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TABLE OF CONTENTS
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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ý | Definitive Proxy Statement | |
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o | Soliciting Material under §240.14a-12 | |
| Bristol-Myers Squibb Company | ||||
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| (4) | Date Filed: | |||
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PROXY STATEMENT SUMMARY | 3 | |
ELECTION OF DIRECTORS | ||
Majority Vote Standard and Mandatory Resignation Policy | ||
Criteria for Board Membership | ||
Director Independence | ||
Director Succession Planning and Identification of Board Candidates | ||
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CORPORATE GOVERNANCE AND BOARD MATTERS | ||
Active Board Oversight of Our Governance | ||
Board Leadership Structure | ||
Board's Role in Strategic Planning and Risk Oversight | ||
Risk Assessment of Compensation Policies and Practices | ||
Annual Evaluation Process | ||
Meetings of our Board | ||
Annual Meeting of Shareholders | ||
Committees of our Board | ||
Codes of Conduct | ||
Related Party Transactions | ||
Disclosure Regarding Political Activities | ||
Communications with our Board of Directors | ||
Compensation of Directors | ||
EXECUTIVE COMPENSATION | ||
Compensation Discussion and Analysis | ||
Compensation and Management Development Committee Report | ||
Summary Compensation Table | ||
Grants of Plan-Based Awards | ||
Outstanding Equity Awards at Fiscal Year-End | ||
Option Exercises and Stock Vesting | ||
Present Value of Accumulated Pension Benefits | ||
Non-Qualified Deferred Compensation Plan | ||
Post-Termination Benefits | ||
Termination of Employment Obligations (Excluding Vested Benefits) | ||
ITEMS TO BE VOTED UPON | ||
Item 1—Election of Directors | ||
Item 2—Advisory Vote to Approve the Compensation of our Named Executive Officers | ||
Equity Compensation Plan Information | ||
Item 3—Advisory Vote on the Frequency of the Advisory Vote to Approve the Compensation of our Named Executive Officers | 70 | |
Item 4—Re-approval of the Material Terms of the Performance-Based Awards under the Company's 2012 Stock Award and Incentive Plan (as amended) | 70 | |
Item 5—Approval of an Amendment to the Company's 2012 Stock Award and Incentive Plan | 72 | |
Item 6—Ratification of the Appointment of Independent Registered Public Accounting Firm | ||
Audit and Non-Audit Fees | ||
Pre-Approval Policy for Services Provided by our Independent Registered Public Accounting Firm | ||
Audit Committee Report | ||
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VOTING SECURITIES AND PRINCIPAL HOLDERS | ||
Common Stock Ownership by Directors and Executive Officers | ||
Principal Holders of Voting Securities | ||
Section 16(a) Beneficial Ownership Reporting Compliance | ||
Policy on Hedging and Pledging | ||
OTHER MATTERS | ||
Advance Notice Procedures | ||
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Compensation Committee Interlocks and Insider Participation | ||
Availability of Corporate Governance Documents | ||
FREQUENTLY ASKED QUESTIONS | ||
EXHIBIT A—Categorical Standards of Independence | A-1 | |
EXHIBIT B—2012 Stock Award and Incentive Plan (as amended) | B-1 | |
EXHIBIT C—Directions to our |
345 Park Avenue
New York, New York 10154-0037
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
Notice is hereby given that the 20162017 Annual Meeting of Shareholders will be held at Bristol-Myers Squibb Company, 777 Scudders Mill Road, Plainsboro,3401 Princeton Pike, Lawrence Township, New Jersey, on Tuesday, May 3, 2016,2, 2017, at 10:00 a.m. for the following purposes as set forth in the accompanying Proxy Statement:
Holders of record of our common and preferred stock at the close of business on March 11, 201614, 2017 will be entitled to vote at the meeting.
By Order of the Board of Directors  Katherine R. Kelly Associate General Counsel and Corporate Secretary |
Dated: March 23, 20162017
Regardless of the number of shares you own, your vote is important. If you do not attend the Annual Meeting to vote in person, your vote will not be counted unless a proxy representing your shares is presented at the meeting. To ensure that your shares will be voted at the meeting, please vote in one of these ways:
If you do attend the Annual Meeting, you may revoke your proxy and vote by ballot.
Dear fellow shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of Bristol-Myers Squibb Company on Tuesday, May 3, 2016,2, 2017, at 10:00 a.m. at our offices located in Plainsboro,Lawrence Township, New Jersey. We hope that you will be able to attend.
During the meeting, we will cover a number of business items, including the election of directors, advisory votevotes to approve the compensation of our named executive officers,Named Executive Officers and the frequency of the advisory vote on compensation of our Named Executive Officers, two proposals related to our 2012 Stock Award and Incentive Plan, ratification of the appointment of an independent registered public accounting firm, and consideration of one shareholder proposal. Your vote
We will also use the meeting as an opportunity to look back on the past year, highlighting everything from our strong financial and operational company performance to our regulatory and clinical advances to the important work of the BMS Foundation. We will discuss our ongoing efforts to transform our operating model to enable us to continue to seize opportunities in a challenging external environment. And, of course, we will talk about our unwavering focus on our patients and their families—the people at the center of everything we do.
Lastly, we will use this opportunity to thank Secretary Togo D. West, Jr. and Dr. Thomas J. Lynch, Jr. for their many years of dedicated service to the Bristol-Myers Squibb Board of Directors and our shareholders. The Board is very important. extremely grateful to Secretary West and Dr. Lynch for their contributions. Secretary West will retire from the Board of Directors effective after this Annual Meeting, and Dr. Lynch retired from the Board on March 15, 2017 and became our new Chief Scientific Officer. We would also like to welcome Robert Bertolini, Matthew Emmens and Theodore Samuels to the Board. Bob, Matt and Ted were each elected to serve as a member of our Board of Directors effective February 21, 2017. Each brings to our company important experience and skills that will further strengthen and complement our Board.
Last year, over 88%89% of the outstanding shares were represented at the Annual Meeting. Whether or not you attend in person, we hope that your shares will be represented at the meeting.
During the meeting, we will also discuss the important work we did last year for patients. From transforming cancer care to diversifying our portfolio to building an even stronger organization, 2015 was an extraordinary year for Bristol-Myers Squibb. Perhaps most significantly, we also became an even more patient-centric company, devoting more time and attention to the people at the center of everything we do – our patients and their families.
And lastly, we will use the opportunity to thank Lewis Campbell for his many years of dedicated service to Bristol-Myers Squibb and our shareholders. Lewis will retire from the Board of Directors effective after this Annual Meeting. We will also welcome Peter Arduini to the Board. Pete was elected to serve as a member of our Board of Directors effective April 1, 2016. Your vote is very important.
We look forward to welcoming many of you to our 20162017 Annual Meeting.
 Giovanni Caforio, M.D. Chief Executive Officer |  Lamberto Andreotti Chairman of the Board |
To my fellow shareholders:
2015 was an extraordinary year for Bristol-Myers Squibb and it represented an important inflection point for our company. We emerged from a multi-year transformation to deliver strong operational performance, establishing a position of strength as we enter this exciting next chapter. 2015 was marked by significant growth across our core priority brands, advancement of our leadership position in immuno-oncology, which is a new way of treating cancer by using the body's own immune system, and investment in our key therapeutic areas to further strengthen our pipeline.
