UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.)
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PERRIGO COMPANY PLC
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NOTICE OF 2024 ANNUAL GENERAL MEETING | |||
NOTICE OF 20222024 ANNUAL GENERAL MEETING
Friday,Thursday, May 6, 20222, 2024
10:00 a.m. (Irish Time)
The 20222024 Annual General Meeting (the “AGM”(“AGM”) of Shareholders of Perrigo Company plc (“the Company” or “Perrigo”) will be held on Friday,Thursday, May 6, 20222, 2024, at 10:00 a.m. (Irish Time) at The Westin Dublin, College Green, Westmoreland Street,,70 Sir John Rogerson's Quay, Grand Canal Dock, Dublin 2, Ireland, GuineaD02 R296, Ireland.
Meeting Agenda:
Meeting Agenda:
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Proposals 1 – 54 are ordinary resolutions requiring the approval of a simple majority of the votes cast at the meeting. Proposal 65 is a special resolution requiring the approval of not less than 75% of the votes cast. All proposals are more fully described in this Proxy Statement.
In addition to the above proposals, the business of the AGM shall include the consideration of the Company’s Irish Statutory Financial Statements for the fiscal year ended December 31, 2021,2023, along with the related directors’ and auditor’s reports and a review of the Company’s affairs.
ADMISSION TO THE ANNUAL GENERAL MEETING
The well-being of all attendees and participants at the AGM is a primary concern for the Company, and in this context, we will continue to monitor developments in relation to the COVID-19 pandemic. While all shareholders are invited to attend the AGM, the AGM will proceed subject to the guidance provided by the Irish Government and the Department of Health (of Ireland) or any other governmental agency in place at the time of the meeting and such other measures as the Board considers appropriate to address health and safety concerns. As a result, there may be restrictions on travel and/or gatherings that affect or prohibit travel to and in-person attendance at the AGM. Due to the ongoing risks posed by the COVID-19 pandemic, the members of our Board and senior management may not be physically present at our AGM in Ireland and may instead participate remotely. Furthermore, toCompany. To promote the health and safety of attendees, we may impose additional procedures or limitations on meeting attendance based on applicable governmental requirements or recommendations or facility requirements. Such additional procedures or limitations may include, but are not limited to, limits on the number of attendees to promote social distancing and requiring the use of face masks.
Shareholders are also encouraged to keep up-to-date with, and follow, any guidance from the Government of Ireland and the Department of Health (of Ireland) (as appropriate) as circumstances may change on short
notice. Should we determine that alternative arrangements may be advisable or required due to public health recommendations regarding COVID-19, such as changing the date, time, location or format of the meeting, we will announce our decision by press release and/or filing with the Securities and Exchange Commission and also post additional information on the Investor Relations section of our website (http://investors.perrigo.com).
For these reasons, weWe encourage all shareholders to vote their shares by proxy in advance of the AGM to ensure you can vote and be represented at the AGM if attending in person is not feasible or not recommended. This can be done in advance of the AGM by using one of the voting options detailed in the accompanying proxy statement.
If you wish to attend the AGM, you must be a shareholder as of the record date, March 7, 2022.4, 2024. If you plan on attending the meeting, you may obtain admission tickets at the registration desk immediately prior to the meeting. Shareholders whose shares are registered in the name of a broker, bank or other nominee should bring proof or a certificate of ownership to the meeting.
Your vote is important. Please consider the issues presented in this Proxy Statement and vote your shares as soon as possible. To do so, you should promptly sign, date, and return the enclosed proxy card or proxy voting instruction form or vote by telephone or Internet following the instructions on the proxy card or instruction form.
A shareholder entitled to attend and vote at the AGM is entitled, using the form provided (or the form in section 184 of the Irish Companies Act 2014), to appoint one or more proxies to attend, speak and vote instead of him or her at the AGM. A proxy need not be a shareholder of record.
By order of the Board of Directors
Todd W. KingmaKyle L. Hanson
Executive Vice President, General Counsel
and Company Secretary
March 24, 2022[ ], 2024
We are once again pleased to take advantage of the Securities and Exchange Commission rule allowing companies to furnish proxy materials to their shareholders over the Internet. This e-proxy process expedites shareholders’ receipt of proxy materials while reducing the costs and the environmental impact of our AGM. On or about March 24, 2022,[ ], 2024, we mailed to our beneficial owners and consenting shareholders of record a notice of internet availability of proxy materials containing instructions on how to access our proxy statement, Annual Report and Irish Statutory Financial Statements and how to vote online. All other shareholders will receive a paper copy of the proxy statement, proxy card, Annual Report and Irish Statutory Financial Statements by mail unless otherwise notified by us or our transfer agent.
The notice of internet availability contains instructions on how you can (i) receive a paper copy of the proxy statement, proxy card, Annual Report and Irish Statutory Financial Statements if you only received a notice by mail or (ii) elect to receive your proxy statement, Annual Report and Irish Statutory Financial Statements over the Internet if you received them by mail this year.
This Proxy Statement, the Annual Report on Form 10-K and Irish Statutory Financial Statements for the fiscal year ended December 31, 2021,2023, are available at www.proxydocs.com/PRGO.
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The proxy statement, form of proxy and voting instructions are being mailed to shareholders starting on or about March 24, 2022.[ ], 2024.
i 2022 Proxy Statement
PERRIGO• 2024 PROXY STATEMENT |
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Proxy Summary
Here are highlights of important information you will find in this proxy statement. As this is only a summary, we encourage you to review the complete proxy statement before you vote.
Our Annual General Meeting
Logistics
Date and Time May at 10:00 a.m.(Irish Time) |
70 Sir John Rogerson's Quay, Grand Canal Dock Dublin 2, D02 R296, Ireland | |
Record Date March | Shareholders on the close of business on the record date may vote on all matters. |
Proposals
Resolutions Proposed for Shareholder Vote | Board Vote | Page Reference for Additional | ||||
1. Election of directors | FOR each nominee | 62 | ||||
2. Ratify, in a non-binding advisory vote, the appointment of Ernst & Young LLP as the Company’s independent auditor, and authorize, in a binding vote, the Board of Directors, acting through the Audit Committee, to fix the remuneration of the auditor | FOR |
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3. Advisory vote on executive compensation | FOR | 73 | ||||
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5. Renew the Board’s authority to opt-out of statutory pre-emption rights under Irish law | FOR |
Governance
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Governance
• Annual director elections |
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• 9 of 10 director nominees are independent |
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• All committee members are independent |
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• Board of Directors is diverse in gender, ethnicity, experience and skills |
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• Regular Board refreshment |
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• Independent directors regularly meet in executive session |
• Separate independent Chair and Chief Executive Officer roles • Annual Board and committee assessments • Robust stock ownership guidelines • Majority voting for directors • No shareholder rights plan • Board level risk oversight • Anti-hedging and anti-pledging policies
• Regular shareholder engagement | ||
Board Refreshment
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Executive Transition/Succession Planning
Sharon Kochan, Former Executive Vice President, President, Rx leftProxy Summary
Board Refreshment
The Nominating & Governance Committee recommends individuals as director nominees based on various criteria, including their business and professional background, integrity, diversity, understanding of our business, demonstrated ability to make independent analytical inquiries and the Perrigo Company as partwillingness and ability to devote the necessary time to Board and committee duties. A director’s qualifications in meeting these criteria are considered at least each time the director is recommended for Board membership. Should a new director be needed to satisfy specific criteria or to fill a vacancy, the Nominating & Governance Committee will initiate a search for potential director nominees, and it will seek input from other Board members, including the CEO and Chairman of the saleBoard, as well as any senior management or outside advisers assisting in identifying and evaluating candidates. The average tenure of our Generic Prescription Drug businessdirectors is approximately 5 years as of the date of the AGM.
The following have been recent refreshments made to Altaris Capital. our Board:
Executive Transition / Succession Planning
The Company is led by an Executive Leadership Team (“ELT”) which consists of the Chief Executive Officer ("CEO") and his direct reports. Perrigo and its Board of Directors have long-partnered on a robust Executive Leadership Team Talent Review and Succession planning process. In May 2023, Murray S. Kessler notified the Company of his intent to retire. The Board implemented its succession plan, and on June 8, 2023 appointed Patrick Lockwood-Taylor, a 30-year experienced executive in consumer self-care, as President, CEO and Director, at which time Mr. Kessler retired from those same positions, but remained with the Company in an advisory role to assist with the transition until July 31, 2023.
Additionally, James E. DillardTriona Schmelter was appointed Executive Vice President and President, Consumer Health CareSelf-Care Americas in October 2021, followingSeptember 2023 replacing James Dillard III. Ms. Schmelter was chosen as a key leader with a proven track-record in not only the resignation of Richard Sorota.Consumer Products space but also leading significant business transformation. We continually conduct Talent Reviews and create succession plans for these key roles.
20212023 Performance Update1
Our ambition
After completing its transformation to a pure play consumer self-care company in 2022, Perrigo progressed its self-care journey in 2023. The Company has refined its strategy to focus on 1) delivering consumer-preferred brands and innovation, 2) driving category growth with our consumers, 3) powering our business with our world-class, quality assured supply chain, and 4) evolving to a single operating model across business lines and geographies. The goal is to empower consumers’ self-care decisions, usingdeliver sustainable, value accretive growth by ‘consumerizing’, simplifying and scaling the Company’s core competenciesorganization, while earning a top-tier total shareholder return.
In addition to fully take advantage ofthese strategic advancements, the massive global trend towards self-care. In 2021, management and the Board of Directors took decisive action and completed our three-year plan to transform Perrigo into a consumer Self-Care market leader, despite pandemic related challenges, by:
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Other highlights and results from continuing operations, include:2) delivering double-digit gross profit, operating income and EPS improvement year-over-year, and 3) expanding year-over-year and sequential gross and operating margins every quarter during the year. These successes were achieved despite the evolving U.S. regulatory environment within the infant formula industry, which impacted our infant formula business during the year.
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Other strategic highlights include:
Other commercial and business highlights:
Other financial highlights of fiscal year 2023 results from continuing operations include:
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Executive Compensation
Executive Compensation Principles
A key element of our success in transforming toAs a Consumer Self-Care market leader, the Company is havingfocused on our new corporate vision, purpose statement and blueprint to build 'One Perrigo'. Our ability to successfully execute our business strategies will depend in large part on continuing to have the right executive leadership team to guide Perrigo in successfully executing our transformation roadmap and ensuringensure the long-term success of the company.
For this reason, our executive compensation program is designed to attract, inspire, and retain the highest level of executive talent. Further, our programs are structured to closely align with our business objectives and commitment to shareholder value creation by having the vast majority of our executives`executives' compensation being at risk, not guaranteed, and linked to performance in order to be realized.
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What We Do | What We Do Not Do | |||||||||||||
| Pay-for-Performance philosophy that emphasizes variable, at-risk, performance based, equitable pay |
| Permit hedging or pledging of
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| Directly align executive compensation with shareholder returns through long-term operational, financial, and share price performance |
| Provide “single trigger” change in control cash severance benefits | |||||||||||
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| Mitigate risk by conducting independent annual risk assessments | |||||||||||||
| Incorporate plan design features that cap maximum level of payouts, use multiple performance metrics and include claw back provisions | |||||||||||||
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| Regularly review annual share utilization and potential dilution from equity compensation plans |
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Proxy Summary Program Design • The primary elements of executive compensation consist of base salary, annual incentive and long-term equity incentive compensation. • The vast majority (85% for our current CEO and 73%, on average, for our other Named Executive Officers or “NEOs”) of our ongoing target executive compensation opportunity is performance-based and/or at-risk (i.e., not guaranteed). • Compensation is weighted toward long-term equity awards rather than short-term cash compensation to directly align the interests of executive leadership and our shareholders.
2023 Compensation Highlights • For 2023, base salaries for all named executive officers were increased in line with the Company's overall salary increase budget of 4%. • Overall, our performance exceeded our sales targets but fell short of the earnings target in the Annual Incentive Plans or "AIP". Actual payouts to executives vary based on business segment performance. • The three-year cumulative payout for the 2021-2023 currency-neutral Adjusted Operating Income used for Performance Share Units (“PSU OI”) was 114% of target. Please see detailed explanation on page 36. • The three-year cumulative payout for the 2021-2023 Relative Total Shareholder Return Performance Share Units (“rTSR-PSUs”) was 0% of target. • In 2023, NEOs were granted annual Long-Term Incentive Plan (“LTIP”) awards allocated 50% to PSU OI that may only be earned based on achievement of Adjusted Operating Income growth goals over three years (2023-2025), 20% to rTSR-PSUs that may only be earned based on our relative Total Shareholder Return (“rTSR”) performance versus the constituents of the S&P 500 over three years, and 30% to Restricted Stock Units (“RSUs”) vesting over three years—meaning that 70% of our Executives’ Target Long-Term Incentive (“LTI”) compensation is subject to performance hurdles in order to vest. • In 2023, Murray S. Kessler notified the Company of his intent to retire. Patrick Lockwood-Taylor, a 30-year experienced executive in consumer self-care, was appointed CEO in June 2023. Mr. Lockwood-Taylor's annual target Total Direct Compensation ("TDC") was established at $8,240,000 which ranked between the 25th and the 50th percentile of the most recently available market data for CEOs of our executive compensation peer companies.
Questions and Answers and Voting Information Please see the Questions and Answers and Voting Information section beginning on page
Corporate Governance General We manage our business under the direction of our Board of Directors. The Chief Executive Officer Corporate Governance Guidelines The Board of Directors has adopted Corporate Governance Guidelines that are available on our website Code of Conduct Our Code of Conduct acknowledges that a reputation for ethical, moral and legal business conduct is one of Perrigo’s most valuable assets. In addition to acknowledging special ethical and legal obligations for financial reporting, the Code of Conduct requires that our employees, officers and directors comply with laws and other legal requirements, adhere to our policies and procedures, avoid conflicts of interest, protect corporate opportunities and confidential information, conduct business in an honest and ethical manner and otherwise act with integrity and in Perrigo’s best interest. Our Code of Conduct is available on our website Director Independence Our Corporate Governance Guidelines provide that a substantial majority of our directors should meet NYSE independence requirements. A director will not be considered independent unless the Board of Directors determines that the director meets the NYSE independence requirements and has no relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Based on its most recent annual review of director independence, the Board of Directors has determined that
In making its independence determination, the Board of Directors has broadly considered all relevant facts and circumstances and concluded that there are no material relationships that would impair these directors’ independence.
Board Oversight of Risk While management is responsible for day-to-day risk management, the Board of Directors is responsible for the overall risk oversight, including Management periodically presents to the Board of Directors its view of the major risks facing the Company, which may include a dedicated The following chart provides a summary overview of key areas of risk oversight for the Board and management.
Corporate Governance
Board Leadership Our governance documents provide the Board with flexibility to select the appropriate leadership structure for the Company. In making leadership structure determinations, the Board considers many factors, including the specific needs of the business and what is in the best interests of the Company’s shareholders. Our current leadership structure consists of a separate Chairman of the Board and Chairman of the Board We have had a separate, independent Chairman of the Board since 2016, and • presiding at all Board meetings, including executive sessions of the independent directors; • serving as a liaison between the CEO and the independent directors, including being responsible for communicating with the CEO regarding CEO performance evaluations and providing feedback from the independent director sessions; • having the authority to call meetings of the independent directors; and • approving Board meeting agendas and schedules to assure there is sufficient time for discussion of all agenda items.
The Chairman is selected from those Perrigo directors who are independent and who have not been a former executive officer of Perrigo. The Chairman position is for an initial term of three years,subject to annual reviews by our Nominating & Governance Committee, annual re-election of that director at the intervening AGMs, and an annual appointment by the independent directors. Shareholder Engagement We believe that ongoing, transparent communication with our shareholders is critical to our long-term success. We have a robust shareholder engagement program, and we maintain active, year-round communication with our shareholders and prospective shareholders through a number of forums, including quarterly earnings presentations, investor conferences, securities filings, phone calls, correspondence
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margin accounts, as well as from pledging Company securities as collateral for a loan. In addition, the policy prohibits Company directors and all employees, including executive officers, from selling Company securities “short”, engaging in “short sales against the box”, and entering into hedging or monetization transactions or similar arrangements with respect to Company securities.
Political and Lobbying Activities and Expenditures
Given the naturePerrigo recognizes that investors and extent ofother stakeholders may be interested in our political and lobbying activities by many companies, shareholders are often concerned about how boards oversee these types of activities and expenditures. With this in mind, we provide the following information:
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However, in February 2021our Nominating & Governance Committee and Board reviewed our governance policies and disclosures related to political and lobbying activities and adopted a written policy regarding political lobbying activities and expenditures that can be accessed on our website at:
https://investor.perrigo.com/corporate-governance.
5 2022 Proxy Statement
Environmental, Social & Governance (ESG)(“ESG”)
ESG Strategy & Risk Oversight
At Perrigo, is committedwe consider sustainability critical to doingour business and growth strategy. We are dedicated to conducting our business in a socially, environmentally, and fiscally responsible and transparent manner. That commitment is reflectedmanner while maintaining transparency in our well-establishedreporting. We believe that our short- and long-term success is directly linked to responsibly managing our environmental impact, respecting human rights, creating an authentic work environment where our people can thrive, and producing high-quality, affordable products that make consumers' lives better.
Aiming to integrate our ESG strategy into our overall business strategy, we have established the ESG governance (as described above),structure of Perrigo to facilitate strategic alignment. Oversight of ESG responsibilities is assigned to relevant Board committees, ensuring we conduct regular reviews of significant ESG issues and progress.
Our Nominating & Governance Committee is responsible for sustainability and ESG initiatives, managing risk oversight pertaining to corporate governance, sustainability, and environmental matters. To support these initiatives our corporate responsibilityPresident and CEO, along with our Vice President of Sustainability & ESG and other Company leaders, consistently engage with the Board, providing regular consultations and updates on sustainability topics.
Performance objectives are assigned to members of the leadership team to further integrate sustainability into our daily operations. One such goal for our CEO and key executives is to reduce at least 368 metric tons of virgin packaging materials from our products within calendar year 2023, and that goal was exceeded with a reduction of 452 metric tons. Additionally, renewable energy and utility reduction targets are assigned to the EVP of Operations and Supply Chain, while Diversity, Equity and Inclusion ("DEI") objectives are assigned to multiple members of the Perrigo Executive Leadership Team.
Under the leadership of our Vice President of Sustainability and ESG, our ESG team is composed of experts responsible for steering the strategy, implementation, and reporting of our global ESG and sustainability initiatives, encompassing areas such as climate change, packaging and human rights. The Global Sustainability team maintains regular communication with internal and external stakeholders, gathering valuable perspectives that inform our strategies, program decisions, and focus.
Reporting and Disclosures:
We report our progress against our commitments and programs as well as by our board oversight of governance and sustainability. We have self-reported on our ESG impact, goals, and progresseach year in our Corporate Social Responsibility Report since 2013, which is published annually mid-yearannual sustainability and can be found under “Corporate Responsibility”ESG report. Over the last few years, we have adopted multiple frameworks to guide our efforts, including:
Additional information about our sustainability efforts and commitments, including our annual sustainability report, our Sustainability and Accounting Standards (SASB) Index, and Task Force on Climate-related Financial Disclosures (TCFD), can be found in the most recentsustainability section of our website: www.Perrigo.com - Our Commitment to the Environment. References to reports and the website are for informational purposes only, and neither the sustainability report which will be refreshed upon the next publication later this year.nor other information on our website is incorporated by reference herein.
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Our sustainability and ESG initiatives are overseen by, and reviewed quarterly with, the Nominating
Environmental, Social & Governance Committee, which is responsible for risk oversight relating to corporate governance, cybersecurity,(“ESG”)
Environmental, Social and Governance Highlights
Since 2021, we revitalized and continuously updated our environmental sustainability strategy, emphasizing three key pillars: climate and environmental matters.operations, plastics and packaging, and our supply chain. This realignment ensures a sharper focus and greater alignment with global standards and the growing array of customer sustainability programs.
Our Sustainability and ESG Reporting Frameworks:
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Environmental Sustainability (ESG)
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Perrigo isClimate & Energy: In 2021, we committed to reducingattain net-zero carbon emissions by 2040. Recognizing the challenges this goal presents in a manufacturing environment, we pledged to reduce our impact onown emissions by 42% by 2030. Additionally, we aim to transition to 100% renewable energy in our own operations by 2026. In 2022, over 9% of our total electricity usage came from renewable sources and we secured multiple new agreements that took effect in calendar year 2023.
Water Stewardship: We are measuring our impacts in the environment. Our environmental sustainability prioritiesareas where our influence is the greatest—the communities in which we operate. In 2022, we withdrew 291 million gallons of fresh water for our manufacturing sites. Approximately 3% of these came from regions considered high-water stress by the World Resource Institute.
Packaging: We are focused on the five areas that we have determined are most materialpromoting a circular economy. As a fast-moving consumer goods company, packaging is core to our business and stakeholders: Climate changeour products. We have set goals to improve consumer recyclability, increase recycled content and CO2 emissions, plasticsreduce packaging material usage through design innovations.In 2023, our executive ESG goal was to reduce at least 368 metric tons of virgin packaging in the year and packaging, waste and recycling, water efficiency and responsible sourcing.we exceeded this goal with 452 metric tons of reduction.
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These five sustainability priorities are embedded into our three-legged sustainability strategy, with each leg having its own set of goals and objectives:
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For more details, metrics and key risk areas, see the Sustainability section of our latest CSR report.
Social and People (ESG)
Perrigo’s vision is to “make lives better, by bringing quality affordable self-care products that consumers trust, everywhere they are sold”.Human Rights: We are proud to save consumers billions of dollars a year on healthcare costs by providing high quality, affordable brands and brand alternatives. But our commitment to making lives better goes beyond saving money for our consumers. We are also dedicated to promoting well-being initiatives for our employees; education and community engagement and giving; diversity, equity, and inclusion; and ethical supply chains.
The Perrigo Company Charitable Foundation and Community Engagement
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Promoting good health and well-being is what we do. Perrigo develops thousands of affordable products that enhance health and well-being, such as nutritional products, diabetes care, and nicotine replacement (supporting SDG goals 3.2, 3.4, and 3.5). However, we go beyond the inherent social benefits of our business model.
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The Perrigo Company Charitable Foundation: This Foundation is a private, nonprofit organization wholly funded by Perrigo Company plc, and it acts as the philanthropic arm of the company, supporting initiatives that promote investments in healthcare, education, and support services in communities where Perrigo operates. The Foundation also makes annual “signature gift” donations, as well as donation matching, scholarship programs, disaster relief, and charitable donations to encourage associates to volunteer their own time.
The Perrigo Foundation donated a total of $2.6 million in cash across the globe during 2021, along with an additional $1.4 million worth of products, approximately $640,000 of which was donated specifically to support healthcare and healthcare services. Visit the Corporate Responsibility page on www.perrigo.com or the Community section of the CSR report to learn more.
Employee Wellness: See Human Capital section below for more on Employee Wellness.
Duecommitted to the heavy reliance on Science, Technology, Engineering, and Math within our industry and company, Quality Education, which is the focus of SDG Goal 4, is both a passion for our employees and the other key focus for giving by the Perrigo Foundation. Last year, we donated over $1.06 million to promote quality education in support of supporting targets 4.1- 4.7.
While significantly limited by current COVID-19 restrictions during the last two years, Perrigo employees pride themselves on strong community engagement and programs, especially relating to education. In fact, Perrigo maintains programs such as Caring 4 Communities, which donates $100 to a charity for every 10 hours an employee volunteers, as well as partnerships and mentor programs with a number of local schools and non-profits.
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Diversity, Equity, and Inclusion (DEI): Perrigo’s inclusive culture values the diversity of our workforce, the consumers we serve, and our surrounding communities.Our commitment to self-care, relentless obsession with our people and consumers, strong moral compass, and evolving social issues serve as our DEI guide.
Our three-year strategy focuses on driving maturity in three key areas:
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Our DEI goals are focused on the following:
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Global Diversity Statistics
As of December 2021
Global DEI Campaigns: We highlight key DEI topics throughout the year to educate, engage and inspire our colleagues. Our recent topics include:
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DEI and COVID: Perrigo educated our workforce on avoiding any social stigma associated with COVID-19, and leaders were informed about how COVID-19 is disproportionately impacting people of color. Leaders and Human Resources partnered with each individual essential worker, as needed, to discuss healthcare, childcare, mental well-being and more. Associates that could work at home were set up with the resources and support needed for success. Leaders met regularly to discuss the unique needs of our diverse workforce as we navigate a global health pandemic.
We are pleased to have launched our first DEI Report in January 2022. The report can be accessed on Perrigo.com
Together, we make lives better!
Visit the Diversity Equity and Inclusion page on www.perrigo.com to learn more.
Human Rights and Supply Chain Ethics:
Perrigo’s Human Rights policy and commitments take a zero-tolerance stance onfight against modern slavery, human trafficking,child labor, unsafe working conditions and allany other formsform of human rights abuse. Our EthicalWe maintain a robust set of ethical standards that apply to all employees of Perrigo globally, as well as any contractors, suppliers, and Social Compliance Program monitorsother third parties doing business on our suppliers around the globe and is designed to ensure they are operating in accordance with our ethical expectations.behalf. In 2021,2022, we conducted more than 180170 third-party ethical and social compliance audits, 50 supplier visits and 120 formal self-assessments of our sites and suppliers within the supply chain.
People & Communities: As a philanthropic leader in the community, we are dedicated to cultivating a culture that makes lives better, not just through our supply chain, an increase from the 115 completedproducts but also through our actions. We firmly believe that community engagement not only directly benefits our associates but also contributes to building morale. In 2022, our contributions amounted to a total of $5.1 million in 2020. cash and products worldwide. Our primary initiatives centered on supporting employees in Ukraine and providing disaster relief for Hurricane Ian.
For more informationdetails, see the Sustainability and ESG report available on www.Perrigo.com. The next Sustainability and ESG report will be published mid-year and will cover the performance data for calendar year 2023.
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Environmental, Social & Governance (“ESG”)
Building a Winning Culture through Belonging
Where all colleagues feel welcomed, valued, respected, and heard, and part of a thriving global community.
In early 2023, Perrigo created our approachnext 3-year strategy and introduced the concept of belonging to Human Rights, seethe organization. Belonging is considered by many to be one of the most effective DEI measures, sitting at the intersection of DEI and engagement. Higher levels of belonging lead to significant increases in engagement, satisfaction, performance, how we handle adversity, well-being and more. We believe that building a winning culture through belonging helps us do our modern slavery statement at https://www.perrigo.com/modernslaverystatement.best work for ourselves, each other, and the consumers we serve.
2023 Strategy Focused Action Examples:
Strategy Focus | Build Inclusive Mindsets | Manage Talent Equitably | Enable Leaders & Embed Accountability |
Intended Outcome (long-term) | All colleagues clearly understand what a culture of belonging looks like and can recognize characteristics within their own team. | All colleagues can thrive because our talent systems & processes drive decisions and achieve results that are equitable. | All leaders clearly understand how to utilize DEI as a lens to make strategic decisions that influence belonging. |
Action Examples | Belonging campaign • Defined belonging & educated workforce • Introduced “Everyday Actions to Build Belonging” • Leader discussion guides & FAQs • “About Me” Belonging profiles • Microaggressions & microaffirmations workshop | Engagement survey • Implemented improved engagement survey tool & process • Measured 6 DEI categories: Belonging, Collaboration, Recognition, Inclusion, Speak My Mind, & Diversity Commitment • Identified baseline & designed improvement action plans | Conversations That Matter • Connected DEI to Perrigo’s Culture Framework • Provided leaders 7 goals related to DEI in 2023 in the form of “Conversations That Matter” • Example goal – Everyone on your team knows how we define inclusion and understands the behaviors that support it |
PERRIGO• 2024 PROXY STATEMENT | 7 | |
Diversity Data: (From 2019 to Year End 2023)
Independent Board Diversity 20% 50%* |
Executive Leadership Team 9% 50%* |
Global Female Leaders 41% 43% |
Global Female Total 50% 48% | |||
U.S. People of Color 19 24% |
U.S. Veteran 3% 3% |
U.S. Disability 4% 7% |
Countries 35 33 |
* Reflects self-disclosed gender and/or race/ethnicity reporting
2024 Priorities:
Strategy Focus | Build Inclusive Mindsets | Manage Talent Equitably | Enable Leaders & Embed Accountability |
Intended Outcome (long-term) | All colleagues clearly understand what a culture of belonging looks like and can recognize characteristics within their own team. | All colleagues can thrive because our talent systems & processes drive decisions and achieve results that are equitable. | All leaders clearly understand how to utilize DEI as a lens to make strategic decisions that influence belonging. |
Priority Focus: | Partner with leaders to further implement drivers of increased belonging and greater cultural competency. Prioritize teams with below benchmark belonging scores. | Adding new methods and processes to source and select best-in-class talent that enables us to serve all consumers. Train Talent Acquisition and Leaders on improved selection. | Conduct focus groups to understand what drives retention for Perrigo. Partner with leaders to influence belonging and retention actions. Improve exit interview process. |
Success Measure: | Business Unit and Team scores against benchmark levels as reported by Engagement survey partner and belonging score increases by 2%. | Increase in applicant flow of talent from historically underrepresented U.S communities leading to increased representation of underrepresented communities. | Increase retention of colleagues that identify with historically underrepresented U.S. communities. |
TOGETHER, we make lives better! |
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8 | PERRIGO• 2024 PROXY STATEMENT | |
Environmental, Social & Governance (“ESG”)
Human Capital Management
As noted earlier, Perrigo’sPerrigo has updated its vision, is"To Provide the Best Self-Care for Everyone" and its purpose to “make"Make lives better, by bringing quality affordable self-care products that consumers trust, everywhere they are sold”Better Through Trusted Health and Wellness Solutions, Accessible to All". We are passionate about making lives better. At Perrigo, we believe that the continuous personal and professional development of our people is an important component of our ability to attract, retain, and motivate top talent, which are all important aspects of our self-care strategy. Our global workforce consists of more than 9,9009,100 full time and part time employees spread across 3433 countries, of which approximately 21%20% were covered by collective bargaining agreements as of December 31, 2021.2023. We continuously endeavor to provide a diverse, inclusive, and safe work environment so our colleagues can bring their best to work, every day. We are allEach of us is responsible for upholding Perrigo’s Core Values – Integrity, Respect, Responsibility, and Responsibility – in addition to the Perrigo Code of Conduct which, together, form the foundation of allCuriosity and our policies, procedures, and practices. Together, we drive Perrigo forward to deliver on our vision to make lives better by bringing Quality, Affordable Self-Care Products that consumers trust everywhere they are sold.Culture Framework.
Total Rewards
Our Total Rewards philosophy is to continuously attract, engage and inspire talentour People by designing compensation, benefitsTotal Rewards that reinforce Belonging at Perrigo and other programs that support the total well-being ofalign with our people.Values and Winning Culture, helping to fulfill Perrigo's Vision. Our total rewards package delivers competitive pay, cash-based incentives, broad-based stock grants, retirement benefits, leading healthcare, paid time off, and on-site services, amongst other benefits.
Well-being
11 2022 Proxy Statement
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Well-being
Perrigo is pleased to offer all colleagues and their household members well-being programs including mindfulness training, life coaching, free counseling services, legal & financial guidance and referrals, education resources and more.
Over the past 18 months, we have enhancedWe continue to enhance our global well-being offering to include a global Employee Assistance Program (EAP)(“EAP”) to further empower the emotional self-care and well-being of our people and their families at no cost to them. The EAP focuses on providing resources and professional support in the areas of physical, emotional, financial, work-life, community, and educational well-being.
Additionally, we are proud to continue our “HEALTHYyou” well-being program that supports our colleagues and their families in maintaining and improving their health as they navigate their own self-care and well-being journeys. This program is highly valued by our colleagues, and it continues to be recognized externally by receiving the Best“Best and Brightest in Wellness™ Award every year since 2017.
Health & Safety
Perrigo’s commitment to self-care starts with our own team. Protecting our people on the job is imperative. From our aggressive safety goals to our behavior-based PASSPerrigo Auditing Safety System (“PASS”) observations program, our programs are some of the most robust and transparent in the industry. We work hard to exceed regulations, ensure our employees are well-trained and foster safe workplace environments. Doing so allows us to continuously deliver high-quality self-care products to our customers and consumers.
COVID-19 ResponseGrowth
Our top priority during the global COVID-19 pandemic has been, and continues to be, the safety of our colleagues. When faced with the challenges of this pandemic, we focused on understanding and supporting each diverse individual and the unique circumstances impacting their ability to serve as an essential worker. We have implemented safety measures to protect our on-site essential colleagues, while asking those who can safely work from home to do so. On-site, we’ve implemented a multi-step pre-screening process before entry into any facility, deep-cleaning protocols, and other safety precautions, all consistent with the rules and guidelines in each jurisdiction in which we operate.
Growth
We are committed to engaging our colleagues and to fostering a belonging culture, where our people feel enabled to contribute their best to Perrigo’s self-care vision. This includes initiatives supporting overall job satisfaction and personal and professional skill development. We want to enable our colleagues to build successful careers at Perrigo while upholding our core values of Integrity, Respect, and Responsibility.
Our development philosophy focuses on a 70-20-10 approach, which provides a practical, blended framework for learning to support individual long-term success (where individuals obtain 70% of their knowledge from job-related experiences, 20% from interactions with others, and 10% from formal educational events).
The primary means of learning and development of our colleagues is through meaningful and challenging work. We are ablehave a robust process for identifying talent and matching them with opportunities to match colleagues with stretching job-related experiencesstretch through our robust talent management processes. review process.
PERRIGO• 2024 PROXY STATEMENT | 9 | |
We moved fromcontinue to develop a 3 pointhealthy pipeline of diverse internal talent to a 5-pointprogress through the organization and have healthy rates of retention. These are strong indicators of our ability to grow capability internally.
Personal development and learning are guided by ongoing conversations and feedback as part of our performance management rating scale to enable more specific performance evaluation and feedback and create greater differentiation. We have also created a set of behavioral expectations called Career Success Drivers to stress the importance of delivering results while strengthening our culture.
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philosophy. Our leaders are encouraged to hold regular career development conversations with our colleagues and support them to find job related experiences to help them get one step closer to reaching their potential. Our approach resulted in 1,100935 promotions and 924in 2023. Additionally, 360 people made lateral moves for colleagues in 2021.to grow their career experience.
Continuous Learning
We start this process with our new colleagues who are all given a structured orientation and onboarding for faster integration. We also empower colleagues to take control of their own development by providing access to our GROWyou personal development curriculum. We expanded access to personal and professional skill development by partneringcontinuing to partner with LinkedIn Learning. This platform providessupplements our curriculum by offering colleagues 24/7 access to over 10,00018,000 on-demand self-study courses. Growing our colleagues through ongoing challenging work opportunities and feedback relies on demand courses to colleagues to support continued growth and success.
Buildingcontinually improving the capabilityquality of our leadership. We continue to improve our ability to identify our future leaders isand provide development for them through our Leadership in Action development program. Last year 72 leaders completed the program.
We also crucial to help us navigatepiloted the increasingly dynamic environment. We invested in developing the leadership capability of 250first two of our most seniorsuite of leadership development programs in 2023 - Aspire for aspiring leaders and Impact for first time leaders. 190 colleagues participated in 2021. We also created the Leadershippilot programs in Action development program for our mid-level leaders to grow their capability.2023.
Engagement
Perrigo regularly conducts global engagement surveys to gather feedback from colleagues to identify strengths and opportunities within our culture. Additionally, we use a variety of channels to facilitate open and direct communication, including regular open forums and town hall meetings with our executive leadership team.
In 2023 we introduced a new survey program where we routinely track six topics, Growth, Belonging, Well-Being, Purpose, Empowerment and Clarity. In addition, we track an overall measure of engagement "eSat" which stands for engagement and satisfaction Score. eSat scores range from 0 (worst) to 100 (best), with 50 being the middle, and reflect the average response to the question: “How happy are you working at your company?”. This question has proven to have the highest correlation with the drivers of engagement, along with outcomes such as retention and productivity. The eSat question is asked with every engagement survey so that engagement can be tracked continually. Our eSat score in 2023 was 70.
13 2022 Proxy Statement
10 | PERRIGO• 2024 PROXY STATEMENT | ||
Board of Directors and Committees | |||
Board of Directors and Committees
Perrigo’s Board of Directors met 106 times during 2021.2023. The Board of Directors has standing Audit, Talent & Compensation and Nominating & Governance Committees, and there were a total of 3120 formal committee meetings during 2021.2023. Each director attended at least 75% of the regularly scheduled and special meetings of the Board and Board committees on which he or she served during 2021.2023.
We encourage all of our directors to attend our annual general meetings, and all directors then serving participated in the AGM in 2021.2023.
The Board has adopted a charter for each of the Audit, Talent & Compensation and Nominating & Governance Committees that specifies the composition and responsibilities of each committee. Copies of the charters are available on our website (http://www.perrigo.com)(www.Perrigo.com) under Investors – Corporate Governance – Committees and are available in print to shareholders upon request to our Company Secretary, Todd W. Kingma,Kyle L. Hanson, Sharp Building, Hogan Place, Dublin 2, D02 TY74, Ireland, or GeneralMeeting@perrigo.com.
Audit Committee
During 2021,2023, the Audit Committee met 57 times. The Audit Committee currently consists of the following independent directors: Donal O’Connor (Chair), Katherine C. Doyle and Geoffrey M. Parker and Theodore R. Samuels.Parker.
The Audit Committee monitors our accounting and financial reporting principles, and policies and our internal controls and procedures.controls. It is directly responsible for the compensation and oversight of the work of the independent registered public accounting firm in the preparation and issuance of audit reports and related work, including the resolution of any disagreements between management and the independent registered public accounting firm regarding financial reporting. It is also responsible for overseeing the work of our internal audit function. Additional information on the committee and its activities is set forth in the Audit Committee Report on page 61.
The Board of Directors has determined that each member of the Audit Committee (1) meets the audit committee independence requirements of the NYSE listing standards and the rules and regulations of the SEC and (2) is able to read and understand fundamental financial statements, as required by the NYSE listing standards. The Board has also determined that Donal O’Connor, Katherine C. Doyle and Geoffrey M. Parker and Theodore R. Samuels have the requisite attributes of an “audit committee financial expert”“Audit Committee Financial Expert” under the SEC’s rules and that such attributes were acquired through relevant education and work experience.
