thank you for your continued support of BD.
|
Sincerely, | | | | | | | |
|
Sincerely, | |
| | |
| Vincent A. Forlenza Chairman |
Chairman and Chief Executive Officer
|
Becton, Dickinson and Company
1 Becton Drive
Franklin Lakes, New Jersey 07417-1880
NOTICE OF ANNUAL MEETING OF SHAREHOLDERSBecton, Dickinson and Company
1 Becton Drive
Franklin Lakes, New Jersey 07417-1880
December
14, 201717, 2020
The 2018 Annual Meeting of Shareholders of Becton, Dickinson and Company, a New Jersey corporation (“BD”), will be held as follows: | | |
DATE: | | Tuesday, January 23, 2018 |
TIME: | | 1:00 p.m. EST |
LOCATION: | | Four Seasons Hotel New York
57 East 57th Street
New York, New York
|
PURPOSE: | | To consider and act upon the following proposals: |
| | 1. The election as directors of the thirteen nominees named in the attached proxy statement for aone-year term;
|
| | 2. The ratification of the selection of the independent registered public accounting firm;
|
| | 3. An advisory vote to approve named executive officer compensation;
|
| | 4. A shareholder proposal to amend BD’s proxy accessby-law, if properly presented at the meeting; and
|
| | 5. Such other business as may properly come before the meeting or any adjournment or postponement thereof.
|
Shares represented by properly executed proxieson Tuesday, January 26, 2021, at 1:00 p.m. Eastern Time (the “2021 Annual Meeting”). The 2021 Annual Meeting will be votedheld virtually via the Internet, and shareholders can access the 2021 Annual Meeting and vote and submit questions by visiting
www.virtualshareholdermeeting.com/BDX2021 and entering the control number provided in accordancethese proxy materials. In the event that on the date fixed for the 2021 Annual Meeting, it is not legally permissible to hold a virtual annual meeting under New Jersey law because a state of emergency is not then in effect in New Jersey, we will announce alternative arrangements for the 2021 Annual Meeting as promptly as practicable. Any such change will be announced via press release and website posting, as well as the filing of additional proxy materials with the instructions specified therein. Shares represented by properly executed proxies that do not provide specific voting instructionsSecurities and Exchange Commission.
At the 2021 Annual Meeting, shareholders will be voted in accordance withconsider and act upon the recommendationsfollowing proposals:
1.The election as directors of BD’s Board of Directors set forththe thirteen nominees named in the accompanyingattached proxy statement.statement for a one-year term;
2.The ratification of the selection of the independent registered public accounting firm;
3.An advisory vote to approve named executive officer compensation;
4.A shareholder proposal seeking to lower the ownership threshold required to call a special shareholders meeting, if properly presented at the meeting; and
5.Such other business as may properly come before the meeting, or any adjournment or postponement thereof.
Important Notice Regarding the Availability of Proxy Materials for the 20182021 Annual Meeting of Shareholders to be held on January 23, 2018.26, 2021. BD’s proxy statement and 20172020 Annual Report of Shareholders, which includes BD’s consolidated financial statements, are available atwww.edocumentview.com/BDX.www.proxyvote.com. Shareholders of record
atas of the close of business on December
8, 2017 will be7, 2020 are entitled to
attendnotice of and
to vote at the
meeting.2021 Annual Meeting (or any adjournment or postponement thereof), Additional instructions for accessing the 2021 Annual Meeting and voting and submitting questions are included in the accompanying proxy statement.
| | | | | | | | |
| By order of the Board of Directors, |
|
| | |
| Gary DeFazio |
Senior Vice President and Corporate Secretary |
YOU CAN VOTE BY PROXY OR SUBMIT VOTING INSTRUCTIONS IN
ONE
TABLE OF
THREE WAYS:CONTENTS
Visit the website noted on your proxy/voting instruction card.
Use the telephone number noted on your proxy/voting instruction card.
Promptly return your signed and dated proxy/voting instruction card in the envelope provided.
_____________________________
2021 ANNUAL MEETING OF SHAREHOLDERS
Tuesday, January
23, 201826, 2021
_____________________________
BECTON, DICKINSON AND COMPANY
Franklin Lakes, New Jersey 07417-1880
_____________________________
These proxy materials are being mailed or otherwise sent to shareholders of Becton, Dickinson and Company (“BD”) on or about December
14, 201717, 2020 in connection with the solicitation of proxies by the BD Board of Directors (the “Board”) for BD’s
20182021 Annual Meeting of Shareholders (the
“2018“2021 Annual Meeting”) to be held
virtually via the Internet at 1:00 p.m. EST on Tuesday, January
23, 2018 at the Four Seasons Hotel New York, 57 East 57th Street, New York, New York.26, 2021. BD’s directors and its officers and other BD associates also may solicit proxies by telephone or otherwise. Brokers, banks and other nominees will be requested to solicit proxies or authorizations from beneficial owners and will be reimbursed for their reasonable expenses. BD has retained MacKenzie Partners, Inc. to assist in soliciting proxies for a fee not to exceed $25,500$25,000 plus expenses. The cost of soliciting proxies will be borne by BD.
Important Notice Regarding the Availability of Proxy Materials for the 20182021 Annual Meeting of Shareholders to be held on January 23, 2018.26, 2021. This proxy statement and BD’s 20172020 Annual Report to Shareholders are also available atwww.edocumentview.com/BDX.Shareholders entitled to vote; Attendance at the 2018 Annual Meeting
www.proxyvote.com. Shareholders of record at the close of business on December 8, 2017 are
The record date for determining shareholders entitled to notice of, and to vote at, the
meeting.2021 Annual Meeting (or any adjournment or postponement thereof) was December 7, 2020. As of such date, there were
229,407,806290,851,605 shares of BD common stock outstanding, each entitled to one vote.
Virtual meeting
Due to the ongoing public health concerns regarding the COVID-19 pandemic, the Board has directed that the 2021 Annual Meeting be held as a virtual meeting via the Internet. The decision to hold the 2021 Annual Meeting in a virtual format is in accordance with New Jersey law, which permits virtual shareholder meetings while the state of emergency in New Jersey relating to the COVID-19 pandemic remains in effect. In the event that on the date fixed for the 2021 Annual Meeting, it is not legally permissible to hold a virtual annual meeting under New Jersey law because a state of emergency is not then in effect in New Jersey, we will announce alternative arrangements for the 2021 Annual Meeting as promptly as practicable. This may include holding the 2021 Annual Meeting in person or as a hybrid meeting in which the meeting will be held in person with concurrent participation by remote means for shareholders who are not physically present. Any such change will be announced via press release and website posting, as well as the filing of additional proxy materials with the Securities and Exchange Commission.
We are committed to ensuring that our shareholders have the same rights and opportunities to participate in the 2021Annual Meeting as they would if the 2021 Annual Meeting were being held as an in-person meeting at a physical location. To that end, shareholders will have the ability to attend the 2021 Annual Meeting, vote their shares electronically, and ask questions at the meeting, as discussed further below.
How to attend the 2021 Annual Meeting
Shareholders may attend the 2021 Annual Meeting by logging in at www.virtualshareholdermeeting.com/BDX2021. To log in, you will need the control number that is printed on your proxy/voting instruction card (referred to as the "proxy card"), the Notice Regarding the Availability of Proxy Materials or the email sending you the link to the proxy materials, as applicable. If your shares are held in the name of a bank, brokerbrokerage firm or other nominee, (also known as shares heldyou should follow the instructions provided by them in “street name”) andorder to participate in the virtual meeting.
We recommend that you wish to attendlog in 15 minutes before the meeting, you must present proof of ownership asstart of the record date, such as2021 Annual Meeting to ensure sufficient time to complete the check-in procedures. If you are not a bank or brokerage account statement, to be admitted. BDshareholder, you may request appropriate identification for any person seeking to attendstill access the meeting as a conditionguest, but you will not be able to vote or ask questions.
The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most updated version of admission.Quorum; Required vote
The holders ofapplicable software and plugins. If you encounter any technical difficulties logging onto
www.virtualshareholdermeeting.com/BDX2021 or during the meeting, there will be a majority1-800 number and international number available on the website to assist you. Technical support will be available 15 minutes prior to the start time of the shares entitledmeeting and through the conclusion of the meeting. How to ask questions at the 2021 Annual Meeting
The 2021 Annual Meeting will include a question and answer session, during which we will answer questions submitted in accordance with the meeting rules posted on the meeting website (www.virtualshareholdermeeting.com/BDX2021) and that are relevant to the company and meeting matters. Shareholders will have an opportunity to submit written questions via the Internet at any time during the meeting by following the instructions that will be available on the meeting website. Shareholders may also submit written questions in advance of the 2021 Annual Meeting at www.proxyvote.com. In both cases, shareholders must have available their control number.
There is no limit on the number of questions a shareholder can ask. The question and answer session will include both questions submitted in advance of and during the meeting. Substantially similar questions will be answered once to avoid repetition and allow more time for other questions. If time does not permit us to address each question received either before or during the 2021 Annual Meeting, the company’s answers will be posted to the "Investors" page of our corporate website, www.bd.com, as soon as possible after the meeting.
How to vote at the meeting must be present in person or represented by proxy to constitute a quorum. Directors are elected by a majority of the votes cast
Voting at the meeting (Proposal 1). If an incumbent director receives a greater number of votes “against” the director’s election than votes “for” such election, the director must offer to submit his or her resignation, and the Board will decide whether to accept the offer to resign in accordance with the process described on page 21 of this proxy statement. Approval of each of Proposal 2 (ratification of independent registered public accounting firm), Proposal 3 (advisory vote to approve named executive compensation), and Proposal 4 (shareholder proposal) requires the affirmative vote of a majority of the votes cast at the meeting.Under New Jersey law, abstentions and shares that brokers do not have the authority to vote in the absence of timely instructions from the beneficial owners will not be counted as votes cast, and, accordingly, will have no effect on the outcome of the vote for any of the proposals.
How to vote
Shareholders of record may cast their votes at the meeting. In addition, shareholdersmeeting by following the instructions at www.virtualshareholdermeeting.com/BDX2021.
Voting by proxy. You may cast your vote by proxy through the Internet by going to www.proxyvote.com and entering your control number. Shareholders of record and BD plan participants that receive paper copies of the proxy materials may also cast their votes by proxy and participants in the BD plans described below may submit their voting instructions by: using the Internet and voting at the website listed on the enclosed proxy/voting instruction card (the “proxy card”);
• using the telephone number listed on thetheir proxy card; or
• signing, completing and returning the proxy card in the postage-paid envelope provided.
Votes and voting instructions provided through the Internet and by telephone are authenticated by use of a personal identificationyour control number. This procedure allows shareholders to appoint a proxy, and the various plan participants to provide voting instructions, and to confirm that their actions have been properly recorded. Specific instructions to be followed are set forth on the proxy card. If you vote through the Internet or by telephone, you do not need to return your proxy card.In order to be timely processed, voting instructions submitted by participants in BD’s Global Share Investment Program (the “GSIP”)a BD plan must be received by 12:0011:59 p.m. ESTEastern Time on January 17, 2018, and voting instructions submitted by participants in all other BD plans must be received by 12:00 p.m. EST on January 19, 2018. 21, 2021. All proxies submitted by record holders through the Internet or by telephone must be received by 11:00 a.m. EST59 p.m. Eastern Time on January 23, 2018. 25, 2021 in order to be timely processed.
If you are the beneficial owner of shares held in street name, you
have the right tocan direct your bank, broker or other nominee on how to vote your shares by
usingfollowing the
voting instruction forminstructions provided to you by your
nominee, or by following their instructions for voting through the Internet or by telephone. In the alternative, you may vote in person at the meeting if you obtain a valid proxy from your bank, broker or other nominee and present it at the meeting.nominee.
Shares represented by properly executed proxies will be voted in accordance with the instructions specified therein. Shares represented by properly executed proxies that do not specify voting instructions will be voted in accordance with the recommendations of the Board set forth in this proxy statement. If you hold your shares in street name and you do not provide timely voting instructions to your bank, broker or other nominee, your nominee will not be permitted to vote your shares in its discretion on Proposals 1, 3,the election of directors (Proposal 1), the advisory vote to approve executive compensation (Proposal 3), or 4,the
shareholder proposal regarding special meetings (Proposal 4), but may still be permitted to vote your shares in
itstheir discretion on
Proposal 2.the ratification of the independent registered public accounting firm (Proposal 2).
Participants in the BD 401(k) Plan
or the 401(k) plans of any BD subsidiary may instruct the
401(k) Planplan trustee how to vote the shares of BD common stock allocated to their
401(k)plan accounts. Shares for which no voting instructions
have beenare received by the
401(k) Planplan trustee will be voted in the same proportion as those shares for which timely instructions are received.
Participants in BD’s Deferred Compensation and Retirement Benefit Restoration Plan (the “Restoration Plan”), the 1996 Directors’ Deferral Plan (the “Directors’ Deferral Plan”), and the
GSIPGlobal Share Investment Program ("GSIP") (if so provided under the terms of the local country GSIP plan) may provide voting instructions for
allthe shares of BD common stock allocated to their plan accounts.
The trustees of these plans will vote the planPlan shares for which
they do not receiveno voting instructions
from participantsare received by the plan trustees will be voted in the same proportion as
thethose plan shares for which
they do receive instructions.timely instructions are received.
Proxies representing shares of BD common stock held of record also will serve as proxies for shares held under the Direct Stock Purchase Plan sponsored and administered by Computershare Trust Company, N.A. and any shares of BD common stock allocated to participants’ accounts under the plans mentioned above, if the registrations are the same. Separate mailings will be made for shares not held under the same registrations.
Quorum; Required vote
The holders of a majority of the shares entitled to vote at the 2021 Annual Meeting must be present in person or represented by proxy to constitute a quorum. Virtual attendance at the 2021 Annual Meeting constitutes presence in person for purposes of a quorum.
Directors are elected by a majority of the votes cast at the meeting (Proposal 1). If an incumbent director receives a greater number of votes “against” the director’s election than votes “for” such election, the director must offer to submit his or her resignation and the Board will decide whether to accept the offer to resign in accordance with the process described on page 17 of this proxy statement.
Approval of each of Proposals 2 through 4 requires the affirmative vote of a majority of the votes cast at the meeting. Under New Jersey law, abstentions and shares that brokers do not have the authority to vote in the absence of timely instructions from the beneficial owners will not be counted as votes cast, and, accordingly, will have no effect on the outcome of the vote on these proposals.
Revocation of proxies or change of instructions
A proxy given by a shareholder of record may be revoked or changed
at any time before it is voted by:
• sending written notice of revocation to the Corporate Secretary of BD at the address set forth above or delivering such notice at the meeting prior to the voting of the proxy,so that it is received no later than January 25, 2021,
• delivering a proxy (by one of the methods described above under the heading “How to vote”) bearing a later date, or
• voting in person by written ballot at the meeting.
Participants in the plans described above may change their voting instructions by
timely delivering new voting instructions by one of the methods described above under the heading “How to vote.”
If you are the beneficial owner of shares held in street name, you may revoke or change your voting instructions in the manner provided by your bank, broker or other
nominee, or you may vote in person at the meeting in the manner described above under the heading “How to vote.”nominee.
The Board is not aware of any matters to be presented at the
20182021 Annual Meeting other than those set forth in the accompanying notice. If any other matters properly come before the meeting
(or any adjournment or postponement thereof), the persons named in the proxy card will vote on such matters in
their discretion in accordance with their best judgment.
OWNERSHIP OF BD COMMON STOCK
Securities owned by certain beneficial owners
The following table sets forth as of September 30,
2017,2020, information concerning those persons known to BD to be the beneficial owner of more than 5% of BD’s outstanding
common stock, the only class of BD capital
stock.stock with voting rights. This information is based on filings made by such persons with the Securities and Exchange Commission (“SEC”).
| | | | | | | | | | | | | | |
Name and address of beneficial owner | | | | Title of Security | | | Amount and nature of beneficial ownership | | | Percent of class | |
T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202 | | | | | Common Stock | | | | 30,142,561 | (1) | | | 13.1 | % |
| | | | | Depositary Shares | | | | 15,539,594 | (2) | | | 31.1 | % |
BlackRock, Inc. 40 East 52nd Street New York, NY 10022 | | | | | Common Stock | | | | 17,740,001 | (3) | | | 7.8 | % |
| | | | | Depositary Shares | | | | 4,809,557 | (4) | | | 9.7 | % |
The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA 19355 | | | | | Common Stock | | | | 17,587,014 | (5) | | | 7.7 | % |
In general, “beneficial ownership” includes those shares that a person has the sole or shared power to vote or dispose of, including shares that the person has the right to acquire within 60 days. | | | | | | | | | | | | | | | | | | | | |
Name and address of beneficial owner | | Title of Security | | Amount and nature of beneficial ownership | | Percent of class |
The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA 19355 | | Common Stock | | 24,570,326 (1) | The beneficial owner has sole dispositive power with respect to these shares and sole voting power with respect to 9,621,581 shares. | 8.5% |
BlackRock, Inc. 55 East 52nd Street New York, NY 10022 | | Common Stock | | 21,378,911 (2) | The beneficial owner has sole dispositive power with respect to these shares, and sole voting power with respect to 4,137,990 shares. | 7.4% |
T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202 | | Common Stock | | 18,775,471 (3) | The beneficial owner has sole dispositive power with respect to these shares, and sole voting power with respect to 15,498,075 shares. |
(4) | The beneficial owner has sole dispositive power and voting power with respect to these shares. |
(5) | The beneficial owner has sole dispositive power with respect to 17,187,091 shares and shared dispositive power with respect to 399,923 shares, and sole voting power with respect to 345,159 shares and shared voting power with respect to 62,304 shares.6.5% |
(1) The beneficial owner has sole dispositive power with respect to 23,299,681 shares and shared dispositive power with respect to 1,270,645 shares, and has shared voting power with respect to 417,479 shares.
(2) The beneficial owner has sole dispositive power with respect to these shares and sole voting power with respect to 18,770,559 shares.
(3) The beneficial owner has sole dispositive power with respect to these shares and sole voting power with respect to 6,662,245 shares.
Securities owned by directors
nominees and management
The following table sets forth as of December 1,
20172020 information concerning the beneficial ownership of BD common stock by (i) each director and nominee, (ii) the executive officers named in the Summary Compensation Table on page 42, and (iii) all
BD directors and executive officers as a group.
In general, “beneficial ownership” includes those shares that an individual has the sole or shared power to vote or dispose of, including shares that may be acquired under outstanding equity compensation awards or otherwise within 60 days. Except as indicated in the footnotes to the table, eachEach person has the sole power to vote and dispose of the shares he or she beneficially owns.
BD has a policy that prohibits directors, officers and employees from pledging BD shares or engaging in transactions that are intended to hedge against the economic risk of owning BD shares. None of BD’s directors or executive officers has pledged or hedged against any of the shares listed.
BD
COMMON STOCK | | | | | | | | |
Name | | Amount and nature of beneficial ownership(1) | | | Percentage of class | |
Basil L. Anderson | | | 31,056 | | | | * | |
Catherine M. Burzik | | | 6,318 | | | | * | |
Alexandre Conroy | | | 135,671 | | | | * | |
R. Andrew Eckert | | | 1,564 | | | | * | |
Vincent A. Forlenza | | | 1,401,461 | | | | * | |
Claire M. Fraser | | | 20,498 | | | | * | |
Christopher Jones | | | 19,287 | | | | * | |
Marshall O. Larsen | | | 22,320 | | | | * | |
Gary A. Mecklenburg | | | 30,870 | | | | * | |
David F. Melcher(2) | | | 0 | | | | * | |
James F. Orr | | | 36,398 | | | | * | |
Willard J. Overlock, Jr. | | | 59,943 | | | | * | |
Thomas Polen | | | 42,222 | | | | * | |
Claire Pomeroy | | | 5,221 | | | | * | |
Christopher R. Reidy | | | 114,857 | | | | * | |
Rebecca W. Rimel | | | 8,900 | | | | * | |
Timothy M. Ring(2) | | | 0 | | | | * | |
Bertram L. Scott | | | 39,613 | | | | * | |
Ellen R. Strahlman | | | 54,945 | | | | * | |
Directors and executive officers as a group (23 persons) | | | 2,349,359 | | | | 1.0 | % |
Common Stock | | | | | | | | | | | | | | | | | |
Name | | Amount and nature of beneficial ownership(1) | | Percentage of class |
Catherine M. Burzik | | 10,567 | | | | * |
Represents less than 1% of the outstanding BD common stock.R. Andrew Eckert | | 4,312 | | | | * |
(1)Vincent A. Forlenza | Includes (a) shares held directly, (b) with respect to | 1,115,289 | | | | * |
Claire M. Fraser | | 20,377 | | | | * |
Jeffrey W. Henderson | | 2,113 | | | | * |
Christopher Jones | | 24,090 | | | | * |
Patrick K. Kaltenbach | | 14,495 | | | | * |
Samrat S. Khichi | | 74,064 | | | | * |
Marshall O. Larsen | | 25,054 | | | | * |
Alberto Mas | | 85,756 | | | | * |
David F. Melcher | | 5,778 | | | | * |
Thomas E. Polen | | 105,720 | | | | * |
Claire Pomeroy | | 8,179 | | | | * |
Christopher R. Reidy | | 219,899 | | | | * |
Rebecca W. Rimel | | 12,085 | | | | * |
Timothy M. Ring | | 78,822 | | | | * |
Bertram L. Scott | | 45,430 | | | | * |
Directors and executive officers indirect interests in BD common stock held under the BD 401(k) Plan, GSIP and the Restoration Plan, and (c) with respect to thenon-management directors, indirect interests in BD common stock held under the Directors’ Deferral Plan. Additional information on certain of these plans appears on pages 5-6. Includes shares under outstanding stock appreciation rights and restricted stock units that executive officers may acquire within 60 days, as follows: Mr. Forlenza, 1,221,894 shares; Mr. Conroy, 109,343 shares; Mr. Polen, 35,676 shares; Mr. Reidy, 99,796 shares; and Dr. Strahlman, 45,355 shares. Also includes, with respect to eachnon-management director, shares issuable under restricted stock units as follows: Mr. Anderson, 24,366 shares; Ms. Burzik, 6,318 shares; Mr. Eckert, 1,553 shares; Dr. Fraser, 20,498 shares; Mr. Jones, 13,410 shares; Mr. Larsen, 18,606 shares; Mr. Mecklenburg, 24,284 shares; Mr. Orr, 24,280 shares; Mr. Overlock, 27,361 shares; Dr. Pomeroy, 5,221 shares; Ms. Rimel, 8,245 shares; and Mr. Scott, 25,795 shares. The above table does not reflect the grant of restricted stock units the persons elected as director at the 2018 Annual Meeting will receive, as the amount of these grants cannot be determined at this time. See“Non-management directors’ compensation—Equity award” on page 15.a group (23 persons) | | 2,199,268 | | | | * |
(2) | Messrs. Melcher and Ring currently serve as directors* Represents less than 1% of C.R. Bard, Inc. The above table does not reflect any shares that Messrs. Melcher and Ring may acquire in connection with BD’s pending acquisition of C.R. Bard, Inc., as these amounts are indeterminable at this time. See “Proposal 1—Election of Directors.” The table also does not reflect the outstanding BD common stock.
pro-rated restricted stock unit award they would each receive upon joining the Board, as this amount is also indeterminable. See “Non-management directors’ compensation—Equity Award.”
|
Table of Contents
(1) Includes (a) shares held directly, (b) with respect to executive officers, indirect interests in BD common stock held under BD plans, and (c) with respect to the non-management directors, indirect interests in BD common stock held under the Directors’ Deferral Plan. Additional information on certain of these plans appears on page 5. Includes shares that executive officers may acquire within 60 days of December 1, 2020 under outstanding equity compensation awards, including: Mr. Forlenza, 934,482 shares; Mr. Kaltenbach, 14,495 shares; Mr. Khichi, 73,867 shares; Mr. Mas, 75,118 shares; Mr. Polen, 91,603 shares; and Mr. Reidy, 194,821 shares. Also includes, with respect to each non-management director, shares issuable within 60 days of December 1, 2020 under certain outstanding equity awards as follows: Ms. Burzik, 4,823 shares; Mr. Eckert, 774 shares; Dr. Fraser, 18,160 shares; Mr. Henderson, 774 shares; Mr. Jones, 10,767 shares; Mr. Larsen, 16,186 shares; Mr. Melcher, 3,038 shares; Dr. Pomeroy, 2,206 shares; Ms. Rimel, 6,112 shares; Mr. Ring, 774 shares and Mr. Scott, 23,688 shares.
Equity compensation plan information
The following table provides certain information as of September 30,
20172020 regarding BD’s equity compensation plans.
| | | | | | | | | | | | |
Plan Category | | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | (b) Weighted-average exercise price of outstanding options, warrants and rights(1) | | | (c) Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column(a)) | |
Equity compensation plans approved by security holders | | | 10,013,862 | (2) | | $ | 116.30 | | | | 8,231,761 | (3) |
Equity compensation plans not approved by security holders | | | 1,639,001 | (4) | | | N/A | | | | 0 | (5) |
| | | | | | | | | | | | |
Total | | | 11,652,863 | | | $ | 116.30 | | | | 8,231,761 | |
(1) | Shares issuable pursuant to outstanding performance-based restricted stock units and time-vested restricted stock units under the 2004 Plan and BD’s Stock Award Plan, as well as shares issuable under the Directors’ Deferral Plan, the Restoration Plan and the GSIP, are not included in the calculation of weighted-average exercise price, as there is no exercise price for these shares. |
(2) | Shares issuable includes (i) 303,003 stock options and 6,466,001 SARs granted under the 2004 Plan, (ii) 1,079,876 performance-based restricted stock units (assuming maximum payout) and 2,136,218 time-vested units granted under the 2004 Plan, and (iii) 28,764 shares issuable under restricted stock unit awards granted under the Stock Award Plan. The weighted average remaining term of the outstanding options and SARs is 6.08 years. |
(3) | Represents shares available for issuance under the 2004 Plan and includes 3,052,553 shares available for full-value awards, assuming maximum payout of outstanding Performance Units. |
(4) | Includes 129,544 shares issuable under the Directors’ Deferral Plan, 337,670 shares issuable under the Restoration Plan, and 1,171,787 shares issuable under the GSIP. |
(5) | Not shown are shares issuable under the Directors’ Deferral Plan, the Restoration Plan or the GSIP. There are no limits on the number of shares issuable under these plans, and the number of shares that may become issuable will depend on future elections made by plan participants. |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | Weighted-average exercise price of outstanding options, warrants and rights(1) (b) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
Equity compensation plans approved by security holders | | 9,041,662 | | (2) | | $166.91 | | 9,776,376 | | (3) |
Equity compensation plans not approved by security holders | | 1,480,262 | | (4) | | N/A | | 0 | | (5) |
| | | | | | | | |
Total | | 10,521,924 | | | | $166.91 | | 9,776,376 | |
(1) Shares issuable pursuant to outstanding performance-based restricted stock units and time-vested restricted stock units under BD's 2004 Employee and Director Equity-Based Compensation Plan (referred to herein as the "2004 Plan") and BD’s Stock Award Plan, as well as shares issuable under the Directors’ Deferral Plan, the Restoration Plan and the GSIP, are not included in the calculation of weighted-average exercise price, as there is no exercise price for these shares.
(2) Shares issuable includes (i) 25,100 stock options and 6,337,267 SARs granted under the 2004 Plan, (ii) 962,436 performance-based restricted stock units (assuming maximum payout) and 1,697,039 time-vested units granted under the 2004 Plan, and (iii) 19,820 shares issuable under restricted stock unit awards granted under the Stock Award Plan.
(3) Represents shares available for issuance under the 2004 Plan and includes 4,717,195 shares available for full-value awards, assuming maximum payout of outstanding Performance Units.
(4) Includes 96,093 shares issuable under the Directors’ Deferral Plan, 288,851 shares issuable under the Restoration Plan, and 1,095,318 shares issuable under the GSIP.
(5) Not shown are shares issuable under the Directors’ Deferral Plan, the Restoration Plan or the GSIP. There are no limits on the number of shares issuable under these plans, and the number of shares that may become issuable will depend on future elections made by plan participants.
Directors’ Deferral Plan. The Directors’ Deferral Plan allowsnon-management directors to defer receipt, in an unfunded cash account or a BD common stock account, of all or part of their annual retainer and other cash fees. Directors may also defer receipt of the shares underlying their restricted stock unit awards. The number of shares credited to the BD common stock accounts of participants is adjusted periodically to reflect the payment and reinvestment of dividends on the BD common stock. Participants may also elect to have amounts held in a cash account converted into a BD common stock account. Amounts credited to the BD stock fund are paid out in BD shares at the time of distribution. The Directors’ Deferral Plan is not qualified, and participants have an unsecured contractual commitment of BD to pay the amounts due under the Directors’ Deferral Plan.
Restoration Plan. Information regarding the deferral features of the Restoration Plan can be found beginning on page 5250 of this proxy statement. The number of shares credited to the BD common stock accounts of participants is adjusted periodically to reflect the payment and reinvestment of dividends on the BD common stock. Amounts credited to the BD common stock accounts of the Restoration Plan are paid out in BD shares at the time of distribution. The Restoration Plan is not qualified, and participants have an unsecured contractual commitment of BD to pay the amounts due under the plan.
GSIP. BD maintains the GSIP for itsnon-U.S. associates in certain jurisdictions outside of the United States. The purpose of the GSIP is to providenon-U.S. associates with a means of savingway to save on a regular and long-term basis and acquiringacquire a beneficial interest in
BD common stock. Participants may contribute a portion of their base pay, through payroll deductions, to the GSIP for their account. BD provides matching funds of up to 3% of a participant’s base pay through contributions to the participant’s plan account. A participant may withdraw the vested portion of the participant’s account, although such withdrawals must be in the form of a cash payment if the participant is employed by BD at the time of withdrawal. Following termination of service, withdrawals will be paid in either cash or shares, at the election of the participant.
Section 16(a) beneficial ownership reporting compliance
Section 16(a) of the Securities Exchange Act of 1934 requires BD’s directors and executive officers to file initial reports of their ownership of BD’s equity securities and reports of changes in such ownership with the SEC and the New York Stock Exchange (“NYSE”). Directors and executive officers are required by SEC regulations to furnish BD with copies of all Section 16(a) forms they file with respect to BD securities. Based solely on a review of copies of such forms and written representations from BD’s directors and executive officers, BD believes that, for the period from October 1, 2016 through September 30, 2017, all of its directors and executive officers were in compliance with the reporting requirements of Section 16(a).
Proposal 1. | ELECTION OF DIRECTORS |
PROPOSAL 1. ELECTION OF DIRECTORS
Members of our Board are elected to serve a term of one year and until their successors have been elected and qualified. All of the nominees for director have consented to being named in this proxy statement and to serve if elected.
Each of the nominees is a current member of
BD’sour Board,
except for Messrs. Melcher and
Ring, who currently serve as directors of C.R. Bard, Inc. (“Bard”). Under the terms of the agreement by which BD has agreed to acquire Bard, BD is required to appoint Mr. Ring and one other Bard director mutually agreed upon by BD and Bard to the Board upon the closing of the acquisition. In accordance with the terms of the agreement, the Board has appointed Messrs. Melcher and Ring to the Board, subject to and effective upon the closing of the Bard acquisition. Accordingly, the votes on the nominations of Messrs. Melcher and Ring for aone-year term until the 2019 Annual Meeting of Shareholders (the “2019 Annual Meeting”) are conditioned upon the Bard acquisition being completed prior to the 2018 Annual Meeting. If the closing of the Bard acquisition has not occurred by the 2018 Annual Meeting, Messrs. Melcher and Ring will not be elected to the Board at the 2018 Annual Meeting, and the votes regarding their nominations will have no effect. They will, however, thereafter become members of the Board upon the closing of the Bard acquisition, to serve until the 2019 Annual Meeting.Except as discussed above regarding Messrs. Melcher and Ring, BD does not know of any reason why any nominee would be unable to serve as director. If any nominee is unable to serve, the shares represented by valid proxies will be voted for the election of such other person as the Board may nominate, or the size of the Board may be reduced.
Messrs. Basil L. Anderson and James F. Orr, who have reached the mandatory retirement age under BD’s Corporate Governance Principles (the “Principles”), will retire as members of the Board effective at the conclusion of the 2018 Annual Meeting.
BD directors have a variety of backgrounds, which reflects the Board’s continuing efforts to achieve a diversity of viewpoint, experience, knowledge, ethnicityviewpoints, insights and gender.perspectives on the Board. As more fully discussed below, director nominees are considered on the basis of a range of criteria, including their business knowledge and background, prominence and reputation in their fields, global business perspective and commitment to strong corporate governance and citizenship. They must also have experience and ability that is relevant to the Board’s oversight role with respect toof BD’s business and affairs. Each nominee’s biography includes the particular experience and qualifications that led the Board to conclude that the nominee should serve on the Board.