We also underwent an important leadership transition. In May, Giovanni Caforio succeeded Lamberto Andreotti as Chief Executive Officer and Lamberto became Chairman of the Board. Additionally, the independent members of the Board elected a Lead Independent Director, with significant independent leadership responsibilities. We believe this leadership structure best positions Bristol-Myers Squibb to execute against our strategic goals as we enter the next chapter of expected growth, while maintaining strong independent leadership in the boardroom.
Your Board remains committed to continued excellence in governance, openness to shareholder feedback, and practices that ensure the Board is comprised of skilled, diverse and engaged members. As evidence of this commitment, three key areas of focus in 2015 are worth highlighting:
At Bristol-Myers Squibb, our Mission is "to discover, develop and deliver innovative medicines that help patients prevail over serious diseases." My fellow Directors and I believe in this Mission, and we strive to ensure from the boardroom that the company is well positionedwell-positioned to be successful in this important undertaking. Thank2016 was an outstanding year financially for us, and despite the unique challenges we faced, we continued to make meaningful strides in the right direction, leveraging the operational flexibility afforded to us by our transition to a specialty biopharmaceutical company. Namely, 2016 was marked by continued growth across our core priority brands, additional clinical and regulatory achievements, important business development activities, the evolution of our operating model, and a strong balance sheet.
In December 2016, we announced that our Chairman of the Board, Lamberto Andreotti, has decided to retire effective after this Annual Meeting. We would like to use this opportunity to thank Lamberto for his many years of dedicated service to Bristol-Myers Squibb and its shareholders, including in his former capacity as CEO from 2010 to 2015. The Board of Directors has elected Giovanni Caforio, M.D., to become Chairman of the Board upon Lamberto's retirement. The Board looks forward to working with Dr. Caforio in his new role as Chairman and CEO.
On March 23, 2017, we announced that I have also decided to retire effective after this Annual Meeting. I am very pleased to report that Dr. Vicki Sato will be your new Lead Independent Director. Vicki has been a stalwart member of our Board over the last several years, and I know that as Lead Independent Director, she will continue to advance our commitment to excellence in governance.
Your Board remains committed to sound corporate governance, openness to shareholder feedback, and practices that ensure the Board is comprised of skilled, diverse and engaged members that effectively support the execution of the company's strategy. As evidence of this commitment, three key areas of focus in 2016 are worth highlighting:
Your Bristol-Myers Squibb family of employees, management leadership, and Board is an extraordinary collection of devoted and talented team members. It has been an honor to serve with them, and, in doing so, to serve your interests while remembering those who rely upon the Bristol-Myers Squibb name and integrity. On behalf of the Board of Directors, I thank you for your continued support.
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| Togo D. West, Jr. Lead Independent Director Chair, Compensation and Management Development Committee |
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| Date: | Tuesday, May | |||||
| Time: | 10:00 a.m. | |||||
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| For additional information about the Annual Meeting, see "Frequently Asked Questions" beginning on page | ||||||
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| Voting Matters | Voting Matters | |||||||||||||||||||||||
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Item | Proposal | Board Vote Recommendation | Required Vote | Page Number | Item | Proposal | Board Vote Recommendation | Required Vote | Page Number | |||||||||||||||
| | 1 | Election of Directors | FOR ALL | Majority of votes cast | 10 | | 1 | Election of Directors | FOR ALL | Majority of votes cast | 9 | | ||||||||||||
| 2 | Advisory vote to approve the compensation of our named executive officers | FOR | Majority of shares voted | 84 | 2 | Advisory vote to approve the compensation of our Named Executive Officers | FOR | Majority of shares voted | 69 | |||||||||||||||
| | 3 | Ratification of the appointment of an independent registered public accounting firm | FOR | Majority of shares voted | 85 | | 3 | Advisory vote on the frequency of the advisory vote to approve the compensation of our Named Executive Officers | EVERY (1) YEAR | Majority of shares voted | 70 | | ||||||||||||
| 4 | Shareholder proposal on special shareowner meetings | AGAINST | Majority of shares voted | 88 | 4 | Re-approval of the material terms of the Performance-Based Awards under the Company's 2012 Stock Award and Incentive Plan (as amended) | FOR | Majority of shares voted | 70 | |||||||||||||||
| | | | | | | | | | | | 5 | Approval of an Amendment to the Company's 2012 Stock Award and Incentive Plan | FOR | Majority of shares voted | 72 | | ||||||||
| 6 | Ratification of the appointment of an independent registered public accounting firm | FOR | Majority of shares voted | 80 | ||||||||||||||||||||
| | 7 | Shareholder proposal to lower the share ownership threshold to call special shareholder meetings | AGAINST | Majority of shares voted | 82 | | ||||||||||||||||||
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20152016 Performance Highlights
20152016 marked Bristol-Myers Squibb's emergence fromsuccessful transition to a multi-year transformationspecialty biopharmaceutical company, with a strategy uniquely designed to an exciting new chapter forleverage both the company. Followingreach and resources of a major pharmaceutical company, and the entrepreneurial spirit and agility of a biotech firm. Building on a number of years of foundation-buildingfoundation building and working to streamline our core therapeutic areas, we delivered strongmet, or exceeded, our financial and operational and financial performancegoals in 2015 that created significant value for our shareholders.key areas in 2016.
Key OperationalFinancial and FinancialOperational Highlights for 20152016
20152016 was an exceptionala great year in which we began a new chapter ofbuilt on the substantial growth and laid a strong foundation forput in place in 2015. Management's continued execution of our future as we continued to advance a diversified pipeline of innovative medicines. In a year during which we lost exclusivity ofAbilify, our largest productstrategic priorities in 2014, we2016 resulted in increased revenues by 4% compared to 2014. In addition, although ourof 17% and increased GAAP dilutedand non-GAAP earnings per share decreased by 23% due to higher researchof 185% and development expenses as noted in the footnote below, our non-GAAP diluted earnings per share increased by 9%41%, respectively, compared to 2014.2015. This growth was the result of the strong performance of new and inline brands (products that are not expected to lose exclusivity for at leastin the U.S. between the next fewthree years, in the U.S. or EU)case ofSprycel, and the next ten years, in the case ofOpdivo), significantadditional clinical and regulatory achievements, particularly in immuno-oncology, important business development activities that supplement our innovative pipeline, the evolution of our operating model, and a strong balance sheet.