Talent & Compensation Committee
During 2021,2023, the Talent & Compensation Committee formerly known as the Remuneration Committee (the “Committee”(“TCC”) met 67 times. The CommitteeTCC currently consists of the following independent directors: Jeffrey B. Kindler (Chair), Bradley A. Alford, Orlando D. Ashford and Erica L. Mann.Mann and Albert A. Manzone.
The CommitteeTCC reviews and recommends to the Board compensation arrangements for the CEO and non-employee directors. It also reviews and approves the annual compensation for executive officers,
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including salaries, annual incentives, and long-term incentive compensation. The CommitteeTCC administers Perrigo’s annual incentive and long-term incentive plans. The CommitteeTCC also reviews and makes recommendations to the Board regarding corporate culture, diversity, equity, and inclusion initiatives.
The CommitteeTCC engaged Frederic W. Cook & Company, Inc. (“FW Cook”) as its independent consultant to provide independent, outside perspective and consulting services on Perrigo’s executive compensation and non-employee director programs. Additionally, FW Cook assists the CommitteeTCC in considering and analyzing market practices, trends, and management’s compensation recommendations. Perrigo did not retain FW Cook to perform any other compensation-related or consulting services for the Company. Interactions between FW Cook and management were generally limited to discussions on
PERRIGO• 2024 PROXY STATEMENT | 11 | |
behalf of the CommitteeTCC or as required to compile information at the Committee’sTCC’s direction. Based on these factors, its own evaluation of FW Cook’s independence pursuant to the requirements approved and adopted by the SEC and the NYSE, and information provided by FW Cook, the CommitteeTCC has determined that the work performed by FW Cook did not raise any conflicts of interest.
Additional information regarding the processes and procedures of the CommitteeTCC is presented in the Compensation Discussion and Analysis, beginning on page 24.21.
Nominating & Governance Committee
During 2021,2023, the Nominating & Governance Committee met 5formally 6 times. In addition, members of the Nominating & Governance Committee met together with advisors regularly in connection with board refreshment, management succession, and self-assessment planning activities. The Nominating & Governance Committee currently consists of the following independent directors: Adriana Karaboutis (Chair), Rolf A. Classon,Orlando D. Ashford, Katherine C. Doyle and Theodore R. Samuels.Donal O'Connor.
The Nominating & Governance Committee identifies and recommends to the Board qualified director nominees. This committee also develops and recommends to the Board the Corporate Governance Guidelines applicable to Perrigo, leads the Board in its annual review of Board performance and makes recommendations to the Board with respect to the assignment of individual directors to various committees as well as succession planning.
Board oversight of global cybersecurity and information security risk
The Nominating & Governance Committee also overseesmeets separately in advance of each regular Board meeting and makes recommendationswhen needed in the event of a specific cyber threat. The Chair of the Nominating & Governance Committee regularly reports out to the Board regarding Perrigo’s cybersecurityon key matters considered by the Committee.
The Nominating & Governance Committee routinely engages with relevant management on a range of cybersecurity-related topics, including the threat environment and vulnerability assessments, policies and practices, as well. While no organization can prevent all attackstechnology trends and regulatory developments from the global threat landscape, Perrigo recognizes the critical role that Cybersecurity plays in maintaining operations. To protect the organization, Perrigo uses a “defense in depth” strategy. An industry standard frameworkChief Information Officer (“CIO”) and maturity modelChief Information Security Officer (“CISO”). The Board is used to assess our capabilities, educate associates and shape future investments. A combination of internal skillsperiodically briefed on related cybersecurity matters from other executives from Legal, Privacy, IT, and external experts are leveragedrelated to identify, detectbreach management, external attestation of the company’s cyber practices and protect against potential eventsprocesses, and evolving cyber matters that may impactinform the organization. company’s cyber strategy and approach.
The Board of Directors is an integral componentresponsible for understanding and regularly reviewing the entity’s cyber risk management strategy and execution. The Board’s Nominating & Governance Committee, comprised solely of independent Directors, is charged with oversight of risks related to global cybersecurity and operational resiliency. The Board includes at least one member with cybersecurity and technology experience.
As part of its objective, independent oversight of the key risks facing our company, the Board ensures that management is protecting the company’s data and systems, with a keen focus on global cybersecurity and information security risk which are critical components of our Cybersecurityrisk management program.
We use a risk-based, “all threats” and “defense in depth” approach to identify, protect, detect, respond to and recover from cyber threats. Recognizing that no single technology, process or business control can effectively prevent or mitigate all risks, we employ multiple technologies, processes and controls, all working independently but as part of a cohesive strategy to minimize risk. This strategy is regularly tested by external parties through auditing, penetration testing, and other exercises designed to assess and test our cyber health, resiliency and the effectiveness of our program.
12 | PERRIGO• 2024 PROXY STATEMENT | |
Board of Directors and Committees
Executive Sessions of Independent Directors
The independent members of the Board of Directors hold regularly scheduled meetings in executive session without management, and they also meet in executive session with the CEO on a regular basis.
15 2022 Proxy Statement
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Board and Committee Self-Assessments
The Board and the Audit, Talent & Compensation and Nominating & Governance Committees have historically conducted annual self-assessments, either through the use of extensive internal questionnaires or third parties. Through this process, directors evaluate the composition, effectiveness, processes and skills of the Board and individual Committees and identify areas that may merit further focus or consideration. The results of the assessments are reviewed and discussed by members of the Nominating & Governance Committee, which then reports to and leads a discussion with the full Board.
Shareholder Communications with Directors
Shareholders and other interested parties may communicate with any of our directors or with the
independent directors as a group by writing to them in care of our Company Secretary, Todd W. Kingma,Kyle L. Hanson, at Sharp Building, Hogan Place, Dublin 2, D02 TY74, Ireland. Relevant communications will be distributed to the appropriate directors depending on the facts and circumstances outlined in the communication. In accordance with the policy adopted by our independent directors, any communications that allege or report significant or material fiscal improprieties or complaints about internal accounting controls or other accounting or auditing matters will be immediately sent to the Chair of the Audit Committee and, after consultation with the Chair, may be sent to the other members of the Audit Committee. In addition, the Chairman of the Board will be advised promptly of any communications that allege misconduct on the part of Perrigo management or that raise legal or ethical concerns about Perrigo’s practices or compliance concerns about Perrigo’s policies. The General
PERRIGO• 2024 PROXY STATEMENT | 13 | |
Counsel maintains a log of all such communications, which is available for review by any Board member upon his or her request.
Director Nominations
The Nominating & Governance Committee is responsible for screening and recommending candidates for service as a director and considering recommendations offered by shareholders in accordance with our Articles of Association. The Board as a whole is responsible for approving nominees. The Nominating & Governance Committee recommends individuals as director nominees based on various criteria, including their business and professional background, integrity, diversity, understanding of our business, demonstrated ability to make independent analytical inquiries and the willingness and ability to devote the necessary time to Board and committee duties. A director’s qualifications in meeting these criteria are considered at least each time the director is recommended for Board membership. Should a new director be needed to satisfy specific criteria or to fill a vacancy, the Nominating & Governance Committee will initiate a search for potential director nominees, and it will seek input from other Board members, including the CEO and Chairman of the Board, as well as any senior management and anyor outside advisers retained to assistassisting in identifying and evaluating candidates.
As highlighted above, after five years of distinguished service, Rolf A. Classon has decided not to stand for re-election to the Board at our Annual General Meeting. In accordance with our Constitution, the Board has determined that the number of directors effective as of the close of the Annual General Meeting will be reduced to ten. The Nominating and Governance Committee is currently conducting a search for a new director nominee and has engaged Davis Partners Group, a third-party search firm, to assist in the selection process. The Committee and search firm have identified potential qualified candidates, but do not believe the search will be concluded in time to submit a candidate to a vote by shareholders at the 2022 annual general meeting. The Committee expects to actively continue its search and to consider candidates in light of the above criteria.
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Shareholders may nominate candidates for consideration at an annual general meeting by following the process described in the Articles of Association and summarized in this proxy statement under “Voting Information – How do I submit a shareholder proposal or director nomination for the next AGM?”
Upon a change in a director’s job responsibility, including retirement, our Corporate Governance Guidelines require the director to tender his or her resignation from the Board. The Nominating & Governance Committee will consider the change in circumstance and make a recommendation to the Board to accept or reject the offer of resignation.
Proxy Access
Proxy access has been a part of Perrigo since 2017 and allows eligible shareholders to include their own director nominees in Perrigo’s proxy materials along with the candidates nominated by the Board. This right is summarized in this proxy statement under “Voting Information – How do I use proxy access to nominate a director candidate for the next AGM?”
Board Refreshment
TheAs set out within the 'Director Nominations' section, the Board is committed to thoughtful board refreshment and ongoing board succession planning. During 2016 and 2017, seven new independent directors were added to our Board. Mr. KesslerAlbert A. Manzone was appointed as a director upon his appointment as our President and CEOto the board in October 2018. Erica MannJuly 2022. Patrick Lockwood-Taylor was appointed to the Board in 2019. Katherine C. Doyle and Orlando D. Ashford wereJuly 2023, following his appointment as President & CEO. Julia M. Brown was appointed to the boardBoard in July 2020 and December 2020, respectively. In addition, after five years of distinguished service, Rolf A. Classon is retiring from the Board. The Board thanks Mr. Classon for his years of valuable service on the Board and to the CompanyNovember 2023.
As of the date of the AGM, the average tenure of our non-employee directors will be approximately 4.35 years.
Stock Ownership
Under our Corporate Governance Guidelines, each director who is not a Perrigo employee is required to attain stock ownership at a level equal to six times their annual cash retainer, or $450,000. retainer. Non-employee directors are subject to the same definition of stock ownership and retention requirements as executive officers. The details of the Stock Ownership Guidelines (“SOGs”) are described in the Compensation Discussion and Analysis – Other Policies, Practices and Guidelines – Executive Stock Ownership Guidelines section, on page 41.37. All of our non-employee directors and named executive officers are in compliance with these guidelines, either by satisfying applicable ownership levels or complying with the retention requirements.
17 2022 Proxy Statement
14 | PERRIGO• 2024 PROXY STATEMENT | ||
Certain Relationships and Related-Party Transactions | |||
Our Code of Conduct precludes our directors, officers and employees from engaging in any type of activity, such as related-party transactions, that might create an actual or perceived conflict of interest. In addition, our Board of Directors adopted a Related-Party Transaction Policy that requires that all covered related-party transactions be approved or ratified by the Nominating & Governance Committee. Under that policy, each executive officer, director or director nominee must promptly notify the Chair of the Nominating & Governance Committee and our General Counsel in writing of any actual or prospective related-party transaction covered by the policy. The Nominating & Governance Committee, with input from our Legal Department, reviews the relevant facts and approves or disapproves the transaction. In reaching its decision, the Nominating & Governance Committee considers the factors outlined in the policy, a copy of which is available on our website (http://www.perrigo.com)(www.Perrigo.com) under the heading Investors – Corporate Governance – Related-Party Transaction Policy.
In addition, on an annual basis, each director and executive officer completes a directors’ and officers’ questionnaire that requires disclosure of any transactions with Perrigo in which he or she, or any member of his or her immediate family, has a direct or indirect material interest in Perrigo. The Nominating & Governance Committee reviews the information provided in response to these questionnaires.
Based on its review of applicable materials, the Nominating & Governance Committee has determined that there are no transactions that require disclosure in this proxy statement.
Director Compensation | |||
Director Compensation
The Talent & Compensation Committee reviews and makes a recommendation to the Board regarding non-employee director compensation. In determining the level and mix of compensation for non-employee directors, the Talent & Compensation Committee considers our executive compensation peer group and other market data, practices and trends as well as information and analyses provided by FW Cook, its independent consultant.
In 2021,2023, there were no changes to the level and mix of compensation for non-employee directors. All of our non-employee directors were paid an annual cash retainer, and a supplemental annual cash retainer was also paid to committee chairs, the Chairman, and non-chair committee members all as described below.
Chairman Annual Cash Retainer: (in lieu of director retainer) | $150,000 | ||
Director Annual Cash Retainer | $75,000 | ||
Committee Member Retainer: | |||
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Audit | $12,500 | ||
Talent & Compensation | $12,500 | ||
Nominating & Governance | $ 8,000 | ||
Committee Chair Retainer: (in lieu of member retainer) | |||
| |||
Audit | $25,000 | ||
Talent & Compensation | $25,000 | ||
Nominating & Governance | $16,000 |
For 2021,2023, our Chairman of the Board and other non-employee directors received annual equity awards in the form of restricted stock units having a value of approximately $375,000 and $300,000, respectively. These awards vest one year from the grant date and are intended to directly link the majority of director compensation to shareholders’ interests. For Directors who are appointed mid-year, we routinely provide a pro-rated grant.
Directors who are Perrigo employees receive no compensation for their servicesservice as directors.
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PERRIGO• 2024 PROXY STATEMENT | |||
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Director Compensation
The following table summarizes the 20212023 compensation of our non-employee directors who served during the year.
Director Compensation
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)1 | Total ($) |
| Fees Earned or |
| Stock Awards |
| Total | ||||||
O'Connor, Donal |
| 105,304 |
|
| 299,992 |
|
| 405,296 |
| ||||||
Parker, Geoffrey M. |
| 87,500 |
|
| 299,992 |
|
| 387,492 |
| ||||||
Samuels, Theodore 2 |
| 32,771 |
|
| — |
|
| 32,771 |
| ||||||
Alford, Bradley A. | 87,500 | 299,991 | 387,491 |
| 87,500 |
|
| 299,992 |
|
| 387,492 |
| |||
Kindler, Jeffrey B. |
| 100,000 |
|
| 299,992 |
|
| 399,992 |
| ||||||
Karaboutis, Adriana |
| 91,000 |
|
| 299,992 |
|
| 390,992 |
| ||||||
Mann, Erica L. |
| 87,500 |
|
| 299,992 |
|
| 387,492 |
| ||||||
Doyle, Katherine C. |
| 92,804 |
|
| 299,992 |
|
| 392,796 |
| ||||||
Ashford, Orlando D. | 87,500 | 422,454 | 509,954 |
| 158,000 |
|
| 374,990 |
|
| 532,990 |
| |||
Classon, Rolf A. | 158,000 | 375,000 | 533,000 | ||||||||||||
Doyle, Katherine C. | 87,500 | 299,991 | 387,491 | ||||||||||||
Karaboutis, Adriana | 91,000 | 299,991 | 390,991 | ||||||||||||
Kindler, Jeffrey B. | 100,000 | 299,991 | 399,991 | ||||||||||||
Mann, Erica L. | 87,500 | 299,991 | 387,491 | ||||||||||||
O’Connor, Donal | 100,000 | 299,991 | 399,991 | ||||||||||||
Parker, Geoffrey M. | 87,500 | 299,991 | 387,491 | ||||||||||||
Samuels, Theodore R. | 95,500 | 299,991 | 395,491 | ||||||||||||
Manzone, Albert A. |
| 87,500 |
|
| 299,992 |
|
| 387,492 |
| ||||||
Brown, Julia M. 3 |
| 12,534 |
|
| — |
|
| 12,534 |
|
PERRIGO• 2024 PROXY STATEMENT | 17 | |
Ownership of Perrigo Ordinary Shares | |||
Directors, Nominees and Executive Officers
The following table shows how many Perrigo ordinary shares the directors, nominees, and named executive officers, individually and collectively, beneficially owned as of March 7, 2022.4, 2024. The percent of class owned is based on Perrigo ordinary shares outstanding as of that date. The named executive officers are the individuals listed in the Summary Compensation table on page 38.22.
Beneficial ownership is a technical term broadly defined by the SEC to mean more than ownership in the usual sense. In general, beneficial ownership includes any shares a shareholder can vote or transfer and stock options and restricted stock units that are vested currently or become vested within 60 days. Except as otherwise noted, the shareholders named in this table have sole voting and investment power for all shares shown as beneficially owned by them.
Ordinary Shares Beneficially Owned | Shares Acquirable Within 60 Days of Record Date(1) | Total | Percent of Class | Ordinary Shares |
| Shares Acquirable Within 60 |
| Total |
| Percent | ||||||||
Director |
|
|
|
|
|
| ||||||||||||
Bradley A. Alford | 23,978 | 6,599 | 30,577 | * |
| 31,453 |
| 8,764 |
| 40,217 |
| * | ||||||
Orlando D. Ashford | 1,551 | 0 | 1,551 | * |
| 10,037 |
| — |
| 10,037 |
| * | ||||||
Rolf A. Classon | 17,442 | 8,249 | 25,691 | * | ||||||||||||||
Julia M. Brown |
| — |
| — |
| — |
| * | ||||||||||
Katherine C. Doyle | 2,931 | 0 | 2,931 | * |
| 10,406 |
| — |
| 10,406 |
| * | ||||||
Adriana Karaboutis | 10,447 | 0 | 10,447 | * |
| 17,922 |
| — |
| 17,922 |
| * | ||||||
Jeffrey B. Kindler |
| 18,450 |
| 8,764 |
| 27,214 |
| * | ||||||||||
Patrick Lockwood-Taylor |
| 20,500 |
| — |
| 20,500 |
| * | ||||||||||
Erica L. Mann |
| 12,901 |
| — |
| 12,901 |
| * | ||||||||||
Albert A. Manzone |
| 2,848 |
| — |
| 2,848 |
| * | ||||||||||
Donal O'Connor (2) |
| 22,128 |
| 8,764 |
| 30,892 |
| * | ||||||||||
Geoffrey M. Parker (3) |
| 47,084 |
| — |
| 47,084 |
| * | ||||||||||
Named Executive Officers Other Than Directors |
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Murray S. Kessler | 120,501 | 242,882 | 363,383 | * |
| — |
| 217,655 |
| 217,655 |
| * | ||||||
Jeffrey B. Kindler | 10,975 | 6,599 | 17,574 | * | ||||||||||||||
Erica L. Mann | 5,690 | 0 | 5,690 | * | ||||||||||||||
Donal O’Connor (2) | 14,653 | 6,599 | 21,252 | * | ||||||||||||||
Geoffrey M. Parker (3) | 24,609 | 0 | 24,609 | * | ||||||||||||||
Theodore R. Samuels (4) | 38,212 | 6,599 | 44,811 | * | ||||||||||||||
Named Executive Officers Other Than Directors | ||||||||||||||||||
Raymond P. Silcock | 56,992 | 38,101 | 95,093 | * | ||||||||||||||
Eduardo Bezerra |
| 8,428 |
| 4,870 |
| 13,298 |
| * | ||||||||||
James Dillard III | 22,938 | 0 | 22,938 | * |
| 25,130 |
| 27,546 |
| 52,676 |
| * | ||||||
Svend Andersen (5) | 55,024 | 0 | 55,024 | * | ||||||||||||||
Todd W. Kingma (6) | 67,269 | 90,986 | 158,255 | * | ||||||||||||||
Sharon Kochan (7) | 65,129 | 0 | 65,129 | * | ||||||||||||||
Directors and Executive Officers as a Group (19 Persons) (8) | 540,901 | 513,304 | 1,054,205 | 0.8% | ||||||||||||||
Svend Andersen (4) |
| 82,424 |
| 56,851 |
| 139,275 |
| * | ||||||||||
Kyle L. Hanson |
| 8,766 |
| 3,518 |
| 12,284 |
| * | ||||||||||
Ronald Janish (5) |
| 25,163 |
| 42,869 |
| 68,032 |
| * | ||||||||||
Directors and Executive Officers as a Group (20 Persons) (6) |
| 279,338 |
| 240,907 |
| 520,245 |
| 0.4% |
|
* Less than 1%.
5)
6)
7) Shares owned include 450 shares in a charitableretirement fund.
8)
18 | PERRIGO• 2024 PROXY STATEMENT | |
Ownership of Perrigo Ordinary Shares
Other Principal Shareholders
The following table shows all shareholders other than directors, nominees and named executive officers that we know to be beneficial owners of more than 5% of Perrigo’s ordinary shares. The percent of class owned is based on 134,542,239135,515,939 Perrigo ordinary shares outstanding as of March 7, 2022.4, 2024.
Name and Address of Beneficial Owner | Ordinary Shares Beneficially Owned | Percent of Class | ||
The Vanguard Group (1) 100 Vanguard Blvd. Malvern, PA 19355 |
13,789,589 |
10.2% | ||
Barrow Hanley Global Investors(2) 2200 Ross Avenue, 31st Floor Dallas, TX 75201-2761 |
13,505,133 |
10.0% | ||
BlackRock Inc. (3) 55 East 52nd Street New York, NY 10055 |
11,557,239 |
8.6% | ||
T. Rowe Price Associates, Inc. (4) 100 E. Pratt Street Baltimore, MD 21202 |
10,721,574 |
8.0% |
Name and Address of Beneficial Owner | Ordinary Shares Beneficially Owned | Percent of Class | ||||||||
The Vanguard Group(1) 100 Vanguard Blvd. Malvern, PA 19355 | 14,994,309 | 11.07% | ||||||||
BlackRock Inc.(2) 55 East 52nd Street New York, NY 10055 | 13,342,622 | 9.85% | ||||||||
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13, 2024.
(3)
(4) T. Rowe Price Associates, Inc. has sole voting power with respect to 4,642,385 of the shares and sole dispositive power with respect to 10,721,574 shares. This information is based on a Schedule 13G/A filed with the SEC on February 14, 2022.
PERRIGO• 2024 PROXY STATEMENT | 19 | |
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 requires that Perrigo’s executive officers, directors
and 10% shareholders file reports of ownership and changes of ownership of Perrigo ordinary shares with the SEC. Based on a review of copies of these reports filed with the SEC and written representations from executive officers and directors, all filing requirements were met during 2021,2023, such that there were no delinquent reports in 2021. 2023.
20
Executive Compensation | |||
Executive Compensation
Compensation Discussion and Analysis
Introduction
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Our ambitionAfter completing its transformation to a pure play consumer self-care company in 2022, Perrigo progressed its self-care journey in 2023. The Company has refined its strategy to focus on 1) delivering consumer-preferred brands and innovation, 2) driving category growth with our consumers, 3) powering our business with our world-class, quality assured supply chain, and 4) evolving to a single operating model across business lines and geographies. The goal is to empower consumers’ self-care decisions, usingdeliver sustainable, value accretive growth by ‘consumerizing’, simplifying and scaling the Company’s core competenciesorganization, while earning a top-tier total shareholder return.
In addition to fully take advantagethese strategic advancements, the Company maintained its financial momentum in 2023 by 1) achieving record net sales from continuing operations, 2) delivering double-digit gross profit, operating income and EPS improvement year-over-year, and 3) expanding year-over-year and sequential gross and operating margins every quarter during the year. These successes were achieved despite the evolving U.S. regulatory environment within the infant formula industry, which impacted our infant formula business during the year.
Other strategic highlights include:
Other commercial and business highlights:
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PERRIGO• 2024 PROXY STATEMENT | 21 | |
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Other financial highlights andof fiscal year 2023 results from continuing operations include:
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Our Named Executive Officers for 20212023
Perrigo’s named executive officers (“NEO”) for 20212023 were:
Named Executive Officer | Position | |
| President and Chief Executive Officer | |
| Former President and Chief Executive Officer | |
Eduardo Bezerra | Executive Vice President and Chief Financial Officer | |
James Dillard III | Former Executive Vice President and President, Consumer Self-Care Americas | |
Svend Andersen | Executive Vice President and President, Consumer Self-Care International | |
| Executive Vice President, General Counsel, and Company Secretary | |
| Executive Vice President, | |
|
*Specific details regarding Mr. Kochan who separated from Perrigo as part of the sale of our Generic Prescription Drug business to Altaris Capital in July 2021 are discussed on page 44,
This Compensation Discussion and Analysis provides information about our executive compensation program, factors that were considered in making compensation decisions for our NEOs, and details on our programs designed to drive Perrigo’s performance into the future.
2021
22 | PERRIGO• 2024 PROXY STATEMENT | |
Executive Compensation
2023 Say-on-Pay Voting Results
At the 2021our 2023 AGM, our shareholders strongly supportedapproved our executive compensation, with 80.2%67.2% of the votes cast voting in favor of the say-on-pay proposal. TheWhile approved by a majority, this was a decline relative to the prior year and was below the level the Talent & Compensation Committee considered("TCC") felt was acceptable. As part of our engagement efforts following our AGM, we explicitly included executive compensation as part of our proposed agenda to proactively solicit our investors feedback and have a dialogue on our executive compensation program.
We reached out to our top 25 investors, representing 67.9% of shares outstanding. We had conversations with 9 of those investors representing 39.8% of shares outstanding. Company participants included members from investor relations, legal, HR, sustainability & ESG, and finance.
Additionally, several of these meetings were attended by our Chair of the TCC and Chairman of Board of Directors representing 22.6% of shares outstanding. We also reached out to and engaged with two top proxy advisors. Our Chair of the TCC also joined those meetings.
During these calls we received candid feedback from our shareholders support ofand took the opportunity to have a robust discussion on our executive compensation program. Feedback from our shareholders varied with many supporting the overall compensation program. Other investors also noted there was room for improvement in our disclosures when discussing our compensation programs in its evaluation of our compensation policiesprogram and program design for fiscal 2021. All changes made to our program design over the past several years were intended to better support our business strategy. Further,rationale behind certain decisions. During these calls, a few central themes emerged. What we continue to maintain an open line of communication on executive compensation issues with shareholders. In 2021, Perrigo met with shareholders accounting for more than 60% of its shares outstanding, or more than 74% of its active shareholders, to discuss a range of topics including, but not limited to, our consumer self-care strategy, business operationsheard and long-term outlook, capital allocation, transformation objectives and timing, corporate governance and ESG initiatives.how responded is below:
25 2022 Proxy Statement
What We Heard | How We Responded | ||
While many shareholders appreciated the enhanced disclosure of performance goals for our PSU-OIs included in our 2023 proxy statement describing the 2021-2023 PSU OI program, they indicated a preference towards measurement of cumulative 3-year performance rather than year-over-year growth. | Beginning with the 2024 LTIP award, PSU OI awards will be based on a cumulative three-year OI goal as opposed to three annual goals that are based on growth over prior year actual results. The PSU OI goals continue to be aligned with 3/5/7 growth objectives, as described in more detail below.
Additional details on the 2023 PSU OI program are provided in the Long-Term Incentive Award opportunities on page 33. Goals under the most recently completed PSU OI program are found on page 35. | ||
Some shareholders expressed concern over a perceived misalignment between the level of CEO pay and Company performance. | Target TDC for our former CEO, Mr. Kessler, was above median, reflecting his 20+ years of experience as a public-company CEO, proven track record, and strong leadership throughout our strategic transformation. Although Mr. Kessler’s target TDC ranked high, earned pay delivery was aligned with Company performance, in particular with respect to the long-term equity compensation, which was the largest proportion of CEO compensation. Implementation of our CEO succession plan provided the opportunity to set Mr. Lockwood-Taylor’s starting target TDC between the 25th percentile and median of peer company CEOs. While earned pay delivery will continue to be aligned with Company performance, this lower level of target TDC should mitigate the perceived pay-for-performance misalignment. Additional information on the changes to total compensation and the agreement with Patrick Lockwood-Taylor can be found on page 39. | ||
Shareholders appreciated the additional color we provided on the importance of our 3/5/7 long-term growth objectives related to our metric selection and goal setting for our incentive plans. | We have enhanced the discussion around the design and goal setting with the AIP and LTIP. As part of the self-care transformation plan to recapture “The Perrigo Advantage” which was unveiled in 2019, the company communicated our strategy to achieve repeatable “3/5/7” growth, i.e., 3% annual Net Sales growth, 5% annual adjusted operating income growth, and 7% annual adjusted diluted Earnings Per Share (“EPS”) growth. Consistently achieving these growth goals would represent successful completion of the self-care transformation and aligns with our long-term strategy. We believe these metrics most effectively align pay and performance and are the same metrics used by our shareholders to evaluate performance. Therefore, we use Net Sales growth and annual adjusted operating income (at the company and segment level, as applicable) as the financial measures in our AIP, and we use adjusted operating income growth as a key measure in our LTIP. While adjusted diluted EPS growth is an important aspect of our 3/5/7 strategy, we have not yet incorporated it into our AIP or LTIP because the strategic focus on profitable growth makes Operating Income the optimal metric for the LTIP. We will continue to consider other metrics for future plan design. | ||
PERRIGO• 2024 PROXY STATEMENT | 23 | |
What We Heard | How We Responded | |
Shareholders expressed an interest in having more diversified metrics across the LTI and AIP (Perrigo’s Short-Term Incentive plan). | We use Adjusted OI (at the Company and segment level, as applicable) as one of several metrics in our AIP. We also use Adjusted OI growth, measured over three years, as a performance metric in our LTIP. We use Adjusted OI in both the AIP and LTIP because it is a measure of operational performance that incentive plan participants understand and can influence, supports our 3/5/7 strategy, and is linked to shareholder value creation. However, we balance this measure with multiple other measures in our AIP and LTIP. Beginning with the 2023 AIP incentive plan, we added an additional incentive plan metric; Adjusted Gross Margin. In response to shareholder feedback and to align with our near-term financial goals, we are incorporating an additional metric into the 2024 AIP; Operating Cash Flow. This further diversifies the performance metrics used across the AIP and LTIP. | |
Some shareholders expressed an interest in seeing more detailed metrics related to ESG goals that are included in the NEO's individual strategic objectives. | We included the targets and results of the ESG-related goals included in NEO's strategic objectives, which was to reduce at least 368 metric tons of virgin packaging materials from our products within calendar year 2023. More information on these results can be found in the 2023 Performance Goals and Evaluation table on page 31. |
24 | PERRIGO• 2024 PROXY STATEMENT | |
Executive Compensation
Best Compensation Governance and Practices
Our executive compensation program continues to be grounded in the following policies and practices, promoting sound compensation governance, enhancing alignment of our pay-for-performance philosophy, and furthering our NEOs’NEOs interests with those of our shareholders:
| |||||||||||||||
What We Do | What We Do Not Do | ||||||||||||||
Pay-for-Performance philosophy that emphasizes variable, at-risk, performance based, equitable pay |
| Permit hedging or pledging of | |||||||||||||
| Provide significant perquisites | ||||||||||||||
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Directly align executive compensation with shareholder returns through long-term operational, financial, and share price performance | |||||||||||||||
| Provide excise tax gross-up on any change in control payments | ||||||||||||||
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Mitigate risk by conducting independent annual risk assessments | |||||||||||||||
Incorporate plan design features that cap maximum level of payouts, use multiple performance metrics and include claw back provisions | |||||||||||||||
Have rigorous stock ownership guidelines | |||||||||||||||
Use an independent compensation consultant | |||||||||||||||
Regularly review annual share utilization and potential dilution from equity compensation plans | |||||||||||||||
20212023 Compensation Decisions
The Committee’sTCC’s key compensation decisions, based on the Company’s results in 2021,2023, were aligned with actual performance in the year:
Program Element | Talent & Compensation Committee Decisions | ||
| TC | ||
Annual Base Salary | Based on the |
employees.
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| The | |
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LTIP | In |
PERRIGO• 2024 PROXY STATEMENT | 25 | |
Program Element | Talent & Compensation Committee Decisions | |
years, and 30% to Service-Based Restricted Stock Units (“ |
What Guides Our Executive Compensation Program
Our Executive Compensation Principles
Perrigo’s executive compensation program is designed to attract, inspireengage and retaininspire our entire executive team, including our named executive officers, who are critical to the execution of Perrigo’s Self-Care strategy and the long-term success of the company.Company. Perrigo’s executive compensation program reflects our core principles:
Pay is linked to performance: A significant portion of total compensation should be performance-based (at-risk) and linked to the attainment of specific, measurable objectives, including the delivery of our strategic and transformation plan.
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Pay opportunities are market-competitive: Compensation opportunities and program design should attract, engage and inspire the highest level of executive talent who can effectively deliver our strategies and are focused on the long-term interests of our shareholders.
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Pay is shareholder-aligned: Compensation should be provided through multiple pay elements (base salaries, annual and long-term incentives) designed to drive sustainable business performance, build a strong internal culture of company ownership, and create long-term value for all our shareholders.
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The core elements of our executive compensation program are summarized in the table below.
Element | Form | What It Does | ||
Base Salary | Cash | Provides a competitive rate of fixed compensation relative to similar positions at relevant peer companies that enables us to attract and retain critical executive talent. | ||
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AIP | Cash (Variable) | Focuses executives on achieving measurable, annual financial, operational, and strategic goals that, in the aggregate, create long-term, sustainable shareholder value. | ||
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LTIP | Equity (Variable) | Provides incentives for executives to execute on long-term financial/strategic growth goals that drive shareholder value creation and support our long-range talent development and retention strategy. |
27 2022 Proxy Statement
|
The charts below show the target compensation of our CEO and NEOs for fiscal year 2021.2023. These charts illustrate that a majority of NEO compensation is performance-based and/or variable (88%(85% for our CEO and an average of 74%73% for our other NEOs). The weighting of these pay elements is consistent with the market and best practices and puts a substantial majority of the NEOs’ total direct compensation at risk if performance goals are not achieved or if Perrigo performance declines.
*CEO Compensation displayed is for Patrick Lockwood-Taylor
26 | PERRIGO• 2024 PROXY STATEMENT | |
Executive Compensation
The Decision-Making Process
The Role of the Talent & Compensation Committee (“TCC.The Committee”). The Committee,TCC, which is composed entirely of independent directors, oversees our executive compensation program. The CommitteeTCC works very closely with FW Cook, its independent executive compensation consultant, and management to examine the efficacy of Perrigo’s executive compensation program. Details of the Committee’sTCC’s authority and responsibilities are specified in the Committee’sTCC’s charter, which may be accessed at http://perrigo.investorroom.com/corporate-governance.
Each year, the CommitteeTCC reviews and approves the elements of compensation for all executive officers, including the NEOs. The CommitteeTCC submits its recommendations regarding the CEO’s compensation to the independent directors of the Board for approval.
To assist it in making compensation decisions, the CommitteeTCC annually reviews comprehensive historical, current and projected data on the total compensation and benefits package for each of our NEOs. As needed, additional analyses for various termination events are provided (including terminations with and without cause and for death, disability, retirement or following a change in control) so that the CommitteeTCC can consider and understand the nature and magnitude of potential payouts and obligations under the various circumstances. The information is prepared by management and reviewed by FW Cook, generally containing data that are substantially similar to that contained in the tables presented below.
The Role of Management. The CEO makes recommendations to the CommitteeTCC regarding the compensation of all other executive officers for the Committee’sTCC’s approval. The CEO does not participate in the deliberations of the CommitteeTCC regarding his own compensation. Management is responsible for implementing the executive compensation program as approved by the CommitteeTCC and the Board.
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The Role of the Independent Consultant. For 2021,2023, the CommitteeTCC continued to engage FW Cook as its independent compensation consultant to provide advice on various aspects of our executive and non-employee director compensation programs. Other than the support that it provided to The Committee,the TCC, FW Cook provided no other services to the Company or Perrigo management.
The Role of Market Comparison Data. The CommitteeTCC uses information provided by FW Cook regarding the compensation practices of select companies (the “Peer(“Peer Group”), in addition to applicable broader market data, as an element in evaluating both the structure of our executive compensation program and target levels of compensation. Management also periodically reviews survey and industry data from Mercer Human Resource Consulting,Willis Towers Watson, Aon Hewitt, the Korn Ferry Hay Group, and others regarding the market positioning for base salary, annual, and long-term incentive target levels for all employees, including executives. The CommitteeTCC considers this information, together with the factors described above under “Our Executive Compensation Principles”, on page 26, in determining executive compensation.
Each year, with assistance from F.W.FW Cook, the CommitteeTCC reviews the composition of our peer groupPeer Group with the goal to ensure its alignment with our consumer self-care strategy and core business focus. As part of such reviews, the CommitteeTCC considers specific criteria and recommendations regarding companies to add or remove from the peer group.Peer Group. The primary criteria used in determining peer companies are similarity in strategic focus, business operations and/or regulatory environment, company size (revenue and/or market cap) and industry, as well as evaluating companies that consider Perrigo to be a peer, and/or peer networks as determined by other external parties.
The peer groupPeer Group used to inform the Committee’sTCC’s evaluation and determination of executive compensation opportunities for 20212023 was established in the third quarter of 2020. At that time, the Committee determined that adding six additional consumer focused companies of comparable size and similar customer and strategic business profiles was appropriate. Campbell Soup, Hain Celestial, McCormick & Co. and Coty were added because they are similarly sized as Perrigo and all have similar consumer-facing business models, including significant self-care products. Bausch Health and Endo International, in addition to being similarly sized, have a reasonably significant OTC pharmaceutical portfolio and operate in a highly regulated environment similar to Perrigo`s.2022. The table below shows the full list of 20 publicly traded companies that were included in the peer groupPeer Group used to inform the Committee’sTCC’s decisions for fiscal year 20212023 executive compensation.
Bausch Health |
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Campbell Soup | ||||
Church & Dwight Co., Inc. Clorox | Endo International Estee Lauder Hain Celestial Helen of Troy | Post Holdings Prestige Consumer Healthcare, Inc. Reckitt Benckiser Group plc Revlon |
| 27 | |
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Colgate-Palmolive Coty | ||||
Edgewell Personal Care | Kimberly-Clark McCormick & Co. Nu Skin Enterprises | Spectrum Brands Holdings, Inc TreeHouse Foods, Inc. |
In the third quarter of 2023, the TCC approved an update to the Peer Group that will be used to inform the TCC’s decisions for fiscal year 2024 executive compensation. We routinely evaluate our peers based on business "fit" and similarly situated revenues and market cap. Given the emergence of other Self-care organizations, the TCC took the opportunities to add Haleon, Herbalife and Kenvue who specialize in self-care products and are better aligned to Perrigo. With the additions, the TCC felt it was appropriate to remove Colgate-Palmolive, Kimberly Clarke, and Estee Lauder from our peer group, as these companies are larger in revenue and/or market cap and are not as closely aligned from a business operations and regulatory environment standpoint.
The CommitteeTCC considers the 50th percentile of market data to be a salient indication of what is competitive in the market. However, the CommitteeTCC does not focus exclusively on market benchmarking data when making compensation decisions for the NEOs. Instead, market data is one of many contributing factors and reference points that the CommitteeTCC uses when determining appropriate compensation levels for each element of our program (salary, annual, and long-term incentives) and for the combined sum of these elements (total direct compensation).