NOMINEES FOR DIRECTOR
Nominees for Director
| | | | | |
| |
| Catherine M. Burzik,67, 70, has been a director since 2013. From 2006 until the sale of the company in 2012, sheMs. Burzik served as President and Chief Executive Officer of Kinetic Concepts, Inc., a medical device company specializing in the fields of wound care and regenerative medicine. Prior thereto, she was President of Applied Biosystems and President of Ortho-Clinical Diagnostics, Inc., a Johnson & Johnson company. Ms. Burzik also is a director of Haemonetics Corporation. Ms. Burzik is a seasoned executive in the healthcare industry, having led major medical device, diagnostic, diagnostic imaging and life sciences businesses. She contributes strong strategic, product development and leadership expertise, and extensive knowledge of the global healthcare field.
|
| | R. Andrew Eckert, 56,59, has been a director since 2016. Since AprilIn August 2020, Mr. Eckert became Chief Executive Officer of Zelis Inc., a provider of healthcare cost management and payments solutions. From 2017 until the sale of the company in October 2019, he has served as director and President and Chief Executive Officer of Acelity L.P. Inc., a global wound care company. From 2015 until the sale of the company in 2016, he served as the Chief Executive Officer of Valence Health, Inc., a health carehealthcare information technology and services company. Prior thereto, Mr. Eckert served as Chief Executive Officer of TriZetto Corporation, a healthcare ITinformation technology solutions firm, and Chief Executive Officer of CRC Health Group, a provider of specialized behavioral healthcare services. Mr. Eckert also is the Chairman of Varian Medical Systems.Systems and a director of Vyaire Medical Inc. Mr. Eckert is a leader in the growing field of health carehealthcare information technology, with extensive experience as an executive officer of several healthcare companies. He has a deep knowledge of operations, strategic planning, product development and marketing, and has valuable corporate governance insight gained from having served as a director of several public companies.
|
| | | | | |
| |
| Vincent A. Forlenza, 64,67, has been a director since 2011. He2011, and became BD’s Chairman in 2012 and2012. He was elected itsBD's Chief Executive Officer ("CEO") in 2011.2011 and retired from that role in January 2020. He also served as BD’s President from 2009 to April 2017, and as its Chief Operating Officer ("COO") from July 2010 to October 2011. Mr. Forlenza also is a memberdirector of Moody’s Corporation. He is the Board of Directors and former Chairman and a current director of the Advanced Medical Technology Association (AdvaMed), an international medical technology trade organization. He isorganization, a director of the Quest Autism Foundation, and a member of the Board of Trustees of The Valley Health System andSystem. He is also a membertrustee of the Board of Directors of the Quest Autism Foundation.Lehigh University. Mr. Forlenza has been with BD for over 3640 years in a number of different capacities, including strategic planning, business development, research and development and general management, in each of BD’s segments and inas well as overseas roles. Mr. Forlenza brings to the Board extensive business and industry experience, and provides the Board with a unique perspective on BD’s strategy and operations, particularly in the area of new product development.
|
| | |
| | Claire M. Fraser, Ph.D, 62,65, has been a director since 2006. Since 2007, she has beenDr. Fraser is the Director of the Institute for Genome Sciences and a Professor of Medicine and Microbiology and Immunology at the University of Maryland School of Medicine in Baltimore, Maryland. From 1998 to 2007, she served as President and Director of The Institute for Genomic Research, anot-for-profit center dedicated to deciphering research organization engaged in human and analyzing genomes.microbial genomics studies. Dr. Fraser also serves onis the BoardPresident and a director of the American Association for the Advancement of Science the Maryland Technology Development Corporation (TEDCO) and also serves as a director of Ohana Biosciences Inc. Dr. Fraser is a prominent scientist with a strong background in infectious diseases and molecular diagnostics, including the development of novel diagnostics and vaccines. She also brings considerable managerial experience in her field.
|
| Jeffrey W. Henderson, 56, has been a director since August 2018. Mr. Henderson is the President of JWH Consulting LLC, a business and investment advisory firm, focused primarily on the healthcare industry. He was previously an Advisory Director to Berkshire Partners LLC, a private equity firm, from September 2015 to December 2019. Mr. Henderson served as Chief Financial Officer of Cardinal Health Inc., a global healthcare products and services company, from May 2005 to November 2014. Prior to joining Cardinal Health, Mr. Henderson held multiple positions at Eli Lilly and General Motors, including international positions. He also is a director of Qualcomm, Inc., FibroGen, Inc. and Halozyme Therapeutics, Inc. and was Non-Executive Chairman of Qualcomm, Inc. from 2018 to 2019. Mr. Henderson is an experienced healthcare executive who brings to the Board a deep knowledge of the industry, along with strong financial, strategic and operational expertise and significant international experience. Mr. Henderson also brings valuable corporate governance experience from his service as a director of other public companies. |
| Christopher Jones, 62,65, has been a director since 2010. In 2001, Mr. Jones retired in 2001 as Chief Executive Officer of JWT Worldwide (previously known as J. Walter Thompson), an international marketing firm. He is a member of the Board of Trustees of The Pew Charitable Trusts, and a member of the Board of Directors of the Albert and Mary Lasker Foundation. He also is a director of the Cello Group, Chairman of Palmer Hargreaves, and a member of the Health Advisory Board of The Johns Hopkins University Bloomberg School of Public Health. Mr. Jones contributes an important international perspective based on his distinguished career as a marketing leader and head of a global marketing firm. He offers substantial marketing, strategic and managerial expertise derived from his broad range of activities in the field.
|
| | | | | |
| |
| Marshall O. Larsen, 69,72, has been a director since 2007. In 2012, Mr. Larsen retired in 2012 as Chairman, President and Chief Executive Officer of Goodrich Corporation, a supplier of systems and services to the aerospace and defense industry. Mr. Larsen also is a director of Air Lease Corporation Lowe’s Companies, Inc. and UnitedRaytheon Technologies Corporation. As a veteran chief executive officer of a public company, Mr. Larsen offers the valuable perspective of an individual with highly-developed executive leadership and financial and strategic management skills in a global manufacturing company. These qualities reflect considerable domestic and international business and financial experience.
|
| | Gary A. Mecklenburg
David F. Melcher, 71,66, has been a director since 2004. In 2006, he retired as President and Chief Executive Officer of Northwestern Memorial HealthCare, a position he had held since 1986, and he also served as President of Northwestern Memorial Hospital from 1985 to 2002. He is currently a director of LHP Hospital Group, Inc. and Froedtert Health, Inc.Mr. Mecklenburg’s long tenure in hospital administration affords him a broad perspective on the many facets of the delivery of healthcare and a deep knowledge of healthcare financing and administration. As the former leader of a major teaching hospital, Mr. Mecklenburg possesses strong executive management, financial, strategic and operational knowledge as applied in a healthcare setting.
|
| | |
| | David F. Melcher, 63, will become a director upon the closing of BD’s acquisition of Bard. He hasC.R. Bard, Inc. (“Bard”) in 2017, and had served as a Bard director of Bard since 2014, and has served on its Finance, Audit and Compensation and Personnel committees of Bard’s board. Since 2015,2014. In December 2017, he has servedretired as President and Chief Executive Officer of Aerospace Industries Association, a trade association representing major aerospace and defense manufacturers and suppliers, a position he plans to leave at the end of 2017.had held since 2015. From 2011 to 2015, heMr. Melcher was Chief Executive Officer, President and a member of the Board of Directorsdirector of Exelis Inc., a diversified, global aerospace defense, information and technology services company, having served as President of ITT Defense and Information Solutions until Exelis Inc. spun off from ITT in 2011. Prior to 2008,company. Lieutenant General (Ret.) Melcher spent 32 years of distinguished service in the U.S. Army.
He also is the Lead Director of Cubic Corporation and a director of the United Services Automobile Association. Mr. Melcher brings strong executive experience as a result of his many years in leadership positions in the defense community and as a former chief executive officer of a public company. Mr. Melcher offers the perspective of a seasoned executive with extensive experience and expertise in the areas of domestic and international business, program management, strategy development, finance and IT.information technology. |
| | Willard J. Overlock, Jr.
Thomas E. Polen, 71, has been47, was elected a director in January 2020, at which time he also became BD's CEO. He has served as BD's President since 1999. He retired in 1996April 2017 and served as a partner in Goldman, Sachs & Co., whereBD's COO from October 2018 to January 2020. Prior thereto, he served as Executive Vice President and President of BD's Medical segment. Mr. Polen has spent 20 years with BD in a membernumber of its Management Committee,capacities of increasing responsibility, and retainsplayed a key role in leading BD's acquisitions of CareFusion Corporation and Bard. As BD's COO, Mr. Polen had oversight responsibility for all three of BD's business segments, as well as global research and development, innovation, operations and the titlecommercial organization of Senior DirectorBD's Americas region. Mr. Polen brings to The Goldman Sachs Group, Inc. Mr. Overlock is a member of the Board extensive industry experience and business expertise, particularly in the areas of Directorsstrategy and innovation, and in-depth knowledge of Evercore Partners, Inc., a trustee of Rockefeller University,BD’s businesses and Chairman of the Board of Directors of the Albert and Mary Lasker Foundation. Mr. Overlock also is a member of the Board of the Cue Ball Group, LLC.Mr. Overlock has broad financial and investment banking experience based on his senior leadership roles in these areas. He contributes financial and transactional expertise and acumen in mergers and acquisitions and complex financial transactions. served markets. |
| | Claire Pomeroy, 62,65, has been a director since 2014. Since 2013, sheDr. Pomeroy has served as the President of the Albert and Mary Lasker Foundation, a private foundation that seeks to improve health by accelerating support for medical research through recognition of research excellence, public education and advocacy. Prior thereto, Dr. Pomeroyshe served as Dean of the University of California, Davis (“UC Davis”) School of Medicine, and Chief Executive Officer of the UC Davis Health System. Dr. Pomeroy also is a memberChair of the Board of DirectorsFoundation for Biomedical Research and a director of the Sierra Health Foundation, Center for Women in Academic Medicine and Science, iBiology, the New York Academy of Medicine, New York Blood Center,the Science Philanthropy Alliance and the Foundation for Biomedical Research. She is a member of the Board of Trustees of the Morehouse School of Medicine. Dr. Pomeroy is also a director of Haemonetics Corporation. Dr. Pomeroy is an expert in infectious diseases, with broad experience in the areaareas of healthcare delivery, health system administration, higher education, medical research and public health. She brings to the Board important perspectives in the areas ofon patient care services, global health and health policy.
|
| | | | | |
| |
| Rebecca W. Rimel, 66,69, has been a director since 2012. SinceFrom 1994 she hasuntil her retirement in July 2020, Ms. Rimel served as President and Chief Executive Officer of The Pew Charitable Trusts, a public charity that works to improve public policy and inform the public. Ms. Rimel previouslypublic on issues and trends. Prior thereto, she served as Assistant Professor in the Department of Neurosurgery at the University of Virginia Hospital and also as Head Nurse of its medical center emergency department. Ms. Rimel also is a director of BioTelemetry, Inc. and, a director/trustee of various DeutscheDWS mutual funds.funds, and a member of the Board of Trustees of The Bridgespan Group.
Ms. Rimel brings to the Board executive leadership and extensive experience in public policy and advocacy, particularly in the area of healthcare. She also offers the perspective of someone with a strong background in the healthcare field. |
| | |
| | Timothy M. Ring, 60, is the63, has been a director since BD’s acquisition of Bard in 2017, at which time he was serving as Bard’s Chairman and Chief Executive Officer, of Bard. Mr. Ring will become a director of BD upon the closing of BD’s acquisition of Bard.position he had held since 2003. Mr. Ring also is a director of Quest Diagnostics Incorporated, and aco-founder of TEAMFund, Inc., an impact fund focused on delivering medical technology tosub-Saharan Africa and India. With over 20 years of experience in various leadership positions at Bard, including as Chairman and Chief Executive Officer, Mr. Ring offers a unique perspective on the Bard business. As an experienced chief executive officer of a public company, Mr. Ring also contributes expertise in many facets of business, including strategy, product development and international operations, and has extensive experience in the healthcare industry.
|
| | Bertram L. Scott, 66,69, has been a director since 2002. Mr. Scott isretired as Senior Vice President of Population Health of Novant Health an integrated network of physician practices, outpatient centers and hospitals.in 2019. He previously served as President and Chief Executive Officer of Affinity Health Plan, and as President, U.S. Commercial of CIGNA Corporation. Prior thereto, Mr. Scotthe served as Executive Vice President of TIAA-CREF and as President and Chief Executive Officer of TIAA-CREF Life Insurance Company. Mr. Scott also is a director of AXA Financial,AllianceBernstein Holding L.P., Equitable Holdings, Inc., (“EQH”) and Lowe’s Companies, Inc. and Tufts Health Plan. Mr. Scott possesses strong strategic, operational and financial experience from the variety of executive roles in which he has served during his career. He brings experience in corporate governance and business expertise in the insurance and healthcare fields.
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR"FOR" EACH OF THE NOMINEES FOR DIRECTOR.
The Board and Committees of the Board
BD is governed by the
Board of Directors.Board. The Board has established
fourfive operating committees (the “Committees”)
: that meet regularly: the Audit Committee; the Compensation and Management Development Committee (the “Compensation Committee”); the Corporate Governance and Nominating Committee (the “Governance Committee”);
the Quality and Regulatory Committee (the “QRC”); and the Science, Marketing, Innovation and Technology Committee (the “SMIT Committee”).
These Committees meet regularly. The Board has also established an Executive Committee that meets only as needed.
The Board has adopted written charters for each of the Committees that are posted on BD’s website atwww.bd.com/investors/corporate_governance/. Printed copies of these charters, BD’s 20172020 Annual Report on Form10-K, and BD’s reports and statements filed with or furnished to the SEC may be obtained, without charge, by contacting the Corporate Secretary, Becton, Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey 07417-1880,07417-1880; telephone201-847-6800.
Committee membership and function
Set forth below are the members of each Committee and a summary description of each Committee’s areas of oversight.
As stated earlier, Messrs. Anderson and Orr are retiring from the Board at the conclusion of the 2018 Annual Meeting. | | | | | |
Members | | Function |
Bertram L. Scott—Chair Basil L. Anderson
Catherine M. Burzik
Christopher Jones
Willard J. Overlock, Jr.
R. Andrew Eckert Jeffrey W. Henderson David F. Melcher Rebecca W. Rimel | | •
Retains and reviews the qualifications, independence and performance of BD’s registered public accounting firm (the “independent auditors”). •
Reviews BD’s public financial disclosures and financial statements, and its accounting principles, policies and practices; the scope and results of the annual audit by the independent auditors; BD’s internal audit process; and the effectiveness of BD’s internal control over financial reporting. •
Reviews BD’s guidelines and policies relating to enterprise risk assessment and management. •
Oversees BD’s ethics and enterprise compliance programs. •
Reviews financial strategies regarding currency, interest rates and use of derivatives, and reviews BD’s insurance program. • Functions as a qualified legal compliance committee, if necessary.
|
Upon joining the Board, Mr. Melcher will become a member of the Audit Committee.
The Board has determined that the members of theeach Audit Committee and Mr. Melcher meetmember meets the independence and financial literacy requirements of the NYSE for audit committee members. The Board also has determined that each of Messrs. Anderson,Henderson, Melcher and Scott and Ms. Burzik qualifies as an “audit committee financial expert” under the rules of the SEC.
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
| | | | | |
Members | | Function |
Marshall O. Larsen—Chair Basil L. Anderson
Gary A. Mecklenburg
James
Jeffrey W. Henderson Christopher Jones Bertram L. Scott | | •
Reviews BD’s compensation and benefits programs, recommends the compensation of BD’s Chief Executive Officer (“CEO”)CEO to the independent members of the Board, and approves the compensation of BD’s other executive officers. •
Approves all employment, severance and change in control agreements with our executive officers. •
Serves as the granting and administrative committee for BD’s equity compensation plans.• plans, including grants to directors.
Oversees certain other BD benefit plans. •
Reviews initiatives for identifying and developing leaders and candidates for senior leadership development initiatives.positions. |
Upon joining the Board, Mr. Melcher will become a member of the Compensation Committee.
The Board has determined that each member of the Compensation Committee
and Mr. Melcher meets the independence requirements of the NYSE for compensation committee members. Each member
and Mr. Melcher also qualifies as an “outside director”
under the applicable regulations under Section 162(m) of the Internal Revenue Code, and as a
“non-employee “non-employee director” under Section 16 of the Securities Exchange Act of 1934.
Procedure for determining executive compensation
The Compensation Committee oversees the compensation program for the executive officers named in the Summary Compensation Table on page 42 and for BD’s other executive officers. The Compensation Committee recommends compensation actions regarding the CEO to the other independent directors
of the Board and has the authority to take compensation actions with respect to BD’s other executive
officers.officers, as discussed below. The Compensation Committee may not delegate these responsibilities to another Committee
an individual director or members of management.
The Compensation Committee’s meetings are typically attended by BD’s CEO,
andits Chief Human
ResourceResources Officer and
othersother BD associates who support the Compensation Committee in fulfilling its responsibilities. The Compensation Committee considers management’s views
relating toon compensation matters, including the performance metrics and targets for BD’s performance-based compensation. Management also provides information (which is reviewed by our Internal Audit
department)department and the Audit Committee) to assist the Compensation Committee in determining the extent to which performance targets have been achieved. This includes any recommended adjustments to BD’s operating results when assessing BD’s performance. The CEO and Chief Human
ResourceResources Officer also work with the Compensation Committee chair in establishing meeting agendas.
The Compensation Committee meets in executive session with no members of management present for part of each of its regular meetings. The Compensation Committee also meets in executive session when considering compensation decisions regarding our executive officers.
Role of the independent consultant The Compensation Committee is also assisted in fulfilling its responsibilities by its independent consultant, Pay Governance LLC (“Pay Governance”). Pay Governance is engaged by, and reports directly to, the Compensation Committee. The Compensation Committee ishas not aware ofidentified any conflict of interest on the part of Pay Governance or any factor that would otherwise impair the independence of Pay Governance relating to the
services performed by Pay Governance for the Compensation Committee. No other consultant was used by the Compensation Committee with respect to the 2020 fiscal year compensation of BD’s executive officers.
During fiscal year 2017,2020, Pay Governance was not engaged to perform any services for BD or BD’s management. The Compensation Committee has adopted a policy prohibiting Pay Governance from providing any services to BD or BD’s management without the Compensation Committee’s prior approval, and has expressed its intention that such approval will be given only in exceptional cases. No other consultant was used by
In its role as the Compensation
Committee with respect to the fiscal year 2017 compensation of BD’s executive officers.Committee's independent consultant, Pay Governance reviews allGovernance:
•Reviewed materials prepared for the Compensation Committee by management, prepares additional
•Provided market comparison data and other materials as may be requested by the Compensation Committee, and attends Compensation Committee meetings. In its advisory role, Pay Governance assists
•Assisted the Compensation Committee in the design and implementation of BD’s compensation program. This includes assistingprogram, including the Compensation Committee in selectingselection of the key elements to include inof the program, thesetting of targeted payments for each element, and the establishment of performance targets.Pay Governance also provides market comparison data, which is onetargets,
•Made recommendations regarding the compensation of the factors considered by the Compensation Committee in makingBD’s CEO,
•Assisted with compensation decisions, and makes recommendationsmatters related to our CEO succession,
•Assisted the Compensation Committee regarding the impact of the COVID-19 pandemic on BD's performance-based compensation of BD’s CEO. Pay Governance also conductsprograms, as described later in this proxy statement,
•Conducted an annual review of the compensation practices of select peer companies. Based on this review, Pay Governance advisescompanies, and advised the Compensation Committee with respect to the competitiveness of BD’s compensation program in comparison to industry practices, and identifiesidentified any trends in executive compensation.compensation, and
•Attended Compensation Committee meetings.
At the end of each fiscal year, the independent directors conduct a review of the CEO’s performance. At the following Board meeting, theThe independent directors then meet in executive session to set the compensation of the CEO after considering the results of its review, market comparison data and the recommendations of the Compensation Committee. The CEO does not play a role in determining or recommending CEO compensation.
For 2020, the independent directors also reviewed and set the compensation of the Chairman after considering market practices and the Compensation Committee's recommendations. The Chairman played no role in determining or recommending his
own compensation.
The Compensation Committee is responsible for determining the compensation of BD’s other executive officers. The CEO, in consultation with
theBD's Chief Human
ResourceResources Officer, reviews the performance of the other executive officers with the Compensation Committee and makes compensation recommendations for its consideration. The Compensation Committee determines the compensation for these executives, in consultation with Pay Governance, after considering the CEO’s recommendations and market comparison data regarding compensation levels for comparable positions at peer companies.
All decisions regarding the compensation of BD’s other executive officers are made in executive session.The Board has delegated responsibility for formulating recommendations regarding
non-management director compensation to the Governance Committee,
which isas discussed below.
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE
| | | | | |
Members | | Function |
Gary A. Mecklenburg—
Christopher Jones—Chair R. Andrew Eckert
Catherine M. Burzik Marshall O. Larsen James F. Orr
Claire Pomeroy | | •
Identifies and recommends candidates for election to the Board. •
Reviews the composition, structure and function of the Board and its Committees, as well as the compensation of non-management directors. •
Monitors BD’s corporate governance and Board practices, and oversees the Board’s self-evaluation process. •
Oversees matters impacting BD’s image, reputation and corporate responsibility, including without limitation, communications, community relations, public policy and government relations, activities, and sustainability.environmental, social and governance ("ESG") matters. |
The Board has determined that each member of the Governance Committee meets the independence requirements of the NYSE.
As stated above, the Governance Committee reviews the compensation
program for theof BD's non-management directors and makes recommendations to the
Board regarding director compensation.Board. The Governance Committee may not delegate these responsibilities to another Committee
an individual director or members of management. The Governance Committee has retained Pay Governance as an independent consultant for this purpose. Pay Governance’s responsibilities include providing market comparison data on
non-management director compensation at peer companies, tracking trends in
non-management director compensation practices, and advising the Governance Committee regarding the components and levels of
non-management director compensation. The Governance Committee
ishas not
aware ofidentified any conflict of interest on the part of Pay Governance or any other factor that would impair Pay Governance’s independence.
Executive officers doBD management does not play any role in either recommending or determining
non-management director compensation.
QUALITY AND REGULATORY COMMITTEE
| | | | | |
Members | Function |
Catherine M. Burzik—Chair Claire M. Fraser Christopher Jones Marshall O. Larsen Claire Pomeroy Timothy M. Ring | Oversees BD’s quality strategy and the systems and processes in place to monitor product quality and safety and BD's compliance with regulatory requirements. Reviews the results of any product quality and quality system assessments by BD and external regulators. Reviews any significant product quality, safety or regulatory trends or issues that arise. |
SCIENCE, MARKETING, INNOVATION AND TECHNOLOGY COMMITTEE
| | | | | |
Members | | Function |
R. Andrew Eckert Christopher Jones
Willard J. Overlock, Jr.
Rebecca W. Rimel Timothy M. Ring | | •
Oversees BD’s majorkey innovation activities and new product development programs.• Reviews the alignment of BD’s research and development, medicalcommercialization programs, including:
•Progress against program objectives; •Organizational integration and regulatory affairs,capabilities; and strategic marketing activities to BD’s corporate strategy. • Reviews potentiallyPotentially disruptive trends in technology, medical practice orand the external environment. |
Upon joining the Board, Mr. Ring will become a member
Board, Committee and annual meeting attendance
The Board and its Committees held the following number of meetings during fiscal year
2017:2020: | | | | | |
Board | | | 11 | 9 |
Audit Committee | | | 9 |
Compensation Committee | 6 |
CompensationGovernance Committee
| | | 6 | 4 |
Governance Committee QRC | | | 6 | 10 |
SMIT Committee | | | 5 | 4 |
As a result of the COVID-19 pandemic, the Board held special meetings during the year in addition to its regularly scheduled meetings. The Board also had calls with management relating to the pandemic that did not constitute formal meetings. The QRC meetings reflect QRC's ongoing review of BD's quality management systems.
The Executive Committee did not meet during fiscal year
2017.2020. BD’s
non-management directors,
all of whom are independent, met in executive session at each of the Board meetings held during fiscal year
2017.2020. The Lead Director presided at these executive sessions.
During fiscal year
2017,2020, all directors attended at least 75% of the total number of meetings of the Board and the Committees on which he or she served.
The Board has adopted a policy pursuant to which directors are expected to attend the Annual Meeting of Shareholdersour annual shareholder meetings in the absence of a scheduling conflict or other valid reason. All of the directors attended BD’s 20172020 Annual Meeting of Shareholders.
Non-management
directors’ director compensation
The Board believes that providing competitive compensation is necessary to attract and retain qualified
non-management directors. The key elements of BD’s
non-management director compensation are a cash retainer, equity compensation, Committee chair fees and Lead Director fees. Of the base compensation paid to
thenon-management directors (cash retainer and equity), approximately
two-thirds is equity-based compensation. See
“Corporate Governance—Other significant governance practices—Equity“Equity ownership by directors” on page
21. Mr. Forlenza does17. Management directors do not receive compensation
related to hisfor their service as
a director.
Each
non-management director currently receives an annual cash retainer of
$97,000$107,000 for services as a
director.director, which is paid quarterly. Directors do not receive meeting attendance fees.
Following the outbreak of the pandemic, the Board agreed to reduce its next quarterly cash retainer by 40%, matching the size and duration of the temporary salary reductions our Chairman, CEO and Chief Financial Officer ("CFO") voluntarily took as part of the company's response to the pandemic, as described later in this proxy statement.
Each
non-management director elected at an
Annual Meeting of Shareholdersannual shareholders meeting is granted restricted stock units then valued at
$199,000$209,000 (using the same methodology used to value awards made to our executive officers).
Directors newly elected to the Board receive a restricted stock unit grant that is prorated from the effective date of their election to the next Annual Meeting of Shareholders. The restricted stock units vest and are distributable
one year from grant,at the following annual shareholders meeting, unless deferred at the election of the director.
Committee chair/Lead Director feesAnnual fees for service as a
The chair of each Committee
chair and asreceives an annual fee of $25,000. In addition, our Lead Director
are set forth below. Noreceives an annual fee
is paid to the chair of
the Executive Committee. | | | | |
Audit Committee chair | | $ | 20,000 | |
Compensation Committee chair | | $ | 15,000 | |
Governance Committee chair | | $ | 15,000 | |
SMIT Committee chair | | $ | 15,000 | |
Lead Director | | $ | 30,000 | |
$40,000.
BD reimburses
non-management directors for travel and other business expenses incurred in the performance of their services for BD. Directors may travel on BD aircraft in connection with such activities, and, on limited occasions, spouses of directors have joined them on such flights. Per SEC rules, no compensation is attributed to the directors for these flights in the table below, since the aggregate incremental costs of spousal travel were
minimal.negligible. Directors are also
reimbursed for attending director education courses. BD may also invite spouses of directors to Board-related business events, for which they are reimbursed their travel expenses.Directors are eligible on the same basis as BD associates, to participate in BD’s Matching Gift Program, pursuant to which BD matches charitable contributions made to qualifying nonprofit organizations. Theorganizations, subject to an aggregate limit per participant isof $5,000 per calendar year.
Directors are also reimbursed for attending director education courses.
The following table sets forth the compensation earned or received by BD’s
non-management directors during fiscal year
2017.2020.
Fiscal Year 20172020 Non-Management Directors’ Compensation
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Fees earned or paid in cash ($)(1) | | Stock awards ($)(2) | | All other compensation ($)(3) | | Total ($) |
Catherine M. Burzik | | 121,300 | | 220,772 | | 5,000 | | 347,072 |
R. Andrew Eckert | | 96,300 | | 220,772 | | 5,000 | | 322,072 |
Claire M. Fraser | | 121,300 | | 220,772 | | 5,000 | | 347,072 |
Jeffrey W. Henderson | | 96,300 | | 220,772 | | 5,000 | | 322,072 |
Christopher Jones | | 121,300 | | 220,772 | | 5,000 | | 347,072 |
Marshall O. Larsen | | 161,300 | | 220,772 | | 0 | | 382,072 |
David F. Melcher | | 96,300 | | 220,772 | | 5,000 | | 322,072 |
Claire Pomeroy | | 96,300 | | 220,772 | | 5,000 | | 322,072 |
Rebecca W. Rimel | | 96,300 | | 220,772 | | 0 | | 317,072 |
Timothy M. Ring | | 96,300 | | 220,772 | | 5,000 | | 322,072 |
Bertram L. Scott | | 121,300 | | 220,772 | | 0 | | 342,072 |
| | | | | | | | | | | | | | | | |
Name | | Fees earned or paid in cash($)(1) | | | Stock awards($)(2) | | | All other ($)(3) | | | Total($) | |
Basil L. Anderson | | | 95,416 | | | | 201,195 | | | | 0 | | | | 296,611 | |
Catherine M. Burzik | | | 95,416 | | | | 201,195 | | | | 5,000 | | | | 301,611 | |
R. Andrew Eckert | | | 95,416 | | | | 201,195 | | | | 0 | | | | 296,611 | |
Claire M. Fraser | | | 110,416 | | | | 201,195 | | | | 0 | | | | 311,611 | |
Christopher Jones | | | 95,416 | | | | 201,195 | | | | 0 | | | | 296,611 | |
Marshall O. Larsen | | | 140,416 | | | | 201,195 | | | | 0 | | | | 341,611 | |
Gary A. Mecklenburg | | | 110,416 | | | | 201,195 | | | | 5,000 | | | | 316,611 | |
James F. Orr | | | 95,416 | | | | 201,195 | | | | 0 | | | | 296,611 | |
Willard J. Overlock, Jr. | | | 95,416 | | | | 201,195 | | | | 0 | | | | 296,611 | |
Claire Pomeroy | | | 95,416 | | | | 201,195 | | | | 5,000 | | | | 301,611 | |
Rebecca W. Rimel | | | 95,416 | | | | 201,195 | | | | 0 | | | | 296,611 | |
Bertram L. Scott | | | 115,416 | | | | 201,195 | | | | 5,000 | | | | 321,611 | |
(1) | Reflects (i) cash retainer; (ii) annual Committee chair fees for Dr. Fraser and Messrs. Larsen, Mecklenburg and Scott; and (iii) Lead Director fee for Mr. Larsen. |
(2) | The amounts shown in the “Stock awards” column reflect the grant date fair value under FASB ASC Topic 718 of restricted stock units awarded tonon-management directors during the fiscal year. Since the average BD closing stock price for the 30 trading days prior to grant is used to determine the number of units granted rather than the grant date stock price, the amounts shown for the annual grant are slightly higher than the $199,000 target award value. For a discussion of the assumptions made by us in arriving at the grant date fair value of these awards, see Note 7 to the consolidated financial statements that are included in our Annual Report on Form10-K for the fiscal year ended September 30, 2017. |
(1)Reflects cash retainer and Committee chair fees, and the Lead Director fee for Mr. Larsen. Reflects the temporary reduction in the cash retainer noted above.
(2)Amounts reflect the grant date fair value under FASB ASC Topic 718 of restricted stock units awarded to non-management directors elected at the 2020 Annual Meeting of Shareholders. Since the average BD closing stock price for the 30 trading days prior to grant is used to value the award and determine the number of units granted, rather than the grant date stock price, the amounts reflected for the grant are higher than the $209,000 target award value. For a discussion of the assumptions made in arriving at the grant date fair value of these awards, see Note 8 to the consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020.
Listed below are the aggregate outstanding restricted stock unit awards held by
eachnon-management directorthe persons listed above at the end of fiscal year
2017.2020. The amounts shown include restricted stock units granted prior to January 2015 that are not distributable until the director leaves the Board. | | | | | |
Name | | Stock Awards Outstanding at September 30,
2017 2020 (#) | |
Basil L. Anderson
| | | 24,366 | |
Catherine M. Burzik | | | 6,318 | 4,823 |
R. Andrew Eckert | | | 1,553 | 774 |
Claire M. Fraser | | | 20,498 | 18,160 |
Christopher Jones Jeffrey W. Henderson | | | 13,410 | 774 |
Christopher Jones | 10,767 |
Marshall O. Larsen | | | 18,606 | 16,186 |
Gary A. Mecklenburg David F. Melcher | | | 24,284 | 3,038 |
James F. Orr Claire Pomeroy | | | 24,280 | 2,206 |
Willard J. Overlock, Jr.
| | | 27,361 | |
Claire Pomeroy
| | | 5,221 | |
Rebecca W. Rimel | | | 8,245 | 6,112 |
Timothy M. Ring | 774 |
Bertram L. Scott | | | 25,795 | |
(3) | Amounts shown represent matching gifts under BD’s Matching Gift Program.23,688 |
Changes tonon-management(3) directors’ compensation
During fiscal year 2017, the Board undertook a review of director compensation, with the assistance of Pay Governance. This review included an analysis of the director compensation practices of certain peer companies, including the forms of equity compensation used, the mix of cash and equity compensation, and total compensation. The peer group used in this analysis included the following companies: Abbott Laboratories; Agilent Technologies, Inc.; Allergan plc.; Baxter International Inc.; Boston Scientific Corporation; Danaher Corporation; Medtronic plc; Stryker Corporation; Thermo Fisher Scientific Inc.; and Zimmer Biomet Holdings, Inc.
Following this review, the Board approved the following changes to director compensation, effective at the conclusion of the 2018 Annual Meeting, so as to better align the Board’s compensation practices with those of the peer group companies:
Amounts shown represent matching gifts under BD’s Matching Gift Program.The annual cash retainer will be increased to $107,000 from $97,000.
The value of the annual restricted stock unit awards will be increased to $209,000 from $199,000.
The annual fee for the SMIT Committee chair will be increased to $20,000 from $15,000, and the annual fee for the Lead Director will be increased to $40,000 from $30,000.
Directors’ Deferral Plan
Directors may defer receipt of all or part of their annual cash retainer and other cash fees
pursuant to the provisions ofunder the Directors’ Deferral Plan. Directors may also defer receipt of shares issuable to them under their restricted stock unit awards. A general description of the Directors’ Deferral Plan appears on page 5.
Table of ContentsCommunication with directorsShareholders or other interested parties wishing to communicate with the Board, thenon-management directors or any individual director (including complaints or concerns regarding accounting, internal accounting controls or audit matters) may do so by contacting the Lead Director either:
by mail, addressed to BD Lead Director, P.O. Box 264, Franklin Lakes, New Jersey 07417-0264;
by calling the BD Ethics Help Line, an independent toll-free service, at1-800-821-5452 (callers from outside North America should use “AT&T Direct” to reach AT&T in the U.S. and then dial the above toll-free number); or
by email to ethics_office@bd.com.
All communications will be kept confidential and promptly forwarded to the Lead Director, who shall, in turn, forward them promptly to the appropriate director(s). Such items that are unrelated to a director’s duties and responsibilities as a Board member may be excluded by our corporate security department, including, without limitation, solicitations and advertisements, junk mail, product-related communications, job referral materials and resumes, surveys, and material that is determined to be illegal or otherwise inappropriate.