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| Full Year | Full Year | ||||||||||||||||||
| $ amounts in millions, except per share amounts | $ amounts in millions, except per share amounts | ||||||||||||||||||
| 2015 | 2014 | Change | 2016 | 2015 | Change | ||||||||||||||
| Total Revenues | $16,560 | $15,879 | 4% | Total Revenues | $19,427 | $16,560 | 17% | ||||||||||||
| GAAP Diluted EPS (1) | 0.93 | 1.20 | (23%) | GAAP Diluted EPS | 2.65 | 0.93 | 185% | ||||||||||||
| Non-GAAP Diluted EPS (2) | 2.01 | 1.85 | 9% | Non-GAAP Diluted EPS (1) | 2.83 | 2.01 | 41% | ||||||||||||
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(1) |
| Our non-GAAP financial measures, including non-GAAP earnings and related EPS information, are adjusted to exclude specified items which represent certain costs, expenses, gains and losses and other items impacting the comparability of financial results. For a detailed listing of all specified items and further information, including reconciliations of non-GAAP financial measures, please refer to "—Non-GAAP Financial Measures" in our Annual Report on Form 10-K for the year ended December 31, |
Total Revenues of Select Key Products (Dollars in Millions)
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Unprecedented Achievements in Immuno-Oncology in 2015
Our achievements in immuno-oncology in 2015 with our new drugOpdivo have been unprecedented not only for Bristol-Myers Squibb, but within the market broadly. In 2015,Opdivo
demonstrated an overall survival benefitTotal Revenues of Select Key Products (Dollars in three large Phase III studies, which led to early study stops, with a total of fiveOpdivoMillions) Phase III trials stopped early because the data showed an overall survival benefit compared with standard of care therapy. Within 12 months ofOpdivo's first approval in the U.S. for metastatic melanoma in late December 2014, we worked with unprecedented speed with the U.S. Food and Drug Administration (FDA) and received five additional U.S. approvals for indications across three different tumor types, transforming cancer care in advanced non-small cell lung cancer, melanoma and kidney cancer. As of the end of 2015,Opdivo was approved in over 40 countries. As a result of the efficacy demonstrated in trials, the breadth of our innovative clinical development program across multiple cancer types simultaneously, and the innovation of our people, the timelines for clinical trials, regulatory approvals and market adoption ofOpdivo have all progressed with unprecedented speed. These achievements have further advanced our leadership position in immuno-oncology.
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Execution of our Strategy Continues to Create Value for Shareholders
Our strong financial and operational performance in 2016 continued to develop a strong platform for long-term value creation for shareholders, as evidenced by our 18% three year total shareholder return (stock price appreciation plus dividends), or(TSR) and 92% five-year TSR, reflectswhich exceeded our financial and operational achievements in 2015 and continues to outpace our peers, as we delivered over 19% in one-year TSR and more than 131% in three-year TSR,peer group, while increasing the dividend for the seventheighth year in a row.
Cumulative Indexed Total Shareholder Return
Our Committee on Directors and Corporate Governance maintains an active and engaged Board, whose diverse skill sets benefit from both the industry and company-specific knowledge of our longer-tenured directors, as well as the fresh perspectives brought by our newer directors.directors, including the perspectives of our three newest directors appointed to the Board in February 2017. We continually review our Board's composition with a focus on refreshing necessary skill sets as our business strategy and industry dynamics evolve.
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| Name | Occupation | Independent | Committee Memberships* | Other Public Company Boards | ||||||||||||
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| |   | Age: Director Since: | No | | | |||||||||||
  | Lead Independent Director Age: Director Since: | Yes | CDCG (c); | |||||||||||||
| |  | Peter J. Arduini Age: Director Since: | President and Chief Executive Officer of Integra LifeSciences Holdings Corporation | Yes | CMDC | 1 | | |||||||||
  | Age: Director Since: | Former President and Chief | Audit; CDCG | |||||||||||||
| |  | Matthew W. Emmens Age: 65 Director Since: 2017** | Former Chairman, President and Chief Executive Officer Vertex Pharmaceuticals Incorporated | Yes | CMDC; S&T | 0 | | |||||||||
 | Laurie H. Glimcher, M.D. Age: Director Since: 1997 | S&T | 1 | |||||||||||||
| |  | Michael Grobstein Age: Director Since: 2007 | Former Vice Chairman of Ernst & Young LLP | Yes | Audit; CMDC (c) | 1 | | |||||||||
 | Alan J. Lacy Age: Director Since: 2008 | Non-Executive Chairman, Dave & Buster's Entertainment, Inc. and former Vice Chairman and CEO of Sears Holdings Corporation | Yes | Audit (c); CDCG | 1 | |||||||||||
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| |  | Dinesh C. Paliwal Age: Director Since: 2013 | Yes | CDCG | 1 | | ||||||||||
  | Age: Director Since: | Yes | 2 | |||||||||||||
| |   | Gerald L. Storch Age: Director Since: 2012 | Chief Executive Officer of Hudson's Bay Company | Yes | Audit; CMDC | 1 | |
| * | Committee memberships listed as of the date of this Annual | Audit: | Audit Committee | |||||||
| Meeting. | CDCG: | Committee on Directors and Corporate Governance | ||||||||
| ** | Messrs. Bertolini, Emmens, and Samuels were each elected to | CMDC: | Compensation and Management Development Committee | |||||||
| serve as a member of the Board of Directors effective | S&T: | Science and Technology Committee | ||||||||
| February 21, 2017. Dr Sato will not stand for re-election at the PerkinElmer 2017 annual meeting. | (c): | Committee Chair | ||||||||
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Our Chairman of the Board, Lamberto Andreotti, has decided to retire effective after this Annual Meeting. The Board of Directors has elected Giovanni Caforio, M.D. to become Chairman of the Board upon Mr. Andreotti's retirement. We believe that it is in the best interests of the company to have Dr. Caforio serve as our next Chairman. Our Board determined that Dr. Caforio's deep institutional knowledge and industry experience uniquely position him to serve as Chairman.
The Board recognizes the importance of a Lead Independent Director, and Dr. Sato will serve in this position following the 2017 Annual Meeting.
The Lead Independent Director's responsibilities include, among others:
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ü | Serving as liaison between the independent directors and the Chairman | ü | Approving the quality, quantity and timeliness of information sent to the Board | | ||||||
ü | Reviewing and approving meeting agendas and sufficiency of time | ü | Serving a key role in Board and Chief Executive Officer evaluations | |||||||
| | ü | Calling meetings of the independent directors | ü | Responding directly to shareholder and stakeholder questions, as appropriate | | |||||
ü | Presiding at all meetings of the independent directors and any Board meeting when the Chairman and the Chief Executive Officer are not present, including executive sessions of the independent directors | ü | Providing feedback from executive sessions of the independent directors to the Chief Executive Officer, other senior management and to the Chairman | |||||||
| | ü | Communicating with major shareholders, as appropriate | ü | Recommending advisors and consultants | | |||||
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Corporate Governance Highlights
We are committed to strong governance practices that protect the long-term interests of our shareholders and establish strong Board and management accountability. The "Corporate Governance and Board Matters" section beginning on page 1917 describes our governance framework, which includes the following key governance best practices that we have adopted:
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ü | Annual election of Directors | ü | Proxy access shareholder right | | ||||||
ü | Majority voting standard for election of Directors | ü | Limit on number of public company directorships Board members may hold (4) | |||||||
| | ü | Shareholder right to call a special meeting (25%) | ü | | ||||||
ü | No supermajority voting provisions for common shareholders | ü | Clawback and recoupment policies | |||||||
| | ü | Proactive shareholder engagement | ü | Share ownership and retention policy | | |||||
ü | Robust related party transaction policies and procedures | ü | Prohibition of speculative and hedging transactions by all employees and directors | |||||||
| | ü | Semi-annual disclosure of political contributions | ü | No shareholder rights plan | | |||||
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Shareholder Engagement and Responsiveness
We continued to place a high priority on engagement with our shareholders in 2015,2016, reaching out to our top 30 institutional shareholders, and meeting with shareholders representing over 40%30% of our shares outstanding. Our Lead Independent Director participated in a number of these meetings.outstanding, which included both major asset managers as well as pension funds. The feedback received through these efforts was shared with the entire Board and members of senior management.