29 2022 Proxy Statement
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In addition to market comparison data, the CommitteeTCC also considers an individual’s competencies, experience, and overall performance against measurable objectives; Company, segment, and divisional financial and strategic performance; and the aggregate return on investment of executive rewards to Perrigo. Consideration of market comparison data in setting compensation levels is ultimately intended to ensure that our compensation practices are competitive in terms of attracting, motivating, rewarding and retaining executive leaders who can, and do, drive Perrigo’s long-term performance.
20212023 Executive Compensation Program in Detail
Base Salaries
Name | FY2020 Base Salary | FY2021 Base Salary |
| FY2022 Base Salary |
| FY2023 Base Salary | ||
Patrick Lockwood-Taylor |
| N/A |
| $1,200,000 | ||||
Murray S. Kessler | $1,236,000 | $1,236,000 |
| $1,273,000 |
| $1,273,000 | ||
Raymond P. Silcock | $670,000 | $681,216 | ||||||
Eduardo Bezerra |
| $700,000 |
| $728,000 | ||||
James Dillard III |
| $683,000 |
| $696,150 | ||||
Svend Andersen* | $656,177 | $621,728 |
| $613,800 |
| $651,889 | ||
Todd Kingma | $578,000 | $592,645 | ||||||
James Dillard III | $589,000 | $650,000 | ||||||
Kyle L. Hanson |
| $600,000 |
| $624,000 | ||||
Ronald Janish* |
| N/A |
| $604,768 |
* Amounts paid in Euros were converted to U.S. dollars based on foreign exchange rates on the last day of the respective fiscal year.
The CommitteeTCC approves base salaries for the NEOs other than the CEO. For the CEO,CEO's base salary, the CommitteeTCC submits its recommendation for the CEO base salary to the independent directors of the Board for approval. In approving an NEOs’NEOs base salary, the CommitteeTCC may consider comparisons among positions internally and externally, proxy and survey data, performance against measurable financial and strategic objectives, job experience, and unique role responsibilities (in addition to any other data points determined to be relevant). To assist the CommitteeTCC in this process, each year the CEO provides the CommitteeTCC with base salary recommendations for each of the other NEOs, as well as summaries of such NEOs’NEOs individual performance.
For 20212023 the CommitteeTCC approved increases in base salaries for the NEOs that were in line with the Company’s overall salary increase budget of 3%4%. Mr. Dillard`s increase was greater, reflecting his promotion to EVP & President, Consumer Self-Care Americas on October 4, 2021. Mr. Kessler did not receive a salary increase.
Annual Incentive Award Opportunities
The Perrigo Annual Incentive Plan (“AIP”)AIP is designed to motivate and reward employees for achieving and exceeding specific, measurable, strategic and financial goals that support our objective of sustainably creating and increasing long-term shareholder value. Most colleagues participate in the discretionary AIP, including executives, management and individual contributors. AIP awards are paid in cash following completion of the performance year.
28 | PERRIGO• 2024 PROXY STATEMENT | |
Executive Compensation
Near the beginning of each annual performance period, and in connection with the Board’s approval of the financial plan for the year, the CommitteeTCC determines and approves the performance goals and payout schedules of the AIP. The payout schedules reflect a range of potential award opportunities that are set around the target performance goals for the year. Additionally, the Board determines and approves the individual annual incentive targets of executives, which are stated as a percentage of base salary. Finally, the Board reviews and approves the individual strategic objectives of executive officers to ensure strong alignment of their AIP with
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Perrigo’s business priorities. These individual strategic objectives were a formulaic input for determining the bonus opportunity of executive officers in 2021, meaning that each objective isare articulated with clearly measurable success criteria focused on the execution of our consumer-focused Self-Care transformation strategy. However, to ensure that awards reflect a named executive officer’s contribution to our results, the CommitteeTCC has, or in the case of the CEO, the independent directors have, the discretion to adjust any executive officer’s actual award down to as low as 0% payout based on overall individual performance. The maximum incentive award payout for any individual executive is capped at 200% of the target award opportunity.
Target Award Opportunity and Actual Payouts. The 20212023 target AIP award opportunities (as a percentage of base salary) and actual payouts (as a percentage of target) for the NEOs are shown in below in the table "2023 AIP Financial Targets and Actual Results". The range of award opportunities is listed in the Grants of Plan-Based Awards for 2023 table on page 42.
2023 AIP Performance Measures. The TCC determined and approved the performance goals and payout schedules for the 2023 Corporate and Segment Leader AIPs, which corresponded to the 2023 financial plan approved by the Board near the beginning of 2023. Messrs. Lockwood-Taylor, Kessler, Bezerra, Janish, and Ms. Hanson participated in the Corporate AIP, and Mr. Andersen participated in the CSCI Segment AIP. Mr. Dillard participated in the CSCA Segment AIP.
Eighty percent of each NEO’s AIP is tied to financial measures that underpin our stated strategic long-term growth objectives (3/5/7): AIP OI at the corporate level (and for segment leaders, the segment level) and corporate or segment AIP Net Sales. In addition, for the 2023 AIP plan we lowered the weighting of AIP OI and added Gross Margin as an additional measure because improvement of Gross Margin was an important financial priority for the company for 2023. AIP Net Sales and AIP OI exclude the impact of currency as well as acquisitions and divestitures that were not included in our annual plan. “Total Perrigo” AIP OI and Net Sales are based on the aggregate financial performance of our consumer businesses.
PERRIGO• 2024 PROXY STATEMENT | 29 | |
2023 AIP Financial Targets and Actual Results
IN $MILLIONS | METRIC | TARGET | ACTUAL | PAYOUT | ||||||||
CORPORATE | AIP Net Sales | $4,939.7 | $4,660.1 | 72.7% | ||||||||
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AIP OI | $630.0 | $573.7 | 77.7% | |||||||||
| AIP Gross Margin | 38.9% | 38.8% | 97.8% | ||||||||
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CSC AMERICAS | AIP Net Sales | $3,194.2 | $2,962.4 | 63.7% | ||||||||
AIP. OI | $530.4 | $464.2 | 68.8% | |||||||||
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| AIP Gross Margin |
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| 38.9% |
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| 38.8% |
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| 97.8% |
38.8% | ||||||||||||
CSC INTERNATIONAL | AIP Net Sales | $1,745.5 | $1,697.7 | 86.3%% | ||||||||
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| AIP. OI |
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| $286.5 |
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| $284.7 |
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| 98.4% |
AIP Gross Margin | 38.9% | 38.8% | 97.8% |
Net Sales Threshold/Max is 90% / 110% performance for 50%/200% payout; OI Threshold/Max is 80% / 120% performance for 50%/200% payout; Gross Margin Threshold/Max is -200 basis points of target/+100 basis points of target for 50%/200% payout
* Payout for performance between levels is interpolated; payout for performance below the threshold level on each metric would result in no payout for that metric.
Perrigo’s AIP Net Sales performance for 2023 of $4,660 million consisted of:
Perrigo’s AIP OI performance for 2023 of $574 million consisted of:
In the 2023 plan design twenty percent (20%) of each NEO’s AIP payout is based on performance against pre-established, measurable individual strategic objectives. The independent directors in the case of the CEO, and the TCC in the case of the other NEOs, assessed each NEO against their individual goals.
30 | PERRIGO• 2024 PROXY STATEMENT | |
Executive Compensation
NEO | 2023 Performance Goals | 2023 Evaluation | ||
Patrick Lockwood - Taylor | • Strengthen Perrigo’s Investment Story • Develop Perrigo’s Long-term Strategic Growth Roadmap • Define fit-for-purpose leadership and performance culture | In determining Mr. Lockwood-Taylor’s individual strategic objectives payout credit, the TCC along with the Board’s Chairman considered Mr. Lockwood-Taylor’s performance in relation to his pre-established goals, noting the following accomplishments: • Delivered EPS which was within the guidance range • Exceeded Cash Conversion Ratio and met with top investors and customers. • Established governance framework to ensure successful launch of Opill • Continued to address new Infant Formula guidelines. • Exceeded ESG goal to reduce virgin packaging materials in 2023 by at least 368 metric tons. The total 2023 reduction of virgin packaging materials was 452 metric tons. • Delivered vision to frame the long-term strategic roadmap to consumerize Perrigo. • Defined clear executive leadership team structure and brought in key talent to lead Stabilization and Growth of Americas business. • Set corporate level DEI goals and identified 3 focus areas and action plans to achieve. | ||
Eduardo Bezerra | • Advance our Key Strategic Objectives • Drive Operational Improvement • Build a Highly Capable Finance Organization | In determining Mr. Bezerra’ s individual strategic objectives payout credit, the TCC considered the following accomplishments: • Delivered EPS which was within the guidance range • Achieved net leverage target due to enhanced cash-flow • Exceeded goal in go-live of central finance system and other enabling technology. • Delivered Supply chain reinvention savings ahead of plan • Continued to advance and streamline the global finance organization including developing Perrigo Business Services Roadmap and Implementation plan |
Svend Andersen | • Post Merger Management of Combined Perrigo and HRA Businesses • Take Marketing and Innovation to the next level • Value Creation for the Future | In determining Mr. Andersen’s individual strategic objectives payout credit, the TCC considered the following accomplishments: • Mostly achieved Segment Net Sales, Gross Margin and Adj Operating Income targets including acquired business • Worked toward creating a united strategy and operating model across BUs • Secured new product development growth, exceeded pricing objectives but fell short on SSSO goals • Exceeded ESG goal to reduce virgin packaging materials. The goal was to reduce virgin packaging materials in CSCI products in 2023 by at least 80 metric tons, and the total 2023 CSCI reduction was 131 metric tons. | ||
Kyle L. Hanson | • Mitigate Legal Risks to Company • Maximize Operating Income and Support Growth Initiatives • Drive a Compliant Culture and a continued focus on ESG | In determining Ms. Hanson’s individual strategic objectives payout credit, the TCC considered the following accomplishments: • Managed critical risks resulting in a positive verdict in Irish Insurance Litigation and continued to implement defense strategies • Implemented action to support growth initiatives, infant nutrition response and remediation efforts still in process • Supported board of directors with governance and compliance efforts • Improved focus on ESG and DEI | ||
James Dillard III | • Fix the Core/ Create Growth • Deliver HRA and Clearwater Integration • Leadership | In determining Mr. Dillard’s individual strategic objectives payout credit, the TCC considered the following accomplishments: • Delivered EPS which was within the guidance range, missed Adj OI for the third straight year. • Missed eComm sales • Delivered acquisition integration, exceeding planned synergies. • Exceeded in ensuring plants are staffed in line with forecasts • Exceeded ESG goal to reduce virgin packaging materials. The goal was to reduce virgin packaging materials in CSCA products in 2023 by at least 288 metric tons, and the total 2023 CSCA reduction was 321 metric tons • Fell short on SSSO goals | ||
Ronald Janish | • Supply Chain Reinvention • Deliver Forecast Accuracy and Service • Operations Staffing | In determining Mr. Janish’s individual strategic objectives payout credit, the TCC considered the following accomplishments: • Delivered most defined in-year savings targets related to Supply Chain improvements • Exceeded goals outlined in Redzone Deployment • Exceeded ESG goal to reduce virgin packaging materials. The goal was to reduce virgin packaging materials in 2023 by at least 368 metric tons, and the total 2023 reduction of virgin packaging materials was 452 metric tons. • Partially achieved Forecast Accuracy goals • Exceeded Operations Staffing goals, materially improving turnover rates. |
PERRIGO• 2024 PROXY STATEMENT | 31 | |
In order to ensure that awards reflect a named executive officer's contribution to our results, the TCC has, or in the case of the CEO, the independent directors have, the discretion to adjust any executive officer's actual award down to as low as 0%. For the 2023 payouts, the TCC and independent directors chose to apply this discretion. The plan results and individual performance warranted payouts to the NEOs from 74% to 85%. With a desire to underscore that Senior Leadership should be held to a higher degree of responsibility for financial results, the TCC wanted to ensure that the NEOs received less than the average corporate employee who is receiving 80.5%. The decision was made to cap the maximum payout for NEOs at 75% of target. For AIP eligible NEOs, 2023 AIP payouts ranged from 65%-75% of annual targets.
2023 AIP Target Award Opportunities and Actual Payouts. The 2023 target AIP award opportunities (as a percentage of base salary) and actual payouts (as a percentage of target) for the NEOs are shown in the table below. The range of award opportunities is listed in the Grants of Plan-Based Awards for 20212023 table on page 47.42.
Named Executive Officer | 2021 Target AIP (as % of Salary) | 2021 Actual AIP Payout (as % of Target) | ||
Mr. Kessler | 125% | 93.46% | ||
Mr. Silcock | 80% | 88.46% | ||
Mr. Andersen | 75% | 99.75% | ||
Mr. Kingma | 65% | 93.46% | ||
Mr. Dillard | 68% | 73.46% |
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| 2023 Target AIP |
| 2023 Actual AIP Payout |
Named Executive Officer |
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| (as % of Target) |
Patrick Lockwood-Taylor |
| 120% |
| 75.00% |
Murray S. Kessler* |
| 137% |
| - |
Eduardo Bezerra |
| 80% |
| 75.00% |
James Dillard III** |
| 75% |
| 65.00% |
Svend Andersen |
| 75% |
| 75.00% |
Kyle L. Hanson |
| 65% |
| 75.00% |
Ronald Janish |
| 65% |
| 75.00% |
Earned awards can range
* As Mr. Kessler’s separation from 0 to 200%the Company did not constitute a “Retirement”, as defined in the AIP, he did not receive a prorated AIP bonus.
** As part of targetMr. Dillard's separation on October 31, his AIP Payout was pro-rated based on the portion of the year he was employed and paid based on actual performance againstat the pre-established goals. In addition, to ensure that awards reflect an executive officer’s contribution to our results, the Committee has, or in the caseend of the CEO, the independent directors have, the discretion to reduce any executive officer’s actual award down to as low as 0original performance period.
2024 AIP Design
In 2023, based on individual performance.
2021 AIP Performance Measures. The Committee determinedfeedback from shareholders and our desire to reinforce business critical measurements, the TCC approved the performance goals and payout schedulesaddition of AIP Gross Margin to the 2023 AIP design. Similarly for the 2021 Corporate and Segment Leader AIPs, which corresponded2024 AIP design, the TCC approved the addition of AIP Operating Cashflow to the 2021 financial plan approved by the Board near the beginning2024 AIP design to underscore its importance. Instead of 2021. Messrs. Kessler, Silcock, and Kingma participated in the Corporate AIP, and Mr. Andersen participated in the CSCI Segment plan. Mr. Dillard participated in the Corporate AIP plan given that he was aligned to a corporate role for the majorityhaving 20% of the year.
31 2022 Proxy Statement
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Eighty percentAIP design allocated to the Individual Strategic Goals, performance related to the 2024 Individual Strategic Goals will act as a modifier of each NEO’s AIP is tied to financial measures that underpin our stated strategic long-term growth objectives (“3/5/7”): Adjusted Operating Income (“Adj. OI”) at the corporate level (and for segment leaders, the segment level) and corporate or segment revenue. “Corporate” OI and revenue arefunding based on the aggregate financial performance ofmeasures. Perrigo continues on our consumer businessesevolution into a 'One Perrigo' organization focusing on global self-care, the TCC has approved that all NEOs will be measured on Total Perrigo AIP OI, AIP Net Sales, AIP Gross Margin and exclude the pharmaceutical segment, which was divested in 2021. As shown in the chart below, 2021 revenue attainment, which represents 30% of the NEO`s total target AIP ranged from 81.2% for CSCA to 85.6% of target for CSCI. Adj. OI attainment, which represents 50% of the NEO`s total target AIP, ranged from 0% for CSCA to 98.6% for CSCI.Operating Cashflow.
2021 AIP Financial Targets and Actual Results
IN $MILLIONS | METRIC | TARGET | ACTUAL | PAYOUT (% of TARGET) | ||||||||
CORPORATE | Revenue | $4,256.9 | $4,103.8 | 82.0% | ||||||||
Adj. OI | $567.5 | $471.5 | 57.7% | |||||||||
CSC AMERICAS | Revenue | $2,794.0 | $2,688.8 | 81.2% | ||||||||
Adj. OI | $560.6 | $431.7 | 0.0% | |||||||||
CSC INTERNATIONAL | Revenue | $1,457.0 | $1,415.1 | 85.6% | ||||||||
Adj. OI | $207.9 | $206.7 | 98.6% |
Revenue Threshold/Max is 90%/110% performance for 50%/200% payout; OI Threshold/Max is 80%/120% performance for 50%/200% payout
* Payout for performance between levels is interpolated; payout for performance below the threshold level on each metric would result in no payout for that metric.
Perrigo’s AIP Adjusted Operating Income performance for 2021 was $471.5 million, which consisted of $410.4 million profit from operations as reported in our financial statements, plus $61.1 million of net, non-operational adjustments reviewed and approved by the Audit Committee of the Board. These adjustments primarily included $213.2 million of amortization expense and $173.1 million of impairment charges, offset by a net $365.2 million of unusual litigation receipts primarily driven by Alychlo NV and Holdco I BE NV arbitration. In addition, certain other smaller adjustments were made related primarily to acquisition and integration related charges, restructuring charges, separation and reorganization expenses, acquisitions and divestitures not included in Perrigo’s original plan for 2021 and currency.
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Twenty percent (20%) of each NEO’s AIP payout is based on performance against pre-established, measurable individual strategic objectives. The independent directors in the case of the CEO, and the Committee in the case of the other NEOs, assessed each NEO against his individual goals and determined the payouts as a percentage of target, as laid out in the table below:
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35 2022 Proxy Statement
Executive Compensation
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Additional Bonus for Mr. Kingma
As the Committee evaluated Mr. Kingma’s individual performance, they considered that his overall performance far exceeded expectations. The Committee also gave consideration to the tremendous progress the Company made in successfully resolving several complex legal matters, in which Mr. Kingma played a significant role, including:
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In addition, Mr. Kingma was instrumental in the successful sale of our Generic Prescription Drug business, as well as in securing the binding agreement to acquire HRA Pharma. As previously discussed, these accomplishments significantly reduced uncertainly for the Company, marked the completion of our three-year transformation plan to transform Perrigo into a consumer self-care market leader, and materially strengthen our strategic positioning.
For these reasons, the Committee determined that, in addition to the individual component of the AIP, it wanted to provide Mr. Kingma with an additional $1 million cash bonus award in recognition of these tremendous contributions and the material and positive long-term impact that these contributions will have on Perrigo going forward.
Long-Term Incentive Award Opportunities
Long-term stock-based compensation, awarded under our shareholder-approved Long-Term Incentive Plan (LTIP),LTIP, is intended to motivate and reward Perrigo employees, including the NEOs, for creating sustainable, long-term value, as reflected in the total shareholder return of Perrigo stock. Awards under the LTIP may be in the form of incentive stock options, non-statutory stock options, stock appreciation rights or stock awards, including restricted shares or restricted stock units, or performance stock or performance stock units. We provide long-term incentive opportunities to all eligible employees solely through stock-based awards.
As a variable component of compensation, the amount realized from stock-based compensation will vary based on the long-term performance of Perrigo’s shares. In addition to share price performance, PSUs are only earned if specific, measurable financial and/or market-based performance-conditioned goals are achieved over the applicable performance periods.
The CommitteeTCC sets stock-based award levels after consideration of an NEO’s position, review of market competitive reward and grant practices, and the aggregate expense to Perrigo.
During our regularly scheduled meetings in the first quarter of the calendar year, the independent directors approve all regular annual stock-based awards for the CEO, and the CommitteeTCC approves all stock-based awards for the other NEOs, as well as the maximum potential total grants for other employee levels.participating employees. All regular annual stock-based awards are granted on, and priced upon, the closing price of Perrigo stock on the fifth trading day after Perrigo publicly releases its year-end earnings. earnings or if delayed for business needs, the fifth trading day of the next appropriate month.
Off-cycle stock-based awards may be granted at various times during the year to new hires or to existing non-executive employees under special circumstances (e.g., promotions, retention, performance, etc.) through the shareholder-approved LTIP. Though they rarely occur, off-cycle stock-based awards may also be granted during the year to the executive officers other than the CEO with the approval of the CommitteeTCC and to the CEO with the approval of the independent directors as permitted under the LTIP. Such awards are priced at the closing price of Perrigo’s shares on the day the awards are granted. No such awards were granted to the CEO or NEOs in 2021.2023 other than two sign-on grants to Mr. Lockwood-Taylor. These grants consisted of $2,800,000 Restricted Stock Units and $1,500,000 in Equity Performance Stock Units expressly intended to offset a portion of the approximately $4,300,000 in unvested equity which was forfeited upon exiting his previous employer. Mr. Lockwood-Taylor did not receive a 2023 annual grant under the LTIP.
2023 – 2025 Regular Annual LTIP Awards. All of the NEOs received their annual LTIP award for 2023, which consisted of 50% PSU OI that may be earned based on achievement of PSU OI growth goals (from fiscal 2023 through fiscal 2025), 20% rTSR-PSUs that may be earned based on our rTSR performance versus the companies in the S&P 500 from 2023 through 2025, and 30%RSUs vesting over three years. The table and chart below show the LTIP award values granted in fiscal 2023 for each of the NEOs.
37 2022 Proxy Statement
PERRIGO• 2024 PROXY STATEMENT |
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| 2023 – 2025 Awards | |||
| Adj. OI-PSUs | rTSR-PSUs | RSUs | Total Grant Value |
Named Executive Officer | 50% | 20% | 30% | 100% |
Patrick Lockwood-Taylor (1) | $1,500,016 | N/A | $2,799,992 | $4,300,008 |
Murray S. Kessler | $4,874,987 | $2,247,048 | $2,925,014 | $10,047,050 |
Eduardo Bezerra | $900,013 | $414,827 | $539,986 | $1,854,825 |
James Dillard III | $749,992 | $345,703 | $449,988 | $1,545,683 |
Svend Andersen | $699,985 | $322,662 | $420,013 | $1,442,661 |
Kyle L. Hanson | $650,016 | $299,621 | $390,002 | $1,339,638 |
Ronald Janish | $425,003 | $195,914 | $254,987 | $875,904 |
1) Award amounts were calculated in accordance with ASC 718.
2) Mr. Lockwood-Taylor received a combination of Adj.OI-PSUs and RSUs as a one-time sign-on award to offset a portion of awards forfeited upon leaving his previous organization.
LTIP and Pay-for-Performance
The LTIP is designed to align executive rewards with Perrigo performance and investor expectations, and we believe it is working. When Perrigo’s performance did not meet our targets, LTIP awards paid below target. As outlined in the chart below, taking into account the change in market value of our ordinary shares, only 62%63% of the 20192021 – 20212023 LTIP award ofvalue to our NEOs was realized.
*For both RSUs and PSUs, based onTarget amounts were valued using the closing share price on date of vest (March 4, 2022) of $37.23. For OI-PSUs, considers actual payout of 98%, and for rTSR-PSUs payout of 0%. In the case of Mr. Silcock, only 58% of his 2019 – 2021 LTIP award was realized given his date of grant as a new joiner was different than the rest of NEOs. Analysis excludes Mr. Kochan as he separated from the business in July of 2021.
PSU Performance Cycles Ending in 2021
2019-2021 Adjusted OI PSUs (50% of Target Award). 2021 was the last year of the three-year performance period for the 2019-2021 Adjusted OI PSUs. Vesting credit for each of the three respective years was 112%, 125%, and 58% of target PSUs. The final vesting was 98% and was determined by averaging the vesting credit for each of the 3 years in the 3-year performance period.
2019-2021 rTSR PSUs (20% of Target Award). 2021 was the last year of the three-year performance period for the 2019-2021 rTSR PSUs. The Company’s relative TSR was below the 30th percentile versus the applicable peer group (Perrigo ranked 11th out of 14 companies), and therefore no shares were earned under this award.
Information regarding fiscal 2019 grant is included in footnote 4 to the Outstanding Equity Awards at 2021 Year End table on page 49. The actual number of restricted stock units that vested in 2021 for each of our NEOs is listed under Number of Shares Acquired on Vesting in the Option Exercises and Stock Vested in 2021 table on page 50.
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2021 – 2023 Regular Annual LTIP Awards. All of the NEOs received their target annual LTIP award for 2021, which consisted of 50% Adj. OI-PSUs that may be earned based on achievement of Adj OI growth goals (from fiscal 2021 through fiscal 2023), 20% rTSR-PSUs that may be earned based on our Relative Total Shareholder Return (“rTSR”) performance versus the companies in the S&P 500 from 2021 through 2023, and 30%RSUs vesting over three years. The table and chart below show the LTIP award values granted in fiscal 2021 for each of the NEOs.
2021 – 2023 Target Awards | ||||||||
Named Executive Officer | Adj. OI-PSUs (50%) | rTSR-PSUs (20%) | RSUs (30%) | Target Total Grant Value (100%) | ||||
Mr. Kessler | $3,875,000 | $1,550,000 | $2,325,000 | $7,750,000 | ||||
Mr. Silcock | $1,000,000 | $400,000 | $600,000 | $2,000,000 | ||||
Mr. Andersen | $700,000 | $280,000 | $420,000 | $1,400,000 | ||||
Mr. Kingma | $700,000 | $280,000 | $420,000 | $1,400,000 | ||||
Mr. Dillard | $550,000 | $220,000 | $330,000 | $1,100,000 |
*Award amounts were determined based on the closingmarket price of Perrigoour ordinary shares on the date of grant.grant; $41.04. Realized amounts were valued using the closing market price of our ordinary shares on the date of vest; $37.23 for RSUs vesting on March 4, 2022, $38.75 for RSUs vesting on March 3, 2023, and $27.26 for RSUs and OI PSUs vesting on March 5, 2024. Realized amounts consider actual payout of 114% for OI PSUs and 0% for rTSR PSUs. Analysis excludes Mr. Kessler and Mr. Dillard as they separated from the business on July 31 and October 31, respectively.
2021-2023Currency-Neutral Adjusted Operating Income used for PSUs (Adj. OI-PSUs)(PSU OI)
Fifty percent of each executive’s target annual grant value is in the form of Adj. OI-PSUs. The number of Adj. OI-PSUs to be earned for the 2021 grant is dependent on Perrigo’s average performance vest credit during the three-year performance period of January 1, 2021 through December 31, 2023.
The Board sets challenging target goalsPSUs based on the annual financial plan. Earned awards, if any, can range from 0% to 200% of the target number of shares granted and will vest and pay out approximately three years from the grant date, following certification of performance by the Committee.
PSU OI. The CommitteeTCC selected Adj.currency-neutral Adjusted OI (“PSU OI”) as the applicable long-term performance measure for these PSUs because it directly aligns with our stated strategic long-term growth “3/3/5/7” objectives. Goals7 objectives, specifically consistently delivering 5% annual Adjusted OI growth.
The number of PSU OI units earned can be 0 if threshold goals are not achieved or can range from 50% to 200% of the target number of PSUs based on PSU OI versus goals during the three-year performance period.
34 | PERRIGO• 2024 PROXY STATEMENT | |
Executive Compensation
For the 2023 grant, as with previous years, goals for the three-year period are set up front as follows: the target goal for the first year of the three-year performance period is based on the Board-approved annual financial plan, and the target goals for the second and third years of the three-year performance period are determined by applying a pre-determined and fixed, 5% growth rate (i.e., +5%) overto the prior year’s actual Adj.PSU OI.
39 2022 Proxy Statement
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The per-share accounting cost of the Adj. OI-PSUs is Earned PSUs are based on the stock price onaverage of the grant date. The ultimate expensevesting credit for the Adj. OI-PSUs is based on the number of shares actually earned and is accrued overeach year in the three-year performance period.
The following tables summarize the status of the different performance share awards held by the NEOs:
2023-2025 PSU OI
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| Year 1 |
| Year 2 |
| Year 3 |
CY2023 PSU OI |
| (CY23) |
| (CY24) |
| (CY25) |
Maximum (>=120% of metric target performance pays 200% of Target PSUs) |
| $756.0 |
| $723.6 |
| TBD |
Target (100% of metric target performance pays 100% of Target PSUs) |
| $630.0 |
| $603.0 |
| TBD |
Threshold (80% of metric target performance pays 50% of Target PSUs) |
| $504.0 |
| $482.4 |
| .TBD |
Actual Attainment Baseline for 5% Growth Goal |
| $574.3 |
| TBD |
| TBD |
PSU OI Attainment |
| $573.8 |
| TBD |
| TBD |
Performance as % Metric Target |
| 91% |
| TBD |
| TBD |
Payout as % of Target |
| 78% |
| TBD |
| TBD |
Projected Payout (3 year average of Payout as % of Target) |
| TBD |
2022-2024 PSU OI
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| Year 1 |
| Year 2 |
| Year 3 |
CY2022 PSU OI |
| (CY22) |
| (CY23 YE) |
| (CY24) |
Maximum (>=120% of metric target performance pays 200% of Target PSUs) |
| $663.1 |
| $620.4 |
| $723.6 |
Target (100% of metric target performance pays 100% of Target PSUs) |
| $552.6 |
| $517.0 |
| $603.0 |
Threshold (80% of metric target performance pays 50% of Target PSUs) |
| $442.1 |
| $413.6 |
| $482.4 |
Actual Attainment Baseline for 5% Growth Goal |
| $492.3 |
| $574.3 |
| TBD |
PSU OI Attainment |
| $532.7 |
| $573.5 |
| TBD |
Performance as % Metric Target |
| 96% |
| 111% |
| TBD |
Payout as % of Target |
| 91% |
| 155% |
| TBD |
Projected Payout (3 year average of Payout as % of Target) |
| TBD |
PERRIGO• 2024 PROXY STATEMENT | 35 | |
2021-2023 PSU OI
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| Year 1 |
| Year 2 |
| Year 3 |
CY2021 PSU OI |
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| (CY22) |
| (CY23YE) |
Maximum (>=120% of metric target performance pays 200% of Target PSUs) |
| $681.0 |
| $603.7 |
| $620.3 |
Target (100% of metric target performance pays 100% of Target PSUs) |
| $567.5 |
| $503.1 |
| $516.9 |
Threshold (80% of metric target performance pays 50% of Target PSUs) |
| $454.0 |
| $402.4 |
| $413.5 |
Actual Attainment Baseline for 5% Growth Goal |
| $479.1 |
| $492.3 |
| $574.3 |
PSU OI Attainment |
| $471.6 |
| $532.3 |
| $573.5 |
Performance as % Metric Target |
| 83% |
| 106% |
| 111% |
Payout as % of Target |
| 58% |
| 129% |
| 155% |
Projected Payout (3 year average of Payout as % of Target) |
| 114% |
2024-2026 PSU OI
For the 2024 grant, date fair value, as calculated under the applicable accounting standard (FASB ASC Topic 718),Committee changed the PSU OI program design to further align with investor preference to measure three-year cumulative PSU OI. Instead of measuring year-over-year growth separately for 2021 share-based grants is presentedeach year of the three-year performance period, the 2024-2026 PSU OI will be earned based on cumulative PSU OI dollars generated over the three fiscal years 2024, 2025, and 2026.
Target PSU OI will be the sum of:
2021-2023 Relative Total Shareholder ReturnTSR PSUs (“rTSR”rTSR PSUs”) PSUs
Twenty percent of each executive’s target annual grant value is in the form of rTSR PSUs. The TCC selected rTSR as the applicable long-term performance measure for these PSUs to directly align the interests of the executive team with the long-term market performance of Perrigo’s shares. The inclusion of rTSR-PSUs in the overall LTIP mix also provides a relative external performance metric to balance the internal performance metric of PSU OI growth in the PSU OI PSUs.
The number of rTSR PSUs earned can be 0 if the threshold goal is not achieved, or can range from 50% to be earned for200% of the 2021 grant is dependenttarget number of rTSR PSUs based on Perrigo’s rTSR performance versus the companies in the S&P 500 over the three-year performance period, of January 1, 2021 through December 31, 2023.according to the following table:
The Committee approved the continued use of rTSR as a performance metric in the performance-based equity mix as a way of directly aligning the interests of the executive team with the long-term market performance of Perrigo’s shares. The Committee believes the use of rTSR-PSUs in the LTIP mix further aligns executive interests with that of shareholders. The inclusion of rTSR-PSUs in the overall LTIP mix elevates the percentage of each executive’s annual LTI award that is subject to measurable performance achievement, and also provides a relative external performance metric to balance the internal performance metric of Adj. OI growth.
2023-2025 Relative TSR Percentile Rank | Payout (% of Target Shares) | |
≥ 80th Percentile | 200% | |
55th Percentile | 100% | |
30th Percentile | 50% | |
<30th Percentile | 0% |
36 | PERRIGO• 2024 PROXY STATEMENT | |
For the 2021 grant, the number of rTSR-PSUs that may be earned is based on our relative total shareholder return versus the constituents of the S&P 500, measured cumulatively over the three-year performance period.
Executive Compensation
Total shareholder return for Perrigo and the peer companies is calculated using an average of adjusted closing prices for the 20-trading day periods starting on the first and ending on the last day of the performance period (January 1, 2021 and December 31, 2023, respectively, for the 2021 rTSR-PSUs). Earned shares can range from 0 to 200% of the target number of rTSR-PSUs, as outlined in the following table.
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period. Payout for performance between levels is linearly interpolated. If our absolute TSR is negative, the maximum number of shares that may be earned is 100% of target, regardless of our relative performance. In addition, the overall earned value is capped at 500% of the target value.
Sharon Kochan, former Executive Vice President, President, Rx2021-2023 rTSR PSUs
In July 2021, we completedThe performance period for the final major step in our consumer self-care transformation by selling our Generic Prescription Drug business to Altaris Capital for approximately $1.55 billion. As a result, Sharon Kochan’s employment relationship with Perrigo Company plc as EVP & President of Perrigo Rx ended.
Prior to entry into2021-2023 rTSR PSUs ended December 31, 2023. The Company’s relative TSR was below the Generic Prescription Drug business sale agreement, as part of our regular compensation review process in 2021 and based on30th percentile versus the Committee’s reviewconstituents of the compensation market dataS&P 500, and therefore no shares were earned under this award.
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assessment of individual performance in the prior year, Mr. Kochan received an increase in base pay of 2.5% and a regular long-term incentive target award of $1.1M, the composition of which was the same as all other NEOs as outlined on page 39 under “2021 Regular LTIP Awards”
Under Israeli law, Mr. Kochan, an Israeli resident, was entitled to certain separation payments upon his termination of employment from Perrigo. These amounts are included in the “All Other Compensation” column of the Summary Compensation Table, the details of which can be found on page 45.
Other Policies, Practices and Guidelines
Executive Stock Ownership Guidelines
Consistent with our compensation philosophy of tying a significant portion of the total compensation to performance, our executive compensation program facilitates and encourages long-term ownership of Perrigo stock. Our stock ownership guidelines reinforce that philosophy by requiring executive officers to maintain specific levels of stock ownership.
Each executive officer is required to attain certain target levels of stock ownership. These ownership guidelines are expressed in terms of a multiple of base salary. The current ownership guidelines are as follows:
Chief Executive Officer: 6 times base salary
Executive Vice President: 3 times base salary
Senior Vice President:President (only if designated as Section 16 Officer): 2 times base salary
For purposes of determining an executive officer’s stock ownership, at least fifty percent (50%) must consist of (i) shares purchased on the open market, (ii) shares owned jointly with a spouse and/or children, (iii) shares acquired through the exercise of stock options or vesting of restricted shares or RSUs, or (iv) shares held through the Perrigo Company Profit-Sharing and Investment Plan. The balance of an executive officer’s stock ownership may be satisfied through (a) unvested but earned PSUs or RSUs that have not been forfeited, and (b) unvested service-based restricted shares or RSUs that have not been forfeited. Unearned PSUs and unexercised stock options do not count toward an executive’s ownership when measured against the requirement.
Until each executive officer attains the applicable target stock ownership level, he or she is required to retain a stated percentage of shares received through our incentive plans, including shares obtained through the exercise of stock options, vesting of restricted shares or RSUs, payout of PSUs and any other vehicle through which the individual acquires shares. At any time that an executive’s direct stock ownership is below the required levels set forth above, (i) with respect to restricted shares and units, he or she is restricted from selling more than 50% of the net shares received following the vesting of any service-based or PSUs or RSUs under any of the Company’s compensation plans, and (ii) with respect to stock options, he or she is restricted from selling more than 50% of the net value received upon the exercise of any stock option (i.e. after the cost of the option and taxes are remitted), such that at least 50% of the net value received upon the exercise of any stock option must be converted to directly owned shares. In these cases, however, the participants must still adhere to the retention requirements with respect to the remaining shares. In May of 2023, the TCC modified the definition of ownership to include unvested service-based restricted stock units only for retirement-eligible executives since the RSUs for retirement eligible executives no longer require service to earn the awards as outlined in our 2019 Long-Term Incentive Plan.
As of the end of 2021,2023, all of our executive officers, including our NEOs, were in compliance with these guidelines, either by satisfying applicable ownership levels or complying with the retention requirements.
41 2022 Proxy Statement
PERRIGO• 2024 PROXY STATEMENT |
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Clawback Policy
OurIn August of 2023 Perrigo adopted a Compensation Recovery Policy consistent with the final SEC rules and NYSE listing standards, and our AIP and 2019 LTIP (including in the LTIP grant documents), and Non-Qualified Deferred Compensation policies were all amended to include claw-backclawback provisions that allowrequire Perrigo to recover certain incentive compensation paid to an executive if Perrigo’s financial results are later restated due to the individual’s misconduct, including, without limitation, fraud or knowing illegal conduct.
Anti-Hedging and Anti-Pledging Policy
Our insider trading policy prohibits executive officers and directors from trading in options, warrants, puts and calls or similar instruments on Perrigo securities and holding Perrigo securities in margin accounts, as well as from pledging Perrigo securities as collateral for a loan. In addition, the policy prohibits our directors and all employees, including executive officers, from selling Perrigo securities “short,” engaging in “short sales against the box,” and entering into hedging or monetization transactions or similar arrangements with respect to Perrigo securities.
Compensation Risk Assessment
At the Committee’sTCC’s request, FW Cook, the Committee’sTCC’s independent consultant, conducted an assessment of Perrigo’s compensation policies and practices for 20212023 to determine whether any practices might encourage excessive risk taking on the part of executives. This assessment included a review of Perrigo’s pay philosophy, competitive position, annual incentive arrangements (including broad-based incentive plans, based on an inventory of such plans that management provided to FW Cook) and long-term incentive arrangements (including stock option, restricted stock unitRSU and PSU design, as well as potential mitigating factors such as stock ownership requirements, caps on incentive plan payouts, and recoupment policies).