Corporate Governance Principles
BD’s commitment to good corporate governance is embodied in our Principles.Corporate Governance Principles (the "Governance Principles"). The Governance Principles set forth the Board’s views and practices regarding a number of governance topics, and the Governance Committee assesses the Governance Principles on an ongoing basis in light of current practices. The Governance Principles are available on BD’s website atwww.bd.com/investors/corporate_governance/.Printed copies of the Governance Principles may be obtained, without charge, by contacting the Corporate Secretary, Becton, Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey 07417-1880, phone07417-1880; telephone 201-847-6800.
Board leadership structure
The Board’s goal is to achieve the best board leadership structure for effective oversight and management of BD’s affairs. The Board believes
that there is no single, generally accepted approach to providing
effective board leadership, and that each
possible leadership structure must be considered in the context of the individuals involved and the specific circumstances facing a company. Accordingly, what the Board believes is the right board leadership structure
for BD may vary as circumstances warrant.
At
Following the
present time,conclusion of the
Board believes that the most effective leadership structure for BD is for2020 Annual Meeting, Mr. Polen became our CEO
and Mr. Forlenza continued to
also serve as Chairman. The Board believes
that having Mr. Forlenza remain as Chairman during this
combined roleCEO transition is in the best interests of BD, as it allows
one personMr. Polen to
speak for and lead the company and the Board, creates clear lines of authority and accountability, and provides the necessary leadershipdedicate himself to
execute BD’s strategy.BD's operations while Mr.
Forlenza’s over 36 years of experience at BD and knowledge of our complex businesses, along with his extensive industry expertise, also make him uniquely qualified to lead the BoardForlenza focuses on
the most important issues facing BD.At the same time, theBoard-related matters.
The Governance Principles provide for the appointment of a Lead Director from among the
Board's independent directors whenever the Chairman is not independent. The Lead Director role allows the
non-management directors to provide effective, independent Board leadership and oversight of management. Marshall O. Larsen has served as Lead Director since January 2015.
Under the
Governance Principles, the Lead Director:
• presides over all meetings of the Board at which the Chairman is not present, including executive sessions of the independentnon-management directors, and at such other times as the Board deems appropriate,
• has the authority to call meetings of the independent directors,
• approves Board meeting agendas and information provided to the Board,
• approves Board meeting schedules to ensure that there is sufficient time for discussion of all agenda items,
• coordinates the evaluation of the performance of the CEO by thenon-management directors,
• serves as a liaison between thenon-management members of the Board and the Chairman, and as a contact person to facilitate communications by BD’s employees, shareholders and others with thenon-management members of the Board, directors, and
• if requested by major shareholders, ensures that he or she is available for consultation and direct communication.
The Board believes that having an independent Lead Director provides independent Board oversight of management, including risk oversight, while avoiding the risk of confusion regarding the oversight.
Board’s oversight responsibilities and theday-to-day management of the business. As such, this structure provides independent Board leadership and engagement, while deriving the benefit of having the CEO also serve as Chairman.
Board oversight of risk
General.
Role of the Board and Committees. BD’s management engages in a process referred to asan enterprise risk management (“ERM”) process to identify, assess, manage and mitigate a broad range of risks across BD’s businesses, regions and functions, and to ensure alignment of our risk assessment and mitigation efforts with BD’s corporate strategy. The Audit Committee, through the authority delegated to it by the Board, is primarily responsible for overseeing BD’s ERM activities to determine whether the process is functioning effectively and is consistent with BD’s business strategy.activities. At least twice a year, senior management reviews the results of its ERM activities with the Audit Committee, including the process used within the organization to identify risks, management’s assessment of the significant categories of risk faced by BD (including any changes in such assessment since the last review), and management’s plans to mitigate potential exposures. On at least an annual basis, theThe significant risks identified through BD’s ERM activities and the related mitigation plans are also reviewed with the full Board. ParticularBoard at least once a year. In addition, particular risks (such as cyber security) are then often reviewedin-depth with the Audit Committee or the full Board at subsequent meetings.In addition, theBoard.
The full Board
also reviews the risks associated with BD’s strategic plan and discusses the appropriate levels of risk in light of BD’s business objectives. This is done through an annual strategy review process, and from
time to timetime-to-time throughout the year as part of the Board’s ongoing review of corporate strategy. The full Board also regularly oversees other areas of potential risk, including BD’s capital structure,
significant acquisitions and divestitures, and succession planning for BD’s CEO and other members of senior management.
The various Committees of the Board are also responsible for monitoring and reporting to the full Board on risks associated with their respective areas of oversight. The Audit Committee, among other things, oversees BD’s accounting and financial reporting processes and the integrity of BD’s financial statements, BD’s processes regardingglobal ethics and compliance with laws,program, and its hedging activities and insurance coverages. The QRC oversees matters relating to regulatory compliance and the quality and safety of BD’s products and services. The Compensation Committee oversees risks associated with BD’s compensation practices and programs, the SMIT Committee reviews risks relating to our innovation and product development and commercialization activities, and the Governance Committee oversees risks relating to BD’s corporate governance practices, including director independence, related person transactions and conflicts of interest.interest, as well as matters relating to the Company’s standing as a
responsible corporate citizen (including community relations, charitable activities, public policy and government relations, sustainability and other social and environmental matters). In connection with its oversight responsibilities, each Committee often meets with the members of management who are primarily responsible for the management of risk in their respective areas, including, among others, BD’s
Chief Financial Officer,CFO, Chief Human
ResourceResources Officer, Chief Medical Officer, General Counsel, and senior regulatory,
IT,information technology, R&D and compliance officers.
Risk assessment of compensation programs.With respect to our compensation policies and practices, BD’s management has reviewed our policies and practices to determine whether they create risks that are reasonably likely to have a material adverse effect on BD. In connection with this risk assessment, management reviewed the design of BD’s compensation and benefits programs (in particular, our performance-based compensation programs) and related policies, potential risks that could be created by the programs, and features of our programs and corporate governance generally that help to mitigate risk. Among the factors considered were the mix of cash and equity compensation, and of fixed and variable compensation, paid to our associates; the balance between short- and long-term objectives in our incentive compensation; the performance targets, mix of performance metrics, vesting periods, threshold performance requirements and funding formulas related to our incentive compensation; the degree to which programs are formulaic or provide discretion to determine payout amounts; caps on payouts; our clawback and share retention and ownership policies; and our general governance structure. Based on this review, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on BD.
Director nomination process
Role of the Governance Committee
The Governance Committee reviews potential director candidates and recommends nominees for director to the full Board for its consideration. In making its recommendations,consideration based on the Governance Committee assessesCommittee's assessment of the overall composition of the Board. The Board including diversity, skills, background,believes that having members with a diverse mix of viewpoints, insights and perspectives is critical to board effectiveness, and seeks to have members that collectively possess a wide range of relevant business and financial expertise, industry knowledge, management experience and prominence in areas of
importance to BD.BD that fit the current and future needs of the Board. The Board believes that gender and minority representation is an important element in achieving the broad range of perspectives that the Board seeks to achieve among its members, aand is also important for promoting the culture of inclusion and diversity of viewpoint, experience, knowledge, ethnicity and genderat BD. To that fits the needs ofend, the Board atrecently adopted a policy that particular time.
diverse candidates be included in any pool from which new directors are selected.
It is the Governance Committee’s policy to consider referrals of prospective director nominees
for the Board from other Board members and management, as well as shareholders and other external sources, such as retained executive search firms. The Governance Committee seeks to identify a diverse range of qualified candidates,
including, without limitation, women and
minority candidates. The Governance Committee utilizes the same criteria for evaluating candidates, irrespective of their source.
The Governance Committee has from time to time used a search firm to assist in its efforts to identify and evaluate potential candidates for director. The role of the search firm is to identify a pool of potential director candidates based on the specifications provided by the Governance Committee, and evaluate candidates recommended by other members of the Board or management. The firm reviews the potential candidates with the Governance Committee, performs outreach to candidates selected from the pool to assess interest and availability, conducts reference and background checks and arranges candidate interviews with members of the Governance Committee and our CEO.
When considering potential director candidates, the Governance Committee will seek individuals with backgrounds and qualities that, when combined with those of BD’s other directors, provide a blend of skills and experience that will further enhance the Board’s effectiveness. The Governance Committee believes that any nominee for director
that it recommends must meet the following minimum qualifications:
• Candidates should be persons of high integrity who possess independence, forthrightness, inquisitiveness, good judgment and strong analytical skills.
• Candidates should demonstrate a commitment to devote the time required for Board duties, including, but not limited to, attendance at meetings.
• Candidates should be team-oriented and committed to the interests of all shareholders as opposed to those of any particular constituency.
The Governance Committee assesses the characteristics and performance of incumbent director nominees against the above criteria as well, and, to the extent applicable, considers the impact of any change in the principal occupations of such directors during the last year. To aid in this process, the Governance Committee solicits feedback
on each incumbent director from all the other
directors onmembers of the Board. Upon completion of its assessment, the Governance Committee reports its recommendations for nominations to the full Board.
Shareholder recommendations
To recommend a candidate for consideration
by the Governance Committee, a shareholder should submit a written statement of the qualifications of the proposed nominee, including full name and address, to the Corporate Secretary, Becton, Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey 07417-1880.
BD has a “proxy access”
by-law, which permits eligible shareholders to nominate
director candidates
for the BD Board for inclusion in BD’s proxy statement and proxy card. Our proxy access
by-law provides that a shareholder
or(or a group of up to 20
shareholders,shareholders) owning 3% or more of BD’s outstanding common stock for at least three years can nominate up to two individuals or 20 percent of the Board, whichever is greater, for election at an annual
meeting of shareholders,
meeting, if the shareholder(s) and the nominee(s) meetsubject to the relevant requirements in our
By-laws. By-Laws.
Other significant governance practices
Described below are some of the other significant corporate governance practices that have been instituted by the BD Board.at BD.
Annual election of directors
BD’s directors are elected annually. The Board believes that annual elections of directors reflect a corporate governance best practice, as it provides shareholders the opportunity to express their views on
thedirector performance
of the entire Board each year.
Voting
Majority voting standard for
election of directors
Under our
By-Laws, in uncontested elections
(where(that is, where the number of nominees does not exceed the number of directors to be elected), nominees for director must receive the affirmative vote of a majority of the votes cast in order to be elected to the Board. Any incumbent director who receives a greater number of votes “against” the director’s election than votes “for”
such election is required to offer to submit his or her resignation to the Board following the shareholder vote. The Governance Committee will consider and recommend to the Board whether to accept the resignation offer. The Board will act on such recommendation and publicly disclose its decision within 90 days following the shareholder vote. This
structureprocess allows the Board the opportunity to identify and assess the reasons for the vote, including whether the vote is attributable to dissatisfaction with a director’s overall performance or is the result of shareholder views on a particular
issue, and enables the Board to avoid undesirable and disruptive governance consequences.issue.
The Board believes a rigorous self-evaluation process is important to the ongoing effectiveness of the Board. To that end, each year the Board conducts a self-evaluation of its
performance. As part of this process, each director completes an evaluation formperformance that allows directors to provide individual feedback on
specific aspects of the Board, including the Board’s composition,
the culture,
of the Board, committee structure,
the Board’s relationship with management,
Board meetings,
and the Board’s oversight of strategy
and risk, and other
aspects of BD’s business. A complete listBoard-related topics. The results of the
areas covered by the Board evaluation is available on BD’s website atwww.bd.com/investors/corporate_governance. The collective responsesself-evaluation are
then presented by the chair of the Governance Committee to the full Board. As part of the evaluation, the Board assesses the progress in the areas targeted for improvement a year earlier, and develops actions to be taken to enhance the Board’s effectiveness over the next year.
In recent years, Board self-evaluations have led to, among other things, changes designed to improve the efficiency of our Board meetings, and to enhance our director continuing education program and our onboarding process for new directors. Additionally, eachEach Committee conducts an annual self-evaluation of its performance through a similar process.
Equity ownership by directors
The Board believes that directors should hold meaningful equity ownership positions in BD. To that end, a significant portion of
non-management director compensation is in the form of
restricted stock units.equity awards. The Board believes that
these equity interests helpthis helps to
betterfurther align the interests of the
non-management directors with our shareholders. Under the Board’s share ownership guidelines, each
non-management director is required to own shares of
BD common stock (which includes restricted stock units) valued at five times the annual cash retainer and must comply with the guidelines within three years of joining the Board. All of our
non-management directors have achieved the required share ownership or are within the three-year grace period.
Our relationship with our shareholders and their views about BD are important to us, and the Board recognizes the value of director engagement with BD’s major shareholders. To that end, the Board has established a process by which shareholders can request direct engagement with ournon-management directors regarding executive compensation, corporate governance, board and CEO succession, risk management oversight and other matters within the purview of the Board. This process can be found on our website atwww.bd.com/investors/corporate_governance/. The Board may also initiate direct communications with BD shareholders at any time, in its discretion.
Annual Report of Charitable Contributions
In furtherance of BD’s commitment to good governance and transparent disclosure practices, the Principles require that BD’sBD charitable contributions or pledges in an aggregate amount of $50,000 or more in any fiscal year (not including(excluding contributions under BD’s Matching Gift Program) to entities with which BD’s directors and executive officers, or their families, are affiliated must be approved by the Governance Committee. In addition, BD posts on its website, atwww.bd.com/investors/corporate_governance/, an Annual Report of Charitable Contributions (the “Contributions Report”) listing all contributions and pledges made by BD during the preceding fiscal year in an amount of $10,000 or more to organizationssuch affiliated with any director or executive officer.organizations. The Contributions Report includes a discussion of BD’s contributions philosophyphilosophy.
Code of Conduct
BD maintains a Code of Conduct that is applicable to all directors, officers and the alignmentassociates of BD, including our CEO, CFO, principal accounting officer and other senior financial officers. It sets forth BD’s policies and expectations on a number of topics, including conflicts of interest, confidentiality, compliance with laws (including insider trading laws), preservation and use of BD’s philanthropic activitiesassets, and business ethics. The Code of Conduct also sets forth procedures for addressing any potential conflict of interest (or the appearance of a conflict of interest) involving directors or executive officers, and for the confidential communication and handling of issues regarding accounting, internal control and auditing matters. The Code of Conduct is available in English and over 30 other languages. Every BD associate is required to complete annual training on the Code of Conduct.
BD also maintains an Ethics Help Line telephone number (the “Help Line”) for BD associates as a means of raising concerns or seeking advice. The Help Line is available to all associates worldwide. Associates using the Help Line may choose to remain anonymous and all inquiries are kept confidential to the extent practicable in connection with
this philosophy.the investigation of an inquiry. All Help Line inquiries are forwarded to BD’s ethics and compliance department for investigation. The Audit Committee is informed of any reported matters, whether through the Help Line or otherwise, that could potentially be significant to BD, including accounting, internal control or auditing matters, or any fraud involving management or persons who have a significant role in BD’s internal controls.
Any waivers from any provisions of the Code of Conduct for executive officers and directors will be promptly disclosed to shareholders. In addition, certain amendments to the Code of Conduct, as well as any waivers from certain provisions of the Code of Conduct given to BD’s CEO, CFO or principal accounting officer, will be posted at the website address set forth below.
The Code of Conduct is available on BD’s website at www.bd.com/investors/corporate_governance/. Printed copies of the Code of Conduct may be obtained, without charge, by contacting the Corporate Secretary, Becton, Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey 07417-1880; telephone 201-847-6800.
Enterprise
ethics and compliance
Under the oversight of the Audit Committee, BD’s enterpriseglobal ethics and compliance function seeks to ensure that BD has policies and proceduresa comprehensive compliance program that is designed to prevent and detect violations of the many laws, regulationswrongdoing and policies affecting our business, and that BD continuously encourages lawful and ethical conduct. BD’s enterpriseSenior Vice President & Chief Compliance Officer leads the global ethics and compliance function supplementsand, along with the various compliance and ethics functions that are also in place at BD and seeks to ensure better coordination and effectiveness through program design, prevention, and promotion of an organizational culture of compliance. A committeeCompliance & Ethics Committee, which is comprised of members of senior managementBD’s executive leadership team, oversees these activities. Another key elementactivities to ensure effective operation and enforcement of thisBD’s global ethics and compliance program. The ethics and compliance program is training. This includes aintegrated into our globalon-line compliance training business operations. We evaluate the effectiveness of our program focused on BD’sand adapt it periodically to ensure it is appropriately tailored to address the risks inherent in our global business.
In addition to our Code of Conduct, BD has a set of global policies and standards, including our Global Standards for Interactions with Health Care Providers, Health Care Organizations and Government Officials, which are designed to ensure associates have clear guidance on how to do what is right in the context of their work for BD. BD associates must comply with these Global Standards, the BD Code of Conduct, BD policies and procedures, applicable laws and regulations, and relevant industry codes (including AdvaMed, APACMED, MedTech Europe, Mecomed, and Abimed).
BD associates receive information and training about the Code of Conduct, Global Standards and other policies in a number of ways, including periodic communications and trainings. Associates can access detailed information on our expectations through our intranet and on our ethics and compliance mobile app.
Except as
well as other courses covering various compliance topicsprohibited by applicable law, BD associates are obligated to report any suspected violations of laws, industry codes, the BD Code of Conduct or BD policies in accordance with BD’s Global Speaking Up Policy. BD takes all reports of violations of laws, BD policies, and ethical standards seriously and will promptly, fairly, and thoroughly investigate all such
as antitrust, anti-bribery, conflictsreports. BD does not tolerate any form of
interest, financial integrity, industry marketing codes and information security.retaliation against any person who in good faith reports an actual or suspected violation.
Political contributions
We prohibit
The Company prohibits the use of
BD corporate funds
and assets to support
any candidate,U.S. federal or state candidates, political
party,parties, ballot
measuremeasures or referendum
campaign, unless an exception is approvedcampaigns. Exceptions to this policy require approval by the CEO,
General Counsel and
a designated member of the
General Counsel.Governance Committee. To date, no exceptions have been sought or approved.
If an exception is approved, it may only be granted without regard to the personal political affiliations or views of any individual BD associate at any level across the organization.As permitted under U.S. law, BD operates a political action committee. The BD PAC is a mechanism to enable eligible U.S. associates to voluntarily support candidates for elected office who share BD’s perspectives and approaches to public policy issues. BD provides administrative support to the PAC, as permitted under federal law.
In all cases, BD policy prohibits directors and employees from using company resources to promote their personal political views, causes or candidates, and specifies that the company will not directly or indirectly reimburse any personal political contributions or expenses.
As permitted under U.S. law, the Company operates a political action committee. The BD PAC is a mechanism to enable eligible U.S. associates to voluntarily support candidates for elected office who share BD’s perspectives and approaches to public policy issues. BD has not authorized the establishment of any political action committees operating on the state or local level. Contributions to BD PAC are entirely voluntary and are governed by the BD PAC By-Laws. BD provides administrative support to the PAC, as permitted under federal law.
BD is a member of numerous trade associations through which we seek to advance collaborative and constructive approaches to industry engagement with policymakers and other stakeholders. BD also participates in a variety of issue advocacy coalitions and alliances that provide a venueseek to advance policy proposals focused on key priorities for the medical technology sector to work together to advocate its position on issues that impact our industry. In the U.S., the major associations of which BD is a member include AdvaMed and AdvaMedDx, the Healthcare Institute of New Jersey and the California Life Sciences Association.Company. We have informed our major U.S. trade associations and relevant 501(c)(4) organizations that they are not permitted to useprohibited from applying any BD feesfunds to support contributions to any U.S. federal or state candidate, political party, ballot measure or referendum campaign, unless approved by BD’s CEO and General Counsel.campaign.
Director independence; Policy regarding related person transactions
Under the NYSE rules and our
Governance Principles, a director is
deemed not
to be independent if the director has a direct or indirect material relationship with BD (other than his or her relationship as a director). The Governance Committee annually reviews the independence of all directors and nominees for director and reports its findings to the full Board. To assist in this review, the Board has adopted director independence guidelines (“Independence Guidelines”) that are contained in the
Governance Principles. The Independence Guidelines set forth certain categories of relationships (and related dollar thresholds) between BD and directors
andor their immediate family members, or entities with which they have a relationship, which the Board
in its judgment, has
deemedjudged to be
either material or immaterial for purposes of assessing a director’s
independence.independence (referred to as the "safe harbor" provision). In the event that a director has any relationship with BD that is not addressed in the Independence Guidelines, the independent members of the Board review the facts and circumstances to determine whether
suchthe relationship
is material. The Independence Guidelines are contained in Principle No. 7.could impact independence.
The Board has determined that
the followingall of our non-management director nominees
are independent under the NYSE rules and our Independence Guidelines: Catherine(Catherine M. Burzik, R. Andrew Eckert, Claire M. Fraser,
Jeffrey W. Henderson, Christopher Jones, Marshall O. Larsen,
Gary A. Mecklenburg, David F. Melcher,
Willard J. Overlock, Jr., Claire Pomeroy, Rebecca W. Rimel, Timothy M. Ring, and Bertram L.
Scott. The Board also determined that Basil L. Anderson and James F. Orr, each of whom is retiring from the Board at the conclusion of the 2018 Annual Meeting,Scott) are independent under the NYSE rules and our Independence Guidelines.
Vincent A.Messrs. Forlenza
is an employeeand Polen are employees of BD and, therefore,
isare not independent under the NYSE rules and the Independence Guidelines.
In determining that each of
theseour non-management directors is independent, the Board reviewed BD’s transactions or other dealings with organizations with which a director
may havehas a relationship, such as service by the director as an employee of the organization or as a member of
aits governing or advisory
board of the organization.board. Based on its review, the Board determined that, in each instance,
the relationship fell within the safe harbor provision, or that the nature of the relationship, the degree of the director’s involvement with the organization and the amount involved was such that it would not
otherwise constitute a material relationship or
otherwise impair the director’s independence.
The types of transactions with director-affiliated organizations considered by the Board consisted of the purchase or sale of products and/or services (in the cases of Anderson,directors Burzik, Eckert, Fraser, Henderson, Jones, Larsen, Mecklenburg, Pomeroy, Ring and Scott), the licensing of intellectual property rights (in the cases of directors Fraser Jones and Overlock)Jones), an equity investment (in the case of Mr. Ring), and charitable contributions (in the casecases of Jones)directors Burzik, Jones and Scott).
Related person transactions
During 2020, BD did not engage in any related person transactions involving members of the Board or BD's executive officers. The Board has also established a written policy (the “Policy”) requiring approval or ratification of transactions involving more than $120,000 per year in which a director, executive officer or shareholder owning more than 5% of BD’s outstanding common stock (excluding certain passive investors)investors that own less than 20%) or their immediate family members has, or will have, a material interest. The Policy is available on BD’s website atwww.bd.com/investors/corporate_governance/. The Policy excludes certain specified transactions, including certain charitable contributions and transactions available to BD associates generally. The Governance Committee is responsible for the review and approval or ratification of transactions subject to the Policy. The Governance Committee will approve or ratify only those transactions that it determines in its business judgment are fair and reasonable to BD and in (or not inconsistent with) the best interests of BD and its shareholders, and that do not impact the director’s independence. There were no transactions involving
Sustainability
We view sustainability as a portfolio of complementary initiatives and actions that help us achieve our purpose of advancing the world of health. We see the modern social and environmental challenges our world faces as opportunities to make a difference while strengthening our company.
We tie our sustainability strategy to our business strategy, and we evaluate and prioritize the ESG factors most relevant to our business and stakeholders. By using this process, we have defined four areas of focus that provide the framework for our current Sustainability Goals:
•Innovation
◦Innovate key healthcare processes such as medication management and lab automation.
◦Develop innovations and informatics to enable disease management across the care continuum.
◦Enable the transition from research into clinical practice.
◦Provide solutions that improve healthcare worker and patient safety.
•Access
◦Develop low-cost innovations to address leading causes of mortality and morbidity.
◦Collaborate on health system strengthening with leading agencies and nongovernmental organizations.
◦Further expand BD manufacturing, product array and employment in emerging countries.
•Efficiency
◦Reducegreenhouse gas emissions and increase climate resilience throughout our operations and value chain.
◦Minimizeour environmental footprint and conserve natural resources.
◦Establish a supplier responsibility evaluation methodology.
◦Eliminate priority materials of concern in specified product categories.
◦Improve life cycle impacts of current and future products.
•Empowerment
◦Increase the diversity of our workforce, particularly in leadership roles.
◦Achieve best-in-class associate safety performance.
◦Partner with nonprofits to address unmet needs locally and globally.
◦Drive social impact and associate engagement through volunteer programs.
At the Board level, the Governance Committee has oversight responsibility for matters regarding sustainability and social responsibility. At the management level, BD’s executive officers or directors, shareholders, or their immediate families,Executive Vice President, Integrated Supply Chain, who reports directly to our CEO, has general oversight responsibility with respect to these matters.
We report annually on ESG matters and our progress against our Sustainability Goals in 2017 that were subjectour Sustainability Report. In addition, further information about our climate change strategy and programs to reduce greenhouse gas emissions can be found in our Climate Change Management Report, as well as in our responses to the Policy.
CodeCDP (formerly the Carbon Disclosure Project). Recognizing the increased interest from our stakeholders about our climate change management program, our disclosures are in line with the recommendations of Conduct
BD maintains a Codethe Task Force on Climate-related Financial Disclosures (TCFD). These reports are available at www.bd.com/en-us/company/sustainability-at-bd.
Communication with directors
Shareholders or other interested parties wishing to
all directors, officers and associates of BD, including its CEO, Chief Financial Officer, principal accounting officer and other senior financial officers. It sets forth BD’s policies and expectations on a number of topics, including conflicts of interest, confidentiality, compliancecommunicate with
laws (including insider trading laws), preservation and use of BD’s assets, and business ethics. The Code of Conduct also sets forth procedures for the
communicating and handling of any potential conflict of interest (orBoard, the
appearance of any conflict of interest) involvingnon-management directors or
executive officers, and for the confidential communication and handling of issuesany individual director (including complaints or concerns regarding accounting, internal
control and auditing matters.accounting controls or audit matters) may do so:
• by mail, addressed to BD
also maintains an Ethics Help Line telephone number (the “Help Line”) for BD associates as a means of raising concerns or seeking advice. The Help Line is serviced by an independent contractor and is available to all associates worldwide. Associates using the Help Line may choose to remain anonymous and all inquiries are kept confidential to the extent practicable in connection with the investigation of an inquiry. All Help Line inquiries are forwarded to BD’s Chief Ethics and Compliance Officer for investigation. The Audit Committee is informed of any matters reported to the Chief Ethics and Compliance Officer, whether through the Help Line or otherwise, involving accounting, internal control or auditing matters, or any fraud involving management or persons who have a significant role in BD’s internal controls.In addition to the Help Line, BD’s ethics program provides for broad communication of BD’s Core Values, associate education regarding the Code of Conduct and its requirements, and ethics training sessions.
Any waivers from any provisions of the Code of Conduct for executive officers and directors will be promptly disclosed to shareholders. In addition, certain amendments to the Code of Conduct, as well as any waivers from certain provisions of the Code of Conduct given to BD’s CEO, Chief Financial Officer or principal accounting officer, will be posted at the website address set forth below.
The Code of Conduct is available on BD’s website atwww.bd.com/investors/corporate_governance/. Printed copies of the Code of Conduct may be obtained, without charge, by contacting the Corporate Secretary, Becton, Dickinson and Company, 1 Becton Drive,Lead Director, P.O. Box 264, Franklin Lakes, New Jersey 07417-1880, phone07417-0264;
• by calling the BD Ethics Help Line, an independent toll-free service, at 1-800-821-5452 (callers from outside North America should use “AT&T Direct” to reach AT&T in the U.S. and then dial the above toll-free number); or
201-847-6800.• by email to ethics_office@bd.com.
All communications will be kept confidential and promptly forwarded to the Lead Director, who shall, in turn, forward them promptly to the appropriate director(s). Such items that are unrelated to a director’s duties and responsibilities as a Board member may be excluded by our corporate security department, including, without limitation, solicitations and advertisements, junk mail, product-related communications, job referral materials and resumes, surveys, and material that is determined to be illegal or otherwise inappropriate.
REPORT OF THE COMPENSATION
AND MANAGEMENT DEVELOPMENT COMMITTEE
The primary objective of the BD compensation program is to fully support the strategic business goal of delivering superior long-term shareholder returns through sustained revenue growth, earnings per share growth, return on capital and other metrics. As such, we intend to ensure a high degree of alignment between pay and the long-term value and financial soundness of BD. The Compensation Committee has established the following compensation principles to meet this
objective:objective. • Aligning the interests of executives and shareholders
◦Through equity compensation and equity ownershipretention guidelines for executives, we seek to align the interests of executives with those of BD’s shareholders. ThisEquity compensation represents the largest portion of our compensation structure in terms of target value.
• Linking rewards to performance
◦We maintain apay-for-performance philosophy based on actual performance against clear, measurable company performance targets, particularly those metrics that support the creation of long-term shareholder value.
• Delivering superior business and financial results
◦Performance targets are set to reward executives for achieving short- and long-term results in line with our objective of enhancing long-term shareholder value. In setting short-term goals and in rewarding performance, we will take care to ensure that we do not create incentives to take inappropriate risks.
• Offering a competitive compensation structure
◦We have established and intend to maintain a competitive structure that supports the recruitment and retention of high-performancehigh-performing executives essential to driving the business results required to execute our strategy and create long-term value for shareholders. This structure is determined, in part, by evaluating peer group data which is provided and analyzed by the Compensation Committee’s independent consultant, Pay Governance.
• Maintaining a transparent compensation structure
◦The Compensation Committee strives to provide absolute transparency to executives, employees and shareholders of all aspects of BD’s compensation and benefits structure. This includes disclosure of performance targets, payout formulas, details of other earned benefits and the Compensation Committee’s use of discretion in determining award payouts.
• Maintaining Compensation Committee independence
◦The Compensation Committee is made up exclusively of independent directors and utilizes an independent compensation consultant, Pay Governance, which, by Compensation Committee policy, is prohibited from performing any services for BD or its management without the Compensation Committee’s prior approval.
• Retaining prerogative to adjust programs
◦The Compensation Committee retains the prerogative to change or modify BD’s compensation and benefit programs to reflect prevailing economic, market or company financial conditions.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in BD’s Annual Report on Form
10-K for the fiscal year ended September 30,
20172020 and in this proxy statement.
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
Marshall O. Larsen—Chair
Basil L. Anderson
Gary A. Mecklenburg
James
Jeffrey W. Henderson
Christopher Jones
Bertram L. Scott
COMPENSATION DISCUSSION AND ANALYSIS
This section discusses our executive compensation program and the compensation actions taken with respect to the persons named in the Summary Compensation Table (who we refer to as the “named executive officers”) on page 42. The named executive officers include:
•Thomas E. Polen, Chief Executive Officer and President
•Vincent A. Forlenza, Chairman
•Christopher R. Reidy, Executive Vice President, Chief Financial Officer and Chief Administrative Officer
•Patrick K. Kaltenbach, Executive Vice President and President, Life Sciences Segment
•Samrat S. Khichi, Executive Vice President and General Counsel, Regulatory and Government Affairs
•Alberto Mas, Executive Vice President and President, Medical Segment
Mr. Polen succeeded Mr. Forlenza as BD’s CEO on January 28, 2020, after which, Mr. Forlenza assumed the role of executive Chairman.
All references in this section to years are references to our fiscal year, which ends on September 30, unless otherwise noted.In this section, when discussing our financial performance for the year and awards under our Performance Incentive Plan (the “PIP”), we refer to certain financial measures that do not conform to generally accepted accounting principles (“GAAP”).
Appendix A to this proxy statement contains reconciliations of thesenon-GAAP measures to the comparable GAAP financial measures. Executive Summary
Compensation
Our compensation objectives
and practices
Our goal is to provide an executive compensation program that best serves the long-term interests of our shareholders. We believe that attracting and retaining superior talent and rewarding performance is key to delivering long-term shareholder returns, and that a competitive compensation program is critical to that end. Therefore, we strive to provide a competitive compensation package to our executives that ties a significant portion of pay to performance and uses components that align the interests of our executives with those of BD’s shareholders.
Our compensation practices
The following is a summary of important aspects of our executive compensation program discussed later in this section.
| • | | Balanced mix of pay components and incentives.• Balanced mix of pay components and incentives.We target a balanced mix of cash and equity compensation, and of annual and long-term incentives. The key elements of our program are salary, annual cash incentives under the PIP and long-term equity compensation consisting of stock appreciation rights (“SARs”), stock-settled performance-based units (“Performance Units”), and time-vested units (“TVUs”). |
| • | | Significant performance-based compensation tied to business strategy. We emphasizepay-for-performance to align executive compensation with the execution of our business strategy and the creation of long-term shareholder value. |
Three-quarters of our CEO’sprogram are salary, annual cash incentives under the PIP and long-term equity compensation.
• Significant performance-based compensation tied to business strategy. We emphasize pay-for-performance to align executive compensation with the execution of our business strategy and the creation of long-term shareholder value.
◦A significant portion, 92%, of Mr. Polen’s target compensation in 20172020 was performance-based.
◦We use performance metrics, listed on page 30, that are aligned with and support BD’s business strategy.