During 2015,As in previous years, we received valuable feedback fromcontinued to engage with our shareholdersinvestors on our compensation practices, and this feedback directly informed the changes that our Compensation and Management Development Committee made to our executive compensation program in order to further align our incentive structureand general corporate governance matters. The feedback received was generally positive, with our strategy. These changes are summarized below and detailed in the "Compensation Discussion and Analysis" beginning on page 33.
This year the Board also made it a priority to understand our shareholders' sentimentsfocus on the evolving environment regarding proxy access. After hearingstructural changes to the varietycompensation program, which became effective in 2016, and the voluntary adoption of opinions shared with us on this topic, our Board, in keeping with its commitment to governance best practices, adopted a proxy access shareholder right in February of 2016. The Board took particular care to adopt a bylaw with provisionsOver the last few years, general themes that reflect the input ofhave emerged from our shareholders, the details of which are described on page 13.outreach are:
We encourage our registered shareholders to use the space provided on the proxy card to let us know your feelings about BMS or to bring a particular matter to our attention. If you hold your shares through an intermediary or received the proxy materials electronically, please feel free to write directly to us.
The Compensation and Management Development Committee firmly believes in pay-for-performance and has structured the executive compensation program to align our executives' interests with those of our shareholders.
On May 5, 2015, Dr. Caforio became the Chief Executive Officer of the company and his compensation package as Chief Executive Officer, effective May 5, 2015, is:
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Significant Compensation Program Changes for 2016
During 2015,As noted, during the last few years, our Board and management conducted extensive engagement with shareholders and performed an in-depth review of our compensation program in the context of our pay philosophy and strategic goals. As a result, the Compensation and Management Development Committee determined to make a number of changes to our compensation program, that will becomewhich became effective in 2016. These changes are intended to:
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| Compensation Program Changes | | |||||
ü | Lengthened the performance period in our Performance Share Unit (PSU) program from one year to three years. | | ||||
ü | Eliminated non-GAAP earnings per share (EPS) metric overlap in annual and long-term incentive | |||||
| | ü | Introduced a new mix of financial performance metrics in our PSU | | |||
ü | Reduced the annual maximum incentive opportunity from 251% to 200% of | |||||
| | ü | Increased the disclosure of target setting process and enhanced transparency of individual performance goals and | | |||
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Additional detail on our executive compensation program and the changes the Compensation and Management Development Committee approvedimplemented in 20152016 is provided in the "Compensation Discussion and Analysis" beginning on page 33.29.
Shareholder Proposal Executive Compensation
We expect one shareholder proposalThe Compensation and Management Development Committee firmly believes in pay-for-performance and has structured the executive compensation program to be considered at this Annual Meeting. The proponentalign our executives' interests with those of this proposal (Item 4) requests that the Board take the steps necessary to amend the company's Bylaws to give holders in the aggregate of at least 15% of the company's common stock the power to call a special meeting. After careful consideration, and for the reasons outlined in the "Shareholder Proposal" section beginning on page 88, the Board recommends a vote AGAINST this proposal.our shareholders.
| 2016 Target Total CEO Compensation | |||
In line with our commitment to a highly performance-based compensation structure, approximately 90% of Dr. Caforio's total target compensation (and approximately 82% of the target total compensation for our other Named Executive Officers) is variable and at risk, based on the financial, operational, strategic and share price performance of the company. |  |
Our Board of Directors has nominated 11 current directors, Lamberto Andreotti, Peter J. Arduini, Robert J. Bertolini, Giovanni Caforio, M.D., Matthew W. Emmens, Laurie H. Glimcher, M.D., Michael Grobstein, Alan J. Lacy, Thomas J. Lynch, Jr., M.D., Dinesh C. Paliwal, Theodore R. Samuels, Vicki L. Sato, Ph.D., and Gerald L. Storch, and Togo D. West, Jr., to serve as directors of Bristol-Myers Squibb. The directors will hold office from election until the 20172018 Annual Meeting.
Majority Vote Standard and Mandatory Resignation Policy
A majority of the votes cast is required to elect directors. Any current director who does not receive a majority of votes cast must tender his or her resignation as a director within 10 business days after the certification of the shareholder vote. The Committee on Directors and Corporate Governance, without participation by any director tendering his or her resignation, will consider the resignation offer and recommend to the Board whether to accept it. The Board, without participation by any director tendering his or her resignation, will act on the Committee's recommendation at its next regularly scheduled meeting to be held within 60 days after the certification of the shareholder vote. We will promptly disclose the Board's decision and the reasons for that decision in a broadly disseminated press release that will also be furnished to the U.S. Securities and Exchange Commission (SEC) on Form 8-K. If any nominee is unable to serve, proxies will be voted in favor of the remainder of those nominated and may be voted for substitute nominees, unless our Board of Directors provides for a lesser number of directors.
As specified in our Corporate Governance Guidelines, members of our Board should be persons with broad experience in areas important to the operation of our company. These include areas such as business, science, medicine, finance/accounting, law, business strategy, crisis management, corporate governance, education or government. Board members should possess qualities reflecting integrity, independence, leadership, good business judgment, wisdom, an inquiring mind, vision, a proven record of accomplishment and an ability to work well with others. The Corporate Governance Guidelines also express the Board's belief that its membership should continue to reflect a diversity of gender, race and ethnicity.
All Director Nominees Possess:
Director Orientation and Continuing Education
Director education is an ongoing, year-round process, which begins when a director joins our Board. Upon joining our Board, new directors are provided with a comprehensive orientation to our company, including our business, strategy and governance. For example, new directors typically participate in one-on-one introductory meetings with our senior business and functional leaders and participate in site visits to one or more of our locations. On an ongoing basis, directors receive presentations on a variety of topics related to their work on the Board and within the biopharmaceutical
industry, both from senior management and from experts outside of the company. Directors may also enroll in continuing education programs sponsored by third parties at our expense.
9 of our 11 director nominees are currently independent
Our Corporate Governance Guidelines provide that a substantial majority of Board members be independent from management, and the Board has adopted independence standards that meet the listing standards of the New York Stock Exchange. Our Board has determined that each of our directors and each director nominee for election at this Annual Meeting is independent of Bristol-Myers Squibb and its management in that none currently have a direct or indirect material relationship with our company, except for Giovanni Caforio, M.D.,
Lamberto Andreotti and Lamberto Andreotti.Laurie Glimcher, M.D. Dr. Caforio and Mr. Andreotti are not considered independent directors because Dr. Caforio is currently our Chief Executive Officer and Mr. Andreotti was our Chief Executive Officer until May 2015. Dr. Glimcher is not independent because she is President and Chief Executive Officer of the Dana-Farber Cancer Institute (Dana-Farber), a role she assumed on October 1, 2016, and Bristol-Myers Squibb made payments to Dana-Farber in 2014 that exceeded 2% of Dana-Farber's consolidated gross revenues in that year.