After considering FW Cook’s assessment, the CommitteeTCC concluded that our compensation programs are designed and administered with the appropriate balance of risk and reward in relation to our overall business strategy and are not designed in such a way to encourage executives and employees to take unnecessary risks that would be reasonably likely to have a material adverse effect on Perrigo.
Benefits and Perquisites
Retirement Benefits. We offer retirement benefit plans to provide financial security and to facilitate employees’ saving for their retirement. We make annual contributions under our Perrigo Profit-Sharing and Investment Plan for employees, including the executive officers. We also make matching contributions up to the limits as defined in the applicable regulations under our 401(k) Plan to certain of our employees, including the NEOs.
Executive Benefits. We provide a limited number of perquisites to our NEOs. Benefits may include executive physical exams, relocation benefits, pension benefits and financial counseling/tax advice.
Non-Qualified Deferred Compensation Plan. We maintain a Non-Qualified Deferred Compensation Plan (the “Deferred(“Deferred Compensation Plan”) that allows certain executives, including the NEOs, and other management level personnel to voluntarily elect to defer base salary and earned annual incentive awards. Under that plan, we provide annual profit-sharing contributions and matching contributions that cannot be provided under Perrigo’s Profit-Sharing and Investment Plan (the “(“Tax-Qualified Plan”) because of the limitations of Sections 415 and 401(a)(17) of the Code. Code Section 415 limits the total annual additions to a
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participant’s account under the Tax-Qualified Plan to a specified dollar amount, which was $58,000$66,000 for 2021.2023. Code Section 401(a)(17) limits total compensation that can be considered under the Tax-Qualified Plan. This limit is currently $290,000.$330,000. Due to these limits, certain Perrigo employees would not receive profit-sharing contributions and matching contributions under the Tax-Qualified Plan on their full compensation. Therefore, we provide affected employees who contribute to the Deferred Compensation Plan, including the NEOs, a company match and a profit-sharing contribution under the Deferred Compensation Plan that they would have been eligible for under the Tax-Qualified Plan but for the limitations under the Code.
Employment Agreements (Severance Benefits)
.We typically do not enter into employment agreements with our executives other than our CEO and non-U.S. executives, such as Mr. Andersen and Mr. Kochan,Janish, where local laws require it. We entered into an employment agreement with Mr. KesslerLockwood-Taylor when he was appointed as President and CEO in October 2018. The key compensation terms of this agreement are summarized below.June 2023. In December 2019, based on Svend Andersen’s move to Belgium and based on Belgian law, we
38 | PERRIGO• 2024 PROXY STATEMENT | |
Executive Compensation
terminated Mr. Andersen’s U.K. agreement and replaced it with a Belgian agreement. In March 2023, based on Mr. Janish's move to Ireland and based on Irish law, we entered into an Irish Employment Agreement with Mr. Janish. The key compensation terms of Mr. Andersen’s agreementthese agreements are also summarized below. Mr. Kochan’s agreement became effective September 1, 2016 and ended on July 6, 2021 in connection with the Generic Prescription Drug business sale. The key compensation terms of Mr. Kochan’s agreement are also summarized below.
Post-employment payments under employment agreements, as applicable, and the Executive CommitteeU.S. Severance Policy, and our Change in Control Severance Policy for U.S. Employees, are presented in the section entitled “Potential Payments Upon Termination or Change in Control” beginning on page 52.47.
All other NEOs, except Mr. Kessler, Mr. Lockwood-Taylor, Mr. Andersen, and Mr. Kochan,Janish, are subject to our general severance policy.
Mr. Kessler
Mr.Murray S. Kessler’s employment agreement became effective on October 8, 2018. In accordance with his employment agreement, Mr. Kessler’s compensation included: a base salary; participation in the AIP; annual grants of equity under the LTIP; and participation in Perrigo’s other employee benefit plans.
The employment agreement provided for an initial term of three years, subject to automatic renewal thereafter for one-year periods unless either party provides 180 days’ prior notice of non-renewal. The agreement contained customary confidentiality obligations, non-competition restrictions for two years from the date of termination of employment and non-solicitation restrictions for two years from the date of termination of employment.
On February 13, 2019, Mr. Kessler’s employment agreement was amended to avoid the unintended forfeiture of equity compensation if he were to retire after the initial three-year term of his contract. It provided for accelerated vesting of awards granted under the LTIP (other than PSUs, which will vest or be forfeited based on the attainment of performance goals) so long as Mr. Kessler attains age 62 prior to his termination from employment.
On March 1, 2021, Perrigo Management Company (a subsidiary of the Company) signed an Amended and Restated Employment Agreement (Amended Agreement) with Mr. Kessler to extend his term as CEO, President and member of the Board of Directors for an additional three-year period through October 8, 2024. The term was subject to automatic renewal thereafter for one-year periods unless either party provides 180 days’ prior notice of non-renewal. The Amended Agreement maintained Mr. Kessler’s current salary and provides a target annual bonus opportunity of $1,545,000 in 2021 and not less than $1,745,000 in 2022 and future years. Beginning in 2022, the fair value of Mr. Kessler’s annual grant under the LTIP would be no less than $9,750,000. In 2023 the Board increased Mr. Kessler’s target compensation in recognition of the major strategic accomplishments in the Company’s self-care transformation under his leadership, including the reconfiguration of the Company’s product portfolio, a significant reduction of uncertainty including the resolution of the potential €1.6 billion Irish tax liability and the return to strong growth of the Company’s topline. The Board also felt the executional excellence required for the Company’s go-forward strategic plans further supported an increase in his target compensation which continues to require strong performance in order for the AIP and LTI PSUs to payout for Mr. Kessler.
On May 9, 2023, Mr. Kessler notified the Company of his intent to retire, effective July 31, 2023. The Board implemented its succession plan, and on June 8, 2023 appointed Mr. Lockwood-Taylor as President, CEO and Director, at which time Mr. Kessler retired from those same positions, but remained with the Company in an advisory role to assist with the transition until July 31, 2023.
Mr. Lockwood-Taylor
Mr. Lockwood-Taylor's employment agreement became effective on June 30, 2023. Consistent with our emphasis on performance-based pay, the majority of Mr. Kessler’sLockwood-Taylor's annual compensation is stock-based with the ultimate
value realized based on Perrigo’s stock price performance. In accordance with his employment agreement, Mr. Kessler’sLockwood-Taylor's compensation includes: a base salary; participation in the AIP; annual grants of equity under the LTIP; and participation in Perrigo’s other employee benefit plans.
Mr. Lockwood-Taylor did not receive a 2023 annual grant under the LTIP. The agreement outlines one-time Buy-Out Compensation offered in the form of $2,800,000 Restricted Stock Units and $1,500,000 in Equity Performance Stock Units expressly intended to offset a portion of the approximately $4,300,000 in unvested equity which was forfeited upon
PERRIGO• 2024 PROXY STATEMENT | 39 | |
exiting his previous organization. The Independent Directors were intentional to ensure that a significant portion of this was performance based, subject to performance of PSU OI and aligned with the interest of shareholders.
In addition, the employment agreement did offer initial benefits related to relocation to Grand Rapids, Michigan and Legal Fees related to negotiation of his employment agreement.
The employment agreement provides for an initial term of threetwo years, subject to automatic renewal thereafter for one-yeartwo-year periods unless either party provides 18090 days’ prior notice of non-renewal. The agreement contains customary confidentiality obligations, non-competition restrictions for two years from the date of termination of employment and non-solicitation restrictions for two years from the date of termination of employment.
If Mr. KesslerLockwood-Taylor were involuntarily terminated by us without cause or voluntarily terminated for good reason (as defined in the agreement), he would receive cash severance benefits and continued vesting of certain stock-based awards. The circumstances under which severance benefits are triggered and the resulting payouts are generally consistent with market practices.
OnIn September of 2023, an amendment to Mr. Lockwood-Taylor was issued changing his place of employment from Grand Rapids, Michigan to Morristown, New Jersey negating the need for additional standard relocation support.
The Company and Patrick Lockwood-Taylor entered into Amendment No. 2 to his Employment Agreement, on February 13, 2019,21, 2024, which modified Mr. Kessler’s employment agreement was amendedLockwood-Taylor’s AIP target bonus opportunity for 2024 from 120% of annual base salary to avoid the unintended forfeiture40% of equity compensation if he were to retire after the initial three-year term of his contract. It now provides for
43 2022 Proxy Statement
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accelerated vesting of awards grantedannual base salary. In consideration thereof, Mr. Lockwood-Taylor will receive an RSU grant under the LTIP (other than PSUs, whichin 2025 equal to two times the actual AIP bonus awarded for 2024 performance, plus 10% (the “RSU Grant”). The RSU Grant will be in addition to any annual award under the LTIP and will vest or be forfeited basedin two equal installments on the attainment of performance goals) so long as Mr. Kessler attains age 62 prior to his termination from employment.
On March 1, 2021, Perrigo Management Company (a subsidiaryfirst and second anniversary of the Company) signed an Amended and Restated Employment Agreement (the “Amended Agreement”) with Mr. Kessler to extend his term as CEO, President and member of the Board of Directors for an additional three-year period through October 8, 2024. The term remains subject to automatic renewal thereafter for one-year periods unless either party provides 180 days’ prior notice of non-renewal. The Amended Agreement maintains Mr. Kessler’s current salary and provides a target annual bonus opportunity of $1,545,000 in 2021 and not less than $1,745,000 in 2022 and future years. Beginning in 2022, the fair value of Mr. Kessler’s annual grant under the Long-Term Incentive Plan will be no less than $9,750,000. Under the Amended Agreement, a notice of non-renewal timely sent by Perrigo Management Company will not be considered a Termination for severance purposes.date.
Except as described above, the terms of Mr. Kessler’s ongoing employment remain materially unchanged from his Employment Agreement, dated October 8, 2018, as amended on February 13, 2019.
Mr. Andersen
Mr. Andersen’s current Belgian management agreement became effective in December 2019. In accordance with his management agreement, Mr. Andersen’s compensation includes a base salary; participation in the AIP; annual grants of equity under the LTIP; and an additional fee to use for travel.
The management agreement has an indefinite term and will continue unless Mr. Andersen provides six months’ prior notice of termination or the Company provides three months’ prior notice of termination. The agreement contains confidentiality provisions as well as non-competition and non-solicitation provisions, ranging from one year to two years from the date of termination of his agreement.
Mr. KochanJanish
Mr. Kochan’s employment agreementJanish's Irish Employment Agreement became effective on September 1, 2016.in March 2023. In accordance with histhis employment agreement, Mr. Kochan’sJanish's compensation includedincludes a base salary; participation in the AIP Plan; andAIP; annual grants of equity under the LTI Plan.LTIP; and participation in Perrigo's other employee benefit plans.
The employmentEmployment Agreement is fixed term agreement had an indefinite termending on December 31, 2025 and would continue unless either party provides 18 months’three months' prior notice of termination.termination by both parties. If Mr. Janish were involuntarily terminated by us without cause or voluntarily terminated for good reason (as defined in the Perrigo Employee Severance Programme, Ireland), he would receive cash severance benefits and continued vesting of stock-based awards for thirty-six months. The agreement contains non-disclosure restrictions for three years from the date of termination of his employment and non-competition and non-solicitation restrictions for six months from the date of termination of his employment.confidentiality provisions.
The agreement also contains relocation support consistent with what is required to enable a standard international relocation on a fixed term basis.
40 | PERRIGO• 2024 PROXY STATEMENT | |
Executive Compensation
Summary Compensation Table
The following table summarizes the compensation of our named executive officers for 2021, 2020,2023, 2022, and 2019.2021.
Summary Compensation Table
Name and Principal Position | Fiscal Year | Salary($) | Bonus($) (1) | Stock Awards($)(2) | Option Awards($)(3) | Non-Equity Incentive Plan Compensation($)(4) | All Other Compensation($)(5) | Total($) | ||||||||
Murray S. Kessler CEO, President | 2021 | 1,236,000 | — | 7,749,994 | — | 1,444,014 | 99,253 | 10,529,261 | ||||||||
2020 | 1,219,500 | — | 7,749,982 | — | 1,928,593 | 69,155 | 10,967,230 | |||||||||
2019 | 1,200,000 | — | 7,750,010 | — | 1,791,436 | 66,326 | 10,807,772 | |||||||||
Raymond P. Silcock EVP, CFO | 2021 | 678,287 | — | 2,000,002 | — | 481,950 | 42,792 | 3,203,032 | ||||||||
2020 | 664,625 | �� | 1,999,974 | — | 636,443 | 58,378 | 3,359,420 | |||||||||
2019 | 500,000 | 500,000 | 2,000,033 | — | 471,775 | 8,400 | 3,480,208 | |||||||||
James Dillard III EVP President CSCA | 2021 | 605,558 | — | 1,100,036 | — | 311,694 | 82,103 | 2,099,391 | ||||||||
2020 | 625,400 | — | 1,099,975 | — | 465,143 | 113,652 | 2,304,170 | |||||||||
2019 | 529,266 | — | 1,700,002 | — | 437,677 | 47,848 | 2,714,794 | |||||||||
Svend Andersen EVP, President CSCI(6) | 2021 | 618,980 | — | 1,400,039 | — | 465,148 | 96,657 | 2,580,823 | ||||||||
2020 | 651,400 | — | 1,400,048 | — | 366,614 | 103,849 | 2,521,911 | |||||||||
2019 | 646,704 | — | 1,399,985 | — | 398,390 | 32,394 | 2,477,473 | |||||||||
Todd W. Kingma EVP, General Counsel and Secretary | 2021 | 589,032 | 1,000,000 | 1,400,039 | — | 359,648 | 60,719 | 3,409,437 | ||||||||
2020 | 573,981 | — | 1,400,048 | — | 461,617 | 62,566 | 2,498,212 | |||||||||
2019 | 557,263 | — | 1,399,985 | — | 435,498 | 82,647 | 2,475,393 | |||||||||
Sharon Kochan EVP, President Rx | 2021 | 349,360 | — | 1,100,036 | — | 0 | 1,340,626 | 2,790,022 | ||||||||
2020 | 662,451 | — | 1,099,975 | — | 344,468 | 224,949 | 2,331,842 | |||||||||
2019 | 602,517 | — | 975,042 | — | 349,496 | 207,649 | 2,134,703 |
Name and Principal Position |
| Fiscal |
| Salary |
| Bonus |
| Stock |
| Non-Equity |
| All Other |
| Total |
Patrick Lockwood-Taylor |
| 2023 |
| 604,615 |
| — |
| 4,300,008 |
| 1,080,000 |
| 83,346 |
| 6,067,969 |
CEO, President |
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Murray S. Kessler |
| 2023 |
| 759,557 |
| — |
| 10,047,050 |
| — |
| 91,133 |
| 10,897,739 |
Former CEO, President |
| 2022 |
| 1,263,750 |
| — |
| 9,927,633 |
| 1,678,865 |
| 104,088 |
| 12,974,336 |
|
| 2021 |
| 1,236,000 |
| — |
| 7,749,994 |
| 1,444,014 |
| 99,253 |
| 10,529,261 |
Eduardo Bezerra |
| 2023 |
| 721,000 |
| — |
| 1,854,825 |
| 436,800 |
| 38,767 |
| 3,051,392 |
EVP, CFO |
| 2022 |
| 437,500 |
| 200,000 |
| 1,875,395 |
| 549,976 |
| 9,150 |
| 3,072,021 |
James Dillard III |
| 2023 |
| 576,713 |
| — |
| 1,545,683 |
| 267,425 |
| 39,482 |
| 2,429,303 |
EVP, President CSCA |
| 2022 |
| 674,375 |
| — |
| 2,036,398 |
| 390,078 |
| 81,869 |
| 3,182,721 |
|
| 2021 |
| 605,558 |
| — |
| 1,100,036 |
| 311,694 |
| 82,103 |
| 2,099,391 |
Svend Andersen |
| 2023 |
| 647,142 |
| — |
| 1,442,661 |
| 366,687 |
| 93,806 |
| 2,550,296 |
EVP, President CSCI (5) |
| 2022 |
| 606,592 |
| — |
| 2,010,985 |
| 469,373 |
| 90,967 |
| 3,177,917 |
|
| 2021 |
| 618,980 |
| — |
| 1,400,039 |
| 465,148 |
| 96,657 |
| 2,580,823 |
Kyle L. Hanson |
| 2023 |
| 618,000 |
| — |
| 1,339,638 |
| 304,200 |
| 21,750 |
| 2,283,588 |
EVP, General Counsel and Secretary |
| 2022 |
| 350,000 |
| — |
| 1,571,020 |
| 371,319 |
| 8,550 |
| 2,300,889 |
Ronald Janish |
| 2023 |
| 622,913 |
| — |
| 875,904 |
| 294,824 |
| 439,078 |
| 2,232,720 |
EVP, Global Operations & Supply Chain & CTO |
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2022.
2021.
4)
5) Opportunities..
6)
45 2022 Proxy Statement
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All Other Compensation Detail
Name | Perquisites and Other Personal Benefits($)(1) | Registrant Contributions to Defined Contribution Plans ($)(2) | Registrant Contributions to Non-Qualified Plans ($) | Executive Long-Term Disability ($)(3) | Severance ($)(4) | Total ($) |
| Perquisites |
| Registrant |
| Registrant | Tax Gross-up |
| Total | |||||||
Patrick Lockwood-Taylor |
| 50,551 |
| — |
| — | 32,795 |
| 83,346 | |||||||||||||
Murray S. Kessler | 0 | 17,250 | 82,003 | 0 | 0 | 99,253 |
| — |
| 19,050 |
| 72,083 | — |
| 91,133 | |||||||
Raymond P. Silcock | 0 | 17,250 | 25,542 | 0 | 0 | 42,792 | ||||||||||||||||
Eduardo Bezerra |
| — |
| 19,050 |
| 19,717 | — |
| 38,767 | |||||||||||||
James Dillard III | 21,623 | 60,480 | 0 | 0 | 0 | 82,103 |
| — |
| 19,050 |
| 20,432 | — |
| 39,482 | |||||||
Svend Andersen(4) | 96,657 | 0 | 0 | 0 | 0 | 96,657 |
| 93,806 |
| — |
| 93,806 | ||||||||||
Todd W. Kingma | 0 | 17,250 | 43,469 | 0 | 0 | 60,719 | ||||||||||||||||
Sharon Kochan(4)(5) | 61,658 | 58,797 | 0 | 0 | 1,220,171 | 1,340,626 | ||||||||||||||||
Kyle L. Hanson |
| — |
| 19,050 |
| 2,700 | — |
| 21,750 | |||||||||||||
Ronald Janish |
| 267,427 |
| 19,050 |
| 33,044 | 119,557 |
| 439,078 |
PERRIGO• 2024 PROXY STATEMENT | 41 | |
allowance.
3) Represents executive long-term disability plan premiums paid by the Company.
a tax gross-up associated to his housing allowance, which was offered as part of his relocation package.
5) For Mr. Kochan, represents a severance payment, which is in accordance with local benefit policy and based on the 18-month notice period contained in his employment agreement.
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Grants of Plan-Based Awards for 20212023
The following table provides information regarding equity and non-equity awards granted to the named executive officers during 2021.2023.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(3) | Estimated Future Payouts Under Equity Incentive Plans(4) | All
| All Other
| Exercise
| Grant Date
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| Estimated Future Payouts Under |
| Estimated Future Payouts Under |
| All Other |
| Grant Date | ||||||||||||||||||||||||||
Name | Grant Date(1) | Award Date(2) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Grant |
| Award |
| Threshold | Target | Maximum |
| Threshold | Target | Maximum |
| Awards # |
| of Stock | ||||||||||||||||
Patrick Lockwood-Taylor | — |
| — |
| 720,000 | 1,440,000 | 2,880,000 |
| — |
| — |
| — | ||||||||||||||||||||||||||
| — |
| — |
| — |
| — |
| — |
| — | ||||||||||||||||||||||||||||
| 7/10/2023(8)(9) |
| 5/22/2023 |
| — |
| 22,762 | 45,524 | 91,048 |
| — |
| 1,500,016 | ||||||||||||||||||||||||||
| 7/10/2023 |
| 5/22/2023 |
| — |
| — |
| — |
| 84,977 |
| 2,799,992 | ||||||||||||||||||||||||||
Murray S. Kessler | — | — | 772,500 | 1,545,000 | 3,090,000 | — | — | — | — | — | — | — | — |
| — |
| 872,500 | 1,745,000 | 3,490,000 |
| — |
| — |
| — | ||||||||||||||
3/5/2021(8) | 2/22/2021 | — | — | — | 18,884 | 37,768 | 75,536 | — | — | — | 1,549,999 | 3/6/2023(7) |
| 2/20/2023 |
| — |
| 26,380 | 52,760 | 105,520 |
| — |
| 2,247,048 | |||||||||||||||
3/5/2021(9) | 2/22/2021 | — | — | — | 47,210 | 94,420 | 188,840 | — | — | — | 3,874,997 | 3/6/2023(8) |
| 2/20/2023 |
| — |
| 65,950 | 131,899 | 263,798 |
| — |
| 4,874,987 | |||||||||||||||
3/5/2021 | 2/22/2021 | — | — | — | — | — | 56,652 | — | — | 2,324,998 | 3/6/2023 |
| 2/20/2023 |
| — |
| — |
| — |
| 79,140 |
| 2,925,014 | ||||||||||||||||
Raymond P. Silcock | — | — | 272,400 | 544,800 | 1,089,600 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Eduardo Bezerra | — |
| — |
| 291,200 | 582,400 | 1,164,800 |
| — |
| — |
| — | ||||||||||||||||||||||||||
| 3/6/2023(7) |
| 2/20/2023 |
| — |
| 4,870 | 9,740 | 19,480 |
| — |
| 414,827 | ||||||||||||||||||||||||||
| 3/6/2023(8) |
| 2/20/2023 |
| — |
| 12,176 | 24,351 | 48,702 |
| — |
| 900,013 | ||||||||||||||||||||||||||
| 3/6/2023 |
| 2/20/2023 |
| — |
| — |
| — |
| 14,610 |
| 539,986 | ||||||||||||||||||||||||||
James Dillard III | — |
| — |
| 261,056 | 522,113 | 1,044,225 |
| — |
| — |
| — | ||||||||||||||||||||||||||
3/5/2021(8) | 2/22/2021 | — | — | — | 4,874 | 9,747 | 19,494 | — | — | — | 399,996 | 3/6/2023(7) |
| 2/20/2023 |
| — |
| 4,059 | 8,117 | 16,234 |
| — |
| 345,703 | |||||||||||||||
3/5/2021(9) | 2/22/2021 | — | — | — | 12,183 | 24,366 | 48,732 | — | — | — | 1,000,016 | 3/6/2023(8) |
| 2/20/2023 |
| — |
| 10,146 | 20,292 | 40,584 |
| — |
| 749,992 | |||||||||||||||
3/5/2021 | 2/22/2021 | — | — | — | — | — | 14,620 | — | — | 600,020 | 3/6/2023 |
| 2/20/2023 |
| — |
| — |
| — |
| 12,175 |
| 449,988 | ||||||||||||||||
Svend Andersen | — | — | 241,915 | 483,830 | 967,659 | — | — | — | — | — | — | — | — |
| — |
| 244,458 | 488,917 | 977,833 |
| — |
| — |
| — | ||||||||||||||
3/5/2021(8) | 2/22/2021 | — | — | — | 3,412 | 6,823 | 13,646 | — | — | — | 280,016 | 3/6/2023(7) |
| 2/20/2023 |
| — |
| 3,788 | 7,576 | 15,152 |
| — |
| 322,662 | |||||||||||||||
3/5/2021(9) | 2/22/2021 | — | — | — | 8,529 | 17,057 | 34,114 | — | — | — | 700,019 | 3/6/2023(8) |
| 2/20/2023 |
| — |
| 9,470 | 18,939 | 37,878 |
| — |
| 699,985 | |||||||||||||||
3/5/2021 | 2/22/2021 | — | — | — | — | — | 10,234 | — | — | 420,003 | 3/6/2023 |
| 2/20/2023 |
| — |
| — |
| — |
| 11,364 |
| 420,013 | ||||||||||||||||
James Dillard III | — | — | 212,142 | 424,283 | 848,566 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Kyle L. Hanson | — |
| — |
| 202,800 | 405,600 | 811,200 |
| — |
| — |
| — | ||||||||||||||||||||||||||
3/5/2021(8) | 2/22/2021 | — | — | — | 2,681 | 5,361 | 10,722 | — | — | — | 220,015 | 3/6/2023(7) |
| 2/20/2023 |
| — |
| 3,518 | 7,035 | 14,070 |
| — |
| 299,621 | |||||||||||||||
3/5/2021(9) | 2/22/2021 | — | — | — | 6,701 | 13,402 | 26,804 | — | — | — | 550,018 | 3/6/2023(8) |
| 2/20/2023 |
| — |
| 8,794 | 17,587 | 35,174 |
| — |
| 650,016 | |||||||||||||||
3/5/2021 | 2/22/2021 | — | — | — | — | — | 8,041 | — | — | 330,003 | 3/6/2023 |
| 2/20/2023 |
| — |
| — |
| — |
| 10,552 |
| 390,002 | ||||||||||||||||
Todd W. Kingma | — | — | 192,400 | 384,800 | 769,600 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Ronald Janish | — |
| — |
| 196,550 | 393,099 | 786,198 |
| — |
| — |
| — | ||||||||||||||||||||||||||
3/5/2021(8) | 2/22/2021 | — | — | — | 3,412 | 6,823 | 13,646 | — | — | — | 280,016 | 3/6/2023(7) |
| 2/20/2023 |
| — |
| 2,300 | 4,600 | 9,200 |
| — |
| 195,914 | |||||||||||||||
3/5/2021(9) | 2/22/2021 | — | — | — | 8,529 | 17,057 | 34,114 | — | — | — | 700,019 | 3/6/2023(8) |
| 2/20/2023 |
| — |
| 5,750 | 11,499 | 22,998 |
| — |
| 425,003 | |||||||||||||||
3/5/2021 | 2/22/2021 | — | — | — | — | — | 10,234 | — | — | 420,003 | 3/6/2023 |
| 2/20/2023 |
| — |
| — |
| — |
| 6,899 |
| 254,987 | ||||||||||||||||
Sharon Kochan | — | — | 180,765 | 361,530 | 723,060 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
3/5/2021(8) | 2/22/2021 | — | — | — | 2,681 | 5,361 | 10,722 | — | — | — | 220,015 | ||||||||||||||||||||||||||||
3/5/2021(9) | 2/22/2021 | — | — | — | 6,701 | 13,402 | 26,804 | — | — | — | 550,018 | ||||||||||||||||||||||||||||
3/5/2021 | 2/22/2021 | — | — | — | — | — | 8,041 | — | — | 330,003 |
"
42 | PERRIGO• 2024 PROXY STATEMENT | |
Executive Compensation
47 2022 Proxy Statement
|
5)
7)
8)
9)
PERRIGO• 2024 PROXY STATEMENT | 43 | |
Outstanding Equity Awards at 20212023 Year End
The following table sets forth information detailing the outstanding equity awards held on December 31, 2021,2023, by each of our NEOs.
Option Awards | Stock Awards |
| Option Awards |
| Stock Awards | |||||||||||||||||||||||
Name | Option / Stock Award Grant Date(1) | Number of Securities Underlying Unexercised Options (#) Exercisable(2) | Number of Securities Underlying Unexercised Options (#) Unexercisable(2) | Option Exercise Price ($) | Option Expiration Date | Number of Units of Stock That Have Not Vested (#) | Market Value of Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Units That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Units That Have Not Vested ($)(3) | Option / | Number of | Number of | Option | Option |
| Number of | Market | Equity | Equity | |||||||||
| 7/10/2023 | — | — | — | — |
| 84,977 | 2,734,560 | 42,186 | 1,357,545 | ||||||||||||||||||
Patrick | — | — | — | — | — |
| — | |||||||||||||||||||||
Lockwood-Taylor | — | — | — | — | — |
| — | |||||||||||||||||||||
| — | — | — | — | — |
| — | |||||||||||||||||||||
|
| |||||||||||||||||||||||||||
| 10/8/2018 | 110,074 | — | 72.80 | 10/8/2028 |
| — | |||||||||||||||||||||
Murray S. Kessler | 10/8/2018 | 110,074 | 0 | 72.80 | 10/8/2028 | 0 | 0 | 0 | 0 | 3/5/2021 | — | 145,349 | 4,677,331 | |||||||||||||||
3/6/2019 | 0 | 0 | — | — | 16,384 | 637,338 | 113,329 | 4,408,498 | 3/7/2022 | — | 254,657 | 8,194,862 | ||||||||||||||||
3/5/2020 | 0 | 0 | — | — | 28,120 | 1,093,868 | 94,437 | 3,673,599 | 3/6/2023 | — | 174,986 | 5,631,049 | ||||||||||||||||
3/5/2021 | 0 | 0 | — | — | 56,652 | 2,203,763 | 118,969 | 4,627,894 |
|
|
| |||||||||||||||||
Raymond P. Silcock | 4/5/2019 | 0 | 0 | — | — | 3,963 | 154,161 | 27,415 | 1,066,444 | |||||||||||||||||||
3/5/2020 | 0 | 0 | — | — | 7,256 | 282,258 | 24,371 | 948,032 | ||||||||||||||||||||
3/5/2021 | 0 | 0 | — | — | 14,620 | 568,718 | 30,702 | 1,194,308 | ||||||||||||||||||||
Svend Andersen | 6/6/2017 | 13,075 | 0 | 70.34 | 6/6/2027 | 0 | 0 | 0 | 0 | |||||||||||||||||||
Eduardo Bezerra | 6/7/2022 | — |
| 9,063 | 291,647 | 42,753 | 1,375,792 | |||||||||||||||||||||
3/8/2018 | 11,674 | 0 | 85.06 | 3/8/2028 | 0 | 0 | 0 | 0 | 3/6/2023 | — |
| 14,610 | 470,150 | 32,305 | 1,039,575 | |||||||||||||
3/6/2019 | 0 | 0 | — | — | 2,959 | 115,105 | 20,472 | 796,361 |
|
|
| |||||||||||||||||
3/5/2020 | 0 | 0 | — | — | 5,080 | 197,612 | 17,060 | 663,634 |
|
|
| |||||||||||||||||
3/5/2021 | 0 | 0 | — | — | 10,234 | 398,103 | 21,492 | 836,039 | 3/5/2021 | — |
| 2,680 | 86,242 | 20,631 | 663,906 | |||||||||||||
James Dillard III | 2/7/2019 | 0 | 0 | — | — | 4,297 | 167,153 | 0 | 0 | 3/7/2022 | — |
| 11,074 | 356,361 | 52,236 | 1,680,954 | ||||||||||||
3/6/2019 | 0 | 0 | — | — | 2,325 | 90,443 | 16,085 | 625,707 | 3/6/2023 | — |
| 12,175 | 391,792 | 26,921 | 866,318 | |||||||||||||
3/5/2020 | 0 | 0 | — | — | 3,991 | 155,250 | 13,404 | 521,416 |
| |||||||||||||||||||
3/5/2021 | 0 | 0 | — | — | 8,041 | 312,795 | 16,887 | 656,904 | 6/6/2017 | 13,075 | — | 70.34 | 6/6/2027 |
| — | |||||||||||||
Todd W. Kingma | 8/23/2012 | 8,576 | 0 | 108.62 | 8/23/2022 | 0 | 0 | 0 | 0 | |||||||||||||||||||
| 3/8/2018 | 11,674 | — | 85.06 | 3/8/2028 |
| — | |||||||||||||||||||||
Svend Andersen | 3/5/2021 | — |
| 3,411 | 109,766 | 26,258 | 844,982 | |||||||||||||||||||||
| 3/7/2022 | — |
| 10,936 | 351,920 | 51,584 | 1,659,973 | |||||||||||||||||||||
| 3/6/2023 | — |
| 11,364 | 365,694 | 25,126 | 808,555 | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
| 7/8/2022 | — |
| 5,352 | 172,227 | 25,249 | 812,513 | |||||||||||||||||||||
Kyle L. Hanson | 3/6/2023 | — |
| 10,552 | 339,563 | 23,332 | 750,824 | |||||||||||||||||||||
|
| |||||||||||||||||||||||||||
| 8/21/2014 | 934 | — | 147.75 | 8/21/2024 |
| — | |||||||||||||||||||||
| 2/26/2016 | 4,558 | — | 129.23 | 2/26/2026 |
| — | |||||||||||||||||||||
Ronald Janish | 6/6/2017 | 9,586 | — | 70.34 | 6/6/2027 |
| — | |||||||||||||||||||||
8/22/2013 | 7,182 | 0 | 119.78 | 8/22/2023 | 0 | 0 | 0 | 0 | 3/8/2018 | 8,679 | — | 85.06 | 3/8/2028 |
| — | |||||||||||||
8/21/2014 | 7,133 | 0 | 147.75 | 8/21/2024 | 0 | 0 | 0 | 0 | 3/5/2021 | — |
| 2,071 | 66,645 | 15,941 | 512,981 | |||||||||||||
2/26/2016 | 10,971 | 0 | 129.23 | 2/26/2026 | 0 | 0 | 0 | 0 | 3/7/2022 | — |
| 5,883 | 189,315 | 27,751 | 893,027 | |||||||||||||
6/6/2017 | 20,189 | 0 | 70.34 | 6/6/2027 | 0 | 0 | 0 | 0 | 3/6/2023 | — |
| 6,899 | 222,010 | 15,256 | 490,938 | |||||||||||||
3/8/2018 | 15,945 | 0 | 85.06 | 3/8/2028 | 0 | 0 | 0 | 0 |
|
|
| |||||||||||||||||
3/6/2019 | 0 | 0 | — | — | 2,959 | 115,105 | 20,472 | 796,361 | ||||||||||||||||||||
3/5/2020 | 0 | 0 | — | — | 5,080 | 197,612 | 17,060 | 663,634 | ||||||||||||||||||||
3/5/2021 | 0 | 0 | — | — | 10,234 | 398,103 | 21,492 | 836,039 | ||||||||||||||||||||
Sharon Kochan | 8/23/2012 | 5,886 | 0 | 108.62 | 8/23/2022 | 0 | 0 | 0 | 0 | |||||||||||||||||||
8/22/2013 | 6,245 | 0 | 119.78 | 8/22/2023 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
8/21/2014 | 6,029 | 0 | 147.75 | 8/21/2024 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
2/26/2016 | 7,461 | 0 | 129.23 | 2/26/2026 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
6/6/2017 | 13,075 | 0 | 70.34 | 6/6/2027 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
4/3/2018 | 9,681 | 0 | 82.82 | 4/3/2028 | 0 | 0 | 0 | 0 |
49 2022 Proxy Statement
|
1)
$32.18.
44 | PERRIGO• 2024 PROXY STATEMENT | |
Executive Compensation
Option Exercises and Stock Vested in 20212023
The following table provides information for each NEO concerning the vesting of restricted stock during 2021.2023. No NEO exercised options in 2021.2023.
Stock Awards | Stock Awards | |||||
Name | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | Number of | Value Realized | ||
Patrick Lockwood-Taylor | — | |||||
Murray S. Kessler | 30,446 | 1,249,504 | 284,358 | 10,670,058 | ||
Raymond P. Silcock | 7,593 | 309,040 | ||||
Eduardo Bezerra | 4,532 | 152,819 | ||||
James Dillard III | 20,489 | 788,190 | ||||
Svend Andersen | 11,043 | 457,528 | 24,500 | 943,688 | ||
James Dillard III | 8,619 | 362,533 | ||||
Todd W. Kingma | 13,071 | 542,339 | ||||
Sharon Kochan | 70,033 | 3,236,791 | ||||
Kyle L. Hanson | 12,409 | 404,906 | ||||
Ronald Janish | 14,496 | 558,660 |
Non-Qualified Deferred Compensation in 20212023
The Deferred Compensation Plan allows participants to defer as much as 80% of base salary and 100% of incentive compensation.compensation with no dollar amount cap. Participation in the plan is limited to the executive officers (including the NEOs) and other management level personnel. Amounts deferred under the Deferred Compensation Plan earn a return based on measurement funds made available to participants, which are determined by the Retirement Plan Committee.retirement plan committee. These measurement funds mirror several of the investment choices available in our 401(k) Plan, with the exception of Company stock and Target Date Funds, which isare not an investment option in the Deferred Compensation Plan. There are also model portfolios in the Deferred Compensation Plan that are not in the 401(k) Plan. Participants elect the form and timing of distributions of their Deferred Compensation Plan deferrals prior to the year in which it is deferred. Participants may change their distribution elections, however, changes must be made 12 months in advance and are subject to a five-year delay. Participants may elect in-service distributions to be paid in a lump sum up to five annual installments; in-service deferrals must remain in the Deferred Compensation Plan for at least three years prior to distribution. Participants may elect to receive their retirement/termination distributions in a lump sum or annual installments (up to 15 years) upon separation from service. If a participant’s in-service distribution was not paid prior to a separation from service, the in-service distribution will be paid according to their retirement/termination distribution election. All participants with an account balance subject to Section 409A of the Internal Revenue Code may not begin receiving retirement/termination distributions earlier than the first day of the seventh month following a separation from service.
|
The following table sets forth information relating to the Deferred Compensation Plan.
Name | Executive Contributions in Last FY ($)(1) | Perrigo Contributions in Last FY ($)(2) | Aggregate Earnings FY ($)* | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FY ($)(3) | Executive | Perrigo | Aggregate | Aggregate | Aggregate | |||||
Patrick Lockwood-Taylor | 20,000 | — | 1,283 | — | 21,283 | ||||||||||
Murray S. Kessler | 0 | 82,003 | 17,292 | 0 | 190,111 | — | 72,083 | 48,028 | — | 362,111 | |||||
Raymond P. Silcock | 0 | 25,542 | 5,625 | 0 | 61,593 | ||||||||||
Eduardo Bezerra | 138,835 | 19,717 | 21,354 | — | 192,752 | ||||||||||
James Dillard III | 0 | 0 | 139 | 0 | 1,381 | — | 20,432 | 2,867 | — | 24,468 | |||||
Svend Andersen | 0 | 0 | 0 | 0 | 0 | — | |||||||||
Todd W. Kingma | 57,942 | 43,469 | 37,155 | 0 | 2,416,779 | ||||||||||
Sharon Kochan | 0 | 0 | 175,585 | 1,842,972 | 0 | ||||||||||
Kyle L. Hanson | 75,432 | 2,700 | 9,602 | — | 102,804 | ||||||||||
Ronald Janish | 19,679 | 33,044 | 165,744 | — | 1,340,550 |
PERRIGO• 2024 PROXY STATEMENT | 45 | |
Bezerra, $109,995, Ms. Hanson, $25,992, Mr. Janish, $11,008.