◦While we emphasize “at risk” pay tied to performance, we believe our program does not encourage excessive risk-taking by management.
| • | | Share retention guidelines and policy against pledging/hedging. Our executives are subject to robust share retention and ownership guidelines and are prohibited from pledging BD shares or hedging against the economic risk of their ownership. |
| • | | Limited perquisites and no employment agreements.• Share retention guidelines and policy against pledging/hedging. Our executives are subject to robust share retention and ownership guidelines and are prohibited from pledging BD shares or hedging against the economic risk of their ownership. • Limited perquisites and no employment agreements. We offer our named executive officers very limited perquisites, and none of them have employment agreements. |
| • | | Clawback policy. We have a compensation recovery policy that gives the Board the authority to recover incentive compensation paid to senior management in the event of a restatement of our financial statements resulting from misconduct. |
| • | | Change in control agreements. We have “double-trigger” change in control agreements with our named executive officers to provide continuity of management in the event of an actual or potential change in control of BD. We have adopted a policy of eliminating excise taxgross-ups from future change in control agreements. Equity compensation awards made after January 1, 2015 also have a double-trigger accelerated vesting provision. |
| • | | Use of independent consultant. The Compensation Committee uses an independent consultant to assist it in designing our compensation program and making compensation decisions. The independent consultant did not provide any services to BD or BD management in 2017, per the policy of the Compensation Committee. |
Last year’ssay-on-pay vote
Approximately 94% of the shares voted at last year’s annual meeting were cast in support of BD’s advisory vote on named executive officer compensation. The Compensation Committee views the results of this vote as broad general shareholder support for our executive compensation program. Based on oursay-on-pay vote and the Compensation Committee’s ongoing benchmarking of our compensation policies and practices, the Compensation Committee believes that our compensation program effectively aligns the interests of our named executive officers with thoselimited perquisites, and none of them have employment agreements.
• Clawback policy. We have a compensation recovery policy that gives the Board the authority to recover incentive compensation paid to senior management in the event of a restatement of our shareholdersfinancial statements resulting from misconduct, and to recover equity compensation awarded to a member of management if such executive breaches certain restrictive covenants.
• Change in control arrangements. We have “double-trigger” change in control agreements with our named executive officers to provide continuity of management in the event of an actual or potential change in control of BD. We have adopted a policy of eliminating excise tax "gross-ups" from any new change in control agreements. Equity compensation awards made after January 1, 2015 also have a double-trigger accelerated vesting provision.
• Use of independent consultant. The Compensation Committee uses an independent consultant to assist it in designing our compensation program and making compensation decisions. The independent consultant did not provide any services to BD or BD management in 2020, per the policy of the Compensation Committee.
The impact of the pandemic on our results and executive compensation
Impact on BD’s operations
COVID-19 was officially declared a pandemic in March 2020, although BD began to experience the impact earlier in the year due to our global operations, particularly in China. Government efforts throughout the world to slow and control the spread of COVID-19 led to a sudden and significant decline in global economic activity that had a significant impact on BD. Our business experienced weakened demand resulting from a significant decline in medical procedures due to government restrictions and a shift in healthcare priorities. We experienced a decline in procedure volumes across both acute and non-acute settings, the deferral of elective procedures, such as hernia repairs, and delays in instrument placements. We were also impacted by decreases in demand for routine diagnostic testing and specimen collections (although this was partially offset by higher demand for our COVID-19 testing), and by declines in research activity due to laboratory closures and reduced clinical testing.
The pandemic significantly impacted BD’s financial results relative to our performance-based incentive targets. The weakness in demand caused by the pandemic resulted in an estimated net decrease in revenues for the year of $600 million. Our worldwide revenues in 2020 of $17.117 billion decreased 1.0% from 2019 (and were flat on a currency-neutral basis), while our adjusted earnings per share of $10.20 represented an 11.2% currency-neutral decline.
BD’s resilience to the pandemic
BD management took decisive action to respond to the unprecedented disruption caused by the pandemic.
•Actions were quickly taken to protect our global associates, including travel restrictions, work-from-home requirements and preventative measures at our sites.
•Management ensured BD’s ongoing liquidity and financial flexibility through financing activities, cash preservation initiatives, capital expense reductions and cost control measures.
•We proactively managed our supply chain to ensure that BD could continue to serve our customers, and the company did not experience any significant disruption to its operations or supply chain.
•We suspended BD matching contributions under our savings plans and temporarily reduced executive salaries (with Board members also temporarily reducing their cash compensation).
•Temporary furloughs (with full benefits) were instituted due to lower demand for certain product lines.
At the same time, BD deployed its expertise and scale to contribute significantly to the global healthcare response to COVID-19. BD developed multiple new products to help aid in the detection and identification of COVID-19, including a rapid, point-of-care diagnostic test that has expanded access to critical COVID-19 testing. Our leading position as a manufacturer of needles and syringes also enabled us to partner with the U.S. and other governments to prepare for a future COVID-19 vaccination campaign.
The Compensation Committee’s actions relating to the impact of the pandemic
Impact of pandemic on incentive compensation
The economic disruption from the pandemic materially impacted our performance-based incentive plans.
•The adverse impact to revenues and earnings resulted in BD’s performance coming in below threshold performance for these performance measures under the PIP, our annual cash incentive plan, resulting in a PIP performance factor that would have been significantly below target.
•Performance Unit awards covering the 2018-2020 fiscal year period vested significantly below target, in part due to the impact of the pandemic, and the value of our outstanding, in-cycle performance-based equity awards are also forecasted to be similarly impacted.
Actions of the Compensation Committee
A focus of the Compensation Committee in addressing the unforeseen disruption from the pandemic was to give due consideration to the negative impact on BD’s stakeholders, including our employees and shareholders. At the same time, it sought to use its ability to exercise discretion under BD’s plans to compensate management fairly while not unduly insulating management from the financial consequences of the pandemic. The Compensation Committee was also committed to ensuring that any action taken to address the impact to our long-term goalsperformance incentive compensation would align the interests of BD. Accordingly,management with the long-term interests of our shareholders.
PIP. To address the impact of the pandemic on the PIP, the Compensation Committee considered a number of factors, including the extent to which COVID-19 impacted BD’s financial results and management’s efforts to navigate the company through the disruption caused by the pandemic and contribute to the global response.
•Because of the economic instability brought on by the pandemic, and the inability to predict its impact for the year, the Compensation Committee believed resetting the PIP performance targets was impractical, and decided instead to assess whether to use its discretion to adjust plan funding.
•The Compensation Committee believed any exercise of discretion should be performance-based, and focused on management’s execution in a number of key areas that were critical to enhancing the company’s resilience to the disruption and uncertainty caused by the pandemic, aiding the global pandemic response, and positioning BD to succeed in this new environment.
•The Compensation Committee noted management’s solid execution with respect to these resilience factors, including company performance for the year that exceeded the internal forecast that was set following the outbreak of the pandemic.
•Based on management's considerable contributions during the year, the Compensation Committee established a range of PIP funding it felt was appropriate in light of management’s performance, and after thorough consideration, set funding well below target at 75% (compared to the 18% funding level that would have been achieved under the PIP formula), as discussed beginning on page 34.
The Compensation Committee did not make adjustments for any items impacting BD’s underlying performance that were not related to the pandemic. In particular, the Compensation Committee did not make any significant changesadjustments for the financial impact during the year resulting from the delay in 2017 as a resultshipments of last year’sBD Alaris™ pumps pending compliance with certain FDA filing requirements.
say-on-pay
vote.Changes to our program in 2017
During 2017, the
Performance Units. The Compensation Committee revised certain aspects of the PIP to better align plan incentives with our business strategy by increasing management focus on revenue growth. These changes included:increasing the relative weighting of the revenue target from 25% to 40%,
raising the threshold performance level required to provide funding for the revenue target from 90% to 96% of target, and
revising the PIP funding formula to increase the funding resulting from above-target revenue performance (and, conversely, decrease funding in instances of below-target performance).
We believe sustained revenue growth is a priority for our investors, and that these changes better align the PIP with the interests of our shareholders.
2017 operating performance and executive compensation decisions
Operating performance
While our reported revenues of approximately $12.1 billion declined 3.1%, this primarily reflectsconsidered the impact of the divestiturepandemic on the 2018 award, which vested at 45% of our Respiratory Solutionstarget, and the projected value of the in-flight 2019 grant. Recognizing the unexpected impact of the pandemic on this key component of long-term compensation and the disproportionate impact of the pandemic on BD’s business atand shareholder returns relative to many peer companies, the startCompensation Committee considered various alternatives to address this impact. After considering these alternatives, the Compensation Committee decided to make a special, one-time supplemental grant of SARs to associates who had received the 2018 or 2019 grants, which included certain named executive officers, as described beginning on page 37. So that associates would not be fully protected from the impact of the pandemic, the value of this one-time award was limited to 50% of the decline in value of the 2018 and 2019 Performance Unit grants. Even though Mr. Polen received the 2018 and 2019 Performance Unit grants, the Committee agreed with his decision to forego receipt of this additional one-time award.
Salary actions during the year
Prior to the beginning of the fiscal year. After adjusting for divestitures and currency translation, our revenues grew 4.5%, in lineyear, management decided, with our expectations for the year.
Reported diluted earnings per share (“EPS”) were $4.60, an increase of 2.4%. After adjusting for acquisition-related charges and certain other items, EPS was $9.48, which represents 10.4% growth, or 13.2% on a currency-neutral basis.
We signed anCompensation Committee’s agreement, to acquire Bard,freeze executive salaries as part of cost containment efforts at the company. As a leaderresult, except for salary actions taken with respect to Mr. Polen in the fields of vascular, urology, oncology and surgical specialty products. The pending acquisition will uniquely position BD to improve both the process of care and the treatment of disease for patients and healthcare providers.
In connection with the financing of the Bard transaction, we successfully executed the public sale of approximately $5 billion in equity securities and nearly $10 billion in senior notes on favorable terms.
We reached $250 million in annualized cost savings on a cumulative basis relating to the CareFusion transaction through the end of 2017, and remain on track to achieve $350 million in total annualized cost synergies by the end of 2018.
We continued to drive significant underlying operating margin expansionhis appointment as a result of operating efficiencies, cost leverage, and cost synergy capture.
| • | | Cash flows remained strong, at approximately $2.8 billion, and we increased our dividend for the 45th consecutive year. |
Important transformational programs were implemented throughout the company, including a change in the business model for our dispensing business (which we refer to as Project TraCE), a new global supply chain organization, plant rationalization and executive development programs.
Compensation decisions
Salary. Mr. Forlenza, our CEO in January 2020, our named executive officers received ano salary increase during the year from $1,120,000year.
To assist BD in its response to
$1,165,000 in orderthe COVID-19 pandemic, management volunteered to
keep his salary competitivetemporarily reduce their salaries, with
our Chairman, CEO and CFO agreeing to the
medianbiggest reductions. The salaries of
peer companies. TheMessrs. Forlenza, Polen and Reidy were reduced 40% for a period of 90 days, and salaries of our other
named executive officers
received salary increases that were
in line with increases at BD generally. Mr. Polen’s salary was increased from $728,000 to $825,000 upon his being named BD’s President in April 2017.PIP awards. For 2017, we exceeded target performance for all three PIP performance measures—adjusted earnings per share, revenue and free cash flow—resulting in available funding for PIP awards at 109% of target. The PIP award made to Mr. Forlenza was 110% of his target award, and awards ranged from 109% to 142% of target for our other named executive officers, as discussed below. We believe that the 2017 PIP awards appropriately reflect the individual contributions of our executive officers to BD’s strong financial performancereduced 20% during the year, as well as their efforts relatingsame period. Our Board of Directors also reduced its cash retainer by 40% during this period.
Changes to
the execution of the agreement to acquire Bard, the ongoing successful integration of CareFusion, and the progress made on important strategic initiatives at BD.Equity compensation. Consistent with our past practice, equity compensation represented a significant component of total compensation in 2017. Among the changes in equity compensation awards in 2017fiscal 2020
The Compensation Committee continually reviews our executive compensation program to ensure that it supports our corporate strategy. Consistent with this goal, BD made two changes to the long-term equity compensation awards granted in November 2019. The first was an increase in Mr. Polen’sto substitute three-year average revenue growth for relative total awardshareholder return (TSR”) as a performance metric for our Performance Units, but to retain the relative TSR metric as a modifier of Performance Unit payouts, as described beginning on page 32. This change to our Performance Units further aligns management on the importance of sustained revenue growth to the creation of shareholder value, whichconsistent with our strategic plan.
In addition, time-vested restricted stock units (“TVUs”) were replaced with performance-contingent time-vested units (“PTVUs”). PTVUs do not vest unless the earnings per share ("EPS") target has been met over the three-year performance period. This change was made
in anticipationto increase the amount of
his being named BD’s President later in the fiscal year.total compensation that was “at-risk” for our executives, consistent with our pay-for-performance philosophy.
Objectives of Our Executive Compensation Program
The objectives of our executive compensation program include:
• Aligning the interests of our executives with our shareholders through equity compensation and share retention guidelines.
• Driving superior business and financial results by setting clear, measurable short- and long-term performance targets that support our business strategy and the creation of long-term shareholder value, while at the same time taking care to ensure that our executives are not incentivized to take inappropriate risks.
• Maintaining a pay-for-performance philosophypay-for-performance philosophy by tying a significant portion of pay to performance against our performance targets.
• Offering competitive compensation that helps attract and retain high-performing executives who are essential to executing our strategy and creating long-term value for our shareholders.
In administering the program, the Compensation Committee seeks to provide transparency to BD executives and associates and to our shareholders of all aspects of BD’s compensation and benefits structure. This includes disclosure of performance targets and payout formulas, the benefits provided under the program, and the Compensation Committee’s use of discretion in determining award payouts.
How We Set Executive Compensation
The role of the Compensation Committee, its consultant and management
The Compensation Committee oversees the compensation program for our executive
officers.officers, including the program design and performance targets. The Compensation Committee recommends compensation actions regarding the CEO for approval by the independent members of the Board and sets the compensation of the other named executive officers. The Compensation Committee is assisted in fulfilling its responsibilities by its independent consultant, Pay Governance, and BD’s senior management. Additional information about our process for setting executive compensation, including the roles of Pay Governance and management, is found
beginning on
pages 12-13.In order topage 11.
To maintain the independence of its outside consultant, the Compensation Committee has established a policy that prohibits its consultant from performing any services for BD or BD’s management without the Compensation Committee’s prior approval. In accordance with this policy, Pay Governance did not perform
any services for BD or BD management in
2017.2020.
The use of market comparison data
The Compensation Committee considers
a number ofseveral factors in structuring our program, determining pay components and making compensation decisions. This includes the compensation practices of select peer companies in the healthcare industry, which we refer to as the “Comparison Group.” These companies
wereare chosen by the Compensation Committee after considering the recommendations of Pay Governance and management
and were selected because theyat the beginning of the fiscal year. It is the Compensation Committee’s intent to select companies that have significant lines of business that are similar to BD’s, are of comparable size in revenue and market capitalization, and
are companies that we believe we compete with
BD for executive talent.
The Compensation Committee reviews the composition of the Comparison Group at least annually. The companies in the Comparison Group for
20172020 are below.
| | | | | | | | |
Abbott Laboratories Agilent Technologies, Inc. Allergan plc C.R. Bard, Inc.
* Baxter International Inc. Boston Scientific Corporation | | Danaher Corporation Medtronic plc PerkinElmer, Inc.
Thermo Fisher Scientific Inc. Zimmer Biomet Holdings, Inc. |
*Allergan was acquired by AbbVie in May 2020 and is no longer part of the Comparison Group.
If the sample size from the Comparison Group is not large enough
for a particular named executive officer, data from a secondary peer group or, more broadly, general industry
data may be used. Companies in the secondary peer group vary each year, depending on survey participation, and are selected based on similarities of industry and company size. The Comparison Group data was used for each named executive officer
in 2020, except that for
each component of our compensation program in 2017. In addition,Messrs. Kaltenbach and Mas, data from the secondary peer group
data was
also used
in setting pay levels for Mr. Conroy and general industry data was consulted in setting Mr. Polen’s pay.due to insufficient availability of Comparison Group benchmark data.
Comparison Group Data
| | | | | | | | |
| | Revenue for the twelve months ended September 30, 2017 (in millions) | | | Market capitalization on September 30, 2017 (in millions) | |
25th Percentile | | $ | 5,240 | | | $ | 23,387 | |
Median | | $ | 9,499 | | | $ | 37,108 | |
75th Percentile | | $ | 14,289 | | | $ | 64,668 | |
BD | | $ | 12,158 | | | $ | 44,591 | |
BD Percentile Rank | | | 67% | | | | 59% | |
We attempt | | | | | | | | | | | | | | | | | | | | | | | |
| Revenue for the twelve months ended September 30, 2020 (in millions) ($) | | Market capitalization on September 30, 2020 (in millions) ($) |
25th Percentile | 10,157 | | | | 40,711 | | |
Median | 14,070 | | | | 78,265 | | |
75th Percentile | 26,248 | | | | 152,757 | | |
BD | 16,917 | | | | 67,447 | | |
BD Percentile Rank | 57% | | | | 44% | |
The Compensation Committee attempts to set the
salary, annual cash incentive and equity compensation of the named executive officers at levels that are competitive with
the compensation (salary, annual cash incentive and equity compensation)that paid to persons holding the same or similar positions at the
Comparison Group or secondary peer group companies,
listed above,as applicable, using available market comparison data regarding these companies as a guide. The Compensation Committee (and the independent directors,
as a group, in the case of our CEO) generally
seekseeks to set the compensation of our named executive officers for each of these elements within a competitive range of the median of
this group,the Comparison Group, assuming payout of performance-based compensation at target. The use of market comparison data, however, is just one of the tools used to determine executive compensation, and the Compensation Committee and the independent directors retain the flexibility to set target compensation at levels deemed appropriate for an individual or for a specific element of compensation. Based on the market data provided by Pay Governance, the Compensation Committee believes that the total target compensation
it set for the named executive officers in
20172020 generally approximated median competitive
levels.levels while retaining the ability to factor in performance, experience, and breadth of responsibilities.
Because each compensation element is reviewed individually, compensation decisions made with respect to one element of compensation generally do not affect decisions made with respect to other elements. It is also for this reason that no specific formula is used to determine the allocation between cash and equity compensation, although it is the Compensation Committee’s intent that equity compensation represent the largest portion of total target compensation. In addition, because an executive’s compensation target is set by reference to persons with similar duties at peer companies, we do not establish any fixed relationship between the amount of compensation paid to our CEO and that paid to the other named executive officers.
The use of tally sheets
The
Annually, the Compensation Committee is fromtime-to-timeprovided with a “tally sheet” report prepared by management for eachregarding the named executive officer.officers. The tally sheet includes, among other things, total annual compensation, the value of unexercised or unvested equity compensation awards, and amounts payable upon termination of employment under various scenarios, including retirement or following a change in control. The Compensation Committee uses these tally sheets to providegain additional perspective on the value the executives have accumulated from prior equity awards and plan accruals and their retentive value.
Last year’s say-on-pay vote
Approximately 90% of the shares voted at last year’s annual meeting were cast in support of BD’s advisory vote on named executive officer compensation (known as "say-on-pay"). The Compensation Committee views the vote as broad general shareholder support for our executive compensation program. Based on our say-on-pay vote and the Compensation Committee’s ongoing benchmarking of our compensation policies and practices, the Compensation Committee believes that our compensation program effectively aligns the interests of our named executive officers with those of our shareholders and the long-term goals of BD.
The Key Elements of Our Compensation Program
The key elements of our executive compensation program are summarized
in the table below.
| | | | | | | | | | | | | | |
Component | | Description | | | | Purpose |
| | | |
Base salary | | Fixed cash compensation based on performance, scope of responsibilities, experience and competitive pay practices. | | | | Provide a fixed, baseline level of compensation. |
| | | |
PIP | | Annual variable cash payment tied to performance during the fiscal year. | | | | •Drive business performance on antowards achievement of annual basis.goals. •Reward individual contributions to BD’s performance. |
Long-term equity compensation: | compensation: | | | | | |
| | | |
• SARs | | Exercisable for shares based on difference between exercise price and BD stock price. SARs vest over four years and have a10-year term. | | | | •Increase executive ownership to align interests with shareholders. •Promote executive retention. •Drive long-term, sustained business performance. •Reward creation of shareholder value. |
• Performance Units | | Performance-based restricted stock units, with payout tied to BD’s performance over three-year performance period. | | |
• TVUs PTVUs | | Restricted stock units that vest in three annual installments. | | years from grant, subject to BD meeting the pre-set performance target. |
Our Emphasis onPay-for-Performance Performance-based compensation
The compensation of our named executive officers is weighted towards performance-based compensation, where the actual amount received by an executive varies based on company and individual performance. The chartschart below showshows the performance-based portionand fixed portions of 2017the 2020 target compensation paidof Mr. Polen and for Messrs. Reidy, Kaltenbach, Khichi and Mas (excluding the cash payments made to Mr. ForlenzaMessrs. Kaltenbach and Khichi under their sign-on arrangements, which are discussed later).
2020 Total Compensation*
* Actual amounts received (and the other named executive officers.2017 Total Target Compensation*
* | Actual amounts received (and the percentage of total compensation coming from performance-based compensation) may differ from target amounts based on performance and BD’s stock price. |
percentage of total compensation coming from performance-based compensation) may differ from target amounts based on performance and BD’s stock price. “Performance-based” compensation includes PIP awards, Performance Units, PTVUs and SARs, while “Fixed” compensation includes salary and TVUs.salary. We consider SARs performance-based compensation because they require stock price appreciation to deliver value to an executive.
How our performance metrics support BD’s business strategy BD remains focused on delivering sustainable growth and shareholder value whileand making appropriate investments for the future. BD management operates the business consistent with the following core strategies: Increasing revenue growth by focusingGrow
•Developing and maintaining a strong portfolio of leading products and solutions that address significant unmet clinical needs, improve outcomes, and reduce costs;
•Focusing on our core products, services and solutions that deliver greater benefits to patients, healthcare workers and researchers;
•Investing in research and development for platform extensionsthat will result in category innovation and innovative new products;a robust product pipeline;
Growing•Leveraging our operationsglobal scale to expand our reach in providing access to affordable medical technologies around the world, including emerging markets;
Improving operating effectiveness and balance sheet productivity; and•Supplementing our internal growth through strategic acquisitions;
•Driving an efficient capital structure and strong shareholder returns.
Simplify
•Working across our supply chain to minimize environmental impacts;
•Creating more resilient operations based on an enterprise-wide renewable energy strategy;
•Reducing complexity across our manufacturing network and rationalizing our product portfolio;
•Enhancing our quality and risk management systems;
•Simplifying our internal business processes;
•Focusing on cash and expense management in order to improve operating effectiveness and balance sheet productivity.
Empower
•Fostering a purpose-driven culture with a focus on positive impact to all stakeholders–customers, patients, employees and communities;
•Improving our ability to serve customers and enhance customer experiences through the digitalization of internal processes and go-to-market approaches;
•Cultivating an inclusive work environment that welcomes and celebrates diverse talent and perspectives.
The Compensation Committee believes it is important that our compensation program reinforcereinforces and rewardrewards behaviors that support these business objectives. In addition, the Compensation Committee believes executive compensation should be based in part on how BD’s performance compares to peer companies facing the same market conditions as BD. These considerations inform the Compensation Committee’s selection of the performance measures for BD’s performance-based compensation.
Performance Period and Metrics for
Performance-based Compensation
in 2020
| | | | | | | | | | | | | | |
1 Year (PIP awards) | | 3 years (Performance Units/PTVUs) | | 10 years (SARs) |
| | |
PIP Awards | | Performance Units | | SARs |
Adjusted EPS* Revenues*
EPS Revenues Free cash flow as a percentage of sales* sales | | Average ROIC
Revenue growth Relative TSR (modifier) Adjusted EPS growth | | Stock price appreciation |
* | Adjusted by eliminating the effect of unbudgeted currency fluctuations. |
PIP.
Adjusted EPS. “Adjusted EPS” is our GAAP diluted EPS less acquisition-related purchase accounting adjustments and finance, integration, restructuring and transaction costs. We evaluate corporateuse Adjusted EPS because it is one of the primary bases on which BD sets performance underexpectations each year and earnings is a widely used measure of overall company performance. The use of Adjusted EPS is consistent with how we report our operating results to the PIP usingfinancial community.
Revenues. Revenues measures BD’s ability to innovate and compete in the following metrics: | • | | Adjusted EPS. “Adjusted EPS” is our GAAP EPS less acquisition-related purchase accounting adjustments and finance, integration, restructuring and transaction costs. We use Adjusted EPS because it is the primary basis on which BD sets performance expectations for the year and earnings is a widely-used measure of overall company performance. The use of Adjusted EPS is consistent with how we report our operating results to the financial community. |
| • | | Revenue. Revenue measures BD’s ability to innovate and compete in the global marketplace. This measure focuses management on achieving strong“top-line” growth, consistent with our business strategy. |
| • | | Free cash flow as a percentage of sales. This metric recognizes the importance of the efficient use of cash to our ability to fund ongoing investments in our business, including product development, innovation and geographic expansion. “Free cash flow” means cash flow from our operating activities, less capital expenditures and capitalized software. |
Together,global marketplace. This measure focuses management on achieving strong “top-line” growth, consistent with our business strategy.
Free cash flow as a percentage of sales. This metric recognizes the importance of the efficient use of cash to our ability to fund ongoing investments in our business, including product development, innovation and geographic expansion. “Free cash flow” means net cash from operations, less capital expenditures and capitalized software.
Average return on invested capital ("ROIC"). This metric measures profitability and how effectively company assets are being used. This metric requires our executives to effectively manage a number of different aspects of the business, including new product introductions, productivity improvements and geographic expansion.
Relative TSR.We use relative TSR as a potential modifier of Performance Unit payouts.Relative TSR measures BD’s stock performance (assuming reinvestment of dividends) during the performance period against that of a group of healthcare equipment and life sciences companies included in the S&P 500 Healthcare Index (the “TSR Group”). Performance Unit payouts are modified based on the relative rank of BD’s TSR compared to the TSR Group during the performance period.The use of relative TSR as a modifier allows Performance Unit payouts to reflect BD’s performance, as reflected in our stock price over time, compared to peer companies facing similar business conditions.
The Compensation Committee believes that, together, these
three measures provide a balanced set of performance targets that focus on growth, profitability and operating efficiency.
Adjusted EPS and revenue are each weighted 40%, and the free cash flow metric is weighted 20%. This represents a change from 2016, where Adjusted EPS was weighted 50% and the revenue and free cash flow metrics were each weighted 25%. The Compensation Committee made this change to better align incentives under the PIP with our business strategy by increasing management focus on revenue growth.
When measuring actual performance against the targets, adjustments are made to account for the impact of foreign currency exchange rates in effect during the year, whether favorable or unfavorable to BD, compared to the rates we budgeted when the targets were set. We eliminate this impact of
unbudgeted foreign currency translation so that only BD’s underlying performance is
considered in determining PIP awards.Equity compensation. Equity compensation links executive compensation to BD’s performance against three-year performance goals and stock price appreciation. Two metrics are used to measure performance under the Performance Units, each weighted 50%:
| • | | Average return on invested capital (“ROIC”). This metric measures profitability and how effectively company assets are being used. This metric requires our executives to effectively manage a number of different aspects of the business, including new product introductions, productivity improvements and geographic expansion. |
| • | | Relative total shareholder return (“TSR”). This metric measures BD’s stock performance (assuming reinvestment of dividends) during the performance period against that of a group of 13 companies in the healthcare industry (the “TSR Group”). This measure compares BD’s performance, as reflected in our stock price over time, to peer companies facing similar business conditions and is directly tied to shareholder returns. The TSR Group is broader than the Comparison Group used for compensation market data in order to reduce the volatility in relative performance that can come from using a relatively smaller number of companies. |
measured.
How performance goals are set
The Compensation Committee considers BD’s business plan and the environment in which BD is operating when setting performance targets for the PIP and Performance Units. The healthcare industry continues to face challenges, and the Compensation Committee seeks to reward what it deems to be superior performance by management in light of current industry conditions and growth trends. The Compensation Committee sets what it believes are reasonably achievable performance targets for BD at the time, in light of the BD operating plans reviewed by the Board, and structures payouts so that they are aligned with BD’s performance against those targets.
Our risk analysis of performance-based compensation
While a significant portion of our executive compensation is performance-based, we do not believe that our program encourages excessive or unnecessary risk-taking. While risk-taking is a necessary part of operating and growing a business, the Compensation Committee focuses on aligning BD’s compensation practices with BD’s long-term strategy and attempts to avoid short-term rewards for management decisions that could pose long-term risks to BD. This includes:
| • | | Limits on PIP awards. We do not overweight short-term incentives as a proportion of total pay. PIP awards are also capped at 200% of an executive’s target award to protect against disproportionately large short-term incentives, and the Compensation Committee has the discretion to set PIP awards based on any factors it deems appropriate, including whether management has taken unnecessary or excessive risk. |
| • | | Share retention and ownership guidelines. Our share retention and ownership guidelines ensure that our executives have a significant amount of their personal assets tied to the long-term success of BD, and we have a policy prohibiting pledging BD shares or hedging against the economic risk of their ownership. |
| • | | Use of long-term equity compensation. The largest portion of the compensation paid to our named executive officers is long-term equity compensation that vests over a period of years, which encourages our executives to focus on sustaining BD’s long-term performance. |
| • | | Use of Performance Units. A significant portion of executive equity compensation consists of Performance Units that have a three-year performance cycle. This focuses management on sustainable long-term performance. We also cap the payout of these awards at 200% of target. |
| • | | Use of multiple performance metrics. We use a number of different performance metrics in our performance-based compensation, with no overlapping metrics among our different compensation components, so that undue weight is not given to any one metric. |
• Limits on PIP awards. We do not overweight short-term incentives as a proportion of total pay. PIP awards are also capped at 200% of an executive’s target award to protect against disproportionately large short-term incentives, and the Compensation Committee has the discretion to set PIP awards based on any factors it deems appropriate, including whether management has taken unnecessary or excessive risk.
• Share retention and ownership guidelines. Our share retention and ownership guidelines ensure that our executives have a significant amount of their personal assets tied to the long-term success of BD, and we have a policy prohibiting the pledging of BD shares or hedging against the economic risk of their ownership.
• Use of long-term equity compensation. The largest portion of the compensation paid to our named executive officers is long-term equity compensation that vests over a period of years, which encourages our executives to focus on sustaining BD’s long-term performance.
• Use of Performance Units. A significant portion of executive equity compensation consists of Performance Units that have a three-year performance cycle. This focuses management on sustainable long-term performance. We also cap the payout of these awards at 200% of target.
• Use of multiple performance metrics. We use a number of different performance metrics in our performance-based compensation so that undue weight is not given to any one metric.
The PIP provides our executives an opportunity to receive a cash award for BD’s performance for the fiscal year and their contribution to that performance, as part of our
pay-for-performance philosophy.
Award targets
Setting awards
Target PIP awards for the named executive officers are expressed as a percentage of base salary earned during the year. The “Grants of Plan-Based Awards in Fiscal Year 2017” table on page 45 shows the range of possible awards under the PIP for 2017, based on certain assumptions.
salary. The factors considered when setting actual PIP awards include BD’s overall performance against thepre-set performance targets and the resulting available funding, (discussed below), the executive’s target award and the executive’s individual performance. Our CEO’s performance is measured against the individual goals for the year established by the independent directors. For our other named executive officers, performance is measured against the performance objectives set for the businesses, regions or functions they oversee. In each case, the performance objectives for a named executive officer involve a combination of quantitative and qualitative goals. However, no specific formula or weighting of individual performance objectives is used to determine a named executive officer’s PIP award, nor is the achievement of any particular individual performance objective a condition to receiving an award. Instead, the Compensation Committee and the independent directors use their business judgment to determine what it believes is an appropriate PIP award to recognize BD’s performance and the executive’s contribution to that performance.
Funding for awards
Available based on BD's performance
The available funding
pool for PIP awards is determined by a formula. For each
performance measure,
the Compensation Committee reviews how BD performed againstBD's performance is compared to the target goal set by the Compensation Committee
in order to arrive at a performance factor for that measure.
•For the revenueRevenues target, for every 1% of performance above target, funding with respect to that measure is increased 22.5% above target (up to a maximum of 190%), and for every 1% below target, funding decreases 12.5% below target (to a minimum of 50%).
• For the Adjusted EPS and freeFree cash flow targets, for every 1% of performance above target, funding with respect to that measure is increased 5% above target (up to a maximum of 150%), and for every 1% below target, funding decreases 2.5% below target (to a minimum of 75% for Adjusted EPS and 50% for freeFree cash flow).
Performance• For the Revenues target, performance below 96% of target for revenues results in no funding for the revenueRevenue measure, while performance below 90% of the Adjusted EPS target andor 80% of the free Free cash flow target respectively, results in no funding for those measures.
The performance factors for the three measures are then weighted to arrive at an overall funding
factor. Actualfactor, although actual awards, as a percentage of a named executive officer’s target, may be more or less than the
overall funding factor.
To determine the funding factor, the Revenues and Adjusted EPS metrics are each weighted 40%, and the Free cash flow metric is weighted 20%. The funding formula for the Revenues target has a steeper incremental funding curve than for the other two measures. This is intended to better align the incentives under the PIP with our business strategy by increasing management focus on revenue growth and rewarding higher levels of revenue performance.
When comparing BD’s operating results to the performance targets, the Compensation Committee has the discretion to
adjustmake adjustments to BD’s results
to account for
unbudgeted acquisitions and divestitures during the year, and for other unbudgeted items that are not considered part of our ordinary
operations.operations and other events that significantly impacted BD’s performance. This ensures that business decisions are made based on what management believes is in the best interests of BD, rather than the possible effects on compensation. It also ensures that our executives are not
rewarded for or unfairly penalized by
or rewarded for these types of events.
Equity Compensation Awards
We use a mix of equity compensation vehicles to promote the objectives of our program. | • | | SARs reward executives for the creation of shareholder value over the term of the award. |
| • | | Performance Units measure BD’s performance over a three-year period and are intended to reward sustained long-term financial performance. |
| • | | TVUs are the smallest portion of equity compensation and are used to reduce the volatility in amounts realized from equity compensation that can arise when purely performance-based equity compensation is used. |
SARs reward executives for the creation of shareholder value over the term of the award, and Performance Units measure BD’s performance over a three-year period and are intended to reward sustained long-term financial performance. PTVUs, which represent the smallest portion of equity compensation, were added in 2020 to replace the TVUs that were previously granted to our executives. PTVUs vest only if the Adjusted EPS target for the award has been met over the three-year vesting period. The Compensation Committee issued PTVUs to increase the amount of performance-based equity compensation granted to our executives, consistent with our pay-for-performance philosophy.