Process for Determining Independence
In accordance with our Corporate Governance Guidelines, our Board undertakes an annual review of director independence. In February 20162017 and in March 2016,2017, the Board considered all commercial and charitable relationships of our independent directors and director nominees, including the following relationships, which were deemed immaterial under our categorical standards (see Exhibit A):
Additionally, in determining whether our directors met the applicable independence standards, the Board also considered the following relationships which did not fall under our categorical standards:
The Board determined that none of these relationships impair the independence of these directors under the New York Stock Exchange's independence standards or otherwise.
In addition, the Board considered Dr. Glimcher's new appointment as President and Chief Executive Officer of Dana-Farber Cancer Institute (Dana-Farber) beginning in January 2017. Because Bristol-Myers Squibb's payments to Dana-Farber exceeded 2% of Dana-Farber's consolidated gross revenues in one of the past three years, the Board has determined that Dr. Glimcher will no longer be independent upon assuming her new role with Dana-Farber.
Director Succession Planning and Identification of Board Candidates
Regular Assessment of our Board Composition
The Committee on Directors and Corporate Governance regularly assesses the appropriate size and composition of our Board, which incorporates the results of the Committee's annual evaluation process. The Committee also considers succession planning for its directors.
| Identification and Selection of Director Nominees | Director Tenure |
The Committee on Directors and Corporate Governance, in consultation with the Chairman, conducts an initial evaluation of prospective nominees against the established Board membership criteria discussed above. The Committee also reviews the skills of the current directors and compares them to the particular skills of potential candidates, keeping in mind the Board's commitment to maintain members of diverse experience and background. Candidates may come to the attention of the Committee on Directors and Corporate Governance through current Board members, third-party search firms, management, shareholders or others. Additional information relevant to the qualifications of prospective nominees may be requested from third-party search firms, other directors, management or other sources. After this initial evaluation, prospective nominees may be interviewed by telephone or in person by the members of the Committee on Directors and Corporate Governance, the Chairman, the Lead Independent Director and other directors, as applicable. After completing this evaluation and interview, the Committee on Directors and Corporate Governance makes a recommendation to the full Board as to the persons who should be nominated by our Board, and the full Board determines the nominees after considering the recommendation and any additional information it may deem appropriate. Mr. Arduini, who was electedMessrs. Bertolini, Emmens and Samuels were identified by advisors to serve on the Board, effective April 1, 2016, was initially identified as a potential candidate for election to our Board bycompany and vetted through the use of a third-party
search firm retainedfirm. These candidates were interviewed by members of the Committee on Directors and Corporate Governance.Governance and other directors, and after a period of consultation, the candidates were recommended for nomination to the Board and the Board unanimously approved their nomination and election. The company also discussed Board composition with JANA Partners, LLC, a shareholder of the company, and incorporated their views into its decision process.
Shareholder Nominations for Director
The Committee on Directors and Corporate Governance considers and evaluates shareholder recommendations of nominees for election to our Board of Directors in the same manner as other director nominees. Shareholder recommendations must be accompanied by disclosure, including written information about the recommended nominee's business experience and background with consent in writing signed by the recommended nominee that he or she is willing to be considered as a nominee and, if nominated and elected, he or she will serve as a director. Shareholders should send their written recommendations of nominees accompanied by the required documents to: Bristol-Myers Squibb Company, 345 Park Avenue, New York, New York 10154, Attention: Corporate Secretary.
Proxy Access Shareholder Right
Following extensive engagement with our shareholders, our Board determined to adopt proxy access in February 2016, permitting a shareholder or group of up to 20 shareholders holding 3% of our outstanding shares of common stock for at least three years to nominate a number of directors constituting the greater of two directors or 20% of the number of directors on our Board, as set forth in detail in our Bylaws. If you wish to propose any action pursuant to our proxy access bylaw provision, you must deliver a notice to BMS containing certain information set forth in our Bylaws, not less than 90120 but not more than 120150 days before the anniversary of the prior year's annual meeting.filing of the proxy materials. For our 20172018 Annual Meeting, we must receive this notice between January 3,October 24, 2017 and February 2,November 23, 2017. Shareholders should send their notices to: Bristol-Myers Squibb Company, 345 Park Avenue, New York, New York 10154, Attention: Corporate Secretary.
The following biographies of our director nominees reflect their Board Committee membership and Chair positions as of the date of this year's Annual Meeting.
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| GIOVANNI CAFORIO, M.D. Dr. Caforio, age Key Skills and Experience: With over 26 years of pharmaceutical industry experience, including more than 15 years at the company, Dr. Caforio has overseen the creation of a fully integrated worldwide commercial organization as part of our | |||
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BMS Committees: • Committee on Directors • Science & Technology Other Directorships: Current: • PerkinElmer Corporation • BorgWarner, Inc. • Syros Pharmaceuticals | VICKI L. SATO, PH.D. Dr. Sato, age 68, has served as a professor of management practice at the Harvard Business School since July 2005. From July 2005 to October 2014 she served as professor of the practice of molecular and cell biology at Harvard University. In 2005, Dr. Sato retired as President of Vertex Pharmaceuticals Incorporated, a global biotechnology company, where she was responsible for research and development, business and corporate development, commercial operations, legal and finance. Dr. Sato also served as Chief Scientific Officer, Senior Vice President of Research and Development and Chair of the Scientific Advisory Board at Vertex before being named President in 2000. She serves as Chairman of Denali Therapeutics, Inc. and VIR Biotechnology, Inc. and a Director of Syros Pharmaceuticals. She is a co-Chair on the Advisory Council for LifeSci NYC. She also serves on the Board of Directors of the Peer Health Exchange, Inc. Dr. Sato will not stand for re-election to the Board of Directors of PerkinElmer at their 2017 annual meeting. Key Skills and Experience: Dr. Sato's extensive and distinctive experience in business, academia and science over more than 31 years brings to the Board a valuable perspective on the biotech industry. Dr. Sato has a strong background in research and development positioning her well to serve as Chair of our Science and Technology Committee. Her experience serving on the Boards of other healthcare companies and her knowledge and keen understanding of the issues facing public companies, and in particular, healthcare companies position her well to serve as our Lead Independent Director. | |||
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BMS Committees: • Audit Committee • Compensation and Other Directorships: Current: • Integra LifeSciences | PETER J. ARDUINI Mr. Arduini, age 52, has been President and Chief Executive Officer of Integra LifeSciences Holdings Corporation, a global medical technology company, since January 2012 and currently serves as a member of Integra's Board of Directors. He served as President and Chief Operating Officer of Integra from November 2010 to January 2012. Before joining Integra, Mr. Arduini was Corporate Vice President and President of Medication Delivery, Baxter Healthcare, from 2005 to 2010. Prior to joining Baxter, he worked for General Electric Healthcare, where he spent much of his 15 years in a variety of management roles for domestic and global businesses, culminating in leading the global functional imaging business. Mr. Arduini also serves on the Board of Directors of ADVAMED (the Advanced Medical Technology Association), the Board of Directors of MDIC (the Medical Device Innovation Consortium), and the Board of Directors of the National Italian American Foundation. Mr. Arduini also serves on the Board of Trustees of Susquehanna University. Key Skills and Experience: With over 25 years in the healthcare industry, Mr. Arduini brings to the Board extensive leadership, business and operational experience, particularly with respect to manufacturing and sales of medical technology and devices. In addition, his experience serving as a public company chief executive officer and former chief operational officer positions him well to serve as a member of our Audit Committee and our Compensation and Management Development Committee. | |||