Plans.”
*We do not pay above-market or preferential interest or earnings on amounts deferred under the Deferred Compensation Plan.
51 2022 Proxy Statement
46 | PERRIGO• 2024 PROXY STATEMENT | ||
Potential Payments Upon Termination or | |||
Potential Payments Upon Termination or Change in ControlChange-in-Control
All of our current NEOs participate in our AIP and LTIP and all but Mr. Janish and Mr. Andersen have the ability to participate in our Deferred Compensation Plan. In addition, all of our current NEOs, other than Mr.Messrs. Kessler, Lockwood-Taylor, Janish and Mr. Andersen, are covered by our U.S. Severance Policy, and our Change in Control Severance Policy for U.S. Employees, and through January 15, 2020, by our Executive Committee Severance Policy.Employees. These plans and policies may require us to provide compensation to these officers in the event of a termination of employment or a change-in-control of Perrigo. Mr. Kessler’s agreement providesKessler and Mr. Lockwood-Taylor's agreements provide that hethey would receive compensation under histheir respective employment agreementagreements in the event of a termination of employment or a change-in-control of Perrigo; however, any severance benefits payable under that agreementthose agreements will only occur in the event of a termination of employment that, when following a change-in-control of Perrigo, results in a “double trigger” for severance benefits. The Talent & Compensation CommitteeTCC retains discretion to provide additional benefits to executive officers upon termination or resignation if it determines the circumstances so warrant.
The following table sets forth the expected benefits to be received by each current NEO, in addition to the amounts shown in the Non-Qualified Deferred Compensation in 20212023 table on page 5045 in the event of his termination resulting from various scenarios and assuming a termination date of December 31, 2021,2023, the last business day of 2021,2023, and a stock price of $38.9,$32.18,our closing stock price on that date. For Mr. Kochan,Kessler and Mr. Dillard, this table shows actual benefits received upon the termination of histheir employment in July 2021.and October 2023, respectively. Assumptions and explanations of the numbers included in the table below are set forth in the footnotes to, and in additional text following, the table. Assumptions and explanations of the numbers included in the table below are set forth in the footnotes to, and in additional text following, the table.
Name and Benefits | Change in Control(1) ($) | Death, Disability, Retirement(2) ($) | Termination for Cause or Without Good Reason ($) | Termination Without Cause or for Good Reason(3) ($) | Involuntary Termination for Economic Reasons(3) ($) | |||||
Murray S. Kessler | ||||||||||
Cash | 7,107,000 | 1,545,000 | — | 5,716,500 | 5,716,500 | |||||
Equity Awards | ||||||||||
Service-Based Restricted Stock | 3,934,968 | 3,934,968 | — | 3,200,381 | 3,200,381 | |||||
Performance-Based Restricted Stock | 13,432,287 | 12,709,992 | — | 4,801,933 | 4,801,933 | |||||
Stock Options | — | — | — | — | — | |||||
Other Benefits | 0 | — | — | 0 | 0 | |||||
| ||||||||||
Total Estimated Incremental Value | 24,474,255 | 18,189,960 | — | 13,718,814 | 13,718,814 | |||||
| ||||||||||
Raymond P. Silcock | ||||||||||
Cash | 3,541,200 | 544,800 | — | 1,770,600 | 1,770,600 | |||||
Equity Awards | ||||||||||
Service-Based Restricted Stock | 1,005,137 | 1,005,137 | — | 815,577 | 815,577 | |||||
Performance-Based Restricted Stock | 3,394,297 | 3,208,783 | — | 1,188,590 | 1,188,590 | |||||
Stock Options | — | — | — | — | — | |||||
Other Benefits(4) | 15,000 | — | — | 15,000 | 15,000 | |||||
| ||||||||||
Total Estimated Incremental Value | 7,955,634 | 4,758,720 | — | 3,789,767 | 3,789,767 | |||||
|
PERRIGO• 2024 PROXY STATEMENT | 47 | |
Name and Benefits | Change in Control(1) ($) | Death, Disability, Retirement(2) ($) | Termination for Cause or Without Good Reason ($) | Termination Without Cause or for Good Reason(3) ($) | Involuntary Termination for Economic Reasons(4) ($) | |||||
Svend Andersen | ||||||||||
Cash | 1,243,456 | 466,296 | — | 621,728 | 621,728 | |||||
Equity Awards | ||||||||||
Service-Based Restricted Stock | 710,820 | 710,820 | — | 578,132 | 578,132 | |||||
Performance-Based Restricted Stock | 2,426,543 | 2,296,034 | — | 867,431 | 867,431 | |||||
Stock Options | — | — | — | — | — | |||||
Other Benefits | 0 | — | — | 0 | 0 | |||||
| ||||||||||
Total Estimated Incremental Value | 4,380,819 | 3,473,149 | — | 2,067,291 | 2,067,291 | |||||
| ||||||||||
James Dillard III | ||||||||||
Cash | 4,646,439 | 424,283 | — | 2,323,219 | 2,323,219 | |||||
Equity Awards | ||||||||||
Service-Based Restricted Stock | 725,641 | 725,641 | — | 621,389 | 621,389 | |||||
Performance-Based Restricted Stock | 1,906,528 | 1,804,026 | — | 681,567 | 681,567 | |||||
Stock Options | — | — | — | — | — | |||||
Other Benefits(4) | 15,000 | — | — | 15,000 | 15,000 | |||||
| ||||||||||
Total Estimated Incremental Value | 7,293,607 | 2,953,950 | — | 3,641,175 | 3,641,175 | |||||
| ||||||||||
Todd W. Kingma | ||||||||||
Cash | 2,723,200 | 384,800 | — | 1,361,600 | 1,361,600 | |||||
Equity Awards | ||||||||||
Service-Based Restricted Stock | 710,820 | 710,820 | — | 578,132 | 578,132 | |||||
Performance-Based Restricted Stock | 2,426,543 | 2,296,034 | — | 867,431 | 867,431 | |||||
Stock Options | — | — | — | — | — | |||||
Other Benefits(4) | 15,000 | — | — | 15,000 | 15,000 | |||||
| ||||||||||
Total Estimated Incremental Value | 5,875,563 | 3,391,653 | — | 2,822,163 | 2,822,163 | |||||
| ||||||||||
Sharon Kochan | ||||||||||
Cash | — | — | — | 1,220,171 | — | |||||
Equity Awards | ||||||||||
Service-Based Restricted Stock | — | — | — | 1,337,729 | — | |||||
Performance-Based Restricted Stock | — | — | — | 1,535,131 | — | |||||
Stock Options | — | — | — | — | — | |||||
Other Benefits | — | — | — | 0 | — | |||||
| ||||||||||
Total Estimated Incremental Value | 0 | 0 | — | 4,093,030 | 0 | |||||
|
Name and Benefits | Change in |
| Death, |
| Termination |
| Termination |
| Involuntary |
Patrick Lockwood-Taylor |
|
|
|
|
|
|
|
|
|
Cash | 5,280,000 |
| 1,440,000 |
| — |
| 3,960,000 |
| 3,960,000 |
Equity Awards |
|
|
|
|
|
|
|
|
|
Service-Based Restricted Stock | 2,734,560 |
| 2,734,560 |
| — |
| 2,734,560 |
| 2,734,560 |
Performance-Based Restricted Stock | 1,464,962 |
| 1,357,545 |
| — |
| 1,464,962 |
| 1,464,962 |
Stock Options | — |
| — |
| — |
| — |
| — |
Other Benefits | — |
| — |
| — |
| — |
| — |
Total Estimated Incremental Value | 9,479,522 |
| 5,532,105 |
| — |
| 8,159,522 |
| 8,159,522 |
Murray S. Kessler |
|
|
|
|
|
|
|
|
|
Cash | — |
| — |
| — |
| — |
| — |
Equity Awards |
|
|
|
|
|
|
|
|
|
Service-Based Restricted Stock | — |
| 5,569,646 |
| — |
| — |
| — |
Performance-Based Restricted Stock | — |
| 18,503,243 |
| — |
| — |
| — |
Stock Options | — |
| — |
| — |
| — |
| — |
Other Benefits(4) | — |
| — |
| — |
| — |
| — |
Total Estimated Incremental Value | — |
| 24,072,889 |
| — |
| — |
| — |
Eduardo Bezerra |
|
|
|
|
|
|
|
|
|
Cash | 2,620,801 |
| 582,400 |
| — |
| 728,000 |
| 728,000 |
Equity Awards |
|
|
|
|
|
|
|
|
|
Service-Based Restricted Stock | 761,797 |
| 761,797 |
| — |
| 761,797 |
| 761,797 |
Performance-Based Restricted Stock | 2,117,862 |
| 2,415,366 |
| — |
| 2,117,862 |
| 2,117,862 |
Stock Options | — |
| — |
| — |
| — |
| — |
Other Benefits(4) | 15,000 |
| — |
| — |
| 15,000 |
| 15,000 |
Total Estimated Incremental Value | 5,515,460 |
| 3,759,564 |
| — |
| 3,622,660 |
| 3,622,660 |
James Dillard III |
|
|
|
|
|
|
|
|
|
Cash | — | — | — |
| — |
| 696,150 |
| 696,150 |
Equity Awards |
|
|
|
|
|
|
|
|
|
Service-Based Restricted Stock | — | — | — |
| — |
| 834,395 |
| 834,395 |
Performance-Based Restricted Stock | — | — | — |
| — |
| 2,765,260 |
| 2,765,260 |
Stock Options | — | — | — |
| — |
| — |
| — |
Other Benefits(4) | — | — | — |
| — |
| — |
| — |
Total Estimated Incremental Value | — | — | — |
| — |
| 4,295,805 |
| 4,295,805 |
Svend Andersen |
|
|
|
|
|
|
|
|
|
Cash | 391,133 |
| 488,917 |
| — |
| 195,567 |
| 195,567 |
Equity Awards |
|
|
|
|
|
|
|
|
|
Service-Based Restricted Stock | 827,380 |
| 827,380 |
| — |
| 827,380 |
| 827,380 |
Performance-Based Restricted Stock | 2,853,401 |
| 3,313,510 |
| — |
| 2,853,401 |
| 2,853,401 |
Stock Options | — |
| — |
| — |
| — |
| — |
Other Benefits | — |
| — |
| — |
| — |
| — |
Total Estimated Incremental Value | 4,071,914 |
| 4,629,807 |
| — |
| 3,876,347 |
| 3,876,347 |
Kyle L. Hanson |
|
|
|
|
|
|
|
|
|
Cash | 2,059,200 |
| 405,600 |
| — |
| 624,000 |
| 624,000 |
Equity Awards |
|
|
|
|
|
|
|
|
|
Service-Based Restricted Stock | 511,791 |
| 511,791 |
| — |
| 511,791 |
| 511,791 |
Performance-Based Restricted Stock | 1,395,228 |
| 1,563,337 |
| — |
| 1,395,228 |
| 1,395,228 |
Stock Options | — |
| — |
| — |
| — |
| — |
Other Benefits(4) | 15,000 |
| — |
| — |
| 15,000 |
| 15,000 |
Total Estimated Incremental Value | 3,981,219 |
| 2,480,727 |
| — |
| 2,546,019 |
| 2,546,019 |
Ronald Janish |
|
|
|
|
|
|
|
|
|
Cash | 5,043,336 |
| 393,099 |
| — |
| 2,521,668 |
| 2,521,668 |
Equity Awards |
|
|
|
|
|
|
|
|
|
Service-Based Restricted Stock | 477,970 |
| 477,970 |
| — |
| 477,970 |
| 477,970 |
Performance-Based Restricted Stock | 1,647,230 |
| 1,896,947 |
| — |
| 1,647,230 |
| 1,647,230 |
Stock Options | — |
| — |
| — |
| — |
| — |
Other Benefits(4) | — | — | — |
| — |
| — |
| — |
Total Estimated Incremental Value | 7,168,535 |
| 2,768,015 |
| — |
| 4,646,867 |
| 4,646,867 |
Additionally, Mr. Lockwood-Taylor, Mr. Bezerra and Ms. Hanson will receive two times the sum of salary and annual bonus, plus a pro-rated bonus, if applicable; Mr. Andersen and Mr. Janish will receive the same amount as in the event of termination without cause or involuntary termination for economic reasons.
53 2022 Proxy Statement
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3)
48 | PERRIGO• 2024 PROXY STATEMENT | |
Potential Payments Upon Termination or Change-in-Control
Employment Agreement with Chief Executive Officer and Former Chief Executive Officer
In 2023, Murray S. Kessler notified the Company of his intent to retire. As part of our robust succession planning process, Patrick Lockwood-Taylor, a 30-year experienced executive in consumer self-care, was selected to drive focus on winning in self-care. We know a few shareholders perceived there was a misalignment in Company performance and Mr. Kessler's target Total Direct Compensation or "TDC" of $12,819,000. Mr. Kessler's salary was higher than market median, but was consistent with a 20+ year public company CEO. We set Mr. Lockwood-Taylor's annual target TDC at a competitive rate of $8,240,000 situated between the 25th and the 50th percentile of our executive compensation peer companies.
Murray S. Kessler | Patrick Lockwood-Taylor | ||
Base | $1,324,000 |
| $1,200,000 |
Annual Incentive Award | $1,745,000 |
| $1,440,000 |
Long-Term Incentive Award | $9,750,000 |
| $5,600,000 |
Total Direct Compensation | $12,819,000 | $8,240,000 |
Mr. Lockwood-Taylor's employment agreement provides that his employment may be terminated during the term of the agreement under the following circumstances:
Potential Payments Upon Termination or Change in Control
If during the term of this agreement Mr. Lockwood-Taylor's employment were terminated by us without cause or by him for good reason and he agrees to a release of claims against Perrigo, he would also be entitled to compensation and benefits earned to that date, as well as:
If any such termination without cause or for good reason were to occur within 24 months following a change of control, Mr. Lockwood-Taylor would be entitled to the same benefits as listed above, except he would be entitled to:
PERRIGO• 2024 PROXY STATEMENT | 49 | |
If Mr. Lockwood-Taylor were terminated for cause, he would receive compensation and benefits earned to date. If Mr. Lockwood-Taylor's employment were terminated for death or disability, he would receive compensation and benefits earned to date, including payment for unused vacation days, as well as a prorated annual bonus for the year of termination (determined based on actual performance).
Mr. Kessler’s employment agreement provided that his employment may be terminated during the term of the agreement under the following circumstances:
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Potential Payments Upon Termination or Change in Control
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If during the term of this agreement Mr. Kessler’s employment were terminated by us without cause or by him for good reason and he agrees to a release of claims against Perrigo, he would also be entitled to compensation and benefits earned to that date, as well as:
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If any such termination without cause or for good reason were to occur within 24 months following a change of control, Mr. Kessler would be entitled to the same benefits as listed above, except he would be entitled to:
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If Mr. Kessler were terminated for cause, he would receive compensation and benefits earned to date, including payment for unused vacation days. If Mr. Kessler’s employment were terminated for death or
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disability, he would receive compensation and benefits earned to date, including payment for unused vacation days, as well as a prorated annual bonus for the year of termination (determined based on actual performance).
Payments Under the Annual Incentive Plan
Generally, no portion of the payments under the AIP is considered earned or payable for a particular year unless the NEO is employed by us and in good standing on the last day of the fiscal year.incentive bonus payment date. The AIP, however, may require us to make payments to NEOs who are no longer employed by us on the last day of the fiscal year under the following circumstances:
• retirement at age 65 or older; • retirement at age 60 or older with at least 10 years of service; • early retirement of a named executive officer under an early retirement plan approved by the TCC; • permanent disability as determined by the TCC; or • death.
Potential Payments Upon Termination or Change-in-Control
Under all circumstances listed above, the NEO, or the executive officer’s estate in the case of death, will be entitled to a pro rata portion of any payment under the AIP for that fiscal year, computed to the date of the termination. An NEO eligible to receive a post-termination payment under the AIP will be paid in a lump sum within a reasonable time after the close of the fiscal year in which termination occurred. Payments Under the Long-Term Incentive Plan If an NEO terminates employment with us due to death, disability or retirement, the executive officer’s (i) outstanding options will immediately vest in full, (ii) service-vesting restricted stock units If an NEO is involuntarily terminated for economic reasons, the executive officer may exercise the executive officer’s options, to the extent vested, at any time prior to the earlier of (i) the date that is 30 days after the date that is 24 months after the termination date, or (ii) their respective expiration dates. Any options, RSUs and PSUs that are not vested on the termination date but are scheduled to vest during the 24-month period following the termination date, according to the vesting schedule in effect before termination, will vest as if the participant had continued to provide services to us during the 24-month period. Any unvested options, RSUs and PSUs that are not scheduled to vest during that 24-month period will be forfeited on the termination date. If an NEO who is involuntarily terminated for economic reasons should die while the executive officer’s options remain exercisable, the fiduciary of the NEO’s estate or the executive officer’s beneficiary may exercise the options (to the extent that those options were vested and exercisable prior to the named executive officer’s death) at any time prior to the later of the date that is (i) 30 days after the date that is 24 months after the NEO’s termination date, or (ii) 12 months after the date of death, but in no event later than the respective expiration dates of the options.
Upon an event of termination for any reason during the restriction period, restricted shares and restricted stock units still subject to restriction generally will be forfeited by the NEO and reacquired by Perrigo. Subject to the one-year minimum vesting requirements of the LTIP, we may in our sole discretion waive in whole or in part any or all remaining restrictions with regard to an NEO’s shares. If an NEO is terminated for cause, any restricted shares or restricted stock units subject to a restriction period will be forfeited and the executive officer’s right to exercise the executive officer’s options will terminate. If within 60 days after an NEO is terminated for any reason, we discover circumstances that would have permitted us to terminate an NEO for cause, any shares, cash or other property paid or delivered to the NEO within 60 days of such termination date will be forfeited and the NEO must repay those amounts to Perrigo. If the NEO is terminated for any reason other than those described above, the NEO will have the right to exercise the executive officer’s options at any time prior to the earlier of (i) the date that is three months after the termination date, or (ii) their respective expiration dates, but only to the extent that those options were vested prior to the termination date. Any options or RSUs and PSUs that are not vested at the termination date will be forfeited on the termination date. If an NEO dies after the termination date while the executive officer’s options remain exercisable and the termination was not due to death, disability, retirement or an involuntary termination for cause or due to economic reasons, the fiduciary of the NEO’s estate or the executive officer’s beneficiary may exercise the options (to the extent that those options were vested and exercisable prior to the executive officer’s death) at any time prior to the earlier of (i) 12 months after the date of death, or (ii) their respective expiration dates. Regardless of the vesting requirements that otherwise apply to an award under the LTIP as described above, if the NEO is terminated by reason of a termination without “cause” (as is defined in the
outstanding under the LTIP as of the date of the change in control that have not vested will become vested and the options will become fully exercisable. The restrictions and deferral limitations applicable to any restricted shares and units will lapse and such restricted shares and The above discussion described the default rules applicable to awards. The Payments Under the Non-Qualified Deferred Compensation Plan If an NEO is terminated for any reason other than death, the executive officer will receive a termination benefit under the Deferred Compensation Plan equal to the executive officer’s vested account balance. The Non-Qualified Deferred Compensation in
This termination benefit will be paid to the NEO in a lump sum or under an annual installment method of up to 15 years, based on the NEO’s choice when the executive officer began participation in the plan or as the executive officer subsequently changed the election. If the NEO did not make an election with respect to method of payment for a termination benefit, the executive officer will be deemed to have elected to be paid in a lump sum. A lump sum payment of the termination benefit will be made, or annual installments will commence, as of the first day of the seventh month following the date the NEO terminates the executive officer’s employment with us. An NEO’s beneficiary will receive a survivor benefit equal to the NEO’s vested account balance if the NEO dies before the executive officer commences payment under the Deferred Compensation Plan. The survivor benefit will be paid to the NEO’s beneficiary in a lump sum payment as soon as administratively practicable, but in no event later than the last day of the calendar year in which the NEO’s death occurs or, if later, by the 15th day of the third month following the NEO’s death. Payments Under the On February 13, 2019, we amended and restated our broad-based The change in control policy provides that upon a qualifying termination of employment within two years following a In addition, the NEO would receive payment of health insurance premiums for 18 months, followed by a cash payment equal to the cost of such premiums for another six months, but only if the executive officer is not otherwise entitled to health insurance coverage under another employer-provided plan. Payments Under the U.S. Severance Policy On February 13, 2019, we amended and restated our broad-based severance policy for U.S. employees to modify the definition of change in control thereunder as it pertains to a change in incumbent directors. As amended, any director
Potential Payments Upon Termination or Change-in-Control whose initial assumption of office was in connection with an actual or threatened proxy solicitation may nonetheless be deemed an incumbent director following such time as such director has been both (i) recommended by our Nominating & Governance Committee for election as a director of the Company and (ii) elected by the Company’s shareholders to serve on the Board of Directors of the Company at three successive annual general meetings.
Our broad-based severance policy provides that, upon a qualifying termination of employment not within two years following a change in control, an eligible named executive officer, other than the CEO and non-U.S. NEO, would receive a severance payment equal to 52 weeks of the executive officer’s base salary, payable in installments or a lump sum, and a pro rata bonus payment for the year in which the termination occurs, based on actual performance. In addition, the NEO would receive payment of health insurance premiums for 12 months, but only if the executive officer is not entitled to health insurance coverage under another employer-provided
Talent & Compensation Committee Report The Talent & Compensation Committee of our Board of Directors consists of four directors, each of whom is independent, as defined under SEC rules and the NYSE standards. The Talent & Compensation Committee has reviewed and discussed the
Equity Compensation Plan Information The table below provides information about Perrigo’s ordinary shares that may be issued upon the exercise of options and rights under all of our equity compensation plans as of December 31,
1) Of these shares, 2) All of these shares were available for issuance under our LTIP.
The CEO pay ratio was calculated in accordance with SEC rules and requirements. We are using the same median employee as was identified for purposes of our fiscal year 2022 CEO pay ratio, as we believe the changes in our employee population and compensation arrangements have not significantly impacted our pay ratio disclosure. We identified our median employee in We calculated total compensation for our median employee using the same methodology we use for our named executive officers as set forth in the This information involves reasonable estimates based on employee payroll records and other relevant company information. In addition, SEC rules for identifying the median employee and determining the CEO pay ratio permit companies to employ a wide range of methodologies, estimates and assumptions. As a result, the CEO pay ratios reported by other companies, which may have employed other permitted methodologies or assumptions, and which may have a significantly different work force structure from ours, are likely not comparable to our CEO pay ratio.
Pay versus Performance Pay Versus Performance Disclosure Provided below is the Company’s “pay versus performance” disclosure as required pursuant to Item 402(v) of Regulation S-K promulgated under the Exchange Act.As required by Item 402(v), we have included: • A list of the most important measures that our Talent & Compensation Committee used in 2023 to link a measure of pay calculated in accordance with Item 402(v) (referred to as “compensation actually paid,” or “CAP”) to Company performance; • A table that compares the total compensation of our NEOs as presented in the Summary Compensation Table (“SCT”) to CAP and that compares CAP to specified performance measures; and • Graphs that describe: o the relationship between our total shareholder return (“TSR”) and the TSR of the S&P 1500 Consumer Staples Index (“Peer Group TSR”); and o the relationships between CAP and our cumulative TSR, GAAP Net Income, and our Company selected measure, PSU OI. This disclosure has been prepared in accordance with Item 402(v) and does not necessarily reflect value actually realized by the executives or how our Talent & Compensation Committee evaluates compensation decisions in light of Company or individual performance. In particular, our Talent & Compensation Committee has not used CAP as a basis for making compensation decisions, nor does it use GAAP Net Income as a performance metric in any of our incentive plans. Relative TSR is a performance metric in our long-term incentive plan, but it is measured on a percentile rank basis versus the companies in the S&P 500, while Peer Group TSR in this disclosure is based on the S&P 1500 Consumer Staples Index, which is a market-cap weighted index. Please refer to our Compensation Discussion and Analysis on pages 21 to 46 for a discussion of our executive compensation program objectives and the ways in which we align executive compensation pay with performance. Metrics Used for Linking Pay and Performance. The following is a list of performance measures, which in our assessment represent the most important performance measures used by the Company to link compensation actually paid to the NEOs for 2023 to performance. Each metric below is used for purposes of determining payouts under either our annual incentive program or vesting of our PSUs. Please see the CD&A for a further description of these metrics and how they are used in the Company’s executive compensation program.
PSU OI was the most heavily weighted financial performance metric under our incentive programs, and we believe is a profitability measure that, when combined with the other measures in the AIP and PSU awards, supports long-term shareholder value creation. As such, PSU OI is the Company-selected measure included in the table and graphs that follow.
Pay versus Performance Pay Versus Performance Table. In accordance with Item 402(v), below is the tabular disclosure for the Company’s CEOs and the average of our NEOs other than the CEO for the past four fiscal years.
(1) 2023 CEOs are Mr. Lockwood-Taylor (current) and Mr. Kessler (former); other NEOs are E. Bezerra, J. Dillard (former), S. Andersen, K. Hanson, and R. Janish; 2022 CEO is M. Kessler; other NEOs are E. Bezerra, S. Andersen, J. Dillard, K. Hanson, T. Kingma (former), and R. Silcock (former); 2021 CEO is M. Kessler; other NEOs are R. Silcock, J. Dillard, S. Andersen, T. Kingma, and S. Kochan; 2020 CEO is M. Kessler; other NEOs are R. Silcock, S. Andersen, T. Kingma, R. Sorota. (2) The dollar amounts reported represent CAP, as computed in accordance with SEC rules. For all amounts shown in columns (c), the following methods were used to calculate fair value of awards: option awards fair value was determined using a Black-Scholes option-pricing model; restricted stock units (RSUs) fair value was based on PRGO’s closing stock price on each valuation date, including accrued dividend equivalent units; performance stock units (PSUs) fair value assumes estimated performance results as of the end of each reporting year for financial metrics (return on tangible capital was the performance measure for our 2017 and 2018 PSUs, and adjusted operating income was the performance measure for our 2019, 2020, 2021, 2022, and 2023 PSUs) and a Monte Carlo simulation valuation model for market metrics (which were relative TSR vs. a peer group for the 2018, and vs. the S&P 500 constituents for 2019, 2020, 2021, 2022, and 2023 PSUs), in accordance with FASB ASC 718.The dollar amounts do not reflect the actual amount of compensation earned by or paid during the applicable year. In accordance with SEC rules, the following adjustments were made to the SCT total compensation to determine the CAP values: Reconciliation of Summary Compensation Table to Compensation Actually Paid for CEO:
Reconciliation of Summary Compensation Table to Compensation Actually Paid for average other NEOs:
(a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the SCT for the applicable year. (3) TSR assumes an investment of $100 on December 31, 2019 and the reinvestment of any dividends. (4) Reflects peer group total shareholder return indexed to $100 for the S&P 1500 Consumer Staples Index, which is an industry line index reported in the performance graph included in the Company’s 2022 Annual Report on Form 10-K. (5) The dollar amounts reported represent the amount of net income (loss) reflected in the Company’s audited financial statements for the applicable year. (6) Values shown reflect PSU OI for the applicable reporting year. Relationship between CAP and TSR of Company and Peer Group. The graphs below illustrate the relationship between CAP for our CEO and other NEOs with the TSR of the Company and the Peer Group. While the CAP amounts for our CEO and other NEOs were generally aligned with our TSR, other factors influence CAP, such as our stock price at the time of vesting during the year, the timing of new equity grants, as well as our performance versus the other measures in our annual and long-term incentive plans. The graph below also illustrates the relationship between our TSR and the Peer Group TSR.
Pay versus Performance Relationship between CAP and GAAP Net Income. The graph below reflects the relationship between the CEO and Average other NEO CAP and our GAAP Net Income. As discussed in more detail in our Compensation Discussion & Analysis, GAAP net income is not used as a metric in our annual or long-term incentive plans due to the variance in non-cash and other charges recorded against Net income. As such, we believe that its relationship to CAP and our performance is less illustrative than other metrics that factor more directly into our executive compensation program, including Adj. OI.
Relationship between CAP and PSU OI (our Company-Selected Measure). The graph below reflects the relationship between CEO and Average Other NEO CAP and PSU OI. PSU OI was the most heavily weighted financial performance metric under our 2023 incentive programs. We believe that PSU OI is an important profitability measure because it directly aligns with our stated strategic long-term growth “3/5/7” objectives, and, when combined with the other measures utilized in our incentive plans, supports long-term shareholder value creation. While the CAP amounts for our CEO and other NEOs were somewhat correlated with changes in our PSU OI, other factors influence CAP, such as our stock price at the time of vesting during the year, the timing of new equity grants, as well as our performance versus the other measures in our annual and long-term incentive plans.
The Audit Committee of the Board is responsible for monitoring the following, including their related risks: (1) Perrigo’s accounting and financial reporting principles and policies; (2) the integrity of Perrigo’s financial statements and the independent audit thereof; (3) Perrigo’s compliance with legal and regulatory requirements; (4) the qualifications, independence and performance of Perrigo’s independent registered public accounting firm; (5) the qualifications and performance of Perrigo’s internal audit function including where the service is outsourced and (6) Perrigo’s internal control over financial reporting. In particular, these responsibilities include, among other things, the appointment and compensation of Perrigo’s independent registered public accounting firm, reviewing with the independent registered public accounting firm the plan and scope of the audit of the financial statements and internal control over financial reporting and audit fees, monitoring the adequacy of reporting and internal controls and meeting periodically with internal auditors and the independent registered public accounting firm. All of the members of the Audit Committee are independent directors, as such term is defined in Section 303A.02of the NYSE Listed Company Manual. The Board has adopted an Audit Committee Charter, which it reviews annually based upon input from the Audit Committee. In connection with the December 31,
Proposals to be Voted on Proposal 1 – Election of Directors Under the Company’s Articles of Association, the Board of Directors must consist of between two and eleven directors, with the exact number determined by the Board of Directors. Eleven directors currently serve on our Board of Directors. In connection with All directors who are elected will serve until the Based upon the recommendation of the Nominating & Governance Committee, the Board of Directors has nominated Bradley A. Alford, Orlando D. Ashford, Julia M. Brown, Katherine C. Doyle, Adriana Karaboutis, Shareholders are entitled to one vote per share for each of the ten nominees. In order to be elected as a director, each nominee must receive the affirmative vote of a majority of the votes cast in person or by proxy. If a director nominee does not receive this majority vote, he or she is not elected. Information about each nominee is set forth below is based on information provided to us as ofMarch All Director nominees exhibit:
Our Director nominees bring a balance of relevant skills to our boardroom:
Our Director nominees exhibit an effective mix of diversity, experience and fresh perspectives: • Gender diversity: 30% • Racial or Ethnic Diverse 20% • Average age: 61 years • Average tenure: approximately 5 years • Active versus former executives: 5:5 • Countries of origin: Monaco, Ireland, and U.S.A.
Proposals to be Voted on Director Skills Matrix
Table of ContentsProposals to be Voted on
Election of Directors The following table provides summary information about our nominees for election to the Board of Directors. Additional information for all of our director nominees may be found on pages
* Mr. Parker is Chief Financial Officer of Allogene Therapeutics, and was formerly Chief Financial Officer of Tricida, Inc., a biotechnology company that filed for bankruptcy in 2023 after its investigational drug candidate failed to reach the primary endpoint of its clinical trial. Each director will serve for a term expiring at the About the Nominated Directors Our goal is to assemble a Board that operates cohesively and challenges and questions management in a constructive way. When assessing directors for the Board, we consider: • the directors’ overall mix of skills and experience; • the director’s understanding of our business; • how active they are in participating in Board, committee and annual general meetings; and • their character, integrity, judgment, record of achievement, diversity and independence.
We also look at a director’s ability to contribute to the Board, his or her available time and his or her participation on other boards. We believe these are important factors that impact the quality of the Board’s decision-making and its overall oversight of management and our business. The Nominating & Governance Committee specifically considers diversity in regard to the selection of nominees. The Nominating & Governance Committee recognizes that some institutional investors and institutional shareholder advisory firms have policies regarding “overboarding,” which refers to a director who sits on an excessive number of boards, due to concerns that overboarded directors face excessive time commitments and challenges in fulfilling their duties. In recommending that each nominee should continue to serve on the Board, the Nominating & Governance Committee carefully considered the number of other boards on which each director serves as part of its process, evaluating the level of engagement, skill set, expertise, perspective and other qualities of each director against any overboarding concerns.
Proposals to Our Expectations for Directors We expect each member of our Board of Directors to act honestly and in good faith and to exercise business judgment with a view to the best interests of Perrigo overall. Each director is expected to: • comply with our Code of Conduct, including conflict of interest disclosure requirements; • develop an understanding of our strategy, our business environment and operations, the markets in which we operate and our financial position and performance; • diligently prepare for each Board, committee and annual general meeting by reviewing all of the materials he or she receives in advance; • actively and constructively participate in each Board meeting and seek clarification from management and outside advisors when necessary to fully understand the issues being considered; • participate in continuing education programs, as appropriate; and • participate in the Board and committee self-assessment process.
Director Experience Our Board represents a cross-section of business, industry and financial experience. All of our directors bring to the Board of Directors significant leadership experience derived from their professional experience, All of the nominees for this year are current Perrigo directors. We will vote your shares as you specify on the enclosed proxy card or through telephone or Internet voting. If you return a proxy card and do not specify how you want your shares voted, we will vote them FOR the election of each of the nominees. If unforeseen circumstances (such as death or disability) make it necessary for the Board of Directors to substitute another person for any of the nominees, we will vote your shares FOR that other person. The Board of Directors does not anticipate that any nominee will be unable to serve.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS AT THE
ANNUAL GENERAL MEETING
Proposals to be Voted on
67
Proposals to be Voted on
Proposals to be Voted on Proposal 1 – Elect ten director nominees to serve until the 2025 Annual General Meeting of
RESOLVED that the shareholders elect, by separate resolutions, the following individuals as directors, to serve until the
• Bradley A. Alford • Orlando D. Ashford • Julia M. Brown • Katherine C. Doyle • Adriana Karaboutis • Jeffrey B. Kindler • Patrick Lockwood-Taylor • Albert A. Manzone • Donal O’Connor • Geoffrey M. Parker The Board of Directors unanimously recommends a vote FOR each of the director
Proposal 2 – Ratification, in a Non-Binding Advisory Vote, of the Appointment of Ernst & Young LLP as the Company’s Independent Auditor and Authorization, in a Binding Vote, of the Board of Directors, Acting Through the Audit Committee, to Fix the Remuneration of the Auditor The firm of Ernst & Young LLP (“EY”) began auditing the consolidated financial statements of Perrigo Company, our predecessor, in fiscal 2009. The Audit Committee has appointed EY to serve as our independent auditor for fiscal year We expect representatives of EY to be present at the AGM with the opportunity to make a statement if they desire to do so and to respond to appropriate questions. EY has advised us that neither the firm nor any of its members or associates has any direct financial interest or any material indirect financial interest in Perrigo or any of its affiliates other than as accountants. During fiscal years
(1)
The Audit Committee maintains a policy pursuant to which it reviews and pre-approves audit and permitted non-audit services (including the fees and terms thereof) to be provided by our auditor, except for the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934 that are approved by the Audit Committee prior to the completion of our audit. The Chair of the Audit Committee, or any other member or members designated by the Audit Committee, is authorized to pre-approve non-audit services, provided that any pre-approval shall be reported to the full Audit Committee at its next scheduled meeting. All audit and other services performed by our auditor in fiscal year
Accordingly, we are asking shareholders to approve the following resolution as an Ordinary Resolution of the Company at the AGM: RESOLVED that the shareholders of Perrigo Company plc The Board of Directors unanimously recommends that shareholders vote FOR the ratification, in a non-binding advisory vote, of the appointment of Ernst & Young LLP as our Company’s independent auditor for the fiscal year ending December 31,
Proposals to be Voted on Proposal 3 – Advisory Vote on Executive Compensation Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 It has been our practice to hold a Say-on-Pay vote annually, and at our Consistent with that philosophy, a significant percentage of the total compensation opportunities for each of our named executive officers is directly related to our stock price performance and to other performance factors that measure progress against operating plans and the creation of shareholder value. Through stock ownership requirements and equity incentives, we also align the interests of our executives with the long-term interests of the Company and our shareholders. For these reasons, we believe that our executive compensation program is reasonable, competitive and strongly focused on pay-for-performance principles. At the
The Talent & Compensation Committee and Board of Directors believe that the information provided in the
executives’ compensation with Perrigo’s short-term and long-term performance and provides compensation and incentives needed to attract, motivate and retain key executives that are crucial to Perrigo’s long-term success. Although this Say-on-Pay advisory vote is non-binding, the Talent & Compensation Committee and the Board will review the results of this vote and take them into account for future determinations concerning our executive compensation program. Accordingly, we are asking shareholders to approve the following resolution as an Ordinary Resolution of the Company at the AGM: RESOLVED that the shareholders of Perrigo Company plc The FOR the approval, on an advisory basis, of the compensation of the Company’s named executive
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We believe that equity-based compensation is a critical part of our compensation program. Shareholder approval of the LTIP Amendment and the associated share increase would enhance our ability to attract and retain talented employees, consultants and directors upon whom, in large measure, Perrigo’s sustained progress, growth and profitability depends. For more information on how the LTIP fits within our existing compensation program and our past and current grant practices, see the “Director Compensation”, “Executive Compensation”, and “Equity Compensation Plan Information” sections of this Proxy Statement. The number of shares requested was determined on the retained advice of our compensation consultants. Using their model, we determined that we could request up to 6.8 million shares with a 5 point margin. However, we did not request the maximum number of shares allowable under their model in an effort to minimize shareholder dilution and maximize shareholder value. Our Average Annual Share Usage (“Run Rate”) was 0.83%, 0.68%, and 0.56% in 2018, 2017, and 2016, respectively. The last time we requested shares was 2019.
If this proposal is not approved by our shareholders, we will not be able to issue awards under the 2019 LTIP after the March 2022 grants and our ability to continue to issue equity-based incentive compensation to our directors, employees, and consultants will be limited to the shares available under the 2019 LTIP, which we believe will be insufficient to remain competitive with our peers or to recruit, motivate and retain our employees, directors, and consultants.