Because they are equity-based and subject to long-term vesting each awardperiods, these awards also servesserve to align the interests of our executives with those of our shareholders and to promote executive retention.
The Compensation Committee determines the total grant date dollar value of the equity compensation to be paid to a named executive officer. SAR, Performance Unit and
TVUPTVU awards are then made to the executive based on their estimated grant date values, with SARs and Performance Units each making up approximately 40% of the total award value, and
TVUsPTVUs the remaining 20%
, consistent with prior years.. The values given to equity compensation awards are only estimates and actual amounts realized from these awards may differ from these estimated values.
Performance Unit
metrics and payout formula
The
For 2020, three-year average revenue growth was added as a performance
measures used for themetric under our Performance Units,
arein place of relative TSR. This change was to emphasize the importance of sustained revenue growth under our strategic plan. The relative TSR metric is used instead as a payout modifier, as described below. Both average annual ROIC and
relative TSR, eachaverage revenue growth are weighted 50%. A payout factor for each measure is calculated to determine a final share payout, which can range anywhere from zero to 200% of target.
ROIC. The payout factor for ROICeach performance measure is determined by a scale withthat establishes a threshold performance set at 5% below the ROIC targetlevel (resulting in a 50% payout factor)factor for that measure), and a maximum performance set at 5% above targetlevel (resulting in a 200% payout factor). Performance below the threshold level results in a zero payout factor for the ROICthat measure.
Relative TSR.
The payout factor for
the Performance Units is subject to modification based on BD’s relative TSR
compared to the TSR Group for the performance
is determined byperiod. The modifier can range from 120% of payout (for relative TSR in the
following table: | | |
BD’s Percentile Rank
| | TSR Factor
|
³85th
| | 200% |
75th
| | 165% |
50th
| | 100% |
25th
| | 35% |
Less than 25th
| | 0 |
Iftop 15th percentile) to 80% (for relative TSR in the lowest quartile). In the event BD has a negative TSR for the performance period, the relative TSR factor is capped at 100%,modifier will not be used to increase the payout amount, regardless of where BD’s TSR rankspercentile rank within the TSR Group. The Compensation Committee believes that in instances where BD has a negative TSR, BD’s executives should still be rewarded for superior relative TSR performance, but that it is appropriate that the payout be limited.
Similar to the PIP, the Compensation Committee has the discretion to adjust BD’s average ROIC and revenue performance for acquisitions, divestituresunbudgeted items and other unbudgeted itemssignificant events not considered part of our ordinary operations,operations.
2020 Compensation Actions
Following the onset of COVID-19, the Compensation Committee began considering the potential impact of the pandemic on the company’s performance and executive compensation. The Compensation Committee met six times from April through November to remove companies fromconsider the TSR Group, or adjustbest course for BD, in consultation with management and Pay Governance. An important factor in the TSRCompensation Committee’s deliberations was the impact of companies within the TSR Group or of BD, to accountcrisis and the company’s performance on BD’s stakeholders, including our employees and shareholders. In addition, the Compensation Committee considered other factors that may have affected the company’s financial performance for acquisitions, mergers or other significant events,the year, such as the BD Alaris shipment delay.
As was the case with many companies, the 2020 PIP targets and the performance targets under our Performance Units were set before the outbreak of the pandemic, an unexpected external event of unknown duration. Against this backdrop, the goal of the Compensation Committee in making its compensation decisions was to balance treating management fairly in light of the changed circumstances brought on by the pandemic with the pandemic’s impact on BD’s stakeholders. The Compensation Committee was also focused on ensuring that any action it took to address the impact of the pandemic on our long-term performance-based equity compensation would be done in a
change in capital structure.2017 Compensation Actions
Below isway that aligns the interests of management with the long-term interests of our shareholders.
Salary adjustments
Prior to the beginning of 2020, management decided to freeze executive salaries as part of cost containment efforts at the company. As a
discussion of compensationresult, except for salary actions taken
in 2017 with respect to
the named executive officers.Salary adjustments
The base salaries of the named executive officers are reviewed each November, and any adjustments go into effect onMr. Polen in connection with his appointment as our CEO in January 1 of the following calendar year. Effective January 1, 2017, Mr. Forlenza’s salary was
increased from $1,120,000 to $1,165,000 in order to reward him for outstanding performance and to keep his salary competitive with the median of the Comparison Group. The other2020, our named executive officers received no salary increases that were in lineincrease during the year.
In connection with increases at BD generally. Mr. Polen’s appointment as CEO, his base salary was increased from $900,000 to from $728,000 to $825,000$1,150,000. In addition, upon his being named BD’s Presidentassuming the role of executive Chair, Mr. Forlenza’s base salary was reduced from $1,300,000 to $1,150,000.
To assist BD in
April 2017.its response to the impact of the COVID-19 pandemic, management volunteered and the Compensation Committee agreed to temporarily reduce their salaries, with Messrs. Forlenza, Polen and Reidy receiving the biggest reductions. Their salaries were reduced 40% for a period of 90 days, while the salaries of our other executive officers were reduced 20% during the same period.
Performance against the plan targets
The threshold performance, target performance and maximum performance for each metric under the PIP for
2017,2020, along with BD’s adjusted performance during the year, are set forth on the following table.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Range of Performance | | | Adjusted Performance* | | | Percentage of Target Achieved | | | Funding Factor (rounded) | |
Performance Metric | | Threshold | | | Target | | | Maximum | | | | |
Adjusted EPS (40%) | | $ | 8.41 | | | $ | 9.34 | | | $ | 10.27 | | | $ | 9.57 | | | | 102.5 | % | | | 43% | |
Revenues (40%) (in millions) | | $ | 11,556 | | | $ | 12,037 | | | $ | 12,519 | | | $ | 12,073 | | | | 100.3 | % | | | 45% | |
Free cash flow as % of sales (20%) | | | 14.2% | | | | 15.8% | | | | 17.4% | | | | 16.0% | | | | 101.3 | % | | | 21% | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | | | | | | 109% | |
* | For additional detail on how Adjusted Performance is calculated, see Appendix A. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Range of Performance | | | | Funding Factor (rounded) |
Performance Metric | | | Target | | Maximum | Reported Performance | Adjusted Performance* | Percentage of Target Achieved |
Adjusted EPS (40%) | | | $12.68 | | $13.95 | $2.71 | $10.20 | 80% | 0 |
Revenues (40%) (in millions) | | | $18,035 | | $18,756 | $17,117 | $17,117 | 95% | 0 |
Free cash flow as % of sales (20%) | | | 17.8% | | 19.6% | 17% | 17% | 96% | 18% |
Total (Rounded) | | | | | | | | | 18% |
*For information on how Adjusted Performance is calculated, see Appendix A.
The Adjusted EPS target
representsrepresented an
approximate 11% increase
of 10.7% over
BD's 2019 adjusted
2016 EPS on a currency-neutral basis, while the
revenueRevenue target
represents anrepresented a 4.3% increase
of 4.1% over
adjusted 2016 revenues. These targets were set after taking into account the estimated impact for the year of the previously announced change in the business model of our dispensing business (Project TraCE), which we estimate negatively impacted earnings growth for the year by approximately 2% and revenue growth by approximately 0.5%.BD's 2019 reported consolidated revenues, or 5.3% on a currency-neutral basis. The
freeFree cash flow as a percentage of sales target
also represents an increase overof 17.8% compares to the
201618.7% target
which was 14.9%. Our reported EPSset under the PIP for
2017 was $4.60, our reported revenues were $12,093 million, and our reported free cash flow as a percentage of revenues was 15%.In reviewing BD’s 2017 performance,2019.
As it has historically done, the Compensation Committee made adjustments
to the company’s performance for unbudgeted items, including acquisitions
the effect of the charge taken in connection with Project TraCE, the reversal of a litigation reserveand divestitures, and certain other matters that occurred during
2017.the year. The Compensation Committee made these adjustments to eliminate items that are not considered part of BD’s ordinary operations, so that
only the
PIP funding factor appropriately reflected BD’s underlying operating
results.performance of our business was measured. These adjustments are consistent with how we reported our operating results to the financial community.
Adjustments were also made for the impact of foreign currency fluctuations in excess of what was budgeted when the targets were set, again so that only BD’s underlying performance is considered in determining PIP awards. The reconciliations on Appendix A provide additional detail on the adjustments made by the Compensation Committee.
Based
No adjustments were made by the Compensation Committee to account for any items impacting BD’s underlying performance that were not related to the pandemic, including the financial impact of the previously mentioned delay in BD Alaris shipments.
Impact of the pandemic on PIP funding
The substantial impact of the pandemic on BD’s business resulted in the company failing to achieve threshold performance levels for Revenues or Adjusted EPS for the year under the PIP. The company estimates that the significant decline in medical procedures, delays in instrument placements and other weakness in demand for our products brought on by the pandemic resulted in an estimated net decrease in revenues for the year of $600 million and substantially lower earnings for the year.
Actions taken by the Compensation Committee
Given the uncertainty and instability caused by the pandemic and the difficulty in predicting what the impact would be on BD’s business for fiscal 2020, the Compensation Committee believed it was impractical to attempt a mid-year revision to the PIP performance targets or thresholds. Also, because the pandemic began to impact BD early in our second fiscal quarter, the Compensation Committee did not look separately at BD’s pre- and post-pandemic results to analyze the company’s performance under the PIP.
Instead, the Compensation Committee, with its advisor, Pay Governance, reviewed additional factors that it could consider relating to management’s performance during the year to determine whether to use its discretion to address the unforeseen disruption to BD’s business.
Review of alternative payout scenarios
To inform the Compensation Committee’s deliberations, the Compensation Committee considered a number of alternative scenarios to the 18% funding that would have resulted under the PIP funding formula. These included the PIP performance factor:
•in the absence of any threshold performance hurdles, which produced funding at 52% of target;
•if adjustments were made for the estimated impact of the pandemic on the PIP performance metrics, which yielded funding at 88%; and
•if the company’s performance was measured against the company’s revised internal forecast set in April 2020 following the outbreak of the pandemic, which produced funding of 109%.
This range of alternative funding scenarios provided the Compensation Committee additional perspective on the effect of the PIP’s design, including the role of performance thresholds, on the funding factor under the PIP was 109%. formula.These scenarios also showed the overall impact of the pandemic on the company’s financial results and PIP funding, and management’s performance during the year in operating the company following the outbreak.
Focus on resilience
In addition to these alternative payout scenarios, the Compensation Committee considered resilience actions taken by management to enable BD to weather the significant disruption and uncertainty caused by the pandemic (including safeguarding the health and safety of BD associates), contribute to the global pandemic response and position the company for success as economic conditions improve.To assist in this review, management shared with the Compensation Committee its views on the critical priorities for the company for the balance of the fiscal year following the outbreak of the virus.
After discussions with management and Pay Governance, the Compensation Committee decided it would review management’s efforts during the year with respect to the following resilience factors to guide its use of discretion and assess management’s performance:
Resilience Factors
Quality – Driving quality improvements, including delivering on our quality commitments and improving the company’s quality systems.
Customers – Developing products that are critical to the global COVID-19 response and meeting milestones on the company’s top R&D programs.
Finance/shareholders – managing through the macroeconomic uncertainty created by the pandemic and optimizing the company’s revenue and liquidity.
Operations & supply continuity – responding to pandemic-related changes in customer demand and ensuring supplier stability and supply chain continuity.
Employee safety and well-being – safeguarding associate safety, effecting pandemic-related compensation or workforce actions in a fair and transparent manner, and demonstrating BD’s values and culture.
Below are the actions management took during the year that were considered by the Compensation Committee in assessing performance with respect to these resilience factors.
| | | | | |
Quality | |
•Substantial progress made on important regulatory and quality matters, including preparation for the FDA submission of the 510(k) for the BD Alaris pump. •Delivered on all of BD’s commitments to the FDA under the Preanalytical Systems warning letter. •Launched a comprehensive program to improve the company’s quality management systems and enhance organizational capabilities and governance processes in the quality area. | ☑ |
Customers | |
•Developed multiple new products to help aid in the detection and identification of COVID-19, including tests for our BD Max™ molecular System and a rapid, point-of-care COVID-19 antigen test for our BD Veritor™ Plus System that have expanded access to critical COVID-19 testing. •Leveraged BD’s leading position as needle and syringe manufacturer to partner with the U.S., Canadian and U.K. governments to prepare for future COVID-19 vaccination campaign. •Advanced BD’s top research and development programs, despite the challenges posed by shutdowns and other restrictions, including five new product launches. | ☑ |
Financial/Shareholders | |
•Strengthened BD’s balance sheet to ensure liquidity and continued financial flexibility. •Increased commitments under credit facility. •Executed $3 billion equity offering. •Effective cash management resulted in significant cash savings to help offset lost revenues. •BD’s performance exceeded post-pandemic internal forecast. | ☑ |
Operations & supply continuity | |
•Proactive efforts ensured that BD did not experience any significant disruption to operations or supply chain. ◦Worked closely with key suppliers and implemented business continuity measures to mitigate any potential supplier disruption. ◦Partnered with local governments to seek “essential business” exemptions for key suppliers. •Refocused manufacturing towards most in-demand products to provide continued supply to customers. •Despite challenges from the pandemic, ramped production of BD Veritor and injection devices to meet production goals. •Substantial progress made on product rationalization and manufacturing network consolidation initiative. | ☑ |
Employee safety and well-being | |
•Took decisive action to protect the safety and well-being of BD’s global associates, including travel restrictions, self-quarantines and work-from-home measures. •Temporarily furloughed associates continued to receive their benefits and accrue service credit under retirement and savings plans and accrue vacation and sick time. •Paid associate contributions for medical, dental and vision plans for associates whose work was reduced more that 25%. •Over $700,000 raised through an assistance fund established by BD to help associates and their families impacted by COVID-19. •Transparent communication by management to global associates on actions taken by management and to advance our cultural priorities of quality, growth mindset and servant leadership. | ☑ |
Compensation Committee’s use of discretion
Based on its review, the Compensation Committee concluded that the contributions by BD executives in the key resilience areas were substantial, and that through management’s efforts, BD’s performance exceeded the internal forecast set in April. The Compensation Committee recognized, however, that shareholders and other stakeholders were meaningfully impacted by BD’s financial performance this year.
In consideration of management’s superior performance and the alternative funding scenarios discussed above, the Compensation Committee determined that funding in the range of 70% to 85% of target would be appropriate for the significant level of performance achieved. The Compensation Committee decided, though, to set the funding factor towards the lower end of this range at 75% to account for the negative impact of the COVID-19 pandemic on BD’s shareholders and other stakeholders. The Compensation Committee believed this funding level struck a fair balance of rewarding BD executives for their critical efforts in responding to the unprecedented disruption caused by COVID-19, while not insulating them from the financial impact of the pandemic.
Awards made to named executive officers
The following table shows the PIP awards
that were granted
to the named executive officers for
2017.2020. These awards are also set forth in the Summary Compensation Table on page 42 under the heading
“Non-Equity “Non-Equity Incentive Plan Compensation.”
| | | | | | | | |
Name | | Target Incentive Award ($) | | | Actual Incentive Award ($) | |
Vincent A. Forlenza | | | 1,631,000 | | | | 1,800,000 | |
Christopher R. Reidy | | | 667,918 | | | | 950,000 | |
Alexandre Conroy | | | 465,468 | | | | 583,466 | |
Thomas Polen | | | 701,250 | | | | 875,000 | |
Ellen R. Strahlman, M.D. | | | 553,446 | | | | 603,256 | |
Certain | | | | | | | | | | | | | | | | | |
Name | Target Incentive Award ($) | Actual Incentive Award ($) | Reduction from Target Incentive Award ($) |
Thomas E. Polen | 1,456,762 | 1,092,572 | 364,194 |
Vincent A. Forlenza | 1,798,156 | 1,348,617 | 449,539 |
Christopher R. Reidy | 775,948 | 581,961 | 193,987 |
Patrick K. Kaltenbach | 569,075 | 490,827 | 78,248 |
Sam Khichi | 528,000 | 455,400 | 72,600 |
Alberto Mas | 595,340 | 446,505 | 148,835 |
All of the named executive officers received
PIP awards
that, as a percentageat 75% of their
target award,
consistent with overall PIP funding, except for Messrs. Kaltenbach and Khichi. Mr. Kaltenbach received a PIP award at 86% of target
exceededto recognize his role in the
payout factor,development and launching of important COVID-19 diagnostics on our BD MAX and BD Veritor platforms, as
discussed below:well as driving the Life Sciences segment growth strategy and integrating the newly-formed Integrated Diagnostics Solutions business unit. Mr. ReidyKhichi also received an award at 86% of 142% of his target award in recognition of the role he played in helping BD achieve strong financial performance for the year, including significant underlying operating margin expansion. His award also reflects Mr. Reidy’s continued efforts in realizing cost synergies from the CareFusion integration, which is on track to exceed our original estimates, and the progress made in functional transformation at BD, including our shared service centers and IT function. The award also reflectsrecognize his leadership in the financial analysis of the Bard transaction, and preparing for the integration of the two companies, including identifying potential cost synergies. Mr. Reidy was also recognized for developing a successful financing strategy for the Bard transaction, which resulted in the completion of approximately $15 billion in equity and debt financing on terms favorable to BD, despite a “split rating” from the rating agencies.
Mr. Conroy’s award of 125% of his target award recognizes his role, as President, Americas and EMEA, in helping to deliver strong performance in emerging markets during the year that exceeded management’s expectations. It also reflects significant progress made during the year on important growth and innovationadvancing several critical company initiatives, includinggo-to-market strategies in Europe. The award also reflects Mr. Conroy’s successful transition to the leadership position of improving our Medicationenterprise risk management processes and Procedural Solutions unit in the second half of the year.
Mr. Polen received an award of 125% of his target award. The award reflects Mr. Polen’s successful transition into the President role, the strong performance of our Medical segment during the year, the implementation of significant strategic initiatives (including Project TraCEinclusion and advances in digital health), and steps he took to enhance BD’s organizational capabilities. The award also recognizes his significant role in forming the strategy that led to our agreement to acquire Barddiversity program, and in preparing BD fornavigating complex global litigation and regulatory issues faced by the integration of the two companies, including talent retention, culture and organizational design.company.
Equity compensation awards
2020 awards
The Compensation Committee made the equity compensation awards to the named executive officers shown in the Summary Compensation Table on page 42 in November 2017. Among the changes in equity compensation awards in 2017 was an2019. The increase in Mr. Polen’s total award reflects his anticipated appointment as CEO later in the fiscal year. Mr. Forlenza received no grant for the year, given his anticipated transition to the role of executive Chairman.
Impact of COVID-19 on Performance Unit payouts
In addition to our PIP factor for the year, the pandemic significantly impacted actual and projected Performance Unit payouts. Long-term equity compensation is a key part of our compensation program and motivates our senior executives in creating long-term shareholder value, which aligns their interests with those of BD’s shareholders.
The Compensation Committee considered the lost value to BD’s executives resulting from the substantially lower values of the 2018 award that vested in November 2020 at 45% of target and the in-flight Performance Unit awards granted in 2019, as well as the potentially significant lessening of the retentive and motivational value of the outstanding grants. As part of its review, it noted the disproportionate impact of the pandemic on BD’s business and shareholder returns relative to many peer companies and the resulting impact on Performance Unit values.
After reviewing alternative approaches with Pay Governance, the Compensation Committee addressed the pandemic’s impact through a special, one-time grant of SARs in fiscal 2021 to associates who received the 2018 or 2019 Performance Units, including Messrs. Reidy, Khichi and Mas. (Mr. Kaltenbach did not receive a 2021 equity award because of his announced departure from the company.) Even though Mr. Polen received the 2017 and 2018 Performance Unit grants, the Committee agreed with his decision to forego receipt of the additional one-time award.
Recognizing that the lower value of these awards was not solely related to COVID-19 and because the Compensation Committee did not want to fully protect associates from the impact of the pandemic, the value of the one-time SAR award was limited to 50% of the decline in the value of the 2018 and 2019 Performance Unit awards. The Compensation Committee made the supplemental grant in SARs because their value is tied directly to future BD share appreciation and management’s ability to create shareholder value going forward, further aligning the interests of management and BD shareholders. No changes were made to the performance targets of any in-flight Performance Unit awards.
The one-time, supplemental SAR awards are not reflected in the Summary Compensation Table since they occurred following the close of our 2020 fiscal year. The grant date value of these awards will be reflected in next year’s proxy statement.
Other payments
In accordance with the terms set with Mr. Kaltenbach upon his joining BD as President of our Life Sciences segment, Mr. Kaltenbach received a cash payment of $750,000 in 2020 to compensate him for the above-target payout he would have received under performance-based equity awards from his former employer had he not left to join BD.
In connection with his joining BD from Bard, Mr. Khichi waived his rights to certain payments under his change in control agreement with Bard in exchange for BD's agreement to make three cash payments of approximately $1.05 million each to Mr. Khichi, the last of which was made in
anticipation of his being named BD’s President later in the fiscal year.The Performance Units included in the awards to our named executive officers cover the 2017-2019 performance period, have a target average ROIC of 16.7% (with threshold performance at 12.7% and maximum performance of 21.7%), and use the formula discussed earlier on page 36 for calculating the relative TSR payout factor.
2020.
Other Benefits Under Our Executive Compensation Program
Our Restoration Plan is an unfunded, nonqualified plan that allows eligible associates to defer receipt of cash compensation and shares issuable under certain equity compensation awards on apre-tax basis in addition to what is allowed under ourtax-qualified 401(k) Plan. The Restoration Plan is offered as part of a competitive compensation program. We do not provide any guaranteed earnings on amounts deferred byunder the named executive officers,Restoration Plan, and earnings on these accounts are based on their individual investment elections. BD provides matching contributions on cash amounts deferred under the plan,Restoration Plan, subject to certain limits. Mr. Conroy is not eligibleThese matching contributions were temporarily suspended during 2020 as part of our response to participate in the Restoration Plan. A more complete description ofpandemic. Additional information regarding the deferred compensation provisions of the Restoration Plan beginsis on page 52.50.
We offer
retirementpension benefits
for all ofto our
eligible U.S.
BD associates. Because the Internal Revenue Code limits the maximum annual benefit that may be paid to an individual under our qualified Retirement Plan, we provide additional retirement benefits through our Restoration Plan.
Together, the Retirement Plan and Restoration Plan are designed to provide a market-competitive level of income replacement for our retirement-eligible associates and reduce associate turnover. The named executive officers (other than Mr. Conroy) participate in these plans on the same basis as all eligible associates. We do not include the value of equity compensation in calculating pension benefits. A more complete description of these pension benefits
and the French indemnity plan in which Mr. Conroy participates, begins on page
50.48.
Company transportation
Both Mr. Forlenza and Mr. Polen are encouraged to use BD aircraft for both personal and business travel to make more efficient use of their travel time, for personal security and to reduce business continuity risk. Messrs. Forlenza and Polen have entered into time-share agreements under which they make payments to BD for their personal use of BD aircraft. Additional information on the time-share agreements is set forth in the notes to the Summary Compensation Table on page 43.
Following the outbreak of the pandemic, the company decided that it did not want Messrs. Forlenza and Polen to fly commercially. A temporary policy was implemented that required them to fly on BD corporate aircraft for all business and personal travel. Because the executives were required to use the BD aircraft for personal travel, the Compensation Committee decided that it would not require reimbursement for flights during the pandemic under the time-share agreements.
The company has implemented a new policy, effective beginning in fiscal 2021, under which Mr. Forlenza and Mr. Polen are each permitted personal use of our corporate aircraft for up to $100,000 per year in aggregate incremental cost to the company. Any costs in excess of this limit will be reimbursed to the company through their time-share agreements. This new policy gives BD the flexibility to require Messrs. Forlenza and Polen to fly the corporate plane during the pandemic. At the same time, the limit on incremental costs protects against excessive use of the BD plane. The new policy is consistent with how a number of our peer companies address personal use of corporate aircraft.
Messrs. Forlenza and Polen are responsible for the payment of any tax on any income imputed to them from their personal use of corporate aircraft. BD does not provide any gross-up payments with respect to such taxes.
Change in control agreements
We have entered into agreements with the named executive officers relating to their employment following a change in control.control of BD. These agreements provide the executives with continued employment for a period of two years following a change in control, of BD, and provide certain benefits to the executives in the event their employment is terminated without “cause” or they leave their employment for “good reason” (also known as a constructive termination) during such period. Generally, these benefits include a severance payment equal to a multiple of the executive’s salary and PIP award, and certain other benefits. A more complete description of the terms and potential payouts of our change in control agreements begins on page 54.53.
General purpose. Our change in control agreements are intended to retain the executives and provide continuity of management in the event of an actual or potential change in control of BD. These change in control benefits are reviewed fromtime-to-time by the Compensation Committee to ensure that they are consistent with our compensation objectives and market practices. Based on information provided by Pay Governance, change in control arrangements are used by a substantial majority of the companies in the Comparison Group, and the terms of our agreements, including the severance multiple, are consistent with the prevailing practices at those companies. The Compensation Committee believes the benefits provided under these agreements are appropriate and consistent with our objective of attracting and retaining highly qualified executives.
Triggering events. Our agreements contain a “double-trigger”—that is, there must be a change in control of BD anda termination of the executive’s employment (either without cause by BD or for good reason by the executive) in order for any payments to be made. We opted for a double trigger, rather than a “single-trigger” that provides for severance payments solely on the basis of a change in control, since a double trigger is consistent with the purpose of encouraging the continued employment of the executive following a change in control.
Tax reimbursement payments.In certain instances, payments made to an executive upon termination may be subject to a 20% excise tax. Under the agreement with Mr. Forlenza, to offset the effect of this tax, we will reimburse him for any resulting excise tax. We provide for this payment because itThis allows him to recognize the full intended economic benefit of the agreement and eliminates unintended disparities between executives that the excise tax can arbitrarily impose, owing to the particular structure of this tax provision. However, while we believe tax reimbursement provisions serve a valid purpose, in light of trendsbased on what the Compensation Committee believes are best practices in executive compensation, practices, it has beenis our policy since 2011 that any new change in control agreements that we enter into with executive officers will not contain these provisions.Company transportation
The agreements with the other named executive officers, including Mr. Forlenza is encouraged to use BD aircraft for both personal and business travel in order to make more efficient use of his travel time, for personal security and to reduce business continuity risk. Mr. Forlenza has entered into a time-sharing arrangement under which he makes payments to BD for his personal use of BD aircraft. For 2017, Mr. Forlenza’s time-share payments exceeded BD’s incremental costs relating to his personal flights. Additional information on the time-sharing arrangement is set forth in the notes to the Summary Compensation Table on page 43.
Polen, do not contain tax reimbursement provisions. Other change in control provisions
The equity grants awarded in
20172020 include a double-trigger vesting provision upon a change in control. Under this provision, the awards will not automatically vest upon a change in control if the awards are either continued or replaced with similar awards. In those instances, the awards will automatically vest only if the executive is terminated without “cause” or terminates employment for “good reason” (as such terms are defined in the plan) within two years of the change in control.
Awards granted
to the named executive officers prior to January 1, 2015 immediately vest upon a change in control. Unlike the double-trigger discussed above, no termination of employment is required for the accelerated vesting of
thethese awards. We originally provided for single-trigger vesting
forof awards because we believed it provided our associates with the same opportunity as our shareholders to realize the value created by the transaction, but moved to a double-trigger to align BD’s plan with what the Compensation Committee believes are best practices in this area.
Significant Policies and Other Information Regarding Executive Compensation
We have a policy that gives the Board the discretion to require
a member of the BD Leadership Team (which includes the top senior leaders at BD, including the named executive
officers)officers, to reimburse BD for any PIP award or Performance Unit payout that was based on financial results that were subsequently restated as a result of that person’s misconduct. The Board also has the discretion to cancel any equity compensation awards (or recover payouts under such awards) that were granted to such person with respect to the restated period, and to require the person to reimburse BD for any profits realized on any sale of BD stock occurring after the public issuance of the financial statements that were subsequently restated.
The policy also gives the Board the authority to require members of the BD Leadership Teamexecutive officers and other senior leaders who were not involved in the misconduct to reimburse BD for the amount by which their PIP award or Performance Unit payouts exceeded the amount they would have received based on the restated results.
Under the policy, BD may also cancel outstanding equity awards and recover any shares received upon the exercise or vesting of such awards (or any gain realized on the sale of such shares) to the extent the individual breaches any restrictive covenants, such as non-compete and non-solicitation covenants, contained in the agreements for such awards.
Share retention and ownership guidelines
To increase executive share ownership and promote a long-term perspective when managing our business, our named executive officers and certain other members of the BD Leadership Teamsenior executives are required to retain in shares of BD stock, 75%50% of the netafter-tax proceeds shares received from any equity compensation awards granted to them after they become a member ofsubject to the BD Leadership Team. guidelines. They are subject to these requirementsthis requirement until they achieve and maintain the required ownership level. Thelevel set forth below. Previously, persons subject to the guidelines were required ownership levels are:to hold 75% of the net after-tax shares, but this was lowered after benchmarking the company’s practices against other companies.
| | | | | |
Chief Executive Officer; President Position | Multiple |
CEO | 5 times salary | |
Other Executive Officers | | | 3 times salary | |
Certain Other BD Leadership Team Members | | Senior Executives | 1 times salary | |
| | | | | | | | |
What counts as ownership | | What does not count as ownership | |
• Shares held directly | | | • UnvestedUnexercised SARs | |
• Shares held through 401(k) Plan, Restoration Plan and GSIP | | | • Unvested Performance Units | |
• TVUs | | TVUs and PTVUs | | |
Messrs. Forlenza, Polen, Reidy, Kaltenbach and Conroy and Dr. StrahlmanMas have holdings in excess ofthat exceed their ownership requirement. Mr. Polen has not yet attained his required ownership levels, as he was only appointed to the President position in April 2017.targets.
Pledging and hedging policy
We have a policy that prohibits
all of our
directorsassociates (including the named executive officers) and
associatesmembers of our Board from pledging
any BD shares or
other BD securities, or from engaging in options
(including exchange-traded options), puts, calls,
forward contracts or
any other transactions that are intended to hedge against
any decrease in the
economic riskmarket value of
owning BD
shares.shares or other BD securities granted to them as part of their compensation from BD or that are held directly or indirectly by them.
The Compensation Committee has adopted a policy that prohibits the backdating of any equity compensation award and requires our annual equity compensation awards and any
“off-cycle” “off-cycle” awards approved by our CEO to be made on fixed dates. The policy also prohibits manipulating the timing of either the public release of information or the grant of an award
in order to increase the value of an award. Under the policy, the exercise price of any stock option or SAR award will be the closing price of BD stock on the grant date.
Tax considerations
Section 162(m) of the Internal Revenue Code precludes BD from taking a federal income tax deduction for compensation paid in excess of $1 million to its CEO and its three other most highly-compensated executive officers (other than the Chief Financial Officer). For 2017, however, this limitation did not apply to “performance-based” compensation.
While the Compensation Committee
has generally
attemptsattempted to maximize the tax deductibility of executive compensation, the Compensation Committee believes that the primary purpose of our compensation program is to support BD’s business strategy and the long-term interests of our shareholders. Therefore, the Compensation Committee
maintainshas maintained the flexibility to award compensation that may not be
tax-deductible if doing so furthers the objectives of our executive compensation program.
This Compensation Discussion and Analysis section includes a discussion of performance targets in the limited context of our executive compensation program. These targets are not statements of management’s expectations of our future results or other guidance. Investors should not use or evaluate these targets in any other context or for any other purpose.
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table shows the compensation provided by BD to each of the named executive officers in fiscal year
2017.2020.