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BMS Committees: • Audit • Committee on Directors Other Directorships: Current: • Charles River Laboratories | ROBERT J. BERTOLINI Mr. Bertolini, age 55, served as President and Chief Financial Officer of Bausch & Lomb Incorporated from February 2013 until August 2013 (until its acquisition by Valeant Pharmaceuticals). Previously, Mr. Bertolini served as Executive Vice President and Chief Financial Officer at Schering-Plough Corp. from November 2003 until November 2009 (through its merger with Merck & Co.) with responsibility for tax, accounting and financial asset management. Prior to joining Schering-Plough, Mr. Bertolini spent 20 years at PricewaterhouseCoopers LLP, ultimately leading its global pharmaceutical industry practice. Mr. Bertolini also serves on the Board of Directors of Actelion Pharmaceuticals Ltd. Key Skills and Experience: Mr. Bertolini brings to the Board extensive expertise in our industry, particularly in building world-class finance and information technology functions and in leading business development and strategy. In addition, as a former chief financial officer who also has over 20 years' experience at a major auditing firm, Mr. Bertolini has extensive knowledge and background related to accounting and financial reporting rules and regulations as well as the evaluation of financial results, internal controls and business processes and this positions him well to serve as a member of our Audit Committee and our Committee on Directors and Corporate Governance. | |||
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BMS Committees: • Compensation and • Science & Technology Other Directorships: Past 5 Years: • Vertex Pharmaceuticals | MATTHEW W. EMMENS Mr. Emmens, age 65, served as Chief Executive Officer of Shire PLC from 2003 to 2008 and Chairman of the Board from 2008 to 2014. He also served as a Director of Vertex Pharmaceuticals Incorporated from 2004 to 2009, Chairman, President and Chief Executive Officer from 2009 to 2012 and Director from 2012 to 2013. Mr. Emmens served as President, Worldwide Pharmaceuticals of Merck KGaA from 1999 to 2003, as Chief Executive Officer, Commercial Operations of Astra Merck Inc. from 1992 to 1999 and in Sales, Marketing and Administration positions for Merck & Co, Inc. from 1974 to 1991. Key Skills and Experience: With over 40 years in the biopharmaceutical industry, Mr. Emmens brings to the Board significant expertise in management, business development, business and operations, particularly with respect to strategy and team effectiveness. Mr. Emmens' strong leadership qualities and industry knowledge position him well to provide valuable insights to both management and his fellow Board members on issues facing our company and to serve as a member of our Compensation and Management Development Committee and a member of our Science and Technology Committee. | |||
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BMS Committees: • Science & Technology Other Directorships: Current: • Waters Corporation | LAURIE H. GLIMCHER, M.D. Dr. Glimcher, age Dr. Glimcher serves on the Board of Trustees of Key Skills and Experience: Dr. Glimcher is an internationally known immunologist and physician who brings a unique perspective to our Board on a variety of healthcare related issues. Her expertise in the immunology area and her extensive experience in the medical field position her well to serve as a member of our Science and Technology Committee. | |||
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BMS Committees: • Audit Committee • Compensation and Other Directorships: Current: • Mead Johnson Nutrition Past 5 Years: • Given Imaging | MICHAEL GROBSTEIN Mr. Grobstein, age Key Skills and Experience: With over 30 years of experience at a major auditing firm, Mr. Grobstein has extensive knowledge and background relating to accounting and financial reporting rules and regulations as well as the evaluation of financial results, internal controls and business processes. Mr. Grobstein's depth and breadth of financial expertise and his experience handling complex financial issues position him well to serve as Chair of our Compensation and Management Development Committee and a member of our Audit Committee. | |||
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BMS Committees: • Audit Committee (Chair) • Committee on Directors Other Directorships: Current: • Dave & Buster's Past 5 Years: • The Hillman Companies
| ALAN J. LACY Mr. Lacy, age Key Skills and Experience: Mr. Lacy is a highly respected business leader with a proven record of accomplishment. He brings to the Board extensive business understanding and demonstrated management expertise having served in key leadership positions at Sears Holdings Corporation, including Chief Executive Officer. In addition, his experience as a senior financial officer of three large public companies provides him with a comprehensive understanding of the complex financial, legal and corporate governance issues facing large companies and positions him well to serve as Chair of our Audit Committee and a member of our Committee on Directors and Corporate Governance. | |||
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• Compensation and Other Directorships: Current: •
Past 5 Years: • ADT Corporation • Tyco International, Ltd. | DINESH C. PALIWAL Mr. Paliwal, age He also serves on the Boards of Directors of the Business Advisory Council of Farmer School of Business, Miami University of Ohio and the U.S. Business Council. Key Skills and Experience: Mr. Paliwal brings to the Board extensive leadership, business and governance experience having served as a public company chief executive officer and a senior executive officer of various divisions of a multinational corporation. His engineering and financial background, together with his worldwide experience, particularly in emerging markets, provide him with a heightened understanding of the complex issues which arise in the global marketplace. In addition, Mr. Paliwal's experience and his prior service on Boards of other public companies position him well to serve as a member of our Committee on Directors and Corporate Governance and our Compensation and Management Development Committee. | |||
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BMS Committees: • Audit Committee • Committee on Directors Other Directorships: Current: • Perrigo Company, PLC • Stamps.com | THEODORE R. SAMUELS Mr. Samuels, age 62, served with Capital Group Companies from 1981 to 2016. He was President of the Key Skills and Experience: With over 35 years in the financial industry, Mr. Samuels brings to the Board extensive business and operational experience, particularly with respect to economics and investment decision-making. His experience and the investor perspective he brings to the Board position him well to serve as a member of our Audit Committee and our Committee on Directors and Corporate Governance. | |||
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BMS Committees: • Audit Committee • Compensation and Other Directorships: Current: • Supervalu, Inc. | GERALD L. STORCH Mr. Storch, age Key Skills and Experience: A retail veteran with more than 20 years of experience, Mr. Storch provides the Board with valuable business, leadership and management insight, including expertise leading an organization with global operations, giving him a keen understanding of the issues facing a multinational business. These qualities make him a valued member of our Audit Committee. Additionally, his prior service on the compensation committee of another public company positions him well to serve as a member of our Compensation and Management Development Committee. | |||
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CORPORATE GOVERNANCE AND BOARD MATTERS
Active Board Oversight of Our Governance
Our business is managed under the direction of our Board of Directors pursuant to the Delaware General Corporation Law and our Bylaws. The Board has responsibility for establishing broad corporate policies and for the overall performance of our company. The Board keeps itself informed of company business through regular written reports and analyses and discussions with the Chief Executive Officer and other officers of Bristol-Myers Squibb; by reviewing materials provided to Board members by management and by outside advisors; and by participating in Board and Board Committee meetings.