Material Terms of the LTIP
The summary of the LTIP provided below describes the material features of the LTIP; however, it is not complete and, therefore, you should not rely solely on it for a detailed description of every aspect of the LTIP. A copy of the entire LTIP has been filed with this proxy statement and is attached for your review as Annex A.
Effective Date and Duration
The effective date of the LTIP is April 26, 2019. No awards may be granted under the LTIP on a date that is more than ten years after the effective date of the LTIP unless the LTIP is extended by a subsequent vote of our shareholders, but awards theretofore granted may extend beyond that date.
Eligibility
Under the LTIP, the Talent & Compensation Committee may grant share-based incentives to employees, directors and consultants to Perrigo and its affiliates. The LTIP also permits our CEO to grant share-based incentives to employees and consultants to Perrigo and its affiliates; however, our CEO may not grant awards to participants who are subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Approximately 1,782 employees, 9 non-employee directors, and 2 consultants will be eligible to participate in the LTIP.
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Shares Available under the LTIP
As of December 31, 2021, there were 2,827,510 shares available for issuance under the LTIP. As of that date, the number of shares underlying outstanding awards under the LTIP was 2,744,905shares. The number of available shares under the LTIP may change prior to the effective date of the amendment of the LTIP if additional awards are granted or forfeited under the LTIP between December 31, 2021, and the date of our AGM.
If any award under the LTIP expires, is terminated or forfeited, or is settled in cash or exchanged for other awards, on or after the effective date of the LTIP without the issuance of shares, then the shares subject to the award will be added to the shares available for issuance under the LTIP. In addition, any shares which are used as full or partial payment of the purchase price of shares or the tax withholding requirement with respect to any awards shall again be available for awards under the LTIP. If a stock appreciation right is settled in shares, shares that are in excess of the net shares delivered on exercise of such stock appreciation right shall be added back to the number of shares available for future awards under the LTIP.
The number of shares that may be issued with respect to awards under the LTIP to any one participant in a calendar year may not exceed 400,000 shares. The number of shares that may be issued with respect to awards under the LTIP to any one non-employee director in a calendar year may not exceed 25,000 shares.
Plan Administration
The Talent & Compensation Committee administers the LTIP. Subject to the terms of the LTIP, the Talent & Compensation Committee determines award eligibility, timing and the type, amount and terms of the awards. The Talent & Compensation Committee also interprets the LTIP, establishes rules and regulations under the LTIP and makes all other determinations necessary or advisable for the LTIP’s administration. With respect to participants who are not subject to Section 16 of the Exchange Act, our CEO has the authority to determine award eligibility and the timing, type, amount and terms of the awards, subject to the terms of the LTIP.
Types of Awards
Awards under the LTIP may be in the form of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted shares, performance shares, performance units and restricted share units. The terms of each award will be set forth in a written agreement.
Stock Options
A stock option provides the option holder with the right to purchase Perrigo ordinary shares at a future date and at a specified price per share called the exercise price. Options under the LTIP may be either “incentive stock options,” as defined under the tax laws, or nonstatutory stock options; however, only employees may be granted incentive stock options. The per share exercise price may not be less than the fair market value of a Perrigo ordinary share on the date the option is granted. The Talent & Compensation Committee (or our CEO, in the case of an option granted to a participant who is not subject to Section 16 of the Exchange Act) may specify any period of time following the date of grant during which options are exercisable, but the period cannot be longer than 10 years. Incentive stock options are subject to additional limitations relating to such things as employment status, minimum exercise price, length of exercise period, maximum value of the share underlying the options and a required holding period for shares received upon exercise of the option.
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Upon exercise, the option holder may pay the exercise price in several ways. He or she may pay in cash, in previously acquired shares or, if permitted by terms of his or her award agreement, other consideration having a fair market value equal to the exercise price, or through a combination of the foregoing.
Except for adjustments to effect mergers, reorganizations, consolidations, share splits, share dividends, recapitalizations or similar events, in no event shall the purchase price of an option be decreased after the grant date or surrendered in consideration of a new option grant with a lower exercise price or be cancelled or exchanged for cash without shareholder approval.
Stock Appreciation Rights
A stock appreciation right or “right” allows its holder to receive payment from us equal to the amount by which the fair market value of an ordinary share of Perrigo exceeds the grant price of the right on the exercise date. The grant price may not be less than the fair market value of an ordinary share of Perrigo on the grant date of the right and the term may not be greater than 10 years.
Under the LTIP, the Talent & Compensation Committee may grant rights in conjunction with the grant of stock options or on a stand-alone basis. If the Talent & Compensation Committee grants a right with an option award, then the holder can exercise the rights at any time during the life of the related option, but the exercise will proportionately reduce the number of his or her related stock options. The holder can exercise stand-alone stock appreciation rights during the period determined by the Talent & Compensation Committee (or the CEO, as applicable). Upon the exercise of a stock appreciation right, the holder receives cash, ordinary shares of Perrigo or other property, or a combination thereof, in the Talent & Compensation Committee’s or the CEO’s discretion, as applicable. Except for adjustments to effect mergers, reorganizations, consolidations, share splits, share dividends, recapitalizations or similar events, in no event shall the grant price of a stock appreciation right be decreased after the grant date or surrendered in consideration of a new stock appreciation right grant with a lower grant price or be cancelled in exchange for cash without shareholder approval.
Restricted Shares and Restricted Share Units
Restricted shares refers to ordinary shares of Perrigo subject to a risk of forfeiture or other restrictions on ownership for a certain period of time. During the restricted period, the holder of restricted shares may not sell or otherwise transfer the shares, but he or she may vote the shares and may be entitled to any dividend or other distributions if determined by the Talent & Compensation Committee or the CEO, as applicable, provided, however, that any such dividend would become payable only if and to the extent such restricted shares become vested. The restricted shares become freely transferable when the restriction period expires.
A restricted share unit award is an award valued by reference to Perrigo ordinary shares that entitles the holder to receive one ordinary share of Perrigo or cash equal to the value of one ordinary share of Perrigo on the date of vesting of the award. Restricted share units are subject to a risk of forfeiture or other restrictions on ownership for a certain period of time.
The Talent & Compensation Committee (or the CEO, as applicable) sets the terms and conditions of restricted share and restricted share unit awards, including the restrictions applicable to such awards. The Talent & Compensation Committee (or the CEO, as applicable) also determines whether the restrictions have been satisfied and the form of payment of restricted stock units, which may be in cash or Perrigo ordinary shares.
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Performance Shares and Performance Units
A performance share is a right to receive ordinary shares of Perrigo or equivalent value in the future, contingent on the achievement of performance goals or other objectives during a specified period. A performance unit represents an award valued by reference to property other than ordinary shares of Perrigo, as designated by the Talent & Compensation Committee (or the CEO, as applicable), contingent on the achievement of performance goals or other objectives during a specified period.
The Talent & Compensation Committee or the CEO, as applicable, sets the terms and conditions of each award, including the performance goals that must be attained and the various percentages of performance unit value to be paid out upon full or partial attainment of those goals. The Talent & Compensation Committee or the CEO, as applicable, also determines whether the goals have been satisfied and the form of payment, which may be in cash, ordinary shares of Perrigo, other property or a combination thereof.Voted on
Dividend Equivalents
A dividend equivalent provides a participant with the right to receive an amount equal to the amount of dividends paid on one ordinary share of Perrigo for each share represented by the dividend equivalent award. The Talent & Compensation Committee or the CEO, as applicable, determines whether a participant will receive dividend equivalents in connection with an award. Such dividend equivalents shall be subject to the same terms and conditions as the award to which the dividend equivalents relate and shall be payable only if and to the extent the underlying awards become vested.
Minimum Vesting Requirements
The LTIP allows for the grant of awards subject to time-based vesting or performance-based vesting or both. Awards have a minimum vesting period of one-year, except that this one-year minimum vesting requirement does not apply if the participant’s termination from service occurs due to his or her death, disability, or retirement, upon a change in control, or upon his or her termination without cause or separation for good reason within a specified period following a change in control. The one-year minimum vesting requirement also does not apply to any award granted in substitution for another award that does not reduce the vesting period of the award being substituted.
Termination of Employment
The LTIP provides that upon a participant’s death, disability or retirement, (i) all outstanding awards (other than performance units) immediately vest, (ii) performance units will vest or be forfeited depending on the attainment of performance goals, and (iii) stock options and stock appreciation rights may be exercised by the participant, or by his or her estate, beneficiary or conservator in the case of death or disability, at any time prior to their stated expiration dates.
If the participant’s employment is terminated involuntarily for economic reasons, for example, restructurings, dispositions or layoffs, as determined in the discretion of the Talent & Compensation Committee (or the CEO, as applicable), the participant may exercise any vested options or stock appreciation rights until the earlier of 30 days following the date that is 24 months after the termination date and the expiration date of the options or stock appreciation rights. Unvested options, stock appreciation rights, restricted shares and service-vesting restricted share units that are scheduled to vest during the 24-month period following the termination date will
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continue to vest as if the participant had continued to perform services during the 24-month period. Those not scheduled to vest during the 24-month period are forfeited on the termination date. Unvested performance units for which the performance period is scheduled to end during the 24-month period following the participant’s termination date will vest or be forfeited depending on the attainment of performance goals. Any shares subject to a performance unit for which the performance period is not scheduled to end during such 24-month period shall be forfeited on the participant’s termination date.
If a participant’s termination is for cause, all outstanding awards are forfeited. Except as otherwise provided above, in all other terminations, unvested awards are forfeited on the termination date and the participant may exercise his or her vested options and stock appreciation rights during the three-month period after the termination date, but not later than the expiration date of the option or stock appreciation right. In certain circumstances, the LTIP provides for extended exercisability when a participant dies following termination. The payment of certain awards to officers or other key employees following termination from employment will be delayed by at least six months if earlier payment of the awards would result in the imposition of excise taxes on him or her.
This section describes the default rules applicable to awards. The Talent & Compensation Committee (or the CEO, as applicable) has discretion to establish different terms and conditions relating to the effect of a participant’s termination date on awards under the LTIP.
Change in Control
Regardless of the vesting requirements that otherwise apply to an award under the LTIP, unless the Talent & Compensation Committee (or the CEO, as applicable) determines otherwise in an individual award agreement, if the participant’s termination date occurs by reason of a termination without cause or a separation for good reason on or after a change in control and prior to the two-year anniversary of the change in control, all outstanding awards will vest as of such termination date. In the case of performance units, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels.
On a change in control, the Talent & Compensation Committee has the discretion to take any of the following actions with respect to awards granted under the LTIP, without the consent of any participant: (i) require that any outstanding option or stock appreciation right be surrendered for cash or Perrigo shares, (ii) terminate any outstanding option or stock appreciation right after participants have been given an opportunity to exercise such awards, or (iii) convert the award to an award of the surviving corporation.
Generally, a change in control is defined in the LTIP to mean (1) a change in ownership of 50% or more of Perrigo ordinary shares, (2) the consummation of a merger, consolidation or similar transaction following which our shareholders cease to own shares representing more than 50% of the voting power of the surviving entity (or the parent of such entity) or (3) a change in Board composition so that a majority of the Board is comprised of individuals who are neither incumbent members nor their nominees.
Performance-Based Awards Prior to 2018
Prior to January 1, 2018, the Talent & Compensation Committee could designate an award as “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code. These awards were conditioned on the achievement of one or more performance measures based on one or any combination of
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the following, as selected by the Talent & Compensation Committee: cash flow; cash flow from operations; net income; total earnings; earnings per share, diluted or basic; earnings per share from continuing operations, diluted or basic; earnings before interest and taxes; earnings before interest, taxes, depreciation, and amortization; earnings from operations; net asset turnover; inventory turnover; capital expenditures; net earnings; operating earnings; gross or operating margin; debt; working capital; return on equity; return on net assets; return on total assets; return on capital; return on invested capital; return on investment; return on sales; net or gross sales; market share; economic value added; cost of capital; change in assets; expense reduction levels; cost control; debt reduction; productivity; delivery performance; safety record; share price; share price appreciation; and total shareholder return of Perrigo or of a division or affiliate of Perrigo that employs the participant.
The maximum annual cash payment that may be made in settlement of a performance-based compensation award to an executive subject to Section 162(m) of the Code is $6,000,000. No awards granted on or after January 1, 2018, will be considered performance-based compensation for purposes of Section 162(m) of the Code.
Adjustments
The number of shares that may be issued under the LTIP and the number of shares subject to outstanding awards may be adjusted in the event of a merger, reorganization, consolidation, share split, share dividend, recapitalization or other similar event affecting the number of outstanding ordinary shares of Perrigo. In that event, the Talent & Compensation Committee also may make appropriate adjustments to any options, stock appreciation rights, restricted shares, restricted share units, performance shares, performance units or other awards outstanding under the LTIP.
Transferability
The recipient of an award under the LTIP generally may not pledge, assign, sell or otherwise transfer his or her stock options, stock appreciation rights, restricted shares, restricted share units, performance shares, or performance units other than by will or by the laws of descent and distribution. The Talent & Compensation Committee, however, may establish rules and procedures to allow participants in the LTIP to transfer nonstatutory stock options to immediate family members or to certain trusts or partnerships.
Subplans
The LTIP includes three subplans that reflect the requirements of applicable foreign laws with respect to certain types of awards.
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Plan Amendment and Termination
Generally, the Board may amend or terminate the LTIP at any time without shareholder approval. Without shareholder approval, however, the Board may not: (1) increase the number of Perrigo ordinary shares available for issuance under the LTIP (other than as described in “Adjustments” above); (2) change the employees or the class of employees eligible to participate in the LTIP; (3) change the minimum exercise price for any option or stock appreciation right below the grant date fair market value of the award; or (4) materially change the terms of the LTIP. In addition, if any action that the Board proposes to take will have a materially adverse effect on the rights of any participant or beneficiary under an outstanding award, then the affected participant or beneficiary must consent to the action.
Amendment of Awards
The Talent & Compensation Committee or the CEO may amend the terms of any award previously granted, provided that (i) no such amendment will impair the rights of any participant without his or her consent, and (ii) the CEO may only amend the terms of awards granted to participants who are not subject to Section 16 of the Exchange Act.
Clawback
The LTIP includes a claw-back provision that allows Perrigo to recover equity-based compensation paid to an executive under the LTIP (and associated gains) if Perrigo’s financial results are later restated due to the individual’s misconduct, including, without limitation, fraud or knowing illegal conduct. In addition, any Perrigo shares acquired under the LTIP (including shares acquired through the exercise of options and/or stock appreciation rights), and any gains or profits on the sale of such shares, will be subject to any clawback or recoupment policy adopted by Perrigo, as in effect from time to time.
Deferral of Awards
At the discretion of the Talent & Compensation Committee (or the CEO, in the case of a participant who is not subject to Section 16 of the Exchange Act), a participant may elect to defer the payment or settlement of awards upon such terms and conditions as the Talent & Compensation Committee (or the CEO) may prescribe.
Tax Consequences
The holder of an award granted under the LTIP may be affected by certain U.S. federal income tax consequences. Special rules may apply to individuals who may be subject to Section 16(b) of the Exchange Act. The following discussion of U.S. federal income tax consequences is based on U.S. federal income tax laws in effect on the date of this Proxy Statement and is not a complete description of the U.S. federal income tax consequences that apply to participants in the LTIP. This summary is not intended to be exhaustive and does not constitute legal or tax advice. This summary does not address municipal, state or foreign income tax consequences of awards, or employment taxes.
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Incentive Stock Options. There are no federal income tax consequences associated with the grant or exercise of an incentive stock option, so long as the holder of the option was our employee at all times during the period beginning on the grant date and ending on the date three months before the exercise date. The “spread” between the exercise price and the fair market value of Perrigo ordinary shares on the exercise date, however, is an adjustment for purposes of the alternative minimum tax. A holder of incentive stock options defers income tax on the share’s appreciation until he or she sells the shares.
Upon the sale of the shares, the holder realizes a long-term capital gain (or loss) if he or she sells the shares at least two years after the option grant date and has held the shares for at least one year. The capital gain (or loss) equals the difference between the sales price and the exercise price of the shares. If the holder disposes of the shares before the expiration of these periods, then he or she recognizes ordinary income at the time of sale (or other disqualifying disposition) equal to the lesser of (1) the gain he or she realized on the sale and (2) the difference between the exercise price and the fair market value of the shares on the exercise date. This ordinary income is treated as compensation for tax purposes. The holder will treat any additional gain as short-term or long-term capital gain, depending on whether he or she has held the shares for at least one year from the exercise date. If the holder does not satisfy the employment requirement described above, then he or she recognizes ordinary income (treated as compensation) at the time he or she exercises the option under the tax rules applicable to the exercise of a nonstatutory stock option. We are entitled to an income tax deduction to the extent that an option holder realizes ordinary income
Nonstatutory Stock Options. There are no federal income tax consequences to us or to the recipient of a nonstatutory stock option upon grant. Upon exercise, the option holder recognizes ordinary income equal to the spread between the exercise price and the fair market value of Perrigo ordinary shares on the exercise date. This ordinary income is treated as compensation for tax purposes. The basis in shares acquired by an option holder on exercise equals the fair market value of the shares at that time. The capital gain holding period begins on the exercise date. Perrigo receives an income tax deduction upon the exercise of a nonstatutory stock option in an amount equal to the spread.
Stock Appreciation Rights. There are no tax consequences associated with the grant of stock appreciation rights. Upon exercise, the holder of stock appreciation rights recognizes ordinary income in the amount of the appreciation paid to him or her. This ordinary income is treated as compensation for tax purposes. Perrigo receives a corresponding deduction in the same amount that the holder recognizes as income.
Restricted Shares. Unless the holder makes an election to accelerate the recognition of income to the grant date (as described below), the holder of restricted shares does not recognize any taxable income on the shares while they are restricted. When the restrictions lapse, the holder’s taxable income (treated as compensation) equals the fair market value of the shares (less the amount paid for the shares, if any). If within 30 days of receiving a restricted share award the holder files with the Internal Revenue Service an election under Section 83(b) of the Code, the holder will recognize ordinary income equal to the fair market value of the shares on the grant date (less the amount paid for the shares, if any) and any future appreciation will be taxed at capital gain rates. Generally, at the time the holder recognizes taxable income with respect to restricted shares, Perrigo will receive a deduction in the same amount.
Performance Shares, Performance Units and Restricted Share Units. There are no tax consequences associated with the grant of performance shares, performance units or restricted share units. The holder recognizes ordinary income (treated as compensation) upon a payment on the performance shares,
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performance units or restricted share unit awards in amount equal to the payment received, and Perrigo receives a corresponding tax deduction.
Section 280G. Under certain circumstances, the accelerated vesting of an award in connection with a change in control of Perrigo might be deemed an “excess parachute payment” for purposes of the golden parachute tax provisions of Section 280G of the Code. To the extent they are considered excess parachute payments, a participant in the LTIP may be subject to a 20% excise tax and Perrigo may be unable to receive a tax deduction.
Section 409A. Section 409A of the Code imposes complex rules on nonqualified deferred compensation arrangements, including requirements with respect to elections to defer compensation and the timing of payment of deferred amounts. Depending on how they are structured, certain equity-based awards may be subject to Section 409A of the Code, while others are exempt. If an award is subject to Section 409A of the Code and a violation occurs, the affected participant may be subject to a 20% penalty tax and, in some cases, interest penalties. The LTIP and awards granted under the LTIP are intended to be exempt from or conform to the requirements of Section 409A of the Code.
Section 162(m). Generally, whenever an award holder recognizes ordinary income under the LTIP, a corresponding deduction is available to Perrigo. However, Section 162(m) of the Code placed a $1 million limit on the amount of compensation that Perrigo can deduct in any one taxable year for certain covered employees. Historically, certain performance-based pay has been excluded from this limit. However, the performance-based compensation exception has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to certain covered employees in excess of $1 million per taxable year will not be deductible unless it qualified for the transition relief applicable to certain arrangements in place as of November 2, 2017. Due to uncertainties in the application and the interpretation of the changes to Section 162(m) of the Code and the transition relief for arrangements in place as of November 2, 2017, there is no assurance that compensation intended to be exempt from the $1 million deduction limit will in fact be exempt.
New Plan Benefits
The Talent & Compensation Committee has not granted any awards under the 2019 LTIP subject to shareholder approval of the LTIP Amendment. Participation and the types of awards under the 2019 LTIP are subject to the discretion of the Talent & Compensation Committee, and as a result, the benefits or amounts that will be received by any participant or groups of participants under the 2019 LTIP, including from any additional shares authorized under the LTIP Amendment, are not currently determinable. As of December 31, 2021, the closing price of a Perrigo ordinary share was $38.90.
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The following table sets forth information on restricted shares, RSUs, PSUs and options granted under the LTIP between January 1, 2021 and December 31, 2021:
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(1) Assumes PSUs granted in 2021 achieve target performance over the performance period. No options were granted.
Accordingly, we are asking shareholders to approve the following resolution as an Ordinary Resolution of the Company at the AGM:
RESOLVED that the shareholders of Perrigo Company plc (the “Company”) approve the amendment to the Perrigo Company plc 2019 Long-Term Incentive Plan (the “LTIP”) including increasing the number of ordinary shares of the Company available for issuance under the LTIP by 4,471,878 shares.
The Board of Directors unanimously recommends that shareholders vote FOR the amendment of the Perrigo Company plc 2019 LTIP Plan including an increase in the number of shares available under the LTIP
Proposal 54 – Renew the Board’s Authority to Issue Shares under
Irish Law
Under Irish law, directors of an Irish public limited company must have authority from its shareholders to issue any shares, including shares which are part of the company’s authorized but unissued share capital. On May 12, 2021,4, 2023, shareholders granted the Board authority to issue shares, with such authority to expire on November 12, 2022.4, 2024. The proposed resolution seeks to renew the Board’s authority to issue shares.
It ishas been customary practice in Ireland to seek shareholder authority to issue shares with an aggregate nominal value of up to 33%20% of the aggregate nominal value of the company’s issued share capital and for such authority to be renewed each year.
Consistent with that practice, we are seeking approval to issue up to a maximum of 33%20% of our issued ordinary share capital for a period expiring 18 months from the passing of this resolution, unless otherwise varied, revoked or renewed. We expect to propose renewal of this authorization on a regular basis at our annual general meetings in subsequent years.
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Granting the Board this authority is a routine matter for public companies incorporated in Ireland and is consistent with Irish market practice. This authority is fundamental to our business and enables us to issue shares, including, if applicable, in connection with funding acquisitions and raising capital. We are not asking you to approve an increase in our authorized share capital or to approve a specific issuance of shares. Instead, approval of this proposal will only grant the Board the authority to issue shares that are already authorized under our Articles of Association upon the terms below. In addition, because we are a NYSE-listed company, our shareholders continue to benefit from the protections afforded to them under the rules and regulations of the NYSE and the U.S. Securities and Exchange Commission, including those rules that limit our ability to issue shares in specified circumstances. This authorization is required as a matter of Irish law and is
not otherwise required for other companies listed on the NYSE with whom we compete. Approval of this resolution would merely place us on par with other NYSE-listed companies.
Accordingly, we are asking shareholders to approve the following resolution as an Ordinary Resolution of the Company at the AGM:
RESOLVED that the directors are generally and unconditionally authorized to exercise all powers to allot and issue relevant securities (within the meaning of section 1021 of the Companies Act 2014) up to an aggregate nominal value of €44,398.94 (44,398,939€27,260.75 (27,260,746 shares) (being equivalent to approximately 33%20% of the aggregate nominal value of the issued share capital of the Company as at the last practicable date prior to the issue of the notice of this meeting) and that the authority conferred by this resolution shall expire 18 months from the passing of this resolution, unless previously renewed, varied or revoked; provided that the Company may make an offer or agreement before the expiry of this authority, which would or might require any such securities to be allotted after this authority has expired, and in that case, the directors may allot relevant securities in pursuance of any such offer or agreement as if the authority conferred had not expired.
The Board of Directors unanimously recommends that shareholders vote
FOR the renewal of the Board’s authority to issue shares under Irish lawlaw.
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Proposals to be Voted on
Proposal 65 – Renew the Board’s Authority to Opt-out of Statutory
Pre-emption Rights under Irish Law
Under Irish law, unless otherwise authorized, when an Irish public limited company issues shares for cash to new shareholders, it is required first to offer those shares on the same or more favorable terms to existing shareholders of the company on a pro-rata basis (commonly referred to as the pre-emption right). On May 12, 2021,4, 2023, shareholders granted the Board this authorization, with such authority to expire on November 12, 2022.4, 2024. The proposed resolution seeks to renew the Board’s authority to opt-out of statutory pre-emption rights.
It ishas been customary practice in Ireland to seek shareholder authority to opt-out of the pre-emption rights provision in the event of (1) the issuance of shares in connection with any rights issue and (2) the issuance of shares for cash, if the issuance is limited to up to 5%10% of a company’s issued share capital (with the possibility of issuing an additional 5%10% of the company’s issued share capital provided the company uses it only in connection with
an acquisition or specified capital investment that is announced contemporaneously with the issuance, or which has taken place in the preceding six-month period and is disclosed in the announcement of the issue), bringing the total acceptable limit to 10%20% of the company’s issued share capital.
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It is also customary practice for such authority to be limited to a period of up to 18 months. Consistent with these customary practices, we are seeking this authority for a period expiring 18 months from the passing of this resolution, unless otherwise varied, renewed or revoked. We expect to propose renewal of this authorization on a regular basis at our annual general meetings in subsequent years.
Granting the Board this authority is a routine matter for public companies incorporated in Ireland and is consistent with Irish customary practice. Similar to the authorization requested in Proposal 5,4, this authority is fundamental to our business and, if applicable, will facilitate our ability to fund acquisitions and otherwise raise capital. We are not asking you to approve an increase in our authorized share capital. Instead, approval of this
proposal will only grant the Board the authority to issue shares in the manner already permitted under our Articles of Association upon the terms below. Without this authorization, in each case where we issue shares for cash, we would first have to offer those shares on the same or more favorable terms to all of our existing shareholders. This requirement could cause delays in the completion of acquisitions and capital raising for our business. This authorization is required as a matter of Irish law and is not otherwise required for other companies listed on the NYSE with whom we compete. Approval of this resolution would merely place us on par with other NYSE-listed companies.
Accordingly, we are asking shareholders to approve the following resolution as a Special Resolution of the Company at the AGM:
RESOLVED that, subject to and conditional on the passing of the resolution in respect of Proposal No. 54 as set out above, the directors are empowered pursuant to section 1023 of the Companies Act 2014 to allot and issue equity securities (within the meaning of section 1023 of the Companies Act 2014) for cash, pursuant to the authority conferred by Proposal No. 4 as if section 1022 of that Act did not apply to any such allotment, provided that this power shall be limited to:
PERRIGO• 2024 PROXY STATEMENT | 75 | |
and, in each case, the authority conferred by this resolution shall expire 18 months from the passing of this resolution, unless previously renewed, varied or revoked; provided that the Company may make an offer or agreement before the expiry of this authority, which would or might require any such securities to be allotted
87 2022 Proxy Statement
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after this authority has expired, and in that case, the directors may allot equity securities in pursuance of any such offer or agreement as if the authority conferred hereby had not expired.
The Board of Directors unanimously recommends that shareholders vote FOR the renewal of the
Board’s authority to opt-out of statutory pre-emption rights under Irish lawlaw.
Presentation of Irish Statutory Financial Statements | |||
Presentation of Irish Statutory Financial Statements
The Company’s Irish Statutory Financial Statements for the fiscal year ended December 31, 2021,2023, including the reports of the directors and auditor thereon, will be considered at the AGM. Since we are an Irish company, we are required to prepare Irish statutory financial statements under applicable Irish company law and to deliver those accounts to shareholders of record in connection with our AGM. There is no requirement under Irish law that such statements be approved by shareholders, and no such approval will be sought at the AGM. We will mail without charge, upon written request, a copy of the Irish Statutory Financial Statements to beneficial owners of our shares and shareholders of record. Requests should be sent to: Perrigo Company plc, Attention: Todd W. Kingma,Kyle L. Hanson, Company Secretary, Sharp Building, Hogan Place, Dublin 2, D02 TY74, Ireland, or at GeneralMeeting@perrigo.com. The Company’s Irish Statutory Financial Statements are also available on our website at www.perrigo.com.www.Perrigo.com.
PERRIGO• 2024 PROXY STATEMENT
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A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021,2023, including financial statement schedules, is on file with the Securities and Exchange Commission and delivered with this proxy statement. If you would like a copy of the exhibits to the Form 10-K, please contact Todd W. Kingma,Kyle L. Hanson, Company Secretary, Perrigo Company plc, Sharp Building, Hogan Place, Dublin 2, D02 TY74, Ireland, or at GeneralMeeting@perrigo.com.
78 | PERRIGO• 2024 PROXY STATEMENT | |
Questions and Answers and Voting Information | |||
Questions and Answers and Voting Information
Shareholders owning Perrigo’s ordinary shares at the close of business on March 4, 2024, the record date, or their proxy holders, may vote their shares at the AGM. On that date, there were 135,515,939 Perrigo ordinary shares outstanding. Each ordinary share held as of the record date is entitled to one vote on each matter properly brought before the AGM.
Shareholder of Record: If your ordinary shares are registered directly in your name with Perrigo’s Transfer Agent, Computershare, you are considered, with respect to those shares, the “shareholder of record.”
Beneficial Owner: If your shares are held in a brokerage account or by another nominee, you are considered to be the beneficial owner of shares held in “street name.” If you are a beneficial shareholder, these proxy materials, together with a voting instruction card, are being forwarded to you by your broker, bank or other nominee. As the beneficial owner of the shares, you have the right to direct your broker, bank or other nominee how to vote.
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While you should follow the specific voting instructions given by your bank, broker or other nominee; here is a summary of the common voting methods:
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If you own ordinary shares as a shareholder of record, you may vote your shares in any of the following ways:
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If you vote by Internet or by telephone, your electronic vote authorizes the named proxies in the same manner as if you signed, dated and returned a proxy card by mail.
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If you hold your shares in street name, you will need to obtain a legal proxy from your bank, broker or nominee in order for you to vote in person at the AGM and submit the legal proxy along with your ballot at the AGM. In addition, you may request paper copies of the Proxy Statement from your broker, bank or nominee by following the instructions on the Internet Notice of Availability provided by your broker, bank or nominee.
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Other than as set out in this Proxy Statement, the Board knows of no other matter to be presented at the AGM. If any other business properly comes before the AGM, such business will be decided on a poll conducted at the AGM.
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Yes. Even if you have voted by proxy, you may still attend and vote at the AGM. Please note, however, that if you are a beneficial owner whose shares are held in street name, you are not the shareholder of record. In that event, if you wish to attend and vote at the AGM, you must obtain a proxy issued in your name from that holder of record giving you the right to vote your shares at the AGM.
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PERRIGO• 2024 PROXY STATEMENT | 79 | |
Yes, if you own ordinary shares as a shareholder of record, you may change your vote at any time before your proxy is voted at the AGM in one of four ways:
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Perrigo Company plc,
Sharp Building,
Hogan Place,
Dublin 2, D02 TY74, Ireland
Attn: Company Secretary
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If you are a beneficial owner of shares held in street name and you have instructed your bank, broker or other nominee to vote your shares, you may revoke your proxy at any time, before it is exercised, by:
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If you sign, date and return your proxy card or vote by telephone or Internet, your vote will be cast as you direct. If you do not indicate how you want to vote, you give authority to Ray SilcockKyle L. Hanson and Todd KingmaEduardo Bezerra to vote on the items discussed in these proxy materials and on any other matter that is properly raised at the AGM. In that event, your proxy will be voted consistent with the Board’s voting recommendations and FOR or AGAINST any other properly raised matters at the discretion of Ray SilcockKyle L. Hanson and Todd Kingma.Eduardo Bezerra.
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According to our Memorandum and Articles of Association, one or more persons present at the meeting in person and holding or representing by proxy more than 50% of the total issued shares constitutes a quorum. You will be considered part of the quorum if you return a signed and dated proxy card, vote by telephone or Internet, or attend the AGM in person. Abstentions and broker non-votes are counted as “shares present” at the AGM for purposes of determining whether a quorum is present at the meeting.
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A broker non-vote occurs when the broker, bank or other holder of record that holds your shares in street name is not entitled to vote on a matter without instruction from you and you do not give any instruction. Unless instructed otherwise by you, brokers, banks and other street name holders will not have discretionary authority to vote on any matter at the AGM other than Proposals 2, 54 and 65 and will be considered “broker non-votes” having no effect on the relevant resolution.
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To pass an ordinary resolution, a simple majority of the votes cast in person or by proxy must be in favor of the resolution, while 75% of the votes cast is required for a special resolution to pass.
Proposals 1-51-4 are ordinary resolutions requiring a simple majority of votes cast. Proposal 65 is a special resolution requiring 75% of votes cast to pass. Abstentions and broker non-votes will have no impact on the outcome of any proposal.
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80 | PERRIGO• 2024 PROXY STATEMENT | |
Questions and Answers and Voting Information
If you want to submit a proposal for inclusion in our proxy statement for the 20232025 AGM or nominate an individual for election as a director at the 20232025 AGM, you should carefully review the relevant provisions of the Company’s Memorandum and Articles of Association. You must submit your proposal no later than November 24, 2022.22, 2024. Your nomination or proposal must be in writing and must comply with the proxy rules of the Securities and Exchange Commission (the “SEC”(“SEC”) and the Memorandum and Articles of Association of the Company. If you want to submit a nomination or proposal to be raised at the 20232025 AGM but not included in the proxy statement, we must receive your written proposal on or after February 5, 2023,1, 2025, but on or before February 25, 2023.21, 2025. If you submit your proposal after the deadline, then SEC rules permit the individuals named in the proxies solicited by Perrigo’s Board of Directors for that meeting to vote on that proposal at their discretion, but they are not required to do so.
To properly bring a proposal (other than the nomination of a director) before an annual general meeting, the advance notice provisions of our Articles of Association require that your notice of the proposal must include in summary: (1) your name and address and the name and address of the beneficial owner of the shares, if any; (2) the number of Perrigo ordinary shares owned beneficially and of record by you and any beneficial owner as of the date of the notice (which information must be supplemented as of the record date); (3) a description of certain agreements, arrangements or understandings that you or any beneficial owner have entered into with respect to the shares (which information must be supplemented as of the record date) or the business proposed to be brought before the meeting; (4) a representation that you or any beneficial owner are the holder of shares entitled to vote at the meeting and intend to appear at the meeting to propose such business; (5) a representation whether you or any beneficial owner are a part of a
group that intends to deliver a proxy statement or otherwise solicit proxies on the proposal; (6) any other information regarding you or any beneficial owner that would be required under the SEC’s proxy rules and regulations; and (7) a brief description of the business you propose to be brought before the meeting, the reasons for conducting that business at the meeting, and any material interest that you or any beneficial owner has in that business. You should send any proposal to our Company Secretary at Perrigo Company plc, Sharp Building, Hogan Place, Dublin 2, D02 TY74, Ireland.
With respect to director nominations, the advance notice provisions of our Articles of Association require that your notice of nomination must include: (1) your name and address and the name and address of the beneficial owner of the shares, if any; (2) the number of Perrigo ordinary shares owned beneficially and of record by you and any beneficial owner as of the date of the notice (which information must be
93 2022 Proxy Statement
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supplemented as of the record date); (3) a description of certain agreements, arrangements or understandings that you or any beneficial owner have entered into with respect to the shares (which information must be supplemented as of the record date); (4) a representation that you or any beneficial owner are the holder of shares entitled to vote at the meeting and intend to appear at the meeting to propose such business; (5) a representation whether you or any beneficial owner are a part of a group that intends to deliver a proxy statement or otherwise solicit proxies on the proposal; (6) the name, age and home and business addresses of the nominee; (7) the principal occupation or employment of the nominee; (8) the number of Perrigo ordinary shares that the nominee beneficially owns; (9) a statement that the nominee is willing to be nominated and serve as a director; (10) an undertaking to provide any other information required to determine the eligibility of the nominee to serve as an independent director or that could be material to shareholders’ understanding of his or her independence; and (11) any other information regarding you, any beneficial owner or the nominee that would be required under the SEC’s proxy rules and regulations had our Board of Directors nominated the individual. You should send your proposed nomination to our Company Secretary at Sharp Building, Hogan Place, Dublin 2, D02 TY74, Ireland.
In addition to satisfying the foregoing requirements under our Articles of Association, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information and representations required by Rule 14a-19 under the Exchange Act.
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Any shareholder or group of up to 20 shareholders meeting our continuous ownership requirement of 3% or more of our ordinary shares for at least 3 years who wishes to nominate a candidate or candidates for election in connection with our 20232025 AGM and require us to include such nominees in our proxy statement and form of proxy must submit their nomination and request so it is received by us on or after October 25, 2022,23, 2024, but on or before November 24, 2022.22, 2024. The number of candidates that may be so nominated is limited to the greater of two or the largest whole
PERRIGO• 2024 PROXY STATEMENT | 81 | |
number that does not exceed 20% of the Board. Loaned shares recallable on five U.S. business days’ notice count as owned for purposes of meeting the continuous ownership requirement, but each shareholder in the requesting group must have full voting and investment rights as well as economic interest in their shares at the time of nomination, record date and meeting date. Two or more investment funds that are under common management and investment control will count as one shareholder for purposes of determining the size of the group. All proxy access nominations must meet the requirements of the Company’s Memorandum and Articles of Association. You should send your nomination and request to our Company Secretary at Perrigo Company plc, Sharp Building, Hogan Place, Dublin 2, D02 TY74, Ireland.
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The Irish Statutory Financial Statements are the financial statements required to be prepared in accordance with the Irish Companies Act 2014 and cover the results of operations and financial position of the Company for the fiscal year ended December 31, 2021.2023. Our Irish statutory financial statements, including
the reports of the auditor and the directors thereon, will be considered at the AGM and we are mailing those accounts to shareholders of record. Since we are an Irish company, we are required to prepare Irish statutory financial statements under applicable Irish company law and deliver those accounts to shareholders of record in connection with our AGM. However, as shareholder approval of those financial statements is not required, it will not be sought at the AGM. We will mail without charge, upon written request, a copy of the Irish statutory financial statements to beneficial owners and shareholders of record of our shares. Requests should be sent to: Perrigo Company plc, Attention: Company Secretary, Sharp Building, Hogan Place, Dublin 2, D02 TY74, Ireland or by email at GeneralMeeting@perrigo.com.