Fiscal Year 20172020 Summary Compensation Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | | Salary($) | | | Stock Awards ($)(1) | | | SAR Awards ($)(1) | | | Non-Equity Incentive Plan Compensation ($)(2) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | | | All Other Compensation ($)(4) | | | Total ($) | |
Vincent A. Forlenza | | | 2017 | | | | 1,153,750 | | | | 5,641,827 | | | | 3,794,598 | | | | 1,800,000 | | | | 631,381 | | | | 37,284 | | | | 13,058,840 | |
Chairman and Chief Executive | | | 2016 | | | | 1,105,000 | | | | 5,722,028 | | | | 4,572,671 | | | | 2,000,000 | | | | 485,787 | | | | 44,975 | | | | 13,930,461 | |
Officer | | | 2015 | | | | 1,045,000 | | | | 5,381,613 | | | | 3,576,512 | | | | 1,662,080 | | | | 0 | | | | 44,827 | | | | 11,710,032 | |
Christopher R. Reidy | | | 2017 | | | | 778,230 | | | | 1,642,074 | | | | 1,104,268 | | | | 950,000 | | | | 108,790 | | | | 41,000 | | | | 4,624,362 | |
Executive Vice President, | | | 2016 | | | | 746,568 | | | | 1,526,731 | | | | 1,219,994 | | | | 886,300 | | | | 96,148 | | | | 48,725 | | | | 4,524,466 | |
Chief Financial Officer and | | | 2015 | | | | 713,501 | | | | 1,361,651 | | | | 904,912 | | | | 712,788 | | | | 77,550 | | | | 48,725 | | | | 3,819,127 | |
Chief Administrative Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Alexandre Conroy(5) | | | 2017 | | | | 576,242 | | | | 940,531 | | | | 632,450 | | | | 583,466 | | | | 3,343 | | | | 237,087 | | | | 2,973,119 | |
President, Worldwide Medication | | | 2016 | | | | 530,334 | | | | 834,599 | | | | 666,858 | | | | 486,886 | | | | 17,498 | | | | 219,061 | | | | 2,755,236 | |
and Procedural Solutions | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Thomas E. Polen(6) | | | 2017 | | | | 761,417 | | | | 1,492,748 | | | | 1,003,887 | | | | 875,000 | | | | 83,660 | | | | 36,000 | | | | 4,252,712 | |
President | | | 2016 | | | | 651,000 | | | | 953,697 | | | | 762,112 | | | | 748,600 | | | | 101,723 | | | | 43,725 | | | | 3,260,857 | |
Ellen R. Strahlman, M.D. | | | 2017 | | | | 686,771 | | | | 1,044,937 | | | | 702,707 | | | | 603,256 | | | | 86,237 | | | | 36,000 | | | | 3,159,908 | |
Executive Vice President, | | | 2016 | | | | 664,427 | | | | 953,697 | | | | 762,112 | | | | 617,900 | | | | 82,929 | | | | 43,725 | | | | 3,124,790 | |
Research and Development and | | | 2015 | | | | 637,301 | | | | 972,660 | | | | 646,362 | | | | 585,508 | | | | 66,642 | | | | 43,725 | | | | 2,952,198 | |
Chief Medical Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Stock Awards and SAR Awards. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position (1) | | Year | | Salary($) | | Bonus ($) | | Stock Awards ($)(2) | | SAR Awards ($)(2) | | Non-Equity Incentive Plan Compensation ($)(3) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | | All Other Compensation ($)(5) | | Total ($) | Vincent A. Forlenza | | 2020 | | 1,085,000 | | | 0 | | 0 | | | 0 | | | 1,348,617 | | 700,508 | | | 75,257 | | 3,209,382 | | Chairman of the Board | | 2019 | | 1,275,000 | | | 0 | | 7,267,906 | | | 4,797,154 | | | 1,950,000 | | 690,010 | | | 34,563 | | 16,014,633 | | | | 2018 | | 1,191,250 | | | 0 | | 6,693,896 | | | 4,423,618 | | | 1,980,000 | | 646,672 | | | 38,045 | | 14,973,481 | | Thomas E. Polen | | 2020 | | 951,667 | | | 0 | | 5,636,380 | | | 3,749,864 | | | 1,092,572 | | 173,103 | | | 65,840 | | 11,669,426 | | President and Chief | | 2019 | | 900,000 | | | 0 | | 2,350,893 | | | 1,551,444 | | | 990,000 | | 200,284 | | | 37,350 | | 6,029,971 | | Executive Officer | | 2018 | | 849,750 | | | 0 | | 2,231,614 | | | 1,474,555 | | | 1,132,560 | | 102,975 | | | 37,675 | | 5,829,129 | | Christopher R. Reidy | | 2020 | | 775,948 | | | 0 | | 2,038,555 | | | 1,356,122 | | | 581,961 | | 126,766 | | | 39,017 | | 4,918,369 | | Executive Vice President, | | 2019 | | 853,874 | | | 0 | | 1,732,237 | | | 1,143,150 | | | 850,000 | | 124,919 | | | 38,530 | | 4,742,710 | | Chief Financial Officer and | | 2018 | | 818,200 | | | 0 | | 1,992,275 | | | 1,316,570 | | | 902,785 | | 121,039 | | | 28,575 | | 5,179,444 | | Chief Administrative Officer | | | | | | | | | | | | | | | | | | | Patrick K. Kaltenbach | | 2020 | | 636,025 | | | 750,000(6) | | 1,329,930 | | | 884,570 | | | 490,827 | | 0 | | | 70,673 | | 3,671,198 | | Executive Vice President, | | 2019 | | 664,625 | | | 750,000(6) | | 4,136,237 | | | 878,820 | | | 562,380 | | 0 | | | 53,383 | | 7,045,445 | | and President, Life | | 2018 | | 216,667 | | | 2,000,000(6) | | 1,664,189 | | | 1,123,227 | | | 205,685 | | 0 | | | 18,559 | | 5,228,327 | | Sciences Segment | | | | | | | | | | | | | | | | | | | Samrat S. Khichi | | 2020 | | 627,000 | | | 1,051,343(7) | | 926,683 | | | 616,450 | | | 455,400 | | 201,582 | | | 59,538 | | 3,482,596 | | Executive Vice President | | 2019 | | 631,000 | | | 1,051,343(7) | | 835,304 | | | 551,168 | | | 607,200 | | 215,330 | | | 60,601 | | 3,951,946 | | and General Counsel, Public | | 2018 | | 450,000 | | | 1,051,343(7) | | 1,047,147 | | | 692,864 | | | 371,250 | | 94,841 | | | 20,175 | | 3,727,620 | | Policy and Regulatory Affairs | | | | | | | | | | | | | | | | | | | Alberto Mas | | 2020 | | 665,380 | | | 0 | | 1,420,930 | | | 945,204 | | | 446,505 | | 198,325 | | | 40,739 | | 3,717,083 | | Executive Vice President | | 2019 | | 695,300 | | | 0 | | 1,422,672 | | | 939,029 | | | 588,336 | | 561,836 | | | 35,536 | | 4,242,709 | | and President, Medical | | | | | | | | | | | | | | | | | | | Segment | | | | | | | | | | | | | | | | | | |
(1) Mr. Forlenza retired as BD's CEO in January 2020, at which time Mr. Polen became BD's CEO. Although Mr. Khichi was not a named executive officer of BD for fiscal year 2019, the rules of the SEC require us to provide his compensation for that fiscal year. Compensation for fiscal year 2018 is not shown for Mr. Mas, because he was not a named executive officer of BD for that year. As previously announced, Mr. Kaltenbach will be leaving BD in January 2021. (2) Stock Awards and SAR Awards. The amounts shown in the “Stock Awards” column and “SAR Awards” column reflect the grant date fair value of the awards under FASB ASC Topic 718 (disregarding estimated forfeitures). For a description of the methodology and assumptions used to determine the amounts reflected in these columns, see Note 8 to the consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020. The amounts shown in the “Stock Awards” column (which includes Performance Units and TVUs) and “SAR Awards” column reflect the grant date fair value of the awards under FASB ASC Topic 718 (disregarding estimated forfeitures). For a description of the methodology and assumptions used to determine the amounts reflected in these columns, see Note 7 to the consolidated financial statements contained in our Annual Report on Form10-K for the fiscal year ended September 30, 2017. |
The amounts included in the “Stock Awards” column for thefiscal year 2020 include Performance Units awarded in 2017Unit and PTVU awards and reflect the grant date fair values of these awards (i) at target payout of the Performance Units and (ii) assuming satisfaction of the performance target of the PTVUs, which we believe isare the most probable outcomeoutcomes based on the applicable performance conditions. Below are the grant date fair values of thesethe Performance Unit awards, assuming a maximum payout of 200% of target:
| | | | | | | | |
Name | | Grant Date Fair Value at Target Payout | | | Grant Date Fair Value at Maximum Payout | |
Vincent A. Forlenza | | $ | 3,754,483 | | | $ | 7,508,966 | |
Christopher R. Reidy | | | 1,092,725 | | | | 2,185,450 | |
Alexandre Conroy | | | 625,864 | | | | 1,251,728 | |
Thomas E. Polen | | | 993,371 | | | | 1,986,741 | |
Ellen R. Strahlman | | | 695,307 | | | | 1,390,614 | |
(2) | | | | | | | | | | | | | | | | Name | Fair value at target payout ($) | | Fair value at maximum payout ($) | Vincent A. Forlenza | 0 | | | | 0 | Thomas E. Polen | 3,771,684 | | | | 7,543,368 | Christopher R. Reidy | 1,364,216 | | | | 2,728,431 | Patrick K. Kaltenbach | 889,876 | | | | 1,779,753 | Samrat S. Khichi | 620,120 | | | | 1,240,241 | Alberto Mas | 950,884 | | | | 1,901,768 |
(3) Non-Equity Incentive Plan Compensation. Includes amounts earned under BD’s PIP. These amounts are paid in January following the fiscal year in which they are earned, unless deferred at the election of the named executive officer.
(4) Change in Pension Value and Nonqualified Deferred Compensation Earnings. PensionNon-Equity Incentive Plan Compensation. Includes amounts earned under BD’s PIP. These amounts are paid in January following the fiscal year in which they are earned, unless deferred at the election of the named executive officer. |
(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings. |
Pension—Amounts shown are the aggregate changes in the actuarial present value of accumulated benefits under our defined benefit pension plans (including our nonqualified Restoration Plan). These amounts represent the difference between the present value of accumulated pension benefits (determined as of the first date on which the executives areexecutive is eligible to retire and commence unreduced benefit payments) at the beginning and end of the fiscal years shown. A decreaseMr. Kaltenbach does not participate in present value is shown as “0”. InformationBD's defined benefit pension plans, which were closed to new participants effective January 1, 2018. Additional information regarding the pension benefits of our retirement plansnamed executive officers begins on page 50.
48.
Deferred Compensation—Earnings on nonqualified deferred compensation are not included in this column, because no named executive officer earned above-market or preferential earnings (as defined in the rules of the SEC) on nonqualified deferred compensation during the fiscal years shown. Information on the named executive officers’ nonqualified deferred compensation accounts is on page 53.(4) | All Other Compensation. Amounts shown for fiscal year 2017 include the following: |
| | | | | | | | | | | | | | | | | | | | |
| | Vincent A. Forlenza | | | Christopher R. Reidy | | | Alexandre Conroy | | | Thomas E. Polen | | | Ellen R. Strahlman | |
Matching contributions under plans | | $ | 36,000 | | | $ | 36,000 | | | $ | 6,670 | | | $ | 36,000 | | | $ | 36,000 | |
Matching charitable gifts | | | — | | | | 5,000 | | | | — | | | | — | | | | — | |
Term life insurance | | | 1,284 | | | | — | | | | — | | | | — | | | | — | |
Relocation assistance | | | — | | | | — | | | | 230,417 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 37,284 | | | $ | 41,000 | | | $ | 237,087 | | | $ | 36,000 | | | $ | 36,000 | |
51.
(5) All Other Compensation. Amounts shown for fiscal year 2020 include the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Vincent A. Forlenza | Thomas E. Polen | Christopher R. Reidy | Patrick K. Kaltenbach | Samrat S. Khichi | | Alberto Mas |
Matching contributions under plans | $34,338 | | $37,800 | | $34,017 | | $52,883 | | | $59,538 | | $40,739 | |
Matching charitable gifts | 5,000 | | | — | | | 5,000 | | | — | | | | — | | | — | | |
Term life insurance | 1,529 | | | — | | | — | | | — | | | | — | | | — | | |
Corporate aircraft | 34,390 | | | 28,040 | | | — | | | — | | | | — | | | — | | |
Relocation assistance | — | | | — | | | — | | | 17,790 | | | — | | | — | | |
Total | $75,257 | | $65,840 | | $39,017 | | $70,673 | | | $59,538 | | $40,739 | |
The following is a description of these benefits:
| • | | •Matching contributions under plans—The amounts shown reflect BD matching contributions credited pursuant to defined contribution plans. •Matching charitable gifts—The amounts shown are matching contributions made (or committed to be made) through matching gift programs, under which BD matches charitable contributions under plans—The amounts shown reflect matching contributions made by BD pursuant to our 401(k) Plan, the GSIP and the Restoration Plan, as applicable. |
| • | | Matching charitable gifts—The amounts shown are matching contributions made (or committed to be made) by BD through our Matching Gift Program, under which BD matches up to $5,000 of contributions per calendar year made to qualifying non-profit organizations, subject to a $5,000 per calendar year limit.•Term life insurance—BD provides incremental term life insurance benefits to Mr. Forlenza beyond those provided to BD associates generally. The amounts shown reflect the dollar value of the insurance premiums paid by BD for this incremental insurance. •non-profit organizations. |
| • | | Term life insurance—BD provides incremental term life insurance benefits to Mr. Forlenza beyond those provided to BD associates generally. The amounts shown reflect the dollar value of the insurance premiums paid by BD for this incremental insurance. |
| • | | Relocation assistance—Mr. Conroy relocated to New Jersey from France during 2016. In connection with his relocation, BD provided the following benefits to Mr. Conroy in 2017: |
| | | | |
Cost of living allowance | | $ | 46,371 | |
Housing allowance | | | 87,408 | |
Utilities allowance | | | 1,250 | |
Courier and Wire reimbursement | | | 360 | |
Home allowance | | | 23,811 | |
Automobile allowance | | | 14,217 | |
State tax reimbursement | | | 40,000 | |
Federal tax reimbursement | | | 17,000 | |
| | | | |
Total | | $ | 230,417 | |
Corporate aircraft. Pursuant to a policy adopted by the Board of Directors, Mr. Forlenza isand Mr. Polen are encouraged to use BD aircraft for personal and business travel. The value of histheir personal use of BD aircraft is measured by the incremental variable costs incurred by BD in connection with histheir personal flights that are not reimbursed by him.them. These variable costs include fuel, trip-related maintenance, crew travel expenses,on-board catering, and landing and parking fees. If the aircraft flies empty before picking up or after dropping off Mr. Forlenza or Mr. Polen at a destination on a personal flight, the cost of the empty flight is included in the incremental cost. Since BD aircraft are used predominantly for business purposes, we do not include fixed costs that do not change in amount based on usage, such as depreciation and pilot salaries.
Mr. Forlenza hasand Mr. Polen have each entered into a time-sharingtime-share arrangement under which he makes time-sharethey make payments to BD for thetheir personal use of BD aircraft. The payments are formay not exceed the maximum amount permitted by Federal Aviation Administration regulations without subjecting BD to regulation as a charter carrier. The amounts shown in the Summary Compensation Table reflect the incremental variable costs related to personal flights that were not covered by reimbursements under the time-share arrangements. BD does not provide any gross-up payments to either Mr. Forlenza is responsible for the paymentor Mr. Polen with respect to any taxes either of any taxthem owe on any imputed income imputed to him as a result of hisresulting from their personal use of corporate aircraft. For 2017,
•Relocation Assistance—BD provided Mr. Forlenza’s time-share payments exceeded BD’s incremental costs relatingKaltenbach with mortgage subsidy assistance of $13,070 and tax assistance of $4,720 in connection with his hire.
(6) Represents amounts paid to Mr. Kaltenbach pursuant to his personal flights. Accordingly, no value is shown forsign-on arrangements.
(7) Represents amounts paid to Mr. Khichi pursuant to his
personal flights in the Summary Compensation Table.(5) | Compensation for fiscal year 2015 is not shown for Mr. Conroy because he was not a named executive officer in fiscal year 2015. Mr. Conroy is a French citizen and relocated from France to BD headquarters in New Jersey, effective April 1, 2016. The Euro-denominated compensation paid to Mr. Conroy during the fiscal year has been converted to U.S. Dollars for purposes of this and the other tables in this proxy statement using the exchange rate in effect on September 30, 2017. |
(6) | Compensation for fiscal year 2015 is not shown for Mr. Polen because he was not a named executive officer in fiscal year 2015. |
sign-on arrangements.
Information Regarding Plan Awards in Fiscal Year 20172020
Set forth below is information regarding awards granted to the named executive officers in fiscal year
2017.2020. The
non-equity incentive plan awards were made under the PIP. The equity compensation awards were made under
BD’sour 2004 Plan.
Grants of Plan-Based Awards in Fiscal Year 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards(2) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | All Other SAR Awards: Number of Securities Underlying SARs (#) | | | Exercise or Base Price of SAR Awards ($/Sh)(4) | | | Grant Date Fair Value of Stock and SAR Awards($)(5) | |
Name | | Award Type(1) | | Grant Date | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | | | | |
Vincent A. Forlenza | | PIP | | N/A | | | 978,600 | | | | 1,631,000 | | | | 3,262,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | PU | | 11/26/16 | | | | | | | | | | | | | | | 9,122 | | | | 21,464 | | | | 42,928 | | | | | | | | | | | | | | | | 3,754,483 | |
| | TVU | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,444 | | | | | | | | | | | | 1,887,344 | |
| | SAR | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 112,233 | | | | 170.69 | | | | 3,794,598 | |
Christopher R. Reidy | | PIP | | N/A | | | 400,751 | | | | 667,918 | | | | 1,335,836 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | PU | | 11/26/16 | | | | | | | | | | | | | | | 2,655 | | | | 6,247 | | | | 12,494 | | | | | | | | | | | | | | | | 1,092,725 | |
| | TVU | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,331 | | | | | | | | | | | | 549,349 | |
| | SAR | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 32,661 | | | | 170.69 | | | | 1,104,268 | |
Alexandre Conroy | | PIP | | N/A | | | 276,513 | | | | 460,855 | | | | 921,710 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | PU | | 11/26/16 | | | | | | | | | | | | | | | 1,521 | | | | 3,578 | | | | 7,156 | | | | | | | | | | | | | | | | 625,864 | |
| | TVU | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,908 | | | | | | | | | | | | 314,667 | |
| | SAR | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 18,706 | | | | 170.69 | | | | 632,450 | |
Thomas E. Polen | | PIP | | N/A | | | 420,750 | | | | 701,250 | | | | 1,402,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | PU | | 11/26/16 | | | | | | | | | | | | | | | 2,414 | | | | 5,679 | | | | 11,358 | | | | | | | | | | | | | | | | 993,371 | |
| | TVU | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,028 | | | | | | | | | | | | 499,378 | |
| | SAR | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 29,692 | | | | 170.69 | | | | 1,003,887 | |
Ellen R. Strahlman | | PIP | | N/A | | | 332,068 | | | | 553,446 | | | | 1,106,892 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | PU | | 11/26/16 | | | | | | | | | | | | | | | 1,689 | | | | 3,975 | | | | 7,950 | | | | | | | | | | | | | | | | 695,307 | |
| | TVU | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,120 | | | | | | | | | | | | 349,630 | |
| | SAR | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 20,784 | | | | 170.69 | | | | 702,707 | |
2020
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (2) | | Estimated Future Payouts Under Equity Incentive Plan Awards (3) | | All Other SAR Awards: Number of Securities Underlying SARs (#) | | Exercise or Base Price of SAR Awards ($/Sh)(4) | | Grant Date Fair Value of Stock and SAR Awards($)(5) |
Name | Award Type(1) | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | | |
Vincent A. Forlenza | PIP | | N/A | | 1,078,894 | | | 1,798,156 | | | 3,596,312 | | | | | | | | | | | | | |
Thomas E. Polen | PIP | | N/A | | 874,057 | | | 1,456,762 | | | 2,913,524 | | | | | | | | | | | | | |
| PU | | 11/26/19 | | | | | | | | 6,542 | | | 15,394 | | | 30,788 | | | | | | 3,771,684 | |
| PTVU | | 11/26/19 | | | | | | | | N/A | | 7,585 | | | N/A | | | | | | 1,864,696 | |
| SAR | | 11/26/19 | | | | | | | | | | | | | | 76,810 | | 255.22 | | 3,749,864 | |
Christopher R. Reidy | PIP | | N/A | | 465,569 | | | 775,948 | | | 1,551,896 | | | | | | | | | | | | | |
| PU | | 11/26/19 | | | | | | | | 2,366 | | | 5,568 | | | 11,136 | | | | | | 1,364,216 | |
| PTVU | | 11/26/19 | | | | | | | | N/A | | 2,743 | | | N/A | | | | | | 674,339 | |
| SAR | | 11/26/19 | | | | | | | | | | | | | | 27,778 | | 255.22 | | 1,356,122 | |
Patrick K. Kaltenbach | PIP | | N/A | | 341,445 | | | 569,075 | | | 1,138,150 | | | | | | | | | | | | | |
| PU | | 11/26/19 | | | | | | | | 1,544 | | | 3,632 | | | 7,264 | | | | | | 889,876 | |
| PTVU | | 11/26/19 | | | | | | | | N/A | | 1,790 | | | N/A | | | | | | 440,054 | |
| SAR | | 11/26/19 | | | | | | | | | | | | | | 18,119 | | 255.22 | | 884,570 | |
Samrat S. Khichi | PIP | | N/A | | 316,800 | | | 528,000 | | | 1,056,000 | | | | | | | | | | | | | |
| PU | | 11/26/19 | | | | | | | | 1,076 | | | 2,531 | | | 5,062 | | | | | | 620,120 | |
| PTVU | | 11/26/19 | | | | | | | | N/A | | 1,247 | | | N/A | | | | | | 306,562 | |
| SAR | | 11/26/19 | | | | | | | | | | | | | | 12,627 | | 255.22 | | 616,450 | |
Alberto Mas | PIP | | N/A | | 357,204 | | | 595,340 | | | 1,190,680 | | | | | | | | | | | | | |
| PU | | 11/26/19 | | | | | | | | 1,649 | | | 3,881 | | | 7,762 | | | | | | 950,884 | |
| PTVU | | 11/26/19 | | | | | | | | N/A | | 1,912 | | | N/A | | | | | | 470,046 | |
| SAR | | 11/26/19 | | | | | | | | | | | | | | 19,361 | | 255.22 | | 945,204 | |
| | | | | | | | | | | | | | | | | | | | | |
(1) Award Type:
PIP = Performance Incentive Plan
PTVU =
Performance Time-Vested Unit
SAR = Stock Appreciation Right
(2) | The amounts shown represent the range of possible dollar payouts that a named executive officer could earn under the PIP for fiscal year 2017, based on certain assumptions. Actual payments to the named executive officers under the PIP are reflected in the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 42. The amount in the “Threshold” column assumes BD achieved the minimum performance levels for each performance measure, resulting in available funding for awards at 60% of target, and that the named executive officer received a payment equal to 60% of his or her award target. The “Maximum” column reflects an award at 200% of target, the maximum award an individual may receive under the PIP. |
(3) | The amounts shown represent the range of potential share payouts under Performance Unit awards. The amount in the “Threshold” column shows the number of shares that will be paid out assuming BD achieves the minimum performance level for each performance measure under the award. |
(4) | The exercise price is the closing price of BD common stock on the date of grant, as reported on the NYSE. |
(5) | The amounts shown in this column reflect the grant date fair value of the awards under FASB ASC Topic 718 used by BD for financial statement reporting purposes (disregarding estimated forfeitures). For a discussion of the assumptions made to determine the grant date fair value of these awards, see Note 7 to the consolidated financial statements that are included in our Annual Report on Form10-K for the fiscal year ended September 30, 2017. |
(2) The amounts shown represent the range of possible payouts that the named executive officer could have earned under the PIP for fiscal year 2020, based on certain assumptions. Actual payments to the named executive officers under the PIP are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 42. The amount in the “Threshold” column assumes BD achieved the minimum threshold performance levels for each performance measure, resulting in available funding for awards at 60% of target, and that the named executive officer received a payment equal to 60% of his award target.
(3) The amounts shown represent (i) the range of potential share payouts under Performance Unit awards and (ii) the potential share payout under PTVU awards. For the Performance Unit awards, the amount in the “Threshold” column shows the number of shares that will be paid out assuming BD achieves the minimum performance level for each performance measure under the awards.
(4) The exercise price is the closing price of BD common stock on the date of grant, as reported on the NYSE.
(5) The amounts shown reflect the grant date fair value of the awards under FASB ASC Topic 718 used by BD for financial statement reporting purposes (disregarding estimated forfeitures). For a discussion of the assumptions made to determine the grant date fair value of these awards, see Note 8 to the consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020.
The PIP provides an opportunity for eligible associates to receive annual cash incentive
payments.payments based on BD and individual performance. A more detailed discussion of the PIP and the performance targets established under the PIP for fiscal year
20172020 appears in the Compensation Discussion and Analysis section of this proxy statement.
Equity compensation awards
Performance Units. Performance Units are performance-based restricted stock units that vest three years after grant. The potential payouts under these awards range from zero to 200% of target. The actual payout will be based on BD’s performance against the performance targets set for these awards over the three-year performance period covering fiscal years 2017-2019.2020-2022. A more detailed discussion of the performance measures used for these performance targetsawards appears in the Compensation Discussion and Analysis section of this proxy statement. Performance Units are not transferable, and holders may not vote any shares underlying the award until the shares have been distributed. Dividends do not accrue on these awards.TVUs
PTVUs. TVUsPTVUs are restricted stock units that represent the right to receive one shareshares of BD common stock per unit upon vesting. TVUsPTVU awards vest in three annual installments, beginning one yearyears from the grant date. TVUsdate subject to meeting the EPS performance target of the awards. PTVUs are not transferable, and holders may not vote any shares underlying the award until the shares have been distributed. Dividends do not accrue on these awards.
SARs. A SAR represents the right to receive, upon exercise, shares of BD common stock equal in value to the difference between the BD common stock price at the time of exercise and the exercise price.price of the award. SARs are not transferable. SARs have aten-year term, and become exercisable in four equal annual installments, beginning one year from the grant date.
Change in control. The Performance Units, TVUsPTVUs and SARs listed in the above table fully vest, under certain circumstances, following a change in control or in the event of a termination of employment following a change in control under certain circumstances.control. See “Accelerated vesting of equity compensation awards upon a change in control” on page 55.54.
Outstanding Equity Awards
The following table sets forth the outstanding equity awards held by the named executive officers at the end of fiscal year
2017.2020.
Outstanding Equity Awards at 20172020 Fiscal Year-End
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Grant Date | | Number of Securities Underlying Unexercised SARs (#) Exercisable (1) | | Number of Securities Underlying Unexercised SARs (#) Unexercisable (1) | | SAR Exercise Price ($) | | SAR Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#)(2) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) |
Vincent A. Forlenza | | 11/20/2012 | | 202,758 | | 0 | | 76.18 | | 11/20/2022 | | | | | | | | |
| | 11/26/2013 | | 158,479 | | 0 | | 108.89 | | 11/26/2023 | | | | | | | | |
| | 11/25/2014 | | 144,098 | | 0 | | 134.73 | | 11/25/2024 | | | | | | | | |
| | 11/26/2015 | | 165,138 | | 0 | | 150.12 | | 11/26/2025 | | | | | | | | |
| | 11/26/2016 | | 84,174 | | 28,059 | | 170.69 | | 11/26/2026 | | | | | | | | |
| | 11/26/2017 | | 47,978 | | 47,979 | | 226.28 | | 11/26/2027 | | | | | | | | |
| | 11/26/2018 | | 23,125 | | 69,377 | | 242.10 | | 11/26/2028 | | | | | | | | |
| | Various | | | | | | | | | | 48,252 | | | 11,227,275 | | | 20,501 | | | 4,770,173 | |
Thomas E. Polen | | 11/26/2015 | | 3,763 | | 0 | | 150.12 | | 11/26/2025 | | | | | | | | |
| | 11/26/2016 | | 22,269 | | 7,423 | | 170.69 | | 11/26/2026 | | | | | | | | |
| | 11/26/2017 | | 15,992 | | 15,964 | | 226.28 | | 11/26/2027 | | | | | | | | |
| | 11/26/2018 | | 7,479 | | 22,437 | | 242.10 | | 11/26/2028 | | | | | | | | |
| | 11/26/2019 | | 0 | | 76,810 | | 255.22 | | 11/26/2029 | | | | | | | | |
| | Various | | | | | | | | | | 5,962 | | | 1,387,238 | | | 22,025 | | | 5,124,777 | |
Christopher R. Reidy | | 11/26/2013 | | 42,261 | | 0 | | 108.89 | | 11/26/2023 | | | | | | | | |
| | 11/25/2014 | | 36,459 | | 0 | | 134.73 | | 11/25/2024 | | | | | | | | |
| | 11/26/2015 | | 44,059 | | 0 | | 150.12 | | 11/26/2025 | | | | | | | | |
| | 11/26/2016 | | 24,495 | | 8,166 | | 170.69 | | 11/26/2026 | | | | | | | | |
| | 11/26/2017 | | 14,278 | | 14,281 | | 226.28 | | 11/26/2027 | | | | | | | | |
| | 11/26/2018 | | 5,510 | | 16,533 | | 242.10 | | 11/26/2028 | | | | | | | | |
| | 11/26/2019 | | 0 | | 27,778 | | 255.22 | | 11/26/2029 | | | | | | | | |
| | Various | | | | | | | | | | 4,980 | | | 1,158,746 | | | 10,454 | | | 2,432,437 | |
Patrick K. Kaltenbach | | 6/1/2018 | | 5,730 | | 11,463 | | 224.94 | | 6/1/2028 | | | | | | | | |
| | 11/26/2018 | | 0 | | 12,710 | | 242.10 | | 11/26/2028 | | | | | | | | |
| | 11/26/2019 | | 0 | | 18,119 | | 255.22 | | 11/26/2029 | | | | | | | | |
| | Various | | | | | | | | | | 10,340 | | | 2,405,911 | | | 12,220 | | | 2,843,350 | |
Samrat S. Khichi | | 07/16/2014 | | 14,093 | | 0 | | 95.03 | | 07/16/2024 | | | | | | | | |
| | 12/10/2014 | | 12,286 | | 0 | | 110.04 | | 12/10/2024 | | | | | | | | |
| | 12/09/2015 | | 14,822 | | 0 | | 121.49 | | 12/09/2025 | | | | | | | | |
| | 12/14/2016 | | 12,505 | | 0 | | 143.07 | | 12/14/2026 | | | | | | | | |
| | 01/02/2018 | | 7,794 | | 7,797 | | 217.84 | | 01/02/2028 | | | | | | | | |
| | 11/26/2018 | | 2,657 | | 7,971 | | 242.10 | | 11/26/2028 | | | | | | | | |
| | 11/26/2019 | | 0 | | 12,627 | | 255.22 | | 11/26/2029 | | | | | | | | |
| | Various | | | | | | | | | | 1,322 | | | 307,603 | | | 7,764 | | | 1,806,528 | |
Alberto Mas | | 11/26/2015 | | 14,312 | | 0 | | 150.12 | | 11/26/2025 | | | | | | | | |
| | 11/26/2016 | | 7,572 | | 2,524 | | 170.69 | | 11/26/2026 | | | | | | | | |
| | 11/26/2017 | | 5,712 | | 5,712 | | 226.28 | | 11/26/2027 | | | | | | | | |
| | 11/26/2018 | | 4,526 | | 13,581 | | 242.10 | | 11/26/2028 | | | | | | | | |
| | 11/26/2019 | | 0 | | 19,361 | | 255.22 | | 11/26/2029 | | | | | | | | |
| | Various | | | | | | | | | | 2,673 | | | 621,954 | | | 7,894 | | | 1,836,776 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Grant Date | | | Number of Securities Underlying Unexercised SARs (#) Exercisable (1) | | | Number of Securities Underlying Unexercised SARs (#) Unexercisable (1) | | | SAR Exercise Price ($/Sh) | | | SAR Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#)(2) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | |
Vincent A. Forlenza | | | 11/24/2009 | | | | 24,742 | | | | 0 | | | $ | 75.63 | | | | 11/24/2019 | | | | | | | | | | | | | | | | | |
| | | 11/23/2010 | | | | 85,372 | | | | 0 | | | $ | 76.64 | | | | 11/23/2020 | | | | | | | | | | | | | | | | | |
| | | 11/22/2011 | | | | 181,794 | | | | 0 | | | $ | 72.12 | | | | 11/22/2021 | | | | | | | | | | | | | | | | | |
| | | 11/20/2012 | | | | 202,758 | | | | 0 | | | $ | 76.18 | | | | 11/20/2022 | | | | | | | | | | | | | | | | | |
| | | 11/26/2013 | | | | 118,857 | | | | 39,622 | | | $ | 108.89 | | | | 11/26/2023 | | | | | | | | | | | | | | | | | |
| | | 11/25/2014 | | | | 72,048 | | | | 72,050 | | | $ | 134.73 | | | | 11/25/2024 | | | | | | | | | | | | | | | | | |
| | | 11/26/2015 | | | | 41,284 | | | | 123,854 | | | $ | 150.12 | | | | 11/26/2025 | | | | | | | | | | | | | | | | | |
| | | 11/26/2016 | | | | 0 | | | | 112,233 | | | $ | 170.69 | | | | 11/26/2026 | | | | | | | | | | | | | | | | | |
| | | Various | | | | | | | | | | | | | | | | | | | | 96,439 | | | | 18,358,069 | | | | 93,290 | | | | 18,280,176 | |
Christopher R. Reidy | | | 11/26/2013 | | | | 31,695 | | | | 10,566 | | | $ | 108.89 | | | | 11/26/2023 | | | | | | | | | | | | | | | | | |
| | | 11/25/2014 | | | | 18,228 | | | | 18,231 | | | $ | 134.73 | | | | 11/25/2024 | | | | | | | | | | | | | | | | | |
| | | 11/26/2015 | | | | 11,014 | | | | 33,045 | | | $ | 150.12 | | | | 11/26/2025 | | | | | | | | | | | | | | | | | |
| | | 11/26/2016 | | | | 0 | | | | 32,661 | | | $ | 170.69 | | | | 11/26/2026 | | | | | | | | | | | | | | | | | |
| | | Various | | | | | | | | | | | | | | | | | | | | 17,509 | | | | 3,294,462 | | | | 25,932 | | | | 5,081,375 | |
Alexandre Conroy | | | 11/23/2010 | | | | 9,147 | | | | 0 | | | $ | 76.64 | | | | 11/23/2020 | | | | | | | | | | | | | | | | | |
| | | 11/22/2011 | | | | 11,763 | | | | 0 | | | $ | 72.12 | | | | 11/22/2021 | | | | | | | | | | | | | | | | | |
| | | 11/20/2012 | | | | 32,441 | | | | 0 | | | $ | 76.18 | | | | 11/20/2022 | | | | | | | | | | | | | | | | | |
| | | 11/26/2013 | | | | 16,641 | | | | 5,547 | | | $ | 108.89 | | | | 11/26/2023 | | | | | | | | | | | | | | | | | |
| | | 11/25/2014 | | | | 11,392 | | | | 11,395 | | | $ | 134.73 | | | | 11/25/2024 | | | | | | | | | | | | | | | | | |
| | | 11/26/2015 | | | | 6,020 | | | | 18,063 | | | $ | 150.12 | | | | 11/26/2025 | | | | | | | | | | | | | | | | | |
| | | 11/26/2016 | | | | 0 | | | | 18,706 | | | $ | 170.69 | | | | 11/26/2026 | | | | | | | | | | | | | | | | | |
| | | Various | | | | | | | | | | | | | | | | | | | | 10,592 | | | | 1,990,234 | | | | 14,502 | | | | 2,841,667 | |
Thomas E. Polen | | | 11/26/2013 | | | | 0 | | | | 2,775 | | | $ | 108.89 | | | | 11/26/2023 | | | | | | | | | | | | | | | | | |
| | | 11/25/2014 | | | | 7,812 | | | | 7,813 | | | $ | 134.73 | | | | 11/25/2024 | | | | | | | | | | | | | | | | | |
| | | 11/26/2015 | | | | 6,880 | | | | 20,643 | | | $ | 150.12 | | | | 11/26/2025 | | | | | | | | | | | | | | | | | |
| | | 11/26/2016 | | | | 0 | | | | 29,692 | | | $ | 170.69 | | | | 11/26/2026 | | | | | | | | | | | | | | | | | |
| | | Various | | | | | | | | | | | | | | | | | | | | 9,552 | | | | 1,813,225 | | | | 19,752 | | | | 3,870,404 | |
Ellen R. Strahlman | | | 11/26/2013 | | | | 0 | | | | 6,869 | | | $ | 108.89 | | | | 11/26/2023 | | | | | | | | | | | | | | | | | |
| | | 11/25/2014 | | | | 13,020 | | | | 13,022 | | | $ | 134.73 | | | | 11/25/2024 | | | | | | | | | | | | | | | | | |
| | | 11/26/2015 | | | | 6,880 | | | | 20,643 | | | $ | 150.12 | | | | 11/26/2025 | | | | | | | | | | | | | | | | | |
| | | 11/26/2016 | | | | 0 | | | | 20,784 | | | $ | 170.69 | | | | 11/26/2026 | | | | | | | | | | | | | | | | | |
| | | Various | | | | | | | | | | | | | | | | | | | | 12,045 | | | | 2,262,768 | | | | 16,344 | | | | 3,202,607 | |
(1) | (1) SARs become exercisable in four equal annual installments, beginning one year following the date of grant. |
Set forth below is the value of the exercisable SARs held by named executive officers at the end of fiscal year 2017.2020. The value represents the difference between $195.95,$232.68, the closing price of BD common stock on September 30, 2017,2020, and the exercise price of each exercisable SAR held by the named executive officer. These values may not reflect the value actually realized by the named executive officers upon exercise.