The Committee on Directors and Corporate Governance continually reviews corporate governance issues and is responsible for identifying and recommending the adoption of corporate governance initiatives. In addition, our Compensation and Management Development Committee regularly reviews compensation issues and recommends adoption of policies and procedures that strengthen our compensation practices. The "Compensation Discussion and Analysis" beginning on page 3329 discusses many of these policies and procedures.
The Board of Directors has adopted Corporate Governance Guidelines that govern its operation and that of its Committees. Our Board annually reviews the Corporate Governance Guidelines and, from time to time, our Board revises them in response to changing regulatory requirements, evolving best practices and the concerns of our shareholders and other constituents. Our Corporate Governance Guidelines may be viewed on our website at www.bms.com/ourcompany/governance.
The company's governance documents provide the Board with flexibility to select the appropriate leadership structure for the company. They establish well-defined responsibilities with respect to the Chairman and Lead Independent Director roles, including the requirement that the Board have a Lead Independent Director if the Chairman is not an independent director. This information is set forth in more detail on our website atwww.bms.com/ourcompany/governance.governance.
On December 21, 2016, we announced the following Board leadership changes:
Our Board has dedicated significant consideration to our leadership structure, particularly in connection with the context of theplanned retirement of both our Chairman and our Chief Executive Officer in 2015.Mr. Andreotti at the 2017 Annual Meeting. The Board's analysis of our leadership structure took into account many factors, including the specific needs of the Board and the business,company, the strong role of our Lead Independent Director, our Corporate Governance Guidelines (including our governance practices that provide for independent oversight of management), the challenges specific to our company, and the best interests of our shareholders. OurAfter thoughtful and rigorous consideration, the Board believesdetermined that incombining the context of the transition of ourChairman and Chief Executive Officer itpositions and electing Dr. Caforio as the next Chairman of the Board is in the best interestsinterest of the company and our shareholders. Specifically, our Board believes that to have our formerDr. Caforio serve in the combined role of Chairman and Chief Executive Officer Mr. Andreotti, serve asconfers distinct advantages at this time, including:
Additionally, in accordance with our Corporate Governance Guidelines, theThe Board recognizes the importance of appointing a strong Lead Independent Director to maintain a strong counterbalancing structure to ensure that the Board functions in an appropriately independent manner. The Lead
Independent Director is selected annually by the independent directors. Secretary West was elected to serveserved as our Lead Independent Director effective May 5,from 2015 through the date of the 2017 Annual Meeting, and the independent directors have elected Secretary West to continueDr. Sato to serve in that position following the May 2016 annual meeting.
Table of Contents2017 Annual Meeting.
The Lead Independent Director's responsibilities include, among others:
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| | ü | Serving as liaison between the independent directors and the Chairman | ü | Approving the quality, quantity and timeliness of information sent to the Board | | |||||
ü | Reviewing and approving meeting agendas and sufficiency of time | ü | Serving a key role in Board and Chief Executive Officer evaluations | |||||||
| | ü | Calling meetings of the independent directors | ü | Responding directly to shareholder and stakeholder questions, as appropriate | | |||||
ü | Presiding at all meetings of the independent directors and any Board meeting when the Chairman and the Chief Executive Officer are not present, including executive sessions of the independent directors | ü | Providing feedback from executive sessions of the independent directors to the Chief Executive Officer, other senior management and to the Chairman | |||||||
| | ü | Communicating with major shareholders, as appropriate | ü | Recommending advisors and consultants | | |||||
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The Board believes this structure provides an effective, high-functioning Board, as well as appropriate safeguards and oversight. Our Board will continue to evaluate its leadership structure in light of changing circumstances and will evaluate the Board's leadership structure on at least an annual basis and make changes at such times as it deems appropriate.
Board's Role in Strategic Planning and Risk Oversight
Our Board meets regularly to discuss the strategic direction and the issues and opportunities facing our company in light of trends and developments in the biopharmaceutical industry and general business environment. Our Board has been instrumental in determining our next steps as we emergehave emerged as a diversified specialty biopharmaceutical company.
Furthermore, in setting our business strategy, the Board plays a critical role in the determination of the types and appropriate levels of risk undertaken by the company.
Our Board administers its strategic planning and risk oversight function as a whole and through its Board Committees. The following are examples of how our Board Committees are involved in this process:
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| Audit Committee | Regularly reviews and discusses with management our process to assess and manage enterprise risks, including those related to market/environmental, strategic, financial, operational, legal, compliance, information security and reputation | |||||
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| | Compensation and Management Development Committee | Annually evaluates our incentive compensation programs to determine whether incentive pay encourages excessive or inappropriate risk-taking | ||||
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| Committee on Directors and Corporate Governance | Regularly considers and makes recommendations to the Board concerning the appropriate size, function and needs of the Board, determines the criteria for Board membership, provides oversight of our corporate governance affairs and reviews corporate governance practices and policies | |||||
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| | Science and Technology Committee | Regularly reviews our pipeline to evaluate our progress in achieving our near-term and long-term strategic research and development goals and objectives and assures that we make well-informed choices in the investment of our research and development resources, among other things | ||||
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Risk Assessment of Compensation Policies and Practices
The Compensation and Management Development Committee annually conducts a worldwide review of our material compensation policies and practices. Based on this review, we have concluded that our material compensation policies and practices are not reasonably likely to have a material adverse effect on the company. On a global basis, our compensation programs contain many design features that mitigate the likelihood of inducing excessive or inappropriate risk-taking behavior. These features include:
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| | ü | Balance of fixed and variable compensation, with variable compensation tied both to short-term objectives and the long-term value of our stock price | ü | Clawback and recoupment provisions and policies pertaining to annual incentive payouts and long-term incentive awards | | |||||
ü | Multiple metrics in our incentive programs that balance top-line, bottom-line and pipeline performance | ü | Share ownership and retention guidelines applicable to our senior executives | |||||||
| | ü | Caps in our incentive program payout formulas | ü | Equity award policies that limit risk by having fixed annual grant dates | | |||||
ü | Reasonable goals and objectives in our incentive programs | ü | Prohibition of speculative and hedging transactions by all employees and directors | |||||||
| | ü | Payouts modified based upon individual performance, inclusive of assessments against our BMS BioPharma Behaviors and the BMS Commitment | ü | All non-sales managers and executives worldwide participate in the same annual incentive program that pertains to our Named Executive Officers and that has been approved by the Compensation and Management Development Committee | | |||||
ü | The Compensation and Management Development Committee's ability to exercise downward discretion in determining incentive program payouts | ü | Mandatory training on our Principles of Integrity: BMS Standards of Business Conduct and Ethics (the Principles of Integrity) and other policies that educate our employees on appropriate behaviors and the consequences of taking inappropriate actions | |||||||
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Our Board recognizes the important role Board and committee evaluations play in ensuring the effective functioning of our Board. The committee evaluation process of gathering and analyzing feedback is led by each committee chair and commences at the first committee meetings of the year. In March, the Board undertakes its own, separate evaluation process, led by our Chairman and our Lead Independent Director, and committee chairs report to the Board the results of each committee's own evaluation process. Our Board also believes in the importance of continuously improving the functioning of our Board and committees, and thecommittees. The Lead Independent Director actively conveys directors' feedback on an ongoing basis to our Chairman and Chief Executive Officer. The Committee on Directors and Corporate Governance continuously assesses the Board evaluation process and plans to enhance the process for 2017.