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Your shares are likely registered differently or are in more than one account. You should complete and return each proxy card you receive to guarantee that all of your shares are voted.
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Perrigo pays all of the costs of preparing and mailing the proxy statement and soliciting the proxies. We do not compensate our directors, officers and employees for mailing proxy materials or soliciting proxies in person, by telephone or otherwise.
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Yes. Our Proxy Statement, Annual Report on Form 10-K, Irish Statutory Financial Statements and a link to the means to vote by Internet are available at www.proxydocs.com/PRGO.
95 2022 Proxy Statement
Exhibit A | |||
Exhibit A
The Company provides non-GAAP financial measures as additional information that it believes is useful to investors and analysts in evaluating the performance of the Company’s ongoing operating trends, facilitating comparability between periods and companies in similar industries and assessing the Company’s prospects for future performance. These non-GAAP financial measures exclude items, such as impairment charges, restructuring charges, and acquisition and integration-related charges, that by their nature affect comparability of operational performance or that we believe obscure underlying business operational trends. The non-GAAP measures the Company provides are consistent with how management analyzes and assesses the operating performance of the Company and disclosing them provides investor insight into management’s view of the business. Management uses these adjusted financial measures for planning and forecasting in future periods and evaluating segment and overall operating performance. In addition, management uses certain of the profit measures as factors in determining compensation.
We previously had an RX segment which was comprised of our prescription pharmaceuticals business in the U.S. and other pharmaceuticals and diagnostic business in Israel, which have been divested. Following the divestiture, there were no substantial assets or operations left in this segment. The Rx segment was reported as Discontinued Operations in 2021, and as such has been eliminated from continuing operations for all periods presented.
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PERRIGO COMPANY PLC RECONCILIATION OF NON-GAAP MEASURES
Table I
(in millions)
(unaudited)
Twelve Months Ended December 31, 2021 | ||||
Consolidated Continuing Operations | Net Sales | Operating Income | ||
Reported | $4,138.7 | $410.4 | ||
As a % of reported net sales | 9.9% | |||
Pre-tax adjustments: | ||||
Amortization expense related primarily to acquired intangible assets | $213.2 | |||
Acquisition and integration-related charges and contingent consideration adjustments | 16.3 | |||
Restructuring charges and other termination benefits | 16.9 | |||
Unusual litigation | (365.2) | |||
Separation and reorganization expense | 2.1 | |||
Impairment charges | 173.1 | |||
Indirect RX business support costs* | 12.2 | |||
Actual to plan constant currency adjustments | (34.9) | (7.5) | ||
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Adjusted | $4,103.8 | $471.5 |
Twelve Months Ended December 31, 2021 | ||||
Consumer Self-Care Americas | Net Sales | Operating Income | ||
Reported | $2,693.1 | $206.5 | ||
As a % of reported net sales | 7.7% | |||
Pre-tax adjustments: | ||||
Amortization expense primarily related to acquired intangible assets | $51.0 | |||
Impairment charges | 162.2 | |||
Restructuring charges and other termination benefits | 8.0 | |||
Indirect RX business support costs* | 2.7 | |||
Acquisition and integration-related charges and contingent consideration adjustments | 3.1 | |||
Actual to plan constant currency adjustments | (4.3) | (1.8) | ||
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Adjusted | $2,688.8 | $431.7 |
* Includes certain costs which are reported in GAAP continuing operations but were previously allocated to the RX business. On a go-forward basis, such costs will either be covered by the transition services agreement or eliminated following closing. Accordingly, we do not believe such operational costs are representative of the future expenses of our continuing operations.
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Twelve Months Ended December 31, 2021 | ||||
Consumer Self-Care International | Net Sales | Operating Income | ||
Reported | $1,445.6 | $36.1 | ||
As a % of reported net sales | 2.5% | |||
Pre-tax adjustments: | ||||
Amortization expense primarily related to acquired intangible assets | $162.2 | |||
Impairment charges | 10.9 | |||
Restructuring charges and other termination benefits | 6.1 | |||
Unusual litigation | (2.9) | |||
Actual to plan constant currency adjustments | (30.5) | (5.7) | ||
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Adjusted | $1,415.1 | $206.7 |
3 2022 Proxy Statement
AMENDMENT NO. 1
TO THE
PERRIGO COMPANY PLC
2019 LONG-TERM INCENTIVE PLAN
WHEREAS, Perrigo Company plc (the “Company”) sponsors the Perrigo Company plc 2019 Long-Term Incentive Plan (the “Plan”); and
WHEREAS, the Company desires to amend the Plan to reflect an increase in the number of shares that may be issued under the Plan and make certain other clarifying changes.
NOW, THEREFORE, by virtue and in exercise of the amending authority reserved by the Plan sponsor pursuant to Section 15(a) of the Plan, effective as of the dates set forth below, the Plan be, and it hereby is, amended as follows:
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For the avoidance of doubt, any dividends with respect to Restricted Shares shall be payable only if and to the extent the underlying Restricted Shares become vested.
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The maximum number of Shares in respect for which Awards may be granted under the Plan, subject to adjustment as provided in Section 4(f) of the Plan, is (i) 4,471,878, plus (ii) the number of Shares that remained available for issuance under the Plan as of the date that the share increase was approved by Perrigo’s shareholders (including Shares underlying outstanding awards under the Plan, the 2013 Plan and the Prior Stock Plans that are forfeited, terminated, expire unexercised or are otherwise settled without the delivery of Shares on and after the date that the share increase was approved by Perrigo’s shareholders).
* * *
IN WITNESS WHEREOF, Perrigo Company plc has caused this Amendment No. 1 to be executed by its duly authorized officer this 16th day of February, 2022.
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TABLE I
PERRIGO COMPANY PLC
2019 LONG-TERM INCENTIVE PLANRECONCILIATION OF NON-GAAP MEASURES
SECTION 1.PURPOSE AND HISTORY. Perrigo Company, a Michigan corporation, sponsored the Perrigo Company 2008 Long-Term Incentive Plan (the “2008 Plan”)SELECTED CONSOLIDATED INFORMATION
(in millions, except per share amounts)
(unaudited)
Twelve Months Ended December 31, 2023 | ||||||||||
Consolidated Continuing Operations | Net Sales | Gross Profit | Operating | Income (loss) | Diluted | |||||
Reported | $4,655.6 | $1,680.4 | $151.9 | $(4.4) | $(0.03) | |||||
As a % of reported net sales | 36.1% | 3.3% | (0.1)% | |||||||
Pre-tax adjustments: | ||||||||||
Amortization expense related primarily to acquired intangible assets | 127.9 | 269.9 | 272.0 | 2.00 | ||||||
Impairment charges(2) |
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| 90.0 |
| 90.0 |
| 0.66 |
Restructuring charges and other termination benefits |
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| 40.2 |
| 40.2 |
| 0.29 |
Unusual litigation | — | 11.9 | 11.9 | 0.09 | ||||||
Acquisition and integration-related charges and contingent consideration adjustments |
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| 8.8 |
| 8.8 |
| 0.06 |
Gain on early debt extinguishment | — | — | (3.1) | (0.02) | ||||||
Gain on divestitures and investment securities |
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| (4.6) |
| (4.4) |
| (0.03) |
Milestone payments received related to royalty rights | — | — | (10.0) | (0.07) | ||||||
Other adjustments |
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| 6.3 |
| 6.4 |
| 0.05 |
Non-GAAP tax adjustments(3) | — | — | (55.3) | (0.41) | ||||||
Adjusted | $1,808.5 | $574.3 | $352.0 | $2.58 | ||||||
As a % of reported net sales | 38.8% | 12.3% | 7.6% | |||||||
PSU adjustments: Currency(4) | (3.5) | (0.5) | ||||||||
PSU Net Sales and Operating Income |
| $4,652.1 | $573.8 | |||||||
AIP adjustments: Acquisitions and divestitures(4) |
| 8.0 | (0.1) | |||||||
AIP Net Sales and Operating Income |
| $4,660.1 | $573.7 | |||||||
Diluted weighted average shares outstanding (in millions) | ||||||||||
Reported | 135.3 | |||||||||
Effect of dilution as reported amount was a loss, while adjusted amount was income(5) | 1.4 | |||||||||
Adjusted |
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Note: amounts may not add or recalculate due to encourage employees, directors and other persons providing significant services to Perrigo Company and its subsidiaries and/or Affiliates to acquire a proprietary interestrounding. Percentages are based on actuals.
SECTION 2.DEFINITIONS. As used in the Plan, the following terms shall have the meanings set forth below:
(a) “Affiliate” and “Associate” have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
(b) “Award” means any Option, Stock Appreciation Right, Restricted Share Award, Performance Share, Performance Unit, Restricted Share Unit, or any other right, interest, or option relating to Shares or other securities of Perrigo granted pursuant to the provisions of the Plan.
(c) “Award Agreement” means any written agreement, contract, or other instrument or document evidencing any Award granted hereunder and signed by both Perrigo and the Participant.
(d) “Beneficiary” means the person or persons to whom an Award is transferred by his or her will or by the laws of descent and distribution of the state in which the Participant resided at the time of his or her death.
(e) “Board” means the Board of Directors of Perrigo Company plc.
(f) “Cause” means any of the following events, as determined by the Committee:
(1) The commission of an act which, if proven in a court of law, would constitute a felony violation under applicable criminal laws;
(2) A breach of any material duty or obligation imposed upon the Participant by the Company;
(3) Divulging the Company’s confidential information, or breaching or causing the breach of any confidentiality agreement to which the Participant or the Company is a party;
(4) Engaging or assisting others to engage in business in competition with the Company;
(5) Refusal to follow a lawful order of the Participant’s superior or other conduct which the Board or the Committee determines to represent insubordination on the part of the Participant; or
(6) Other conduct by the Participant which the Board or the Committee, in its discretion, deems to be sufficiently injurious to the interests of the Company to constitute cause
(g) “CEO” means the Chief Executive Officer of Perrigo.
(h) A “Change in Control” means the occurrence of any of the following:
(1) Any person, entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act or any comparable successor provisions) (other than (A) Perrigo, (B) any employee benefit plan of the Company or any Trustee of or fiduciary with respect to any such plan when acting in such capacity, or (C) any person who, on the Effective Date of the Plan, is an Affiliate of Perrigo and owning in excess of ten percent (10%) of the outstanding Shares of Perrigo and the respective successors, executors, legal representatives, heirs and legal assigns of such person), alone or together with its Affiliates and associates, and other than in a merger or consolidation of the type referred to in subsection (h)(2) below, has acquired or obtained the right to acquire the beneficial ownership of fifty percent (50%) or more of the Shares then outstanding;
(2) The consummation of a merger, consolidation or similar transaction involving Perrigo and, immediately after the consummation of such merger, consolidation or similar transaction, the shareholders of Perrigo immediately prior to such consummation do not beneficially own (within the meaning of Rule 13d-3 of the Exchange Act or comparable successor rules), directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined voting power of the surviving entity in such merger, consolidation or similar transaction, or (B) outstanding voting securities representing more than fifty percent (50%) of the combined voting power of the parent of the surviving entity in such merger, consolidation or similar transaction; or
(3) The Continuing Directors no longer constitute a majority of the Board.
(i) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.
(j) “Committee” means the Remuneration Committee of the Board, which shall consist of not fewer than three directors, taking into consideration for each such director (i) the rules under Section 16(b) of the Exchange Act regarding “non-employee directors,” (ii) to the extent the administration of an Award relates to a Grandfathered Award, the requirements of Section 162(m) of the Code regarding “outside directors,” and (iii) the rules regarding “independent directors” of the securities exchange on which the Shares31, 2023 are listed, or any successor definition to any of the foregoing. For purposes of the Plan, reference to the Committee shall be deemed to refer to any subcommittee, subcommittees, or other persons or groups of persons to whom the Committee’s authority has been delegated pursuant to Section 3(a) or Section 3(b) of the Plan.
(k) “Company” means Perrigo Company plc, its subsidiaries and/or Affiliates.
(l) “Continuing Director” means any person who was a member of the Board on the Effective Date of the Plan, and any new director thereafter elected by the shareholders or appointed by the Board, provided such new director’s election or nomination for election by the Perrigo shareholders was approved by a majority of directors who were either directors on the Effective Date or whose election or nomination for election was previously so approved.
(m) “Covered Employee” means a “covered employee” within the meaning of Section 162(m)(3) of the Code as in effect immediately prior to enactment of P.L. 115-97.
(n) “Disability” means (i) with respect to an Employee, disability as defined under the Company’s long term disability insurance plan under which such Employee is then covered; (ii) with respect to any Participant who is not covered under a Company long-term disability plan, the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, as determined by the Committee in its sole discretion.
(o) “Dividend Equivalent” means a credit made to the bookkeeping account maintained by the Committee on behalf of a Participant, in an amount equal to the dividends paid on one Share for each Share represented by an Award held by such Participant, as described in Section 11 hereof.
(p) “Effective Date” has the meaning set forth in Section 17 hereof.
(q) “Employee” means any employee of the Company.
(r) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto.
(s) “Fair Market Value” means (i) with respect to a Share, the last reported sale price of a Share on the date of determination, or on the most recent date on which the Share is traded prior to that date, as reported on the securities exchange on which the Shares are listed, and (ii) with respect to any other property, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee.
(t) “Grandfathered Award” means an Award granted to a Covered Employee prior to November 2, 2017, which is (i) intended to constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code as in effect immediately prior to enactment of P.L. 115-97 and (ii) not modified in any material respect on or after November 2, 2017, within the meaning of Section 13601(e)(2) of P.L. 115-97, as may be amended from time to time (including any rules and regulations promulgated thereunder).
(u) “Incentive Stock Option” means an Option that, at the time such Option is granted under Section 6 hereof, qualifies as an incentive stock option within the meaning of Section 422 of the Code or any successor provision thereto. Only Employees may be awarded Incentive Stock Options.
(v) “Involuntary Termination for Economic Reasons” means that the Participant’s Termination Date occursprimarily due to involuntary termination$61.6 million of employment bytax expense related to pre-tax non-GAAP adjustments, plus the Company by reasonremoval of a corporate restructuring, a disposition or acquisition(1) $11.4 million of a business or facility, or a downsizing or layoff, as determined by the CEO, in his sole discretion, or by the Committee in the casetax expense related to audit settlements (2) $2.1 million of a Participant subjecttax expense related to Section 16valuation allowance and (3) $7.2 million of the Exchange Act.
(w) “Nonstatutory Stock Option” means an Option granted under Section 6 hereof that is not intended to be an Incentive Stock Option.
(x) “Option” means an Award of an Incentive Stock Option or a Nonstatutory Stock Option.
(y) “Original Effective Date” means October 28, 2003.
(z) “Participant” means an Employee who has been granted an Award under the Plan.
(aa) “Performance Award” means any Award of Performance Shares or Performance Units pursuant to Section 9 hereof.
(bb) “Performance Period” means the period established by the Committee at the time any Performance Award is granted or at any time thereafter during which the performance goals specified by the Committee with respect to such Award are to be measured.
(cc) “Performance Share” means any grant pursuant to Section 9 hereof of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.
(dd) “Performance Unit” means any grant pursuant to Section 9 hereof of a unit valued by reference to a designated amount of property other than Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.
(ee) “Perrigo” means Perrigo Company plc and any successor thereto.
(ff) “Person” means any individual, corporation, partnership, association, joint-stock company, Company, unincorporated organization, limited liability company, other entity or government or political subdivision thereof.
(gg) “Prior Stock Plans” means (i) the Perrigo Company Employee Stock Option Plan, (ii) the Perrigo Company Non-Qualified Stock Option Plan for Directors, (iii) the Perrigo Company Restricted Stock Plan for Directors, and (iv) the Perrigo Company Restricted Stock Plan for Directors II.
(hh) “Restricted Share” means any Share issued with the restriction that the holder may not sell, transfer, pledge, or assign such Share and with such other restrictions as the Committee, in its sole discretion, may impose (including, without limitation, any restriction on the right to vote such Share, and the right to receive any cash dividends), which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.
(ii) “Restricted Share Award” means an award of Restricted Shares under Section 8 hereof.
(jj) “Restricted Share Unit” or “RSU” means restricted share units which entitle the Participant to receive Shares or the value thereof which is determined in whole or in part, or is otherwise based, on Shares pursuant to Section 10 hereof.
(kk) “Retirement” means a Participant’s Termination Date which occurs (i) pursuant to a voluntary early retirement program approved by the Board or the Committee, (ii) after attaining age 65, or (iii) after attaining age 60 with ten or more years of service with the Company. For this purpose, a year of service shall be a completed 12-month period of service beginning on the first day of the Participant’s service with the Company as an Employee or an anniversary of such date.
(ll) “Shares” means ordinary shares, nominal value €0.001 per share, of Perrigo and such other securities of Perrigo as the Committee may from time to time determine.
(mm) “Short-Term Deferral Period” means, with respect to an amount payable pursuant to an Award, the period ending no later than the 15th day of the third month following the later of (i) the end of the Participant’s taxable year in which the amount is no longer subject to a substantial risk of forfeiture, or (ii) the end of Perrigo’s fiscal year in which the amount is no longer subject to a substantial risk of forfeiture. A Participant shall have no discretion over the payment date and shall have no right to interest as a result of payment on a date other than the first day of the Short-Term Deferral Period.
(nn) “Stock Appreciation Right” means any right granted to a Participant pursuant to Section 7 hereof to receive, upon exercise by the Participant, the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the right on the date of grant, or if granted in connection with an outstanding Option on the date of grant of thetax benefit related Option, as specified by the Committee in its sole discretion, which shall not be less than the Fair Market Value of one Share on such date of grant of the right or the related Option, as the case may be. Any payment by the Company in respect of such right may be made in cash, Shares, other property, or any combination thereof, as the Committee, in its sole discretion, shall determine.
(oo) “Ten Percent Shareholder” means a person who owns (after taking into account the attribution rules of Section 424(b) of the Code or any successor provision thereto) more than 10% of the combined voting power of all classes of shares beneficial interest of the Company.
(pp) “Termination Date” means the date that a Participant ceases to be an Employee and ceases to perform any material services for the Company, including, but not limited to, advisory or consulting services or services as a member of the Board. Unless otherwise determined by the Committee in its sole discretion, for purposes of the Plan, an Employee shall be considered to have a Termination Date if his or her employer ceases to be an Affiliate, even if he or she continues to be employed by such employer.
SECTION 3.ADMINISTRATION.
(a) AUTHORITY OF COMMITTEE. The Plan shall be administered by the Committee. The Committee shall have full power and authority, subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board, to: (i) select the Participants to whom Awards may be granted; (ii) determine the type or types of Awards to be granted to Participants; (iii) determine the number of Shares to be covered by each Award granted hereunder and the term of each such Award; (iv) determine the terms and conditions, not inconsistent with the provisions of the Plan, of any Award granted hereunder (including approval of any form of Award Agreement), which terms and conditions may provide for the forfeiture of Awards, the repayment of cash or Shares or other amounts received with respect to an Award and/or the repayment of any gains or profits on a Participant’s sale of Shares acquired under an Award under specified circumstances; (v) determine whether, to what extent and under what circumstances Awards may be settled in cash, Shares or other property or canceled or suspended; (vi) determine whether, to what extent and under what circumstances cash, Shares and other property and other amounts payable with respect to an Award under this Plan shall be deferred either automatically or at the election of the Participant; (vii) determine whether, to what extent and under what circumstances, any Award shall be canceled or suspended; (viii)interpret and administer the Plan and any instrument or agreement entered into under the Plan; (ix) establish, amend and rescind rules and regulations relating to the Plan, (x) establish, amend and rescind rules and regulations relating to the Plan (including the adoption of any sub-plan under the Plan) for the purpose of satisfying applicable foreign laws and/or qualifying for preferred tax treatment under applicable foreign laws; (xi) appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (xii) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan. Decisions of the Committee shall be final, conclusive and binding upon all persons, including the Company, any Participant, and shareholder, and any Employee of the Company. Perrigo has adopted sub-plans governing awards taxable in the State of Israel and the Republic of Ireland, which sub-plans are attached hereto as Appendix A and Appendix B. Perrigo has also adopted Appendix C as a sub-plan governing Awards to non-employee directors and consultants.
(b) DELEGATION. The CEO has the authority to grant Awards to Participants, other than Participants who are subject to Section 16 of the Exchange Act, and to determine the terms and conditions of such Awards (including approval of any form of Award Agreement), subject to the limitations of the Plan and such other limitations and guidelines as the Committee may deem appropriate. Such delegation of authority includes, but is not limited to, the authority to determine (i) the type or types of Awards to be granted, (ii) the number of Shares to be covered by each such Award, (iii) the expiration date of each such Award, (iv) the period during which an Option shall be exercisable which may be determined at or subsequent to grant, (v) the restriction period applicable to Restricted Share Awards and to RSUs, (vi) the performance criteria and performance period applicable to Performance Awards, (vii) the terms and conditions relating to the effect of a Participant’s Termination Date, and (viii) the effect of a Change in Control on such Awards.
(c) AWARD AGREEMENTS
(1) MINIMUM VESTING. No Award granted under the Plan may vest, in whole or in part, prior to the one-year anniversary of the date of grant of the Award. Notwithstanding the foregoing, a Participant’s
Award Agreement may provide for accelerated vesting if the Participant’s Termination Date occurs due to the Participant’s death, Disability or Retirement, upon a Change in Control, or upon the Participant’s termination without “cause” (as defined in the applicable Award Agreement) or separation for “good reason” (as defined in the applicable Award Agreement) within a specified period following a Change in Control. The forgoing one-year minimum vesting period shall not apply to any Award granted in substitution for an Award pursuant to Section 4(f) that does not reduce the vesting period of the Award being substituted.
(2) VESTING DURING DISABILITY. Unless the Committee determines otherwise, the vesting of Awards granted hereunder shall continue during any period of short-term disability. A Participant who is absent from work due to a long-term disability shall continue to vest until the earlier of (i) the six month anniversary of the commencement of the Participant’s long-term disability, or (ii) the Participant’s Termination Date.
(3) PAYMENT FOR AWARDS. Except as otherwise required in any Award Agreement or by the terms of the Plan, recipients of Awards under the Plan shall not be required to make any payment or provide consideration other than the rendering of services.
(4) ACCEPTANCE OF AWARD. The prospective recipient of any Award under the Plan shall not, with respect to such Award, be deemed to have become a Participant, or to have any rights with respect to such Award, until and unless such recipient shall have executed an agreement or other instrument evidencing the Award and delivered a fully executed copy thereof to Perrigo, and otherwise complied with the then applicable terms and conditions.
SECTION 4. DURATION OF, AND SHARES SUBJECT TO PLAN.
(a) TERM. The Plan shall remain in effect until terminated by the Board, provided, however, that no Award may be granted under the Plan more than 10 years after the Effective Date, but any Award theretofore granted may extend beyond that date.
(b) SHARES SUBJECT TO THE PLAN. The maximum number of Shares in respect for which Awards may be granted under the Plan, subject to adjustment as provided in Section 4(f) of the Plan, is (i) 5,400,000, plus (ii) the number of Shares that remained available for issuance under the 2013 Plan as of the Effective Date (including Shares underlying outstanding awards under the 2013 Plan and Prior Stock Plans that are forfeited, terminated, expire unexercised or are otherwise settled without the delivery of Shares on and after the Effective Date). No further awards shall be made under the Prior Stock Plans after the Original Effective Date.
(c) AWARD SHARE LIMITS. No individual Employee may be granted Awards in any one calendar year with respect to more than 400,000 Shares. The maximum amount payable in cash to a Covered Employee for any calendar year with respect to any Award subject to Section 14 shall be $6,000,000.
(d) COMPUTATION OF SHARES. For the purpose of computing the total number of Shares available for Awards under the Plan, there shall be counted against the above limits the number of Shares subject to issuance upon the exercise or settlement of Awards as of the dates on which such Awards are granted. The Shares which were previously subject to Awards shall again be available for Awards under the Plan if any such Awards are forfeited, terminated, expire unexercised, settled in cash or exchanged for other Awards (to the extent of such forfeiture or expiration of such Awards), or if the Shares subject thereto can otherwise no longer be issued. Further, any Shares which are used as full or partial payment to Perrigo by a Participant of the purchase price of Shares or the tax withholding requirement with respect to any Awards granted under the Plan shall again be available for Awards under the Plan. The number of Shares that are forfeited, expire unexercised or are otherwise settled without the delivery of Shares under the Prior Stock Plans on and after the Original Effective Date shall again be available for Awards under this Plan. If a Stock Appreciation Right is settled in Shares, Shares that are in excess of the net Shares delivered on exercise of such Stock Appreciation Right shall be added back to the number of Shares available for future Awards under the Plan.
(e) SOURCE OF SHARES. Shares which may be issued under the Plan may be either authorized and unissued shares or issued shares which have been reacquired by Perrigo. No fractional shares shall be issued under the Plan. The Committee shall determine whether cash, Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated. In all cases the Committee shall require that the nominal value of each newly issued Share issued in satisfaction of an Award under the Plan (including any sub-plan) shall be paid up.
(f) CHANGES IN SHARES. In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, reverse stock split, spin off or similar transaction or other change in corporate structure affecting the Shares, the Committee shall make equitable adjustments and substitutions with respect to (i) the aggregate number, class and kind of Shares which may be delivered under the Plan, in the aggregate or to any one Participant, (ii) the number, class, kind and option or exercise price of Shares subject to outstanding Options, Stock Appreciation Rights or other Awards granted under the Plan, and (iii) the number, class and kind of Shares subject to, Awards granted under the Plan (including, if the Committee deems appropriate, the substitution of similar options to purchase the shares of, or other awards denominated in the shares of, another company). The Committee shall have the sole discretion to determine the manner of such equitable adjustment or substitution, provided that the number of Shares or other securities subject to any Award shall always be a whole number.
SECTION 5.ELIGIBILITY. Any Employee shall be eligible to be selected as a Participant. Awards may be granted to Employees who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company’s obligation with respect to tax equalizationlaw changes.
SECTION 6.STOCK OPTIONS. Options may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan. Any Option granted under the Plan shall be evidenced by an Award Agreement in such form as the Committee may from time to time approve. Any such Option shall be subject to the following terms and conditions and to such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable:
(a) OPTION PRICE. The purchase price per Share purchasable under an Option shall be determined by the Committee in its sole discretion; provided that (i) such purchase price shall not be less than the Fair Market Value of the Share on the date of the grant of the Option, and (ii) such purchase price for an Incentive Stock Option granted to a Ten Percent Shareholder shall be not less than 110% of the Fair Market Value of the Share on the date of grant of the Option.
(b) OPTION PERIOD. The term of each Option shall be fixed by the Committee in its sole discretion; provided that (i) no Option shall be exercisable after the expiration of 10 years from the date the Option is granted, and (ii) no Incentive Stock Option granted to a Ten Percent Shareholder shall be exercisable after the expiration of five years from the date the Option is granted.
(c) EXERCISABILITY. Options shall be exercisable at such time or times as determined by the Committee at or subsequent to grant. Unless otherwise determined by the Committee at or subsequent to grant, no Incentive Stock Option shall be exercisable during the year ending on the day before the first anniversary date of the granting of the Incentive Stock Option.
(d) METHOD OF EXERCISE. Subject to the other provisions of the Plan and any applicable Award Agreement, any Option may be exercised by the Participant in whole or in part at such time or times, and the Participant may make payment of the option price in such form or forms, including, without limitation, payment by delivery of cash, Shares or other consideration (including, where permitted by law and the Committee,
Awards) having a Fair Market Value on the exercise date equal to the total option price, or by any combination of cash, Shares and other consideration as the Committee may specify in the applicable Award Agreement.
(e) INCENTIVE STOCK OPTIONS. (5)
(f) REPRICING. Except in connection with a corporate transaction involving Perrigo (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Awards may not be amended to reduce the exercise price of outstanding Options or Stock Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other Awards or Options or Stock Appreciation Rights with an exercise price that is less than the exercise price of the original Options or Stock Appreciation Rights, without the approval of Perrigo’s shareholders.
SECTION 7.STOCK APPRECIATION RIGHTS.
(a) GRANT OF AWARDS. Stock Appreciation Rights may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan and may, but need not, relate to a specific Option granted under Section 6. Each Share subject to a Stock Appreciation Right shall have an exercise price of not less than Fair Market Value of a Share on the date of grant of the Stock Appreciation Right. The term of the Stock Appreciation Right shall be fixed by the Committee in its sole discretion, provided that no Stock Appreciation Right shall be exercisable after the expiration of 10 years from the date the Stock Appreciation Right is granted. The Committee, in its sole discretion, shall establish or impose such other terms and conditions with respect to Stock Appreciation Rights as it shall deem appropriate, which need not be the same with respect to each recipient.
(b) OPTIONS. Any Stock Appreciation Right related to a Nonstatutory Stock Option may be granted at the same time such Option is granted or at any time thereafter before exercise or expiration of such Option. Any Stock Appreciation Right related to an Incentive Stock Option must be granted at the same time such Option is granted, and may be exercised only if and when the Fair Market Value of the Shares subject to the Incentive Stock Option exceeds the aggregate purchase price for the Option. In the case of any Stock Appreciation Right related to any Option, the Stock Appreciation Right or applicable portion thereof shall terminate and no longer be exercisable upon the termination or exercise of the related Option, except that a Stock Appreciation Right granted with respect to less than the full number of Shares covered by a related Option shall not be reduced until the exercise or termination of the related Option exceeds the number of shares not covered by the Stock Appreciation Right. Any Option related to any Stock Appreciation Right shall no longer be exercisable to the extent the related Stock Appreciation Right has been exercised.
SECTION 8.RESTRICTED SHARES.
(a) GRANT OF AWARDS. Restricted Share Awards may be issued hereunder to Participants, for no cash consideration or for such minimum consideration as may be required by applicable law, either alone or in
addition to other Awards granted under the Plan. The provisions of Restricted Share Awards need not be the same with respect to each recipient.
(b) REGISTRATION. Any Restricted Shares issued hereunder may be evidenced in such manner as the Committee in its sole discretion shall deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of Restricted Shares awarded under the Plan, such certificate shall be registered in the name of the Participant, and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award.
(c) FORFEITURE. Except as set forth in Section 12 or otherwise determined by the Committee at the time of grant, upon a Participant’s Termination Date for any reason during the restriction period, all Restricted Shares still subject to restriction shall be forfeited by the Participant and reacquired by Perrigo; provided that the Committee may, in its sole discretion, when it finds that a waiver would be in the best interests of Perrigo, waive in whole or in part any or all remaining restrictions with respect to such Participant’s Restricted Shares, except for Restricted Share Awards that are intended to comply with the performance-based compensation requirements of Section 14. Unrestricted Shares, evidenced in such manner as the Committee shall deem appropriate, shall be issued to the grantee promptly after the period of forfeiture, as determineda net loss, diluted shares outstanding equal basic shares outstanding.
84 | PERRIGO• 2024 PROXY STATEMENT | |
Exhibit A
TABLE I (CONTINUED)
PERRIGO COMPANY PLC
RECONCILIATION OF NON-GAAP MEASURES
SELECTED CONSOLIDATED INFORMATION
(in millions, except per share amounts)
(unaudited)
Twelve Months Ended December 31, 2022 | ||||||||||
Consolidated Continuing Operations | Net Sales | Gross Profit | Operating | Income | Diluted Earnings | |||||
Reported | $4,451.6 | $1,455.4 | $78.9 | $(130.9) | $(0.97) | |||||
As a % of reported net sales | 32.7% | 1.8% | (2.9)% | |||||||
Pre-tax adjustments: | ||||||||||
Amortization expense primarily related to acquired intangible assets | 125.7 | 254.0 | 256.2 | 1.89 | ||||||
Acquisition and integration-related charges and contingent consideration adjustments | 32.3 | 106.7 | 164.4 | 1.21 | ||||||
Restructuring charges and other termination benefits |
|
|
| — |
| 43.8 |
| 43.8 |
| 0.32 |
Loss on early debt extinguishment |
|
|
| — |
| — |
| 8.9 |
| 0.07 |
Unusual litigation |
|
|
| — |
| 8.1 |
| 8.1 |
| 0.06 |
Impairment charges |
|
|
| — |
| 4.6 |
| 4.6 |
| 0.04 |
(Gain) loss on divestitures and investment securities | — | (3.8) | (2.2) | (0.02) | ||||||
Non-GAAP tax adjustments(2) | — | — | (72.0) | (0.53) | ||||||
Adjusted | $1,613.4 | $492.3 | $280.9 | $2.07 | ||||||
As a % of reported net sales | 36.2% | 11.1% | 6.3% | |||||||
Diluted weighted average shares outstanding (in millions) | ||||||||||
Reported | 134.5 | |||||||||
Effect of dilution as reported amount was a loss, while adjusted amount was income(3) | 1.3 | |||||||||
Adjusted |
|
|
| 135.8 |
|
Note: amounts may not add or modified by the Committee, shall expire.
SECTION 9.PERFORMANCE AWARDS.
(a) GRANT OF AWARDS. Performance Awards may be issued hereunder to Participants, for no cash consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The performance criteria to be achieved during any Performance Period, the length of the Performance Period, and the amount of the Award to be distributed shall be determined by the Committee upon the grant of each Performance Award. Subject to the provisions of the Plan, the Committee, in its sole discretion, shall determine the Participants to whom and the time or times at which such Awards shall be made and all conditions of the Awards. The provisions of Performance Awards need not be the same with respect to each recipient.
(b) PAYMENT OF AWARDS. Following the end of each Performance Period, the Committee shall certify the extent to which the performance criteria and other conditions of the Award are achieved. Except as otherwise provided in the Plan, Performance Awards shall be settled following the Committee’s certification after the end of the relevant Performance Period, but in no event shall settlement occur later than the last day of the Short-Term Deferral Period applicable to the Award. Performance Awards may be paid in cash, Shares, other property or any combination of the foregoing, as determined in the sole discretion of the Committee at the time of payment.
SECTION 10.RESTRICTED SHARE UNIT AWARDS.
(a) GRANT OF AWARDS. Restricted Share Unit (“RSU”) Awards may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan. At the time of grant of an RSU Award, the Committee shall determine the number of RSUs subject to the Award, when such RSUs shall vest, any conditions (such as continued employment) that must be met in order for the RSUs to vest at the end of the applicable restriction period, and any purchase price applicable to the Award. The Committee shall establish a bookkeeping account in the Participant’s name that reflects the number and type of RSUs standing to the credit of the Participant.
(b) PAYMENT OF AWARDS. Each RSU that vests entitles the Participant to one Share, cash equal to the Fair Market Value of a Share on the date of vesting, or a combination thereof as determined by the Committee and set forth in the Award Agreement. Except as otherwise provided in the Plan or in an Award Agreement, payment in Shares or cash (as applicable) shall be made upon the vesting of an RSU and in no event later than
the last day of the Short-Term Deferral Period; provided, however, that a Change in Control (as defined in Section 2) shall not accelerate the payment date of an RSU that is subject to Section 409A of the Code unless such Change in Control is also a “change in control event” as defined in the regulations under Section 409A of the Code.
SECTION 11. DIVIDEND EQUIVALENTS
If the Committee so determines at the time of grant of an Award, Perrigo shall credit to a bookkeeping account maintained on behalf of such Participant an amount equal to the amount of the dividends the Participant would have received, if such Award held by the Participant on the record date for such dividend payment had been a Share. No interest or other earnings shall accrue on such bookkeeping account. Amounts attributable to such dividend equivalents shall be subject to the same terms and conditions as the Awards to which such dividend equivalents relate. Notwithstanding the foregoing, any dividend equivalents granted in connection with unvested Awards shall be payable only if and to the extent the underlying Awards become vested.
SECTION 12. EFFECT OF TERMINATION DATE
(a) AWARDS, GENERALLY. The Committee shall have the discretion to establish terms and conditions relating to the effect of the Participant’s Termination Date on Awards under the Plan.
(b) OPTIONS, STOCK APPRECIATION RIGHTS, AND RESTRICTED SHARES. Unless otherwise determined by the Committee with respect to an Award of Options, Stock Appreciation Rights or Restricted Shares as provided in the applicable Award Agreement, and subject to the terms of the Plan, the following provisions shall apply to Options, Stock Appreciation Rights and Restricted Shares on a Participant’s Termination Date.
(1) DEATH, DISABILITY, RETIREMENT. If the Participant’s Termination Date occursrecalculate due to the Participant’s death, Disability or Retirement, (i) the restriction period with respect to any Restricted Shares shall lapse, and (ii) the Participant’s outstanding Options and Stock Appreciation Rights shall immediately vest in full and may thereafter be exercised in whole or in part by the Participant (or the duly appointed fiduciary of the Participant’s estate or Beneficiary in the case of death, or conservator of the Participant’s estate in the case of Disability) at any time prior to the expiration of the respective terms of the Options or Stock Appreciation Rights, as applicable.
(2) INVOLUNTARY TERMINATION FOR ECONOMIC REASONS. If the Participant’s Termination Date occurs by reason of Involuntary Termination for Economic Reasons, the Participant may exercise his or her Options and Stock Appreciation Rights, to the extent vested, at any time prior to the earlier of (i) the date which is 30 days after the date which is 24 months after such Termination Date, or (ii) the expiration of the respective terms of the Options or Stock Appreciation Rights. Any Options, Stock Appreciation Rights or Restricted Shares thatrounding. Percentages are not vested at such Termination Date, but are scheduled to vest during the 24-month period following the Termination Date, shall continue to vest during such 24-month period according to the vesting schedule in effect prior to such Termination Date. Any Options, Stock Appreciation Rights and Restricted Shares that are not scheduled to vest during such 24-month period will be forfeited on the Termination Date. Notwithstanding the foregoing, if the Participant’s Termination Date occurs for a reason that is both described in this Section 12(b)(2) and in Section 13(a), the special vesting rules described in Section 13(a) shall apply in lieu of the vesting rules described in this Section 12(b)(2).
If the Participant dies after the Termination Date while his or her Options or Stock Appreciation Rights remain exercisable under this paragraph (2), the duly appointed fiduciary of the Participant’s estate or his or her Beneficiary may exercise the Options and Stock Appreciation Rights (to the extent that such Options and Stock Appreciation Rights were vested and exercisable prior to death), at any time prior to the later of the date which is (i) 30 days after the date which is 24 months after the Participant’s Termination Date, or (ii) 12 months after the date of death, but in no event later than the expiration of the respective terms of the Options and Stock Appreciation Rights.