| | | | |
Name | | Value of Vested SARs | |
Vincent A. Forlenza | | $ | 76,609,082 | |
Christopher R. Reidy | | | 4,380,056 | |
Alexandre Conroy | | | 8,855,480 | |
Thomas E. Polen | | | 793,561 | |
Ellen R. Strahlman | | | 1,112,395 | |
(2) | The amounts shown in this column include grants of restricted stock unit awards that are not performance-based. These include, for each named executive officer, TVUs granted on November 25, 2014, which vest three years after grant, and on November 26, 2015 and November 26, 2016, which vest in three annual installments beginning one year after grant. The amount shown for Mr. Forlenza also includes awards that vest at, or one year following, retirement. Also included in this column are shares payable under Performance Units granted on November 25, 2014, which cover the fiscal year 2015-2017 performance period and vested on November 25, 2017. |
(3) | Market value has been calculated by multiplying the number of unvested units by $195.95, the closing price of BD common stock on September 30, 2017. These values may not reflect the value ultimately realized by the named executive officers. |
(4) | The amounts in this column represent the Performance Unit awards shown below at maximum payout. The actual number of shares issued under these awards will be based on BD’s performance over the applicable performance period. |
| | | | | | | | | | | | |
For Mr. Forlenza:Name | Value of vested SARs ($) |
Vincent A. Forlenza | 84,622,940 | | |
Grant Date Thomas E. Polen | | Number of Shares Issuable | | | Performance Period | | | Vesting Date | |
11/26/2015 | | | 50,362 | | | | Fiscal years 2016-2018 | | | | 11/26/2018 | |
11/26/2016 | | | 42,928 | | | | Fiscal years 2017-2019 | | | | 11/26/2019 | |
|
For Mr. Reidy: | |
| 1,793,477 | | |
Grant Date Christopher R. Reidy | | Number of Shares Issuable | | | Performance Period | | | Vesting Date | |
11/26/2015 | | | 13,438 | | | | Fiscal years 2016-2018 | | | | 11/26/2018 | |
11/26/2016 | | | 12,494 | | | | Fiscal years 2017-2019 | | | | 11/26/2019 | |
|
For Mr. Conroy: | |
| 14,049,984 | | |
Grant Date Patrick K. Kaltenbach | | Number of Shares Issuable | | | Performance Period | | | Vesting Date | |
11/26/2015 | | | 7,346 | | | | Fiscal years 2016-2018 | | | | 11/26/2018 | |
11/26/2016 | | | 7,156 | | | | Fiscal years 2017-2019 | | | | 11/26/2019 | |
|
For Mr. Polen: | |
| 44,350 | | |
Grant Date Samrat S. Khichi | | Number of Shares Issuable | | | Performance Period | | | Vesting Date | |
11/26/2015 | | | 8,394 | | | | Fiscal years 2016-2018 | | | | 11/26/2018 | |
11/26/2016 | | | 11,358 | | | | Fiscal years 2017-2019 | | | | 11/26/2019 | |
|
For Dr. Strahlman: | |
| 6,330,951 | | |
Grant Date Alberto Mas | 1,687,544 | Number of Shares Issuable | | | Performance Period | | | Vesting Date | |
11/26/2015 | | | 8,394 | | | | Fiscal years 2016-2018 | | | | 11/26/2018 | |
11/26/2016 | | | 7,950 | | | | Fiscal years 2017-2019 | | | | 11/26/2019 | |
(2) The amounts shown include grants of restricted stock unit awards that are not performance-based. These include TVUs granted on November 26, 2017 and November 26, 2018, which vest in three annual installments beginning one year after grant. The amount shown for Mr. Forlenza also includes certain other awards that vest one year following retirement. Also included in this column for Messrs. Forlenza, Polen, Reidy and Mas are shares payable under Performance Units granted on November 26, 2017, which cover the fiscal year 2018-2020 performance period and vested on November 26, 2020.
(3) Market value has been calculated by multiplying the number of unvested units by $232.68, the closing price of BD common stock on September 30, 2020.
(4) The amounts shown include (other than for Mr. Forlenza) PTVUs granted on November 26, 2019 that vest on November 26, 2022. The amounts also include Performance Unit awards at target payout granted on November 26, 2018 and (other than to Mr. Forlenza) November 26, 2019 that vest three years from grant.
SAR Exercises and Vesting of Stock Units
The following table contains information relating to the exercise of SARs, and the vesting of TVUs and Performance Units, during fiscal year
2017.2020.
SAR Exercises and Stock Vested in Fiscal Year
2017 | | | | | | | | | | | | | | | | |
| | SAR Awards | | | Stock Awards | |
Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($)(1) | | | Number of Shares Acquired on Vesting (#)(2) | | | Value Realized on Vesting ($)(3) | |
Vincent A. Forlenza | | | 0 | | | | 0 | | | | 57,878 | | | | 9,879,196 | |
Christopher R. Reidy | | | 0 | | | | 0 | | | | 15,435 | | | | 2,634,600 | |
Alexandre Conroy | | | 0 | | | | 0 | | | | 8,130 | | | | 1,387,710 | |
Thomas E. Polen | | | 11,971 | | | | 1,178,616 | | | | 4,464 | | | | 761,960 | |
Ellen R. Strahlman | | | 20,601 | | | | 1,839,983 | | | | 10,004 | | | | 1,707,583 | |
(1) | Represents the difference between the exercise price and the BD common stock price at exercise. Mr. Polen’s exercise of 11,971 SARs resulted in the acquisition of 5,971 shares. Dr. Strahlman’s exercise of 20,601 SARs resulted in the acquisition of 9,283 shares. |
(2) | Shows the shares acquired under TVUs, and under Performance Units covering the fiscal year 2014-2016 performance period, that vested in fiscal year 2017. |
(3) | Based on the closing price of BD stock on the vesting date. |
2020
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | SAR Awards | | | Stock Awards | |
Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($)(1) | | Number of Shares Acquired on Vesting (#)(2) | | Value Realized on Vesting ($)(3) |
Vincent A. Forlenza | | 198,137 | | | | 40,303,306 | | | | 27,280 | | | | 6,962,402 | | |
Thomas E. Polen | | 13,907 | | | | 1,721,793 | | | | 7,647 | | | | 1,951,667 | | |
Christopher R. Reidy | | 0 | | | | 0 | | | | 7,784 | | | | 1,986,632 | | |
Patrick K. Kaltenbach | | 4,236 | | | | 89,215 | | | | 4,970 | | | | 1,209,436 | | |
Samrat S. Khichi | | 0 | | | | 0 | | | | 931 | | | | 246,997 | | |
Alberto Mas | | 12,153 | | | | 1,642,098 | | | | 2,911 | | | | 742,945 | | |
| | | | | | | | | | | | |
(1) Represents the difference between the exercise price and the BD common stock price at the time of exercise. Mr. Forlenza's exercise of 198,137 SARs resulted in the acquisition of 146,047 shares. Mr. Polen's exercise of 13,907 SARs resulted in the acquisition of 6,386 shares. Mr. Kaltenbach's exercise of 4,236 SARs resulted in the acquisition of 339 shares. Mr. Mas' exercise of 12,153 SARs resulted in the acquisition of 6,085 shares.
(2) Shows the shares acquired under TVUs, and under Performance Units covering the fiscal year 2017-2019 performance period, that vested in fiscal year 2020.
(3) Based on the closing price of BD stock on the vesting date.
BD’s
U.S. Retirement Plan is a
non-contributory defined benefit plan.
The Retirement Plan is generally available to all active full-time and part-time U.S. BD associates.The Internal Revenue Code limits the maximum annual benefit that may be paid to an individual under the Retirement Plan and the amount of compensation that may be recognized in calculating these benefits. BD makes supplemental payments to its nonqualified Restoration Plan to offset any reductions in benefits that result from these limitations.
The Retirement Plan and the Restoration Plan generally provide retirement benefits on a “cash balance” basis. Under the cash balance provisions, an associate has an account that is increased by pay credits based on compensation, age and service, and by interest credits based on
the ratea prescribed
by the plans.rate.
Prior to January 1, 2013, benefits were based on a “final average pay” formula for associates who were hired before April 1, 2007 and who did not elect to be covered under the cash balance formula. Effective January 1, 2013, all final average pay participants were converted to the cash balance formula, with an opening cash balance equal to the actuarial present value of the accrued final average pay benefit, based on service and pay through December 31, 2012. Upon retirement, the value of this opening cash balance (with interest credits) is compared to the value of the December 31, 2012 benefit accrued under the final average pay formula and the greater of the two is payable to the participant. Benefits accrued after December 31, 2012 are determined under the cash balance formula only.
Prior to January 1, 2018, the Retirement Plan was generally available to all active full-time and part-time U.S. BD associates. Effective January 1, 2018, the Retirement Plan was frozen, and persons hired or rehired by BD on or after that date do not accrue pension benefits under the plan. Messrs. Forlenza, ReidyKaltenbach and Polen and Dr. StrahlmanKhichi do not participate in the Retirement Plan.
As an employee of Bard, Mr. Khichi participated in the Bard Supplemental Insurance/Retirement Plan
and the Restoration Plan.(the "SIRP"), which Mr. Conroy participates inprovided a French retirement indemnity plan under which he will receive asupplemental retirement benefit based on a participant's compensation and age. Upon the completion of the Bard acquisition in 2017, Mr. Khichi's benefit accruals under this plan became fully vested and were frozen, and he earns interest on his accrued benefits. Mr. Khichi's benefits under the SIRP will be paid to him in a lump sum if he works atfollowing his termination of employment with BD to age 62. This benefit will be calculated based on a formula using his yearsfor any reason.
The following table shows
for Messrs. Polen, Forlenza, Reidy and Mas the actuarial present value on September 30,
20172020 (assuming payment as a lump sum) of accumulated retirement benefits payable under
ourthe listed plans as of the first date on which
the named executive officerhe is eligible to retire and commence unreduced benefit payments. For a description of the other assumptions used in calculating the present value of
thesethe benefits
under the Retirement Plan and Restoration Plan, see Note
89 to the consolidated financial statements contained in our Annual Report on Form
10-K for the year ended September 30,
2017.PENSION BENEFITS AT 2017 FISCALYEAR-END
| | | | | | | | |
Name | | Plan Name | | Number of Years Credited Service (#) | | Present Value of Accumulated Benefit ($) | |
Vincent A. Forlenza | | Retirement Plan | | 37 | | | 1,767,981 | |
| | Restoration Plan | | 37 | | | 9,639,055 | |
Christopher R. Reidy | | Retirement Plan | | 5 | | | 80,399 | |
| | Restoration Plan | | 5 | | | 250,551 | |
Alexandre Conroy | | French Indemnity Plan | | 27 | | | 186,723 | |
Thomas E. Polen | | Retirement Plan | | 17 | | | 266,656 | |
| | Restoration Plan | | 17 | | | 241,035 | |
Ellen R. Strahlman | | Retirement Plan | | 5 | | | 80,466 | |
| | Restoration Plan | | 5 | | | 211,501 | |
2020.
The table also shows Mr. Khichi’s actuarial present value on September 30, 2020 of his benefits under the SIRP payable as of the first date he is eligible to retire and commence unreduced benefit payments. To determine the SIRP present value, payments after the measurement date are discounted at a rate 2.15% per annum, consistent with the rate used to measure the SIRP obligation for consolidated financial statement reporting purposes.
Amounts shown are not subject to any further deduction for Social Security benefits or other offsets.
PENSION BENEFITS AT 2020 FISCAL YEAR-END
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Plan Name | | Number of Years Credited Service (#) | | Present Value of Accumulated Benefit ($) |
Vincent A. Forlenza | | Retirement Plan | | | 40 | | 2,039,090 | | |
| | Restoration Plan | | | 40 | | 11,405,136 | | |
Thomas E. Polen | | Retirement Plan | | | 20 | | 406,409 | | |
| | Restoration Plan | | | 20 | | 577,644 | | |
Christopher R. Reidy | | Retirement Plan | | | 8 | | 146,147 | | |
| | Restoration Plan | | | 8 | | 557,527 | | |
Samrat S. Khichi | | SIRP | | | N/A | | 4,409,676 | | |
Alberto Mas | | Retirement Plan | | | 28 | | 911,571 | | |
| | Restoration Plan | | | 28 | | 2,706,450 | | |
Calculation of U.S. benefits
Final average pay provisions used to determine benefits accrued prior to January 1, 2013. The monthly pension benefit payable in cases of retirement at normal retirement age under the final average pay provisions is calculated using the following formula:(1% (1% of average final covered compensation, plus 1.5% of average final excess compensation)
multiplied by years and months of credited service
service.
For purposes of the formula, “average final covered compensation” wasis generally the portion of an associate’s covered compensation subject to Social Security tax, and “average final excess compensation” is the portion that is not subject to such tax. “Covered compensation” included salary and other forms of regular compensation, including commissions and PIP awards. As noted above, effective January 1, 2013, all final average pay participants were converted to the cash balance formula, with an opening cash balance equal to the actuarial present value of the accrued final average pay benefit accrued based on service and pay through December 31, 2012.
Cash Balance Provisionsbalance provisions. Each month, an associate’s cash balance account is credited with an amount equal to a percentage of the associate’s total compensation for the month (generally, salary and other forms of regular compensation, including commissions and PIP awards). Such percentage is calculated as follows: | | | | | |
Age plus years of credited service as of the upcoming December 31
| | Credit percentage |
Less than 40 | | 3% |
40-49 | | 4% |
50-59 | | 5% |
60-69 | | 6% |
70 or more | | 7% |
In addition, each month the associate’s account is credited with interest. The rate used during the calendar year is determined based on the
30-year U.S. Treasury rates in effect during the prior September, subject to a minimum rate.
Early retirement under U.S. plans. An associate is eligible to retire early and commence benefit payments if the associate is at least age 55 and has at least 10 years of credited service. Mr. Forlenza is currently eligible for early retirement under the plans. Participants may commence payment of benefits under the cash balance formula prior to early retirement eligibility at any age if the participant terminates with at least three years of service. Under the cash balance provisions, the amount of the associate’s benefit will be the associate’s vested account balance on the early retirement date. The associate may elect to begin payment of the account balance on the early retirement date or delay payment until the normal retirement date (age 65).
For participants who formerly participated in the final average pay formula and were converted to cash balance, the portion of the cash balance account attributable to the converted final average pay benefit is compared to the final average pay benefit accrued through the date of conversion under the final average formula. The result that produces the higher benefit is payable.
Form of benefit under U.S. plans. Participants may elect to receive their benefits in various forms. Participants may select a single life annuity, in which pension payments will be payable only during the associate’s lifetime, or, if married, a joint and survivor annuity. Associates may also elect to receive their benefits in a single lump sum payment. Under the final average pay provisions, this lump sum is actuarially equivalent to the benefit payable under the single life annuity option. Under the cash balance provisions, the lump sum is equal to the associate’s account balance.
French indemnity plan
The French retirement indemnity plan pays a specified number of months of salary as a lump sum for termination on or after age 62, based on years of service as summarized in the following schedule.
| | |
Years of service
| | Benefit (months of pay) |
20-29
| | 3 |
30-34
| | 4 |
35-39
| | 5 |
40 or more
| | 6 |
Eligibility for this retirement indemnity begins when the participant becomes eligible for French Social Security benefits upon attaining age 62. If the participant is terminated before age 62, the participant forfeits the retirement indemnity.
DeferredDeferred compensation
Cash deferrals. The Restoration Plan also allows an eligible BD associate to defer receipt of up to 75% of salary and/or up to 100% of a PIP award until the date or dates elected by the associate. The amounts deferred are invested in a BD common stock account or in cash accounts that mirror the gains and/or losses of several different publicly available investment funds, based on the investment selections of the participants. The investment risk is borne solely by the participant. Participants are entitled to change their investment elections at any time with respect to prior deferrals, future deferrals or both. The investment options available to participants may be changed by BD at any time.
Deferral of equity awards. The Restoration Plan also allows eligible associates to defer receipt of up to 100% of the shares issuable under their Performance Units, PTVUs and TVUs. These deferred shares are allocated to the participant’s BD stock account and must stay in such account until they are distributed.
Withdrawals and distributions. Participants may elect to receive deferred amounts either during their employment or following termination of employment. Participants may electemployment, and to receive distributions in installments or in a lump sum. Except in an unforeseen financial emergency, participants may not withdraw deferred amounts prior to their scheduled distribution date.
Matching contributions. BD provides matching contributions on cash amounts deferred under the Restoration Plan. These contributions are made in the first calendar quarter following the calendar year in which the compensation was deferred. BD matches 75% of the first 6% of salary and PIP award deferred by a participant under the Restoration Plan, subject to certain limits.
Unfunded liability. BD is not required to make any contributions to the Restoration Plan with respect to its obligations to pay deferred compensation. BD has unrestricted use of any cash amounts deferred by participants. Participants have an unsecured contractual commitment from BD to pay thedeferred amounts due under the Restoration Plan. When such payments are due, the cash and/or stock will be distributed from BD’s general assets. BD has purchased corporate-owned life insurance that mirrors the returns on cash amounts deferred under the plan to substantially offset this liability.Account information.
The following table sets forth information regarding activity during fiscal year 20172020 in the Restoration Plandeferred compensation accounts maintained byof the named executive officers. Mr. Conroy is not eligible to participate in the Restoration Plan.
NONQUALIFIED DEFERRED COMPENSATION IN FISCAL YEAR
2017 | | | | | | | | | | | | | | | | |
Name | | Executive Contributions in Last Fiscal Year ($)(1) | | | Registrant Contributions in Last Fiscal Year ($)(2) | | | Aggregate Earnings in Last Fiscal Year ($) | | | Aggregate Balance at Last Fiscal Year- End ($) | |
Vincent A. Forlenza | | | 315,288 | | | | 23,850 | | | | 403,408 | | | | 3,261,068 | |
Christopher R. Reidy | | | 65,383 | | | | 23,850 | | | | 43,642 | | | | 368,936 | |
Thomas E. Polen | | | 90,494 | | | | 23,850 | | | | 6,314 | | | | 323,640 | |
Ellen R. Strahlman | | | 130,428 | | | | 23,850 | | | | 54,557 | | | | 427,024 | |
(1) | The following amounts are reported as compensation in the fiscal year 2017 “Salary” column of the Summary Compensation Table appearing on page 42: Mr. Forlenza—$115,288; Mr. Reidy—$12,205; Mr. Polen—$45,578; and Dr. Strahlman—$68,638. The remaining executive contributions relate to the deferral of fiscal year 2016 PIP awards that were payable in 2017. |
(2) | Amounts in this column are included in the “All Other Compensation” column of the Summary Compensation Table and reflect matching credits that were earned by participants in 2017. These amounts are not credited to participant accounts until 2018. |
2020
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Executive Contributions in Last Fiscal Year ($)(1) | | Registrant Contributions in Last Fiscal Year ($)(2) | | Aggregate Earnings in Last Fiscal Year ($) | | Aggregate Balance at Last Fiscal Year- End ($)(3) |
Vincent A. Forlenza | | 303,154 | | | | 25,200 | | | | 254,043 | | | | 4,950,143 | | |
Thomas E. Polen | | 115,431 | | | | 25,200 | | | | 8,915 | | | | 771,828 | | |
Christopher R. Reidy | | 97,159 | | | | 25,200 | | | | 116,257 | | | | 1,054,904 | | |
Patrick K. Kaltenbach | | 812,389 | | | | 26,843 | | | | 179,839 | | | | 1,768,326 | | |
Samrat S. Khichi | | 607,200 | | | | 42,000 | | | | 27,850 | | | | 764,584 | | |
Alberto Mas | | 459,840 | | | | 25,200 | | | | 475,259 | | | | 2,012,065 | | |
(1) The following amounts are reported as compensation in the fiscal year 2020 “Salary” column of the Summary Compensation Table appearing on page 42: Mr. Forlenza - $108,154; Mr. Polen - $43,823; Mr. Reidy - $46,159; Mr. Kaltenbach - $316,725; Mr. Khichi - $0; and Mr. Mas $133,345. The remaining executive contributions relate to the deferral of fiscal year 2019 PIP awards that were payable in fiscal year 2020.
(2) Amounts in this column are included in the “All Other Compensation” column of the Summary Compensation Table and reflect matching credits that were credited to participants in 2020. These amounts are not credited to participant accounts until 2021.
(3) Reflects amounts in which the named executive officer is vested. BD matching contributions fully vest after a participant has been at BD for four years.
Payments Upon Termination of Employment or Change In Control
Payments upon termination of employment
The following table shows the estimated payments and benefits that would be paid by BD to each of the named executive officers as a result of a termination of employment under various scenarios. The amounts shown assume termination of employment on September 30,
2017.2020. However, the actual amounts that would be paid to these named executive officers under each scenario can only be determined at the time of
an actual termination.
| | | | | | | | | | | | | | | | | | | | |
Name | | Termination Without “Cause” or for “Good Reason” Following a Change in Control($)(1) | | | Termination due to Retirement($)(2) | | | Termination Without Cause($)(3) | | | Termination due to Disability($)(4) | | | Termination due to Death($)(5) | |
Vincent A. Forlenza | | | 65,065,409 | | | | 50,498,086 | | | | 52,365,778 | | | | 48,869,741 | | | | 51,199,741 | |
Christopher R. Reidy | | | 14,378,643 | | | | — | | | | 4,998,395 | | | | 8,447,678 | | | | 9,233,464 | |
Alexandre Conroy | | | 8,579,244 | | | | — | | | | 3,728,713 | | | | 4,876,355 | | | | 5,458,192 | |
Thomas E. Polen | | | 11,827,573 | | | | — | | | | 3,384,339 | | | | 4,883,588 | | | | 5,708,588 | |
Ellen R. Strahlman | | | 10,204,058 | | | | — | | | | 3,666,836 | | | | 5,585,885 | | | | 6,277,693 | |
(1) | Includes amounts payable under change in control employment agreements (which are described below), and, for Mr. Forlenza, amounts distributable under BD’s retirement plans, assuming payout as a lump sum. Also includes the accelerated vesting of equity compensation awards, which is discussed below. |
(2) | Includes amounts distributable under BD’s retirement plans, assuming payout as a lump sum, and the accelerated vesting of equity compensation awards upon retirement. Messrs. Reidy, Conroy and Polen and Dr. Strahlman were not eligible for retirement as of September 30, 2017. |
(3) | Includes amounts distributable under BD’s retirement plans, assuming payout as a lump sum, the accelerated vesting of equity compensation awards, outplacement services (with an assumed maximum cost of $100,000), health and welfare benefits and severance benefits (assuming payment in the amount 18 months’ severance, other than for Mr. Conroy, whose severance is determined by a formula based on salary, years of service and age). |
(4) | Includes amounts distributable under BD’s retirement plans, assuming payout as a lump sum, and the accelerated vesting of equity compensation awards. |
(5) | Includes amounts distributable under BD’s retirement plans, assuming payout as a lump sum, the accelerated vesting of equity compensation awards and life insurance benefits. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | Termination Without “Cause” or for “Good Reason” Following a Change in Control($)(1) | | Termination Due to Retirement($)(2) | | Termination Without Cause($)(3) | | Termination Due to Disability($)(4) | | Termination Due to Death($)(5) |
Vincent A. Forlenza | 45,592,705 | | | | 29,491,257 | | | | 31,339,623 | | | | 31,670,305 | | | | 33,970,305 | | |
Thomas E. Polen | 20,000,595 | | | | 0 | | | 4,757,603 | | | | 6,331,855 | | | | 7,481,855 | | |
Christopher R. Reidy | 10,991,463 | | | | 0 | | | 3,370,290 | | | | 4,055,699 | | | | 4,917,863 | | |
Patrick K. Kaltenbach | 8,930,707 | | | | 0 | | | 3,763,278 | | | | 4,523,372 | | | | 5,192,872 | | |
Samrat S. Khichi | 9,959,666 | | | | 0 | | | 6,459,758 | | | | 6,217,200 | | | | 6,877,200 | | |
Alberto Mas | 10,392,018 | | | | 5,682,718 | | | | 6,849,472 | | | | 5,942,157 | | | | 6,642,557 | | |
| | | | | | | | | | | | | | |
(1) Includes amounts payable under change in control employment agreements and the accelerated vesting of equity compensation awards, each of which is discussed below. Also includes: for Messrs. Forlenza and Mas, amounts distributable under BD’s pension plans, assuming payout as a lump sum; for Mr. Kaltenbach, the accelerated vesting of company matching contributions under BD's plans; and for Mr. Khichi, amounts payable under the SIRP.
(2) Includes amounts distributable under BD’s pension plans, assuming payout as a lump sum, and the accelerated vesting of equity compensation awards upon retirement. Messrs. Polen, Reidy, Kaltenbach and Khichi were not eligible for retirement as of September 30, 2020.
(3) Includes the accelerated vesting of equity compensation awards, outplacement services (with an assumed maximum cost of $100,000), health and welfare benefits and severance benefits (assuming 18 months’ severance, as BD does not have a specific severance policy for its executive officers). Also includes: for Messrs. Forlenza and Mas, amounts distributable under BD’s pension plans, assuming payout as a lump sum; and for Mr. Khichi, amounts payable under the SIRP.
(4) Includes the accelerated vesting of equity compensation awards, and also includes: for Messrs. Forlenza and Mas, amounts distributable under BD's pension plans, assuming payout as a lump sum; for Mr. Kaltenbach, the accelerated vesting of company matching contributions under BD's plans; and for Mr. Khichi, amounts payable under the SIRP.
(5) Includes the accelerated vesting of equity compensation awards and life insurance benefits. Also includes: for Messrs. Forlenza and Mas, amounts distributable under BD's pension plans, assuming payout as a lump sum; for Mr. Kaltenbach, the accelerated vesting of company matching contributions under BD's plans; and for Mr. Khichi, amounts payable under the SIRP.
The amounts shown in the above table do not include vested deferred compensation distributable upon termination, which is shown on page
53,51, or the value of vested SARs held by the named executive officers as of September 30,
2017,2020, which
appearsis shown on page
48.47.
Payments upon termination under change in control agreements
BD has entered into
agreementsan agreement with
Messrs. Forlenza, Reidy, Conroy and Polen and Dr. Strahlmaneach of the named executive officers that
provideprovides for the continued employment of the executive for a period of two years following a change in control of BD.
These agreements areThe agreement is designed to retain the
executivesexecutive and provide continuity of management in the event of an actual or potential change in control of BD. The following is a summary of the key terms of the
agreements.agreement.
The agreement provides that BD will continue to employ the executive for two years following a change in control, and that, during this period, the executive’s position and responsibilities at BD will be materially the same as those prior to the change in control. The agreement also provides for minimum salary, PIP
awardsaward and other benefits during this
two-year period. “Change in control” is defined under the agreement generally as:
•the acquisition by any person or group of 25% or more of the outstanding BD common stock;
•the incumbent members of the Board ceasing to constitute at least a majority of the Board;
•certain business combinations; or
•shareholder approval of the liquidation or dissolution of BD.
The agreement also provides that, in the event the executive is terminated without “cause” or the executive terminates his
or her employment for “good reason” during the two years following a change in control, the executive would receive:
•a pro rata PIP award for the year of termination based on the greater of (i) the executive’s average PIP award for the last three fiscal years prior to termination, and (ii) the executive’s target PIP award for the year in which theof termination occurs (the greater of the two being referred to herein as the “Incentive Payment”);
•a lump sum severance payment equal to three times in the case of Messrs. Forlenza and Polen, orand two times for the other named executive officers, the sum of the executive’s annual salary and his or her Incentive Payment;
•a lump sum payment equal to the present value of the increased pension benefits the executive would have received had the executive remained employed for an additional three years, in the case of Messrs.Mr. Forlenza, or two years for theMr. Reidy (the other named executive officers (other than Mr. Polen, whose agreement doesdo not containhave this provision)provision in their agreements);
•continuation of the executive’s health and welfare benefits (reduced to the extent provided by any subsequent employer) for a period of three years in the case of Messrs. Forlenza and Polen, orand two years for the other named executive officers; and
•outplacement services, subject to a limit on the cost to BD of $100,000.
“Cause” is generally defined as the willful and continued failure of the executive to substantially perform his or her duties, or illegal conduct or gross misconduct that is materially injurious to BD. “Good reason” is generally defined to include (i) any significant change in the executive’s position or responsibilities, (ii) the failure of BD to pay any compensation called for by the agreement, or (iii) certain relocations of the executive.
Under the agreement with Mr. Forlenza, if any payments or distributions made by BD to Mr. Forlenza as a result of a change in control would be subject to an excise tax imposed by the Internal Revenue Code, BD will make a tax reimbursement payment to
him.him (also known as a "gross-up" payment). As a result of this payment, Mr. Forlenza would retain the same amount, net of all taxes, that he would have retained had the excise tax not been triggered. This provision applies to any payments or distributions resulting from the change in control, including the accelerated vesting of equity awards. However, if such payments and distributions do not exceed 110% of the level that triggers the excise tax, the payments
or distributions to be made by BD will be reduced to the extent necessary to avoid the excise tax.
The following table sets forth the estimated benefits the named executive officers would receive under
his or hertheir agreement in the event the executive was terminated without “cause” or terminated his
or her employment for “good reason” following a change in control. The table assumes a termination date of September 30,
2017.2020. These estimates are based on salary rates in effect as of September 30,
2017,2020, and use the
20172020 target PIP awards of the named executive officers as the Incentive Payment.
| | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Incentive Payment($) | | | Severance Payment($) | | | Additional Retirement Benefits($) | | | Health and Welfare Benefits($) | | | Outplacement Services($) | | | Total($) | |
Vincent A. Forlenza | | | 1,687,360 | | | | 8,557,080 | | | | 587,160 | | | | 42,000 | | | | 100,000 | | | | 10,973,600 | |
Christopher R. Reidy | | | 754,345 | | | | 3,080,261 | | | | 174,444 | | | | 28,000 | | | | 100,000 | | | | 4,137,050 | |
Alexandre Conroy | | | 465,468 | | | | 2,094,613 | | | | 0 | | | | 28,000 | | | | 100,000 | | | | 2,688,081 | |
Thomas E. Polen | | | 701,250 | | | | 4,578,750 | | | | 0 | | | | 42,000 | | | | 100,000 | | | | 5,422,000 | |
Ellen R. Strahlman | | | 578,328 | | | | 2,540,272 | | | | 149,431 | | | | 28,000 | | | | 100,000 | | | | 3,396,031 | |
No gross-up payment would have been required under the agreement with Mr. Forlenza.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | Incentive Payment($) | | Severance Payment($) | | Additional Retirement Benefits($) | | Health and Welfare Benefits($) | Outplacement Services($) | | Total($) |
Vincent A. Forlenza | 1,910,000 | | | | 9,180,000 | | | | 603,750 | | | | 45,000 | | | | 100,000 | | | | 11,838,750 | |
Thomas E. Polen | 1,456,762 | | | | 7,820,286 | | | | 0 | | | 45,000 | | | | 100,000 | | | | 9,422,048 | |
Christopher R. Reidy | 900,928 | | | | 3,526,185 | | | | 229,336 | | | | 30,000 | | | | 100,000 | | | | 4,786,449 | |
Patrick K. Kaltenbach | 569,075 | | | | 2,477,150 | | | | 0 | | | 30,000 | | | | 100,000 | | | | 3,176,225 | |
Samrat S. Khichi | 528,000 | | | | 2,376,000 | | | | 0 | | | 26,000 | | | | 100,000 | | | | 3,030,000 | |
Alberto Mas | 625,629 | | | | 2,652,059 | | | | 0 | | | 30,000 | | | | 100,000 | | | | 3,407,688 | |
Accelerated vesting of equity compensation awards upon a change in control
For awards granted prior to January 1, 2015, upon a change in control (as defined in our
equity compensation plans)2004 Plan), all unvested SARs become fully vested and exercisable, and all time-vested restricted stock units and Performance Units become fully vested and payable (with Performance Units being payable at
their target amount). This accelerated vesting occurs with respect to all equity compensation awards granted by BD, not just those granted to
the named executive officers. No termination of employment is required to trigger this acceleration.
Awards made after January 1, 2015 will not automatically vest upon a change in control if the awards are either continued or replaced with similar awards. In those instances, the awards will automatically vest only if the associate is terminated without “cause” or the associate terminates employment for “good reason” (as such terms are defined in the 2004 Plan) within two years of the change in control.
Equity compensation upon termination of employment
Upon a named executive officer’s termination due to
retirement:all unvested SARs held byretirement, the named executive officerofficer's:
•unvested SARs become fully exercisable for their remaining term;
all•unvested PTVUs vest in full, and unvested time-vested restricted stock units held by the named executive officer vest in full at, or on the first anniversary of, retirement; and
all•unvested Performance Units held by the named executive officer vest pro rata based on the amount of the vesting period that had elapsed. The payments would be made after the end of the applicable vesting periods and would be based on BD’s actual performance for the applicable performance periods, rather than award targets.
Upon a named executive officer’s termination due to involuntary termination without cause:
cause, the named executive officer's:•unvested SARS are forfeited and the named executive officer is entitled to exercise his or herany then-vested SARs for three months following termination, but only to the extent they were vested at the time of termination;
all•unvested PTVUs are forfeited, and unvested TVUs held by the named executive officer vest pro rata based on the amount of the vesting period that had elapsed and all(except that Mr. Kaltenbach's June 1, 2018 TVU grant would vest in full). All other time-vested restricted stock units fully vest; and
all•unvested Performance Units held by the named executive officer vest pro rata based on the amount of the vesting period that had elapsed. The payments would be made after the end of the applicable vesting periods and would be based on BD’s actual performance for the applicable performance periods, rather than award targets.
Upon a named executive officer’s termination due to death or
disability:all unvested SARs held bydisability, the named executive officerofficer's:
•unvested SARs become fully exercisable for their remaining term;
all•unvested PTVUs and unvested time-vested restricted stock units held by the named executive officer fully vest; and
all•unvested Performance Units held by the named executive officer vest pro rata based on the amount of the vesting period that had elapsed. The paymentpayments would be based on award targets.targets.
Proposal 2. | RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
CEO Pay Ratio
Under the rules of the SEC, we are required to disclose the ratio of our CEO’s annual total compensation to the median of the annual total compensation of all our other employees. For fiscal year 2020, the median annual total compensation of all our employees (other than Mr. Polen) was $39,669 and Mr. Polen’s annual total compensation (as reported in the Summary Compensation Table on page 42) was $11,669,426. Based on the foregoing, our estimate of the ratio of the annual total compensation of our CEO to the median annual total compensation of all our other worldwide employees was 294 to 1.
In accordance with SEC rules, we identified the median employee as of August 1, 2020 by (i) aggregating for each applicable employee (A) annual base salary for salaried employees (or hourly rate multiplied by expected annual work schedule, for permanent hourly employees), and (B) target incentive compensation (including bonus or commission), and (ii) ranking this compensation measure for our employees from lowest to highest. This calculation was performed for all employees, excluding Mr. Polen, whether employed on a full-time, part-time, or seasonal basis. For seasonal and non-permanent employees, we applied a reasonable estimate of hourly rate multiplied by their actual work schedule for the year. We then calculated the annual compensation of the median employee using the same methodology used to calculate Mr. Polen’s compensation for the Summary Compensation Table.
BD believes that the pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, BD’s ratio may not be comparable to the ratios disclosed by other companies based on a number of factors, including differences in employee populations, different geographic distributions of employees, and the nature of the companies' businesses.
PROPOSAL 2. RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP (“E&Y”) has been selected by the Audit Committee
as the Company’s independent registered public accounting firm (referred to
auditherein as the
accounts of BD and its subsidiaries“independent auditors”) for
the fiscal year
ending September 30, 2018.2021. The Audit Committee is solely responsible for the appointment, compensation, retention and oversight of BD’s independent
registered public accounting firm (referred to herein as the “independent auditors”).auditors. Shareholders are being asked to ratify the Audit Committee’s selection of E&Y. If ratification is withheld, the Audit Committee will reconsider its selection.
A representative of E&Y is expected to attend the
20182021 Annual Meeting to respond to appropriate questions and will have the opportunity to make a statement.
Listed below are the fees billed to BD by E&Y for services rendered during fiscal years
20172020 and
2016. | | | | | | | | | | |
| | 2017 | | | 2016 | | | |
Audit Fees | | $ | 14,327,000 | | | $ | 11,678,000 | | | “Audit Fees” include fees associated with the annual audit of BD’s consolidated financial statements, reviews of BD’s quarterly reports on Form10-Q, registration statements filed with the SEC and statutory audits required internationally. |
| | | |
Audit Related Fees | | $ | 225,000 | | | $ | 204,000 | | | “Audit Related Fees” consist of assurance and related services that are reasonably related to the performance of the audit or interim financial statement review and are not reported under Audit Fees. These services include benefit plan audits and other audit services requested by management, which are in addition to the scope of the financial statement audit. |
| | | |
Tax Fees | | $ | 1,317,000 | | | $ | 1,000,000 | | | “Tax Fees” includes tax compliance, assistance with tax audits, tax advice and tax planning. |
| | | |
All Other Fees | | $ | 2,000 | | | $ | 27,000 | | | “All Other Fees” includes various miscellaneous services. |
| | | | | | | | | | |
Total | | $ | 15,871,000 | | | $ | 12,909,000 | | | |
2019. | | | | | | | | | | | | | | |
| 2020 | | 2019 | |
Audit Fees | $ | 17,343,000 | | | $ | 19,432,000 | | “Audit Fees” include fees associated with the annual audit of BD’s consolidated financial statements, reviews of BD’s quarterly reports on Form 10-Q, registration statements filed with the SEC and statutory audits required internationally. |
| | | | |
Audit Related Fees | $ | 485,000 | | | $ | 413,000 | | “Audit Related Fees” consist of assurance and related services that are reasonably related to the performance of the audit or interim financial statement review and are not reported under Audit Fees. These services include benefit plan audits and other audit services requested by management, which are in addition to the scope of the financial statement audit. |
| | | | |
Tax Fees | $ | 972,000 | | | $ | 1,289,000 | | “Tax Fees” includes tax compliance, assistance with tax audits, tax advice and tax planning. |
| | | | |
All Other Fees | $ | 12,000 | | | $ | 7,500 | | “All Other Fees” includes various miscellaneous services. |
| | | | |
Total | $ | 18,812,000 | | | $ | 21,141,500 | |
Pre-Approval of
auditAudit and
non-audit services Non-Audit Services
The Audit Committee is responsible for appointing BD’s independent auditors and approving the terms of the independent auditors’ services. The Audit Committee has established a policy for the
pre-approval of all audit and permissible
non-audit services to be provided by the independent auditors, as described below. All of the services listed in the above table were approved pursuant to this policy.
Audit services.Services. Under the policy, the Audit Committee will appoint BD’s independent auditors each fiscal year andpre-approve the engagement of the independent auditors for the audit services to be provided.
Non-auditNon-Audit Services. services.In accordance with the policy, the Audit Committee has established detailedpre-approved categories ofnon-audit services that may be performed by the independent auditors during the fiscal year, subject to certain dollar limits. The Audit Committee has also delegated to the Chair of the Audit Committee, subject to certain dollar limits, the authority to approve additionalnon-audit services by the independent auditors that either are not covered by thepre-approved categories or exceed thepre-approved dollar limits, provided that the full Audit Committee is informed of each service. All othernon-audit services are required to bepre-approved by the entire Audit Committee.The Audit Committee believes that the provision of the
non-audit services described above by E&Y is consistent with maintaining the independence of E&Y.
The Audit Committee periodically considers the rotation of the independent auditors. The Audit Committee believes that the continued retention of E&Y to serve as BD’s independent auditors is in the best interests of BD and its shareholders.
ACCORDINGLY,
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR"FOR" PROPOSAL 2.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviews BD’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. The independent auditors are responsible for performing an independent audit of BD’s consolidated financial statements in accordance with generally accepted auditing standards and to issue a report thereon. The
Audit Committee monitors these processes.
In this context, the
Audit Committee met and held discussions with management and the independent auditors. Management represented to the
Audit Committee that BD’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States, and the
Audit Committee reviewed and discussed the consolidated financial statements with management and the independent auditors. The
Audit Committee also discussed with the independent auditors the matters required to be discussed by the applicable auditing standards.
In addition, the
Audit Committee discussed with the independent auditors the auditors’ independence from BD and its management, and the independent auditors provided to the
Audit Committee the written disclosures and the letter pursuant to the applicable requirements of the Public Company Accounting Oversight Board regarding the independent
auditor’sauditors' communications with the
Audit Committee concerning independence. The
Audit Committee discussed with BD’s internal and independent auditors the overall scope and plans for their respective audits. The
Audit Committee met with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of BD’s internal controls, and the overall quality of BD’s financial reporting. Management has also reviewed with the Audit Committee its report on the effectiveness of BD’s internal control over financial reporting. The Audit Committee also received the report from the independent auditors on BD’s internal control over financial reporting.
Based on the reviews and discussions referred to above, the
Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in BD’s Annual Report on Form
10-K for the fiscal year ended September 30,
2017,2020, for filing with the Securities and Exchange Commission.
Bertram L. Scott, Chair
Basil L. Anderson
Catherine M. Burzik
Christopher Jones
Willard J. Overlock, Jr.
R. Andrew Eckert
Jeffrey W. Henderson
David F. Melcher
Rebecca W. Rimel
Proposal 3. | ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION |
PROPOSAL 3. ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
The Compensation Discussion and Analysis beginning on page
2623 of this proxy statement describes BD’s executive compensation program and the compensation decisions made with respect to our CEO and the other
individuals named
executive officers reflected in the Summary Compensation Table on page
42 (who we refer to as the “named executive officers”).42. Pursuant to Section 14A of the Securities Exchange Act of 1934, the Board is asking shareholders to cast a
non-binding advisory vote on the following resolution:
“RESOLVED, that the shareholders of Becton, Dickinson and Company (“BD”) approve the compensation of the BD executive officers named in the Summary Compensation Table, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis, the executive compensation tables and the related footnotes and narrative accompanying the tables).”
As we describe in the Compensation Discussion and Analysis, our executive compensation program embodies a
pay-for-performance philosophy that supports BD’s business strategy and aligns the interests of our executives with those of our shareholders. At the same time, we believe our program does not encourage excessive risk-taking by management. We believe that the compensation actions discussed in the Compensation Discussion and Analysis appropriately reflected the performance of our named executive officers and BD during the year.
For these reasons, the Board is asking shareholders to support this Proposal. While the advisory vote we are asking you to cast is
non-binding, the Compensation Committee and the Board value the views of our shareholders and will take into account the outcome of the vote when considering our compensation program and future compensation decisions for our executive officers.
The Board has adopted a policy of holding advisory votes to approve named executive officer compensation on an annual basis, and the next advisory vote will be held at our 20192022 Annual Meeting.
Meeting of Shareholders (the “2022 Annual Meeting”).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR"FOR" PROPOSAL 3.
Proposal 4. | SHAREHOLDER PROPOSAL TO AMEND PROXY ACCESSBY-LAW |
PROPOSAL 4. SHAREHOLDER PROPOSAL REGARDING SPECIAL SHAREHOLDER MEETINGS
Kenneth Steiner, 14 Stoner Avenue, 2M, Great Neck, NY, owner of not less than 500 shares of BD common stock, has given notice that he intends to present
the following stockholder proposal for action at the
2021 Annual
Meeting:“Meeting the following stockholder proposal:
Proposal 4—4
Special Shareholder
Proxy Access EnhancementRESOLVED: StockholdersMeeting Improvement
Shareowners ask our board to take the board of directorssteps necessary to amend its proxy access bylaw provisions and any associatedthe appropriate company governing documents to includegive the following change for the purposeowners of decreasing the average amounta combined 15% of Companyour outstanding common stock the average memberpower to call a special shareowner meeting. Adoption of this proposal could include a nominating groupprovision that any single shareholder could get credit for only half of the 15% threshold. The Board of Directors would continue to have its existing power to call a special meeting.
The current right of 10% of shares to try to convince a New Jersey judge that a special meeting is necessary is probably useless. It would probably be requiredless difficult for the current 25% of shares to holdcall a special meeting than for3-years 10% of shares to satisfyconvince a New Jersey judge that a special meeting was necessary. Management previously failed to produce evidence of the aggregate ownership requirementsshareholders of any large cap company ever convincing a New Jersey judge of the need for a special meeting.
Special meetings allow shareholders to
form a nominating group:No limitation shall be placedvote on the number of stockholdersimportant matters, such as electing new directors that can aggregate their sharesarise between annual meetings. This is more important at Becton Dickinson because BD does not have an independent board chairman.
This proposal topic won 60%-support at the 2009 Becton Dickinson annual meeting. It even won 49% support at the 2011 Becton Dickinson annual meeting just after BDX adopted a lesser shareholder right to achievecall a special meeting that would require action by 25% of BDX shareholders. This 49% support would have exceeded 50% if more shareholders had access to independent proxy voting advice. Six special meeting proposals won majority votes in 2020.
A shareholder proposal to call a special meeting also obtained a 57% vote at Electronic Arts (EA) in August 2019 even though shareholders at the 3%same meeting approved a management proposal for a special meeting right that would require action by 25% of commonEA shareholders. This proposal topic, sponsored by William Steiner, also won 78% support at a Sprint annual meeting with 1. 7 Billion yes-votes.
A 15% stock
required to nominate directors under our Company’s proxy access provisions.Proxy accessownership threshold is important because the current 25% stock ownership threshold for shareholders enablesto call a special meeting may be unreachable due to time constraints and the detailed technical requirements that can trip up half of shareholders who want a special shareholder meeting. Thus the 25% stock ownership threshold to put competing director candidates on the company ballotcall a special meeting can be a 50% stock ownership threshold to see if theycall a special meeting for all practical purposes.
Any claim that a shareholder right to call a special meeting can
get more votes than some of management’s director candidates. A competitive election isbe costly - may be moot. When shareholders have a good
for everyone. This proposal can help ensure that our management will nominate directors with outstanding qualifications in order to avoid giving shareholders a reason to
exercise their right to use proxy access.Even if the 20 largest public pension funds werecall a special meeting - our Board of Directors should be able to aggregate their shares, they would not meet the current 3% criteria for a continuous3-years at most companies according to the Council of Institutional Investors. This proposal addresses the situation that our company now has with proxy access potentially for only the largest shareholders who are the least unlikely shareholderstake positive responding action to make use of it.
Since no group of shareholders at any U.S. company has yet to make use of proxy access, it is important to make sure that the current limitation of 20 shareholders is not a deterrent to shareholders using proxy access.
special meeting unnecessary.
Please vote
to enhance shareholder value:yes:
Special Shareholder
Proxy Access Enhancement—Meeting Improvement - Proposal
4”4
BOARD OF DIRECTORS’ RESPONSE
The Board
recommends a vote AGAINST Proposal 4 for the following reasons.The Boardof Directors has carefully considered this proposal and believes that the proposal is unnecessary given the current right of our shareholders to call a special meeting and is not in the best interests of our shareholders. Accordingly, the Board recommends that shareholders vote “AGAINST” the proposal.
Last year, we adopted amendments
We believe that it is important for our shareholders to have the ability to call special shareholder meetings to address matters that require attention prior to the BDBy-lawsnext annual shareholders meeting. BD’s bylaws provide for a 25% ownership threshold, which we continue to implementbelieve is an appropriate standard for balancing shareholder rights and is consistent with prevailing practices at large public corporations. Lowering this threshold to 15% increases the risk that a proxy access framework that we believe provides meaningful proxy access rights to our shareholders. Specifically, our existing proxy accessby-law permits any shareholder, or asmall group of upshareholders with narrow or short-term interests could call special meetings to 20advance their own particular agendas that are not aligned with the long-term interests of BD and our other shareholders. Special shareholder meetings also subject BD to considerable expense, and can distract management and the Board from important business initiatives and objectives. Such shareholders owning 3%could also call special meetings solely to seek concessions from BD that serve only their interests in exchange for avoiding a special meeting. Preserving our current 25% ownership threshold ensures that a special meeting will be called only when there is significant support for the meeting among our shareholders.
We also note that if the holders of less than 25% of BD’s common stock believe a special meeting should be called, New Jersey law provides that holders of 10% or more of BD’s
outstanding common stock
continuously for at least three yearshave the right to
nominate and include in BD’s annualhave a court call a special shareholders meeting
proxy materials director nominees constituting up to two individuals or 20%upon a showing of
the Board, whichever is greater, subject to the requirements specified in theBy-laws.The Board continues to believe that the proxy access framework it adopted is the most appropriate framework for BD and our shareholders. Prior to the Board’s adoption of our existing proxy accessby-law, we reviewed prevailing practices of other companies that adopted proxy access, and based on our assessment, we
good cause. adopted a proxy access structure that provides shareholders with meaningful proxy access rights, balances the interests of all our shareholders, and is consistent with the prevailing practices of other large U.S. public companies with proxy access. Specifically, a20-shareholder aggregation limit has been widely adopted by companies that have proxy access.
We also believe that allowing an unlimited number of shareholders to form a group for purposes of accessing our proxy access provisions could prove unwieldy and result in an excessive administrative burden and expense for BD. In the absence of a reasonable limit, we could be required to make burdensome, time-consuming inquiries into the nature and duration of the share ownership of a large number of individual shareholders in order to verify their share ownership and confirm their eligibility under our proxy accessby-law. We believe that a reasonable aggregation limit that is consistent with prevailing best practices—such as the one contained in ourBy-laws—is appropriate in order to reduce potential administrative costs and help reduce the risk of abuse of proxy access rights.
In connection with our review of this Proposal, we reached out to many of our largest shareholders in order to understand their views on proxy access and the proposed amendment. Those institutional shareholders that we received feedback from did not support amending our current proxy access provisions as requested by the proponent.
For these reasons, we believe this Proposalproposal is unnecessary and not in the best interests of our shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST"AGAINST" PROPOSAL 4.
SHAREHOLDER PROPOSALS OR DIRECTOR NOMINATIONS FOR
20192022 ANNUAL MEETING
Any proposal that a shareholder wishes to submit for inclusion in BD’s proxy materials for BD’s
20192022 Annual Meeting pursuant to SEC Rule
14a-8 must be received by BD not later than August
16, 2018.19, 2021.
A shareholder’s notice of nomination of one or more director candidates to be included in BD’s proxy statement and
ballotproxy card pursuant to Article II. E of our
By-laws By-Laws (a “proxy access director nomination”) must be received by BD
nonot earlier than July
17, 201820, 2021 and not later than August
16, 2018.19, 2021.
Notice of any other business or director nomination (that is, other than a matter brought pursuant to SEC Rule
14a-8 or a proxy access director nomination) that a shareholder wishes to present for consideration at the
20192022 Annual Meeting pursuant to Article II. D. of our
By-Laws must be received by BD not earlier than September
25, 201827, 2021 and not later than October
25, 2018.27, 2021.
Any proposal or director nomination submitted by a shareholder in connection with the 20192022 Annual Meeting must satisfy the applicable information and other requirements specified in BD’sBy-Laws, which are available on BD’s website at www.bd.com/investors/corporate_governance/. All proposals and nominations, and all supporting materials required by ourBy-Laws, must be addressed to: Corporate Secretary, Becton, Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey 07417-1880. BD will not consider any proposal or nomination that is not timely delivered or otherwise does not meet theBy-law By-Law and SEC requirements for submitting the proposal or nomination.
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
Presented below are reconciliations of
non-GAAP financial measures discussed in the Compensation Discussion and Analysis section of this proxy statement to the comparable GAAP financial measure. All figures below are rounded, and totals may not add due to rounding.
2017 comparable currency-neutral revenue growth
2020 Currency-Neutral Revenue Growth
(
amounts in
millions of dollars) | | | | | | | | | | | | | | | | | | | | | | |
| | A | | | B | | | C | | | D=B+C | | | E | | | F=(A-D-E)/D |
| | 2017 | | | 2016 | | | Divestiture revenue adjustment | | | Comparable 2016 | | | Comparable foreign exchange impact | | | Comparable currency-neutral growth |
Total revenues | | $ | 12,093 | | | $ | 12,483 | | | $ | (842 | ) | | $ | 11,641 | | | $ | (69 | ) | | 4.5% |
2017 adjusted diluted earnings per share
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 2017 | | | 2016 | | | Growth | | | Foreign currency translation | | | Foreign currency- neutral growth | | | Growth % | | Foreign currency- neutral growth % |
Reported diluted earnings per share(pre-tax) | | $ | 4.60 | | | $ | 4.49 | | | $ | 0.11 | | | $ | (0.23 | ) | | $ | 0.34 | | | 2.4% | | 7.6% |
Purchase accounting adjustments(pre-tax) | | | 2.20 | | | | 2.42 | | | | | | | | | | | | | | | | | |
Restructuring costs(pre-tax) | | | 0.38 | | | | 2.42 | | | | | | | | | | | | | | | | | |
Integration costs(pre-tax) | | | 1.06 | | | | 0.88 | | | | | | | | | | | | | | | | | |
Transaction costs(pre-tax) | | | 0.17 | | | | 0.04 | | | | | | | | | | | | | | | | | |
Financing costs(pre-tax) | | | 0.58 | | | | — | | | | | | | | | | | | | | | | | |
Losses on debt extinguishment(pre-tax) | | | 0.33 | | | | — | | | | | | | | | | | | | | | | | |
Lease contract modification-related charge(pre-tax) | | | 3.34 | | | | — | | | | | | | | | | | | | | | | | |
Litigation-related item(pre-tax) | | | (1.51 | ) | | | — | | | | | | | | | | | | | | | | | |
Dilutive impact | | | 0.54 | | | | — | | | | | | | | | | | | | | | | | |
Pension settlement charges(pre-tax) | | | — | | | | 0.03 | | | | | | | | | | | | | | | | | |
Income tax benefit of special item | | $ | (2.21 | ) | | $ | (1.70 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted diluted earnings per share | | | 9.48 | | | | 8.59 | | | $ | 0.89 | | | $ | (0.24 | ) | | $ | 1.13 | | | 10.4% | | 13.2% |
millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | D=(A-B)/B | | E:(A-B-C)/B |
| | A | | B | | C | | % Change |
| | 2020 | | 2019 | | FX Impact | | Reported | | FXN |
| | |
Revenues | | $17,117 | | $17,290 | | $(168) | | (1)% | | —% |
2020 and 2019 Adjusted
performance used under the PIP2017 Revenues
(amounts in millions of dollars)
| | | | |
Reported revenues | | $ | 12,093 | |
Adjustment for favorable impact of acquisitions | | | (12 | ) |
Adjustment for unbudgeted favorable foreign currency translation | | | (8 | ) |
| | | | |
Adjusted currency-neutral revenues | | $ | 12,073 | |
2017 Adjusted EPS
| | | | |
Adjusted diluted earnings per share (see previous reconciliation) | | $ | 9.48 | |
Adjustment for unbudgeted unfavorable foreign currency translation | | | 0.09 | |
| | | | |
Adjusted currency-neutral EPS | | $ | 9.57 | |
2017 Free Cash Flow as Percentage of Sales
(amounts in millions of dollars)
| | | | |
Reported net cash provided by operating activities | | $ | 2,550 | |
Capital expenditures/capitalized software | | | (737 | ) |
| | | | |
Free cash flow (reported) | | $ | 1,813 | |
Transaction costs(pre-tax) | | | 39 | |
Integration costs charges(pre-tax) | | | 237 | |
Restructuring costs(pre-tax) | | | 28 | |
Financing costs(pre-tax) | | | 131 | |
Income tax benefit of adjustments | | | (147 | ) |
Additional cash flow adjustments(1) | | | (175 | ) |
Adjustment for unbudgeted unfavorable foreign currency translation | | | 5 | |
| | | | |
Adjusted free cash flow | | $ | 1,931 | |
(1) | Includes capital expenditure underspend compared to budget and the favorable impact of an accounting change and accounts payable timing, partially offset by unbudgeted early pension contributions. |
| | | | |
Free cash flow as a % of sales (reported) ($1,813/$12,093)
| | | 15 | % |
Adjusted currency-neutral free cash flow as a % of sales ($1,931/$12,073)
| | | 16 | % |
Earnings Per Share | | | | | | | | | | |
| | | | | |
|
| | | | Electronic Voting Instructions
|
| | | | Available 24 hours a day, 7 days a week! |
| | | | Instead of mailing your proxy, you may choose one of the voting
methods outlined below to vote your proxy.
|
| | | | | | Vote by Internet |
| | | | | | • Go towww.envisionreports.com/BDX. |
| | | | | | • Or scan the QR code with your smartphone. |
| | | | | | • Follow the steps outlined on the secure website. |
| | | |
| | Vote by telephone
|
| | | | • Within the USA, US territories and Canada, call toll free1-800-652- |
| | | | VOTE (8683) on a touch tone telephone.
|
| | | | There is No CHARGE to you for the call.
|
| | | | • Outside the USA, US territories and Canada, call 1-781-575-2300 on a |
| | | | | | touch tone telephone. Standard rates will apply.
|
| | | | VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
|
Using ablack inkpen, mark your votes with anXas shown in this example. Please do not write outside the designated areas. | | ☒ | | | | Voting instructions submitted by GSIP participants must be received by 12:00 p.m., EST, on January 17, 2018. Voting instructions submitted by all other BD plan participants must be received by 12:00 p.m., EST, on January 19, 2018. All proxies submitted by record holders through the Internet or telephone must be received by 11:00 a.m., EST, on January 23, 2018. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Twelve Months Ended September 30, |
| | 2020 | | 2019 | | Growth | | Foreign Currency Translation | | Foreign Currency Neutral Growth | | Growth % | | Foreign Currency Neutral Growth % |
Reported Diluted Earnings per Share | | $ | 2.71 | | | $ | 3.94 | | | $ | (1.23) | | | $ | (0.15) | | | $ | (1.08)) | | (31.2)% | | (27.4)% |
Purchase accounting adjustments ($1.356 billion and $1.499 billion pre-tax, respectively) (1) | | 4.80 | | | 5.46 | | | | | | | | | | | |
Integration costs ($49 million and $118 million pre-tax, respectively) (2) | | | 0.76 | | | | 1.18 | | | | | | | | | | | | | | |
Restructuring costs ($26 million and $81 million pre-tax, respectively) (2) | | 0.33 | | | 0.66 | | | | | | | | | | | |
Transaction gain/loss and product-related matters ($383 million and 585 million pre-tax, respectively)(3) | | 2.24 | | | 2.35 | | | | | | | | | | |
European regulatory initiative-related costs ($29 million and $22 million pre-tax, respectively)(4) | | | 0.38 | | | | 0.19 | | | | | | | (0.01) | | | | | | | | |
Investment gains/losses and asset impairments ($59 million pre-tax and $(13) million pre-tax, respectively.(5) | | | 0.35 | | | | 0.06 | | | | | | | (0.01) | | | | | | | | |
Impacts of debt extinguishment ($54 million and $16 million pre-tax, respectively) | | 0.03 | | | 0.20 | | | | | | | | | | | |
Hurricane-related insurance proceeds ($(14) million pre-tax) | | — | | | (0.09) | | | | | | | | | | | |
Income tax benefit of special items and impact of tax reform ($622 million and 265 million, respectively) | | (1.40) | | | (2.26) | | | | | | | | | | | |
Adjusted Diluted Earnings per Share | | $ | 10.20 | | | $ | 11.68 | | | $ | (1.48) | | | $ | (0.17) | | $ | (1.31) | | | (12.7)% | | (11.2)% |
________________________
q(1) IF YOU DO NOT VOTE VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q | | | | |
A | | Proposals — The Board of Directors recommends a voteFOR all the nominees listed;FOR Proposals 2 and 3; andAGAINST Proposal 4. |
| | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
1. Election of Directors: | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | + | | |
01 - Catherine M. Burzik | | ☐ | | ☐ | | ☐ | | 06 - Marshall O. Larsen | | ☐ | | ☐ | | ☐ | | 10 - Claire Pomeroy | | ☐ | | ☐ | | ☐ | | |
| | | | | | | | | | | | | |
02 - R. Andrew Eckert | | ☐ | | ☐ | | ☐ | | 07 - Gary A. Mecklenburg | | ☐ | | ☐ | | ☐ | | 11 - Rebecca W. Rimel | | ☐ | | ☐ | | ☐ | | | | |
| | | | | | | | | | | | | |
03 - Vincent A. Forlenza | | ☐ | | ☐ | | ☐ | | 08 - David F. Melcher | | ☐ | | ☐ | | ☐ | | 12 - Timothy M. Ring | | ☐ | | ☐ | | ☐ | | | | |
| | | | | | | | | | | | | |
04 - Claire M. Fraser | | ☐ | | ☐ | | ☐ | | 09 - Willard J. Overlock, Jr. | | ☐ | | ☐ | | ☐ | | 13 - Bertram L. Scott | | ☐ | | ☐ | | ☐ | | | | |
| | | | | | | | | | | | | |
05 - Christopher Jones | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | | | |
2. Ratification of selection of independent
registered public accounting firm.
| | ☐ | | ☐ | | ☐ | | | | 4. Shareholder proposal to amend the Company’s proxy access by-law.
| | ☐ | | ☐ | | ☐ | | | | |
| | For | | Against | | Abstain | | | | | | | | | | | | | | |
3. Advisory vote to approve named executive
officer compensation.
| | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | |
| | | | |
B | | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below | | |
| | | | | | | | | | | | | | | | | | |
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, custodian, or other representative capacity, please give full title. | | |
| | | | | | |
Date (mm/dd/yyyy) — Please print date below.
| | Signature 1 — Please keep signature within the box.
| | Signature 2 — Please keep signature within the box.
| | |
Dear Shareholder/Plan Participant:
Becton, DickinsonIncludes amortization and Company (“BD”) encourages you to take advantage of convenient ways by which you can vote or direct the voting of your shares. You can vote your shares 24 hours a day, 7 days a week, using either a touch-tone telephone or through the Internet. Your telephone or Internet vote authorizes the proxies named on the below proxy/voting instruction card in the same manner as if you marked, signed, dated and returned the proxy/voting instruction card. If you choose to vote your shares by telephone or through the Internet, there is no need to mail back your proxy/voting instruction card. To vote your shares electronically, please have this voting form in hand and follow the instructions outlined on the reverse side.
Your vote is important. Thank you for voting.
q IF YOU DO NOT VOTE VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
| | |
Proxy / Voting Instruction Card — BECTON, DICKINSON AND COMPANY
| | + |
Proxy Solicited on Behalf of the Board of Directors for the Annual Meeting on January 23, 2018
The undersigned hereby appoints Vincent A. Forlenza, Christopher R. Reidy and Gary DeFazio, and any of them, with full power of substitution, as proxies to attend the Annual Meeting of Shareholders of the Company to be held at 1:00 p.m. EST on Tuesday, January 23, 2018 at the Four Seasons Hotel New York, 57 East 57th Street, New York, New York, and any adjournment thereof, and to vote all shares of the common stock of the Company which the undersigned is entitled to vote upon each of the matters referred to in this proxy and, in their discretion, upon such other matters as may properly come before the meeting. This does not apply to shares held through Company plans, which are addressed below.
Where no choice is made on the reverse side of this form, the proxies will vote FOR all Director nominees; FOR Proposals 2 and 3; and AGAINST Proposal 4.
For plan participants.This card constitutes voting instructionsadjustments related to the respective trusteespurchase accounting for any sharesacquisitions impacting identified intangible assets and valuation of common stock allocatedfixed assets and debt.
(2)Represents integration and restructuring costs associated with acquisitions.
(3)Includes amounts recorded to Other operating expense, net to record product liability reserves, including related legal defense costs, of $378 million and $914 million in 2020 and 2019, respectively. The amount in 2020 also includes a $244 million charge recorded to Cost of products sold related to the undersigned underestimate of probable future product remediation costs. The amount in 2019 also includes the Company’s 1996 Directors’ Deferral Plan (“DDP”),estimated cumulative costs of a product recall of $75 million recorded to Other operating expense, net, as well as the Company’s Deferred Compensationpre-tax gain of $336 million related to BD's sale of its Advanced Bioprocessing business which was recorded to Other operating expense, net.
(4)Represents costs required to develop processes and Retirement Benefit Restoration Plan (“Restoration Plan”)systems to comply with emerging regulations such as the EUMDR and when so provided,GDPR.
(5)Includes charges recorded in Cost of products sold and Research and development expense to write down the Global Share Investment Program (“GSIP”), andcarrying values of certain assets. The amount in 2019 also constitutes voting instructionsincludes an unrealized gain recorded within Other income, net relating to the respective trustees for a proportionate number of shares of common stock in the DDP, Restoration Plan and GSIP for which voting instructions are not received. To the extent the undersigned has been allocated shares of common stock through the Company’s 401(k) Plan, the undersigned is considered a named fiduciary. As a named fiduciary, this card constitutes instructions to the 401(k) Plan trustee as to how to vote those shares. Shares for which no voting instructions are received by the 401(k) Plan trustee will be voted in the same proportion as those shares for which timely instructions have been received.You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE. If you do not vote by telephone or over the Internet, please sign and return this card using the enclosed envelope.
(Items to be voted appear on reverse side.)
| | | | | | |
Change of Address— Please print your new address below.
| | Comments— Please print your comments below.
| | Meeting Attendance
| | |
| | | | | | | | | | |
| | | | | | | | Mark the box to the right if you plan to attend the Annual Meeting (for record holders only). | | ☐ |
| | | | |
∎
| | IF VOTING BY MAIL, COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD. | | + |
an investment.