While the Board considers board refreshment as an integral part of its process to ensure that the skill set, proficiency and perspectives of board members remain sufficiently current and broad to deal with the ever-changing business dynamics of the company; it also considers important the need to balance such refreshment with the understanding that age and experience often bring solid judgment, proven knowledge and wisdom, and invaluable continuity.
Our Board meets on a regularly scheduled basis during the year to review significant developments affecting Bristol-Myers Squibb and to act on matters requiring Board approval. It also holds special meetings when important matters require Board action between scheduled meetings. Members of senior management regularly attend Board meetings to report on and discuss their areas of responsibility. In 2015,2016, the Board met seven11 times. The average aggregate attendance of directors at Board and committee meetings was over 97%96%. No director attended fewer than 75% of the aggregate number of Board and committee meetings during the period he or she served.served, except for Lewis Campbell, who retired from the Board in May 2016. In addition, our independent directors met six10 times during 20152016 to discuss such topics as our independent directors determined, including the evaluation of the performance of our current Chief Executive Officer.
Annual Meeting of Shareholders
Directors are strongly encouraged, but not required, to attend the Annual Meeting of Shareholders. All of the 20152016 nominees for director attended our 20152016 Annual Meeting of Shareholders except for Laurie H. Glimcher, M.D. who had a long-standing previous commitment.Shareholders.
Our Bylaws specifically provide for an Audit Committee, Compensation and Management Development Committee, and Committee on Directors and Corporate Governance, which are composed entirely of independent directors. Our Bylaws also authorize the establishment of additional committees of the Board and, under this authorization, our Board of Directors established the Science and Technology Committee. Our Board has appointed individuals from among its members to serve on these four standing committees and each committee operates under a written charter adopted by the Board, as amended from time to time. These charters are published on our website at http://bms.com/ourcompany/governance/Pages/board_committees_charters.aspx. Each of these Board Committees has the necessary resources and authority to discharge its responsibilities, including the authority to retain consultants or experts to advise the committee.
The table below indicates the current members of our standing Board Committees and the number of meetings held in 2015:2016:
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| Director | Audit(5) | Committee on Directors and Corporate Governance | Compensation and Management Development | Science and Technology(6) | Director(3) | Audit(1) | Committee on Directors and Corporate Governance | Compensation and Management Development | Science and Technology(2) | ||||||||||||||
| Lamberto Andreotti | | | | | | Lamberto Andreotti | | | | | | ||||||||||||
| Giovanni Caforio, M.D. | Peter J. Arduini | X | |||||||||||||||||||||
| Lewis B. Campbell(1) | | C | X | | | Giovanni Caforio, M.D. | | | | | | ||||||||||||
| Laurie H. Glimcher, M.D.(2) | X | X | Laurie H. Glimcher, M.D. | X | |||||||||||||||||||
| Michael Grobstein(3) | X | | X | | | Michael Grobstein | X | | C | | | ||||||||||||
| Alan J. Lacy | C | X | Alan J. Lacy | C | X | ||||||||||||||||||
| Thomas J. Lynch, Jr., M.D. | | X | | X | | Dinesh C. Paliwal | X | X | | | | ||||||||||||
| Dinesh C. Paliwal | X | X | Vicki L. Sato, Ph.D.(4) | X | C | ||||||||||||||||||
| Vicki L. Sato, Ph.D. | | | X | C | | Gerald L. Storch | X | | X | | | ||||||||||||
| Gerald L. Storch | X | X | Togo D. West, Jr.(5) | C | X | ||||||||||||||||||
| Togo D. West, Jr.(4) | | X | C | | | Number of 2016 Meetings | 5 | 4 | 7 | 8 | | ||||||||||||
| Number of 2015 Meetings | 6 | 4 | 6 | 10 | |||||||||||||||||||
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The following descriptions reflect each standing Board Committee's membership and Chair effective as of May 3, 2016.2, 2017.
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| Audit Committee | | |||||
| Committee Chair: Alan J. Lacy
Additional Members: Peter J. Arduini Robert J. Bertolini Michael Grobstein
Gerald L. Storch | Key Responsibilities • Overseeing and monitoring the quality of our accounting and auditing practices • Appointing, compensating and providing oversight of the performance of our independent registered public accounting firm for the purpose of preparing or issuing audit reports and related work regarding our financial statements and the effectiveness of our internal control over financial reporting • Assisting the Board in fulfilling its responsibilities for general oversight of (i) compliance with legal and regulatory requirements, (ii) the performance of our internal audit function and (iii) enterprise risk assessment and risk management policies and guidelines • Reviewing our disclosure controls and procedures, periodic filings with the SEC, earnings releases and earnings guidance • Producing the required Audit Committee Report for inclusion in our Proxy Statement • Overseeing the implementation and effectiveness of our compliance and ethics program • Reviewing our information security and data protection program | | ||||
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| Committee on Directors and Corporate Governance | | |||||
| Committee Chair:
Additional Members: Robert J. Bertolini Alan J. Lacy
| Key Responsibilities • Providing oversight of our corporate governance affairs and reviewing corporate governance practices and policies, including annually reviewing the Corporate Governance Guidelines and recommending any changes to the Board • Identifying individuals qualified to become Board members and recommending that our Board select the director nominees for the next annual meeting of shareholders • Reviewing and recommending annually to our Board the compensation of non-employee directors • Considering questions of potential conflicts of interest involving directors and senior management and establishing, maintaining and overseeing related party transaction policies and procedures • Evaluating and making recommendations to the Board concerning director independence and defining specific categorical standards for director independence • Providing oversight of the company's political activities • Considering matters relating to the company's responsibilities as a global corporate citizen pertaining to corporate social responsibility and corporate public policy and the impact on the company's employees and shareholders • Overseeing the annual evaluation process of the Board and its Committees | | ||||
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| Compensation and Management Development Committee | | |||||
| Committee Chair: Michael Grobstein
Additional Members: Peter J. Arduini Mathew W. Emmens Dinesh C. Paliwal Gerald L. Storch
| Key Responsibilities • Reviewing, approving and reporting to our Board on our major compensation and benefits plans, policies and programs • Reviewing corporate goals and objectives relevant to CEO compensation, evaluating the CEO's performance in light of those goals and objectives and recommending for approval by at least three-fourths of the independent directors of our Board the CEO's compensation based on this evaluation • Reviewing and evaluating the performance of senior management; approving the compensation of executive officers and certain senior management • Overseeing our management development programs, performance assessment of senior executives and succession planning • Reviewing and discussing with management the Compensation Discussion and Analysis and related disclosures required for inclusion in our Proxy Statement, recommending to the Board whether the Compensation Discussion and Analysis should be included in our Proxy Statement, and producing the Compensation and Management Development Committee Report required for inclusion in our Proxy Statement • Establishing and overseeing our compensation recoupment policies • Reviewing incentive compensation programs to determine whether incentive pay encourages inappropriate risk-taking | | ||||
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| Science and Technology Committee