(3) TERMINATION FOR CAUSE. If the Participant’s Termination Date is for Cause, at the time such notice of termination is given by the Company (i) any Restricted Shares subject to a restriction period shall be forfeited, and (ii) the Participant’s right to exercise his or her Options and Stock Appreciation Rights shall terminate. If within 60 days of a Participant’s Termination Date the Company discovers circumstances which would have permitted it to terminate the Participant’s employment or service for Cause, such Termination Date shall be deemed to have occurred for reasons of Cause. Any Shares, cash or other property paid or delivered to the Participant under the Plan within 60 days of such Termination Date shall be forfeited and the Participant shall be required to repay such amount to the Company.
(4) OTHER TERMINATION OF EMPLOYMENT OR SERVICE. If the Participant’s Termination Date occurs for reasons other than as described in this Section 12(b), the Participant shall have the right to exercise his or her Options and Stock Appreciation Rights at any time prior to the earlier of (i) the date which is three months after such Termination Date, or (ii) the expiration date of the respective terms of the Options or Stock Appreciation Rights, as applicable, but only to the extent such Option or Stock Appreciation Right, as applicable, was vested prior to such Termination Date. Any Options or Stock Appreciation Rights which are not vested at such Termination Date shall be forfeited on the Termination Date.
If the Participant dies after the Termination Date while his or her Options or Stock Appreciation Rights remain exercisable under this paragraph (4), the duly appointed fiduciary of the Participant’s estate or his or her Beneficiary may exercise the Options or Stock Appreciation Rights (to the extent that such Options or Stock Appreciation Rights were vested and exercisable prior to death), at any time prior to the earlier of (i) 12 months after the date of death, or (ii) the expiration of the respective terms of the Options or Stock Appreciation Rights, as applicable.
(c) SERVICE-VESTING RSU AWARDS. Unless determined otherwise by the Committee with respect to a service-based vesting RSU Award, the following provisions shall apply.
(1) DEATH, DISABILITY, RETIREMENT. If the Participant’s Termination Date occurs due to the Participant’s death, Disability or Retirement, a service-based vesting RSU shall immediately vest in full, provided that any such Disability is a disability as defined in Section 409A of the Code and the regulations thereunder. Payment of the Award due to death or Disability shall be made within the Short-Term Deferral Period. Subject to Section 16(f) regarding specified employees, payment of the Award due to Retirement shall be made within the 75-day period following the Participant’s separation from service (as defined in Section 409A); provided, however, that the Participant shall not have the right to designate the year of payment if such period spans two calendar years.
(2) INVOLUNTARY TERMINATION FOR ECONOMIC REASONS. If the Participant’s Termination Date occurs by reason of an Involuntary Termination for Economic Reasons that constitutes a separation from service (as defined in Section 409A), (x) any Shares subject to a service-based vesting RSU Award that are scheduled to vest during the 24-month period following such Termination Date shall continue to vest during such 24-month period according to the vesting schedule in effect prior to such Termination Date, and (y) any Shares that are not scheduled to vest during such period shall be forfeited on the Termination Date. Subject to Section 16(f) regarding specified employees, the Participant shall receive payment with respect to such Award when the scheduled vesting date or dates occur. Notwithstanding the foregoing, if the Participant’s Termination Date occurs for a reason that is both described in this Section 12(c)(2) and in Section 13(a), the special vesting rules described in Section 13(a) shall apply in lieu of the vesting rules described in this Section 12(c)(2).
(3) TERMINATION FOR CAUSE. If the Participant’s Termination Date is for Cause, at the time such notice of termination is given by the Company, the portion of any service-based vesting RSU Award that is not vested shall be forfeited at the time of such notice of termination. If within 60 days of a Participant’s Termination Date the Company discovers circumstances which would have permitted it to terminate the Participant’s employment or service for Cause, such Termination Date shall be deemed to have occurred for reasons of Cause. Any Shares, cash or other property paid or delivered to the Participant under the Plan
within 60 days of such Termination Date shall be forfeited and the Participant shall be required to repay such amount to the Company.
(4) OTHER TERMINATION OF EMPLOYMENT OR SERVICE. If the Participant’s Termination Date occurs for reasons other than as described in this Section 12(c), the portion of any service-based vesting RSU Award that is not vested at such Termination Date shall be forfeited on the Termination Date.
(d) PERFORMANCE-VESTING RSU AWARDS (“PSUs”). Unless otherwise determined by the Committee with respect to an RSU Award, the following provisions shall apply.
(1) DEATH, DISABILITY, RETIREMENT. If the Participant’s Termination Date occurs due to the Participant’s death, Disability or Retirement, any Shares subject to the PSU Award shall vest or be forfeited depending on the attainment of performance goals. Subject to Section 16(f) regarding specified employees, the Participant shall receive payment with respect to such PSU Award in accordance with Section 9(b).
(2) INVOLUNTARY TERMINATION FOR ECONOMIC REASONS. If the Participant’s Termination Date occurs by reason of an Involuntary Termination for Economic Reasons that constitutes a separation from service (as defined in Section 409A), (i) any Shares subject to the PSU Award for which the Performance Period is scheduled to end during the 24-month period following such Termination Date shall vest or be forfeited depending on the attainment of performance goals, and (ii) any Shares subject to the PSU Award for which the Performance Period is not scheduled to end during such 24-month period shall be forfeited on the Termination Date. Subject to Section 16(f) regarding specified employees, the Participant shall receive payment with respect to such PSU Award in accordance with Section 9(b). Notwithstanding the foregoing, if the Participant’s Termination Date occurs for a reason that is both described in this Section 12(d)(2) and in Section 13(a), the special vesting rules described in Section 13(a) shall apply in lieu of the vesting rules described in this Section 12(d)(2).
(3) TERMINATION FOR CAUSE. If the Participant’s Termination Date is for Cause, at the time such notice of termination is given by the Company, the portion of any PSU Award that is not vested shall be forfeited at the time of such notice of termination. If within 60 days of a Participant’s Termination Date the Company discovers circumstances which would have permitted it to terminate the Participant’s employment or service for Cause, such Termination Date shall be deemed to have occurred for reasons of Cause. Any Shares, cash or other property paid or delivered to the Participant under the Plan within 60 days of such Termination Date shall be forfeited and the Participant shall be required to repay such amount to the Company.
(4) OTHER TERMINATION OF EMPLOYMENT OR SERVICE. If the Participant’s Termination Date occurs for reasons other than as described in this Section 12(d), the portion of any PSU Award that is not vested at such Termination Date shall be forfeited on the Termination Date.
SECTION 13. CHANGE IN CONTROL PROVISIONS
Notwithstanding any other provision of the Plan to the contrary, unless otherwise determined by the Committee with respect to an Award as stipulated in the applicable Award Agreement, in the event of a Change in Control:
(a) If the Participant’s Termination Date occurs by reason of a termination without “cause” (as is defined in the applicable Award Agreement) or a separation for “good reason” (as defined in the applicable Award Agreement) on or after a Change in Control and prior to the two year anniversary of the Change in Control, the following shall apply to Awards held by Participants:
(1) Any Options and Stock Appreciation Rights outstanding as of such Termination Date, and which are not then exercisable and vested, shall become fully exercisable and vested.
(2) The restrictions and deferral limitations and other conditions applicable to any Restricted Shares shall lapse, and such Restricted Shares shall become free of all restrictions and limitations and become fully vested and transferable.
(3) All Performance Awards shall be considered to be earned and payable as if target performance had been obtained for the performance period. In addition, any deferral or other restriction applicable to the Performance Awards shall lapse and such Performance Awards shall be settled as soon as practicable after the Participant’s Termination Date.
(4) The restrictions and deferral limitations and other conditions applicable to any service-based vesting RSU Award shall lapse, and such RSU Awards shall become fully vested and shall be settled as soon as practicable after the Participant’s Termination Date.
(b) In addition to the foregoing, the Committee may take any one or more of the following actions with respect to any or all Awards that were granted on or after February 7, 2007, without the consent of any Participant:
(1) The Committee may require that Participants surrender outstanding Options and Stock Appreciation Rights in exchange for one or more payments by the Company, in cash or Shares as determined by the Committee, equal to the amount, if any, by which the then Fair Market Value of the Shares subject to the Participant’s unexercised Options and Stock Appreciation Rights exceeds the purchase price. Payment shall be made on such terms as the Committee determines.
(2) After giving Participants an opportunity to exercise their outstanding Options and Stock Appreciation Rights, the Committee may terminate any or all unexercised Options and Stock Appreciation Rights at such time as the Committee deems appropriate.
(3) The Committee may determine that any Awards that remain outstanding after the Change in Control shall be converted to similar grants of the surviving corporation (or a parent or subsidiary of the surviving corporation).
(4) Any such surrender, termination or conversion shall take place as of the date of the Change in Control or such other date as the Committee may specify.
SECTION 14. GRANDFATHERED AWARDS
(a) Notwithstanding any other provision of this Plan, the provisions of this Section 14 shall apply to Grandfathered Awards.
(b) If an Award is subject to this Section 14, then the lapsing of restrictions thereon and the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of one or any combination of the following: cash flow; cash flow from operations; net income, total earnings; earnings per share, diluted or basic; earnings per share from continuing operations, diluted or basic; earnings before interest and taxes; earnings before interest, taxes, depreciation, and amortization; earnings from operations; net asset turnover; inventory turnover; capital expenditures; net earnings; operating earnings; gross or operating margin; debt; working capital; return on equity; return on net assets; return on total assets; return on capital; return on invested capital; return on investment; return on sales; net or gross sales; market share; economic value added; cost of capital; change in assets; expense reduction levels; cost control; debt reduction; productivity; delivery performance; safety record; stock price; stock price appreciation; and total stockholder return, of Perrigo or the Affiliate or division of Perrigo for or within which the Participant is primarily employed. Such performance goals also may be based upon the attaining specified levels of Company performance under one or more of the measures described above relative to the performance of other corporations. Such performance goals shall be set by the Committee within the times period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the Code and the regulations thereunder as in effect immediately prior to enactment of P.L. 115-97.actuals.
(c) Notwithstanding any provision of this Plan other than Section 13, with respect to any Award that is subject to this Section 14, the Committee may not adjust upwards the amount payable pursuant to such Award,
nor may it waive the achievement of the applicable performance goals except in the case of the death or disability of the Participant.
(d) The Committee shall have the power to impose such other restrictions on Awards subject to this Section 14 as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(B) of the Code as in effect immediately prior to enactment of P.L. 115-97.
SECTION 15.AMENDMENT AND TERMINATION.
(a) The Board may amend, alter or discontinue the Plan at any time; provided, however, no amendment, alteration, or discontinuation shall be made that would impair the rights of an optionee or Participant under an Award theretofore granted, without the optionee’s or Participant’s consent; provided, further that, any amendment that would (i) except as is provided in Section 4(f) of the Plan, increase the total number of shares reserved for the purpose of the Plan, (ii) change the employees or class of employees eligible to participate in the Plan, (iii) change the minimum exercise price for any Option or Stock Appreciation Right below the minimum price set forth in Section 6(a) and Section 7 of the Plan, as applicable, or (iv) materially (within the meaning of rules of the securities exchange on which the Shares are then listed) change the terms of the Plan, shall not be effective without the approval of Perrigo’s shareholders.
(b) The Committee may amend the terms of any Award theretofore granted; provided, that no such amendment shall impair the rights of any Participant without his or her consent. In addition, the CEO may amend the terms of any Award theretofore granted to a Participant who is not subject to Section 16 of the Exchange Act; provided, that no such amendment shall impair the rights of any Participant without his or her consent.
(c) Except as provided in Section 14 (regarding Grandfathered Awards), the Committee shall be authorized to make(1)
SECTION 16.GENERAL PROVISIONS.
(a) TRANSFERS OF AWARDS. Unless otherwise determined by the Committee (or the CEO, as applicable) with respect to an Award other than an Incentive Stock Option, no Award, and no Shares subject to Awards granted under the Plan which have not been issued ortax effected, as to which any applicable restriction, performance or deferral period has not lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered, except by will or by the laws of descent and distribution or pursuant to a domestic relations order; provided that, if so determined by the Committee (or the CEO, as applicable), a Participant may,tax expense on these items are aggregated in the manner established“Non-GAAP tax adjustments” line item.
PERRIGO• 2024 PROXY STATEMENT | 85 | |
TABLE II
PERRIGO COMPANY PLC
RECONCILIATION OF NON-GAAP MEASURES
SELECTED CONSOLIDATED INFORMATION
(in millions)
(unaudited)
Twelve Months Ended | |||||
December 31, | December 31, | Total Change | |||
Net Sales | |||||
Consolidated Continuing Operations | $4,655.6 | $4,451.6 | 4.6% | ||
Less: Currency impact(1) | 3.5 | — | (0.1)% | ||
Less: Divestitures(2) | — | 19.3 | 0.4% | ||
Less: Exited product lines(4) | 9.7 |
| 59.6 |
| 1.2% |
Less: Acquisitions(3) | 195.9 | — | (4.4)% | ||
Organic Consolidated Continuing Operations net sales | $4,446.5 | $4,372.7 | 1.7% |
Note: amounts may not add or recalculate due to rounding. Percentages are based on actuals.
intestate succession then in effecttranslate our financial statements in the statecomparable prior year period to show what current period US dollar results would have been if such currency exchange rates had not changed.
Consolidated Continuing Operations | December 31, |
Net cash from operating activities | $405.5 |
Adjusted Income from continuing operations | $352.0 |
Cash conversion | 115.2% |
86 | PERRIGO• 2024 PROXY STATEMENT | |
Exhibit A
TABLE III
PERRIGO COMPANY PLC
RECONCILIATION OF NON-GAAP MEASURES
SELECTED CONSOLIDATED INFORMATION
(in millions, except per share amounts)
(unaudited)
Twelve Months Ended | |||||||
December 31, | December 31, | Total Change | |||||
Consolidated Continuing Operations | |||||||
Adjusted gross profit | $1,808.5 | $1,613.4 | $195.1 | 12.1% | |||
Adjusted gross margin | 38.8% | 36.2% | 260 bps | ||||
Adjusted operating income | $574.3 | $492.3 | $82.0 | 16.7% | |||
Adjusted operating margin | 12.3% | 11.1% | 120 bps | ||||
Adjusted EPS | $2.58 | $2.07 | $0.51 | 24.6% |
Note: amounts may not add or recalculate due to rounding. Percentages are based on actuals.
(b) NO RIGHT TO BE GRANTED AWARDS. No Employee or Participant shall have any claimexchange rates used to be granted any Award under the Plan nor to remaintranslate our financial statements in the employment or service of the Company and there is no obligation for uniformity of treatment of Employees or Participants under the Plan. The Committee may, in its sole discretion, condition eligibility for an Award on the execution of a noncompete or similar-type agreement.
(c) SHARE CERTIFICATES. All certificates for Shares delivered under the Plan pursuantcomparable prior year period to any Award shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any securities exchange upon which the Shares are then listed, and any applicable Federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
(d) DEFERRAL OF AWARDS. The Committee shall be authorized to establish procedures pursuant to which the payment of any Award may be deferred. Subject to the provisions of this Plan and any Award Agreement, the recipient of an Award (including, without limitation, any deferred Award) may, if so determined by the Committee, be entitled to receive, currently or on a deferred basis, interest or dividends, or interest or dividend equivalents, with respect to the number of shares covered by the Award, as determined by the Committee, in its sole discretion, and the Committee may provide that such amounts (if any) shall be deemed toshow what current period US dollar results would have been reinvested in additional Shares or otherwise reinvested. Notwithstanding the foregoing, any dividends or dividend equivalents shall be payable only if and to the extent the underlying Awards become vested.
(e) DELIVERY AND EXECUTION OF ELECTRONIC DOCUMENTS. To the extent permitted by applicable law, Perrigo may (i) deliver by email or other electronic means (including posting on a web site maintained by the Company or by a third party under contract with the Company) all documents relating to the Plan or any Award thereunder (including, but not limited to, prospectuses required by the U.S. Securities and Exchange Commission) and all other documents that Perrigo is required to deliver to its shareholders (including, but not limited to, annual reports and proxy statements), and (ii) permit Participants to electronically execute applicable Plan documents (including, but not limited to, Award Agreements) in the manner prescribed by the Committee.
(f) SECTION 409A SPECIFIED EMPLOYEES AND SEPARATE PAYMENTS. Notwithstanding any other provision of the Plan, if and to the extent any portion of any payment of an Award that is subject to Section 409A is payable upon the Participant’s separation from service (as defined in Section 409A) and the Participant is a specified employee (as defined in Section 409A) as determined by Perrigo in accordance with its procedures, such portion of the payment shall be delayed to the first business day following the six-month anniversary of such separation from service. Each amount payable under an Award that is subject to Section 409A is hereby designated a separate payment for purposes of Section 409A.
(g) WITHHOLDING TAXES. The Company shall be authorized to withhold from any Award granted or payment due under the Plan the amount of any withholding taxes due in respect of an Award or payment hereunder, including withholding from other compensation payable to the Participant by the Company, and shall take all actions as it determines are necessary to satisfy all obligations for the payment of applicable withholding taxes, including, without limitation, any Federal Insurance Contributions Act (“FICA”) taxes due on the vesting of an Award. The Committee shall be authorized to establish procedures for Participants to elect to satisfy such withholding tax obligations by (i) the delivery of, or directing the Company to retain, Shares, or (ii) tendering payment to the Company in the form of a personal check, a bank order, a money order, or such other form of cash payment as may be approved by the Committee. In no event may the number of Shares withheld exceed the number necessary to satisfy the maximum Federal, state and local income and employment tax withholding requirements.
(h) NO IMPACT ON ADOPTION OF OTHER COMPENSATION PROGRAMS. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is otherwise required; and such arrangements may be either generally applicable or applicable only in specific cases.currency exchange rates had not changed.
(i) GOVERNING LAW. The Plan and Awards granted under the Plan shall be governed by the applicable Code provisions to the maximum extent possible. Otherwise, the laws of the State of Michigan (without reference to principles of conflicts of laws) shall govern the operation of, and the rights of Participants under, the Plan and Awards granted hereunder. With respect to Awards granted to Participants who are foreign nationals or who are employed outside the United States, the Plan and any rules and regulations relating to the Plan shall be governed by the applicable Code provisions to the maximum extent possible and otherwise by the laws of the State of Michigan (without reference to principles of conflicts of laws) and, to the extent that applicable foreign law differs from the Code and Michigan law, in accordance with applicable foreign law.
If any provision of this Plan is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, it shall be stricken and the remainder of the Plan shall remain in full force and effect.
(j) FORFEITURE OF AWARDS. If Perrigo, as a result of misconduct, is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws, then (a) if a Participant’s incentive or equity-based compensation is subject to automatic forfeiture due to such misconduct and restatement under Section 304 of the Sarbanes-Oxley Act of 2002, or (b) the Committee determines the Participant either knowingly engaged in or failed to prevent the misconduct, or the Participant’s actions or inactions with respect to the misconduct and restatement constituted gross negligence, the Participant shall (i) be required to reimburse Perrigo for any gain associated with any Option or Stock Appreciation Right exercised during the 12-month period following the first public issuance or filing with the SEC (whichever first occurred) of the financial document embodying such financial reporting requirement (the “12-Month Window”), (ii) be required to reimburse Perrigo the amount of any payment (whether payment is made in cash, Shares or other property, and including any payment with respect to dividends and/or dividend equivalents) relating to any RSUs, PSUs, Restricted Shares and/or Performance Shares earned, accrued or settled during the 12-Month Window, and (iii) all outstanding Awards that have not yet been settled or exercised shall be immediately forfeited. In addition, Shares acquired under the Plan (including Shares acquired through the exercise of Options and/or Stock Appreciation Rights), and any gains or profits on the sale of such Shares, shall be subject to any “clawback” or recoupment policy later adopted by Perrigo.
SECTION 17.EFFECTIVE DATE OF PLAN. This amendment and restatement of the Plan shall be effective on the date that it is approved by Perrigo’s shareholders (the “Effective Date”).
APPENDIX A
2019 LONG-TERM INCENTIVE PLAN
SUB-PLAN GOVERNING AWARDS TAXABLE IN THE STATE OF ISRAEL
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PERRIGO• 2024 PROXY STATEMENT | 87 | |
TABLE IV
PERRIGO COMPANY PLC
RECONCILIATION OF NON-GAAP MEASURES
SELECTED SEGMENT INFORMATION
(in millions)
(unaudited)
Twelve Months Ended | |||||||
December 31, 2023 | December 31, 2022 | ||||||
Consumer Self-Care International | Net Sales | Operating | Net Sales | Operating (Loss) | |||
Reported | $1,693.3 | $(35.2) | $1,525.7 | $(30.0) | |||
Pre-tax adjustments: | |||||||
Amortization expense primarily related to acquired intangible assets | 212.1 | 198.4 | |||||
Restructuring charges and other termination benefits | 21.4 | 29.5 | |||||
Acquisition and integration-related charges and contingent consideration adjustments | 1.5 | 24.7 | |||||
Gain on divestitures and investment securities |
|
| (4.7) |
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|
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Impairment charges(3) | 90.0 | — | |||||
Adjusted |
| $285.1 |
| $222.6 | |||
As a % of reported net sales |
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| 16.8% |
|
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| 14.6% |
PSU adjustments: Currency(1) | (4.9) |
| (0.6) |
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PSU Net Sales and Operating Income | $1,688.4 |
| 284.50 |
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AIP adjustments: Acquisitions and divestitures(1) | 9.3 |
| 0.2 |
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|
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AIP Net Sales and Operating Income | $1,697.7 |
| $284.7 |
Twelve Months Ended | |||||||
December 31, 2023 | December 31, 2022 | ||||||
Consumer Self-Care Americas | Net Sales | Operating | Net Sales | Operating | |||
Reported | $2,962.3 | $389.6 | $2,925.9 | $366.1 | |||
Pre-tax adjustments: | |||||||
Amortization expense primarily related to acquired intangible assets | 57.7 | 55.7 | |||||
Acquisition and integration-related charges and contingent consideration adjustments | 3.1 | 19.5 | |||||
Restructuring charges and other termination benefits | 12.7 | 2.9 | |||||
(Gain) loss on divestitures |
|
| — |
|
|
| (3.8) |
Other(2) |
|
| 1.2 |
|
|
| — |
Adjusted |
| $464.4 |
| $440.4 | |||
As a % of reported net sales |
| 15.7% |
| 15.1% | |||
PSU adjustments: Currency(1) | 1.4 | (0.3) |
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| |||
PSU Net Sales and Operating Income | $2,963.7 | $464.1 |
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| |||
AIP adjustments: Acquisitions and divestitures(1) | (1.3) |
| 0.1 |
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|
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AIP Net Sales and Operating Income | $2,962.4 |
| $464.2 |
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Note: amounts may not add or recalculate due to rounding. Percentages are based on actuals.
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88 | PERRIGO• 2024 PROXY STATEMENT | |
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Without derogating from Section 2(s) of the Plan and solely for the purpose of determining the tax liability pursuant to Section 102(b)(3) of the Ordinance, as long as at the date of grant Perrigo’s shares are listed on any established stock exchange or a national market system, the fair market value of the Shares at the date of grant shall be determined in accordance with the average value of Perrigo’s shares on the thirty (30) trading days preceding the date of grant.
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Options or SARs shall be exercised by the Participant in accordance with the provisions of the Plan and section 4 above, and with regard to an Approved 102 Award, in accordance with the requirements of Section 102.
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Awards shall vest in accordance with the provisions of the Plan and section 4 above, and with regard to an Approved 102 Award, in accordance with the requirements of Section 102.
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Notwithstanding anything to the contrary in the Plan, the settlement of 102 Awards shall be in Shares only.
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As long as 102 Awards are held or supervised by the Trustee, any Dividend Equivalent distributed to the Participant shall be deposited with the Trustee and shall be subject to the terms and conditions of Section 102.
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All rights of the Participant over the Awards or the Shares issued thereunder are personal, cannot be transferred, assigned, pledged, mortgaged, or given as collateral and no right with respect to them may be given to any third party whatsoever, other than by will or laws of descent and distribution, unless and until actual payment of all taxes required to be paid upon such transfer, assignment, pledge or mortgage has been made to the tax assessor, and the tax assessor confirmed that all taxes required to be paid upon such transfer, assignment, pledge or mortgage have been paid.
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Subject to Perrigo’s incorporation documents and the provisions of the Plan and the Award Agreement, with respect to all Restricted Shares and all Shares allocated or issued upon the exercise of Options (but excluding, for avoidance of any doubt, any Restricted Share Units, Performance Shares and unexercised Options) and held by the Participant or by the Trustee as the case may be, the Participant shall be entitled to receive dividends in accordance with the quantity of such shares, and subject to any applicable taxation on distribution of dividends, and when applicable subject to the provisions of Section 102 and the rules, regulations or orders promulgated thereunder.
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This Appendix shall be governed by and construed and enforced in accordance with the laws of the State of Israel applicable to contracts made and to be performed therein, without giving effect to the principles of conflict of laws. The competent courts of Tel-Aviv, Israel shall have sole jurisdiction in any matters pertaining to this Appendix.
APPENDIX B
2019 LONG-TERM INCENTIVE PLAN
SUB-PLAN GOVERNING AWARDS TAXABLE IN THE REPUBLIC OF IRELAND
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“Restricted Share Trust” means the trust established by Perrigo;
“Retention Period” in connection with any of a Participant’s Restricted Shares means the period beginning on the date an award of Restricted Shares is made and ending on the 30th day after the fifth anniversary of that date, or such other period (between one year and five years plus 30 days) as the Committee may from time to time determine with respect to an allocation of Restricted Shares provided always that such period shall be set out in the Award Agreement relating to such Restricted Shares;
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“Award Agreement” means a written agreement, contract or other instrument in such form as may from time to time be settled by the Committee which is entered into by Perrigo and a Participant setting out specific contractual terms restricting the Participant’s ability to deal with or realise value in the Restricted Shares during the designated Retention Period and signed by both Perrigo and the Participant;
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“Restricted Share” means an Award of Restricted Shares under this Irish Sub-Plan, or (where the context so requires) any other Award under the Plan (including any sub-plan) whereby the Shares subject to that Award to which a Participant becomes entitled at grant, vesting, exercise or settlement (as the case may be) are designated as Restricted Shares for a Retention Period under this Irish Sub-Plan within the meaning of Section 128D(3)(a) of the Irish Taxes Consolidation Act 1997, such shares also being forfeitable shares in accordance with Section 8(c) as amended under this Irish Sub-Plan.
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SECTION 5. ELIGIBILITY. Any Employee or director of the Company shall be eligible to be selected as a Participant under the Irish Sub-Plan.
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SECTION 8. RESTRICTED SHARES.
(a) GRANT OF AWARDS. Restricted Share Awards may be issued hereunder to Participants, for no cash consideration or for such minimum consideration as may be required by applicable law, either alone or in connection with the vesting, exercise or settlement (as the case may be) of other Awards granted under the Plan. The provisions of Restricted Share Awards need not be the same with respect to each recipient. Restricted Share Awards may be subject to performance criteria in relation to any performance period as the Committee may determine when the Restricted Share Award is granted.
(b) REGISTRATION. Any Restricted Shares issued or awarded hereunder shall be held in the Restricted Share Trust for the duration of the Retention Period and subject to the provisions of the trust deed and Section 128D of the Taxes Consolidation Act 1997.
(c) FORFEITURE. Except as set forth in Section 12 (as amended by the Irish Sub-Plan) or otherwise determined by the Committee at the time of grant, upon a Participant’s Termination Date for any reason during the Retention Period, all Restricted Shares still subject to restriction shall be forfeited by the Participant and reacquired by Perrigo whereupon as a result of the forfeiture the Participant will cease to have any beneficial interest in the Restricted Shares so forfeited and will not be entitled to receive, directly or indirectly, consideration in money or money’s worth in respect of the forfeited shares in excess if the consideration given by the Participant for the acquisition of the Restricted Shares. If as a result of any forfeiture of Shares under this Section 8(c) the Participant obtains a refund of any taxes paid in respect of the award of Restricted Shares, the Participant shall be obliged to return such refund to Perrigo immediately upon receipt, unless the Committee determines otherwise in its absolute discretion.
(d) PERFORMANCE CRITERIA. The Committee shall specify in the Award Agreement the extent to which forfeiture applies to a Restricted Share Award at the end of the applicable Retention Period as a result of performance criteria not being achieved, or partially being achieved, in relation to the applicable performance period.
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(b) OPTIONS AND STOCK APPRECIATION RIGHTS. Unless otherwise determined by the Committee with respect to an Award of Options and Stock Appreciation Rights as provided in the applicable Award Agreement, and subject to the terms of the Plan, the following provisions shall apply to Options and Stock Appreciation Rights on a Participant’s Termination Date.
(1) DEATH, DISABILITY, RETIREMENT. If the Participant’s Termination Date occurs due to the Participant’s death, Disability or Retirement the Participant’s outstanding Options and Stock Appreciation Rights shall immediately vest in full and may thereafter be exercised in whole or in part by the Participant (or the duly appointed fiduciary of the Participant’s estate or Beneficiary in the case of death, or conservator of the Participant’s estate in the case of Disability) at any time prior to the expiration of the respective terms of the Options or Stock Appreciation Rights, as applicable.
(2) INVOLUNTARY TERMINATION FOR ECONOMIC REASONS. If the Participant’s Termination Date occurs by reason of Involuntary Termination for Economic Reasons, the Participant may exercise his or her Options and Stock Appreciation Rights, to the extent vested, at any time prior to the earlier of (i) the date which is 30 days after the date which is 24 months after such Termination Date, or (ii) the expiration of the respective terms of the Options or Stock Appreciation Rights. Any Options or Stock Appreciation Rights that are not vested at such Termination Date, but are scheduled to vest during the 24-month period following the Termination Date, shall continue to vest during such 24-month period according to the vesting schedule in effect prior to such Termination Date. Any Options or Stock Appreciation Rights that are not scheduled to vest during such 24-month period will be forfeited on the Termination Date. Notwithstanding the foregoing, if the Participant’s Termination Date occurs for a reason that is both described in this Section 12(b)(2) and in Section 13(a), the special vesting rules described in Section 13(a) shall apply in lieu of the vesting rules described in this Section 12(b)(2).
If the Participant dies after the Termination Date while his or her Options or Stock Appreciation Rights remain exercisable under this paragraph (2), the duly appointed fiduciary of the Participant’s estate or his or her Beneficiary may exercise the Options and Stock Appreciation Rights (to the extent that such Options and Stock Appreciation Rights were vested and exercisable prior to death), at any time prior to the later of the date which is (i) 30 days after the date which is 24 months after the Participant’s Termination Date, or (ii) 12 months after the date of death, but in no event later than the expiration of the respective terms of the Options and Stock Appreciation Rights.
(3) TERMINATION FOR CAUSE. If the Participant’s Termination Date is for Cause, at the time such notice of termination is given by the Company the Participant’s right to exercise his or her Options and Stock Appreciation Rights shall terminate. If within 60 days of a Participant’s Termination Date the Company discovers circumstances which would have permitted it to terminate the Participant’s employment or service for Cause, such Termination Date shall be deemed to have occurred for reasons of Cause. Any Shares, cash or other property paid or delivered to the Participant under the Plan within 60 days of such Termination Date shall be forfeited and the Participant shall be required to repay such amount to the Company.
(4) OTHER TERMINATION OF EMPLOYMENT OR SERVICE. If the Participant’s Termination Date occurs for reasons other than as described in this Section 12(b), the Participant shall have the right to exercise his or her Options and Stock Appreciation Rights at any time prior to the earlier of (i) the date which is three months after such Termination Date, or (ii) the expiration date of the respective terms of the Options or Stock Appreciation Rights, as applicable, but only to the extent such Option or Stock Appreciation Right, as applicable, was vested prior to such Termination Date. Any Options or Stock Appreciation Rights which are not vested at such Termination Date shall be forfeited on the Termination Date.
If the Participant dies after the Termination Date while his or her Options or Stock Appreciation Rights remain exercisable under this paragraph (4), the duly appointed fiduciary of the Participant’s estate or his or her Beneficiary may exercise the Options or Stock Appreciation Rights (to the extent that such Options or Stock Appreciation Rights were vested and exercisable prior to death), at any time prior to the earlier of (i) 12 months after the date of death, or (ii) the expiration of the respective terms of the Options or Stock Appreciation Rights, as applicable.
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(e) RESTRICTED SHARES. Unless otherwise determined by the Committee with respect to an Award of service-based vesting Restricted Shares as provided in the applicable Award Agreement, and subject to the terms of the Plan, the following provisions shall apply to service-based vesting Restricted Shares on a Participant’s Termination Date.
(1) DEATH. If the Participant’s Termination Date occurs due to the Participant’s death prior to the end of the Retention Period applicable to his Restricted Shares, the Retention Period with respect to those Restricted Shares shall lapse.
(2) DISABILITY; RETIREMENT. If the Participant’s Termination Date occurs by reason of Disability or Retirement the Participant may continue to hold those Restricted Shares for the remainder of the Retention Period.
(3) INVOLUNTARY TERMINATION FOR ECONOMIC REASONS. If the Participant’s Termination Date occurs by reason of Involuntary Termination for Economic Reasons within 24 months of the end of the Retention Period applicable to his Restricted Shares, the Participant may continue to hold those Restricted Shares for the remainder of the Retention Period. If the Participant’s Termination Date occurs by reason of Involuntary Termination for Economic Reasons more than 24 months before the end of the Retention Period applicable to his Restricted Shares those Restricted Shares will be forfeited on the Termination Date. Notwithstanding the foregoing, if the Participant’s Termination Date occurs for a reason that is both described in this Section 12(e)(3) and in Section 13(a), the special vesting rules described in Section 13(a) shall apply in lieu of the vesting rules described in this Section 12(e)(3).
(4) TERMINATION FOR CAUSE. If the Participant’s Termination Date is for Cause, at the time such notice of termination is given by the Company the Participant’s Restricted Shares will be forfeited. If within 60 days of a Participant’s Termination Date the Company discovers circumstances which would have permitted it to terminate the Participant’s employment or service for Cause, such Termination Date shall be deemed to have occurred for reasons of Cause. Any Shares, cash or other
property paid or delivered to the Participant under the Plan within 60 days of such Termination Date shall be forfeited and the Participant shall be required to repay such amount to the Company.
(5) OTHER TERMINATION OF EMPLOYMENT OR SERVICE. If the Participant’s Termination Date occurs for reasons other than as described in this Section 12(d), the Participant’s Restricted Shares will be forfeited on the Termination Date unless the Committee determines that the Participant may continue to hold his Restricted Shares for the remainder of the Retention Period applicable to those Restricted Shares.
APPENDIX C
2019 LONG-TERM INCENTIVE PLAN
CONSULTANT AND NON-EMPLOYEE DIRECTOR SUB-PLAN
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“Consultant” means a consultant, adviser or other person retained by the Company to render significant services to the Company.
“Non-Employee Director” means a director of the Company who is not an active employee of the Company.
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“Participant” means any person who is a Consultant or Non-Employee Director.
“Retirement”means a Participant’s Termination Date which occurs (i) pursuant to a voluntary early retirement program approved by the Board or the Committee, (ii) after attaining age 65, or (iii) after attaining age 60 with ten or more years of service with the Company. For this purpose, a year of service shall be a completed 12-month period of service beginning on the first day of the Participant’s service with the Company as a Non-Employee Director or Consultant, or an anniversary of such date.
“Termination Date” means the date that a Participant both ceases to be a Non-Employee Director or Consultant and ceases to perform any material services for the Company, including, but not limited to, advisory or consulting services or services as a member of the Board.
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Decisions of the Committee in respect of the Consultant and NED Sub-Plan shall be final, conclusive and binding upon all persons including the Company, any Participant, and shareholder and any Consultant and Non-Employee Director.
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No individual Consultant may be granted Awards in any one calendar year with respect to more than 400,000 Shares, and no individual Non-Employee Director may be granted Awards in any one calendar year with respect to more than 25,000 Shares.
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SECTION 5. ELIGIBILITY. Any Non-Employee Director or Consultant shall be eligible to be selected as a Participant. Awards may be granted Non-Employee Directors or Consultants of the Company or Affiliates who are foreign nationals or who are resident or taxable on the Award outside the United States, or both, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company’s obligation with respect to tax equalization for Participants on assignments outside their home country.
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Payment of the option price of any Option granted to a Consultant or Non-Employee Director shall be settled only in accordance with a method that is in compliance with applicable Irish company law.
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Withholding taxes applicable to any Awards to a Consultant or Non-Employee Director shall be settled only in accordance with a method that is in compliance with applicable Irish company law.
P.O. BOX 8016, CARY, NC 27512-9903
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Annual Meeting of Shareholders
For Shareholders of record as of March 07, 2022
TIME: Friday, May 6, 2022 10:00 AM, Irish Time/5:00 AM, Eastern Time
PLACE: Annual General Meeting to be held at The Westin Dublin, College Green, Westmoreland Street, Dublin 2, Ireland, Guinea and Florin Room - please visit www.proxydocs.com/PRGO for more details.
This proxy is being solicited on behalf of the Board of Directors
The undersigned, revoking any proxy or voting instructions previously given, appoints Raymond P. Silcock and Todd W. Kingma (the “Named Proxies”), and each of them, as attorneys and proxies with full power of substitution and authorizes them to represent and vote as indicated on the reverse side of this card, with all powers which the undersigned would possess if personally present, all the ordinary shares of Perrigo Company plc held of record by the undersigned on March 7, 2022, at the Annual General Meeting of Shareholders to be held at 10:00 a.m. Irish Time/5:00 a.m. U.S. Eastern Time on May 6, 2022, at The Westin Dublin, College Green, Westmoreland Street, Dublin 2, Ireland, Guinea and Florin Room (with details available at www.proxydocs.com/PRGO) or any adjournment therof.
This Proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted “FOR” each director nominee named in Proposal 1, and “FOR” Proposals 2 through 6. If you vote by Internet or telephone, please do not send your proxy by mail.
You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE
Perrigo Company plc
Annual Meeting of Shareholders
THE BOARD OF DIRECTORS RECOMMENDS A VOTE:
FOR each director nominee named in PROPOSAL 1, and “FOR” on PROPOSALS 2 THROUGH 6
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If you plan to attend the meeting, please follow the instructions in the Proxy Statement at
www.proxydocs.com/PRGO.
Authorized Signatures - Must be completed for your instructions to be executed.
Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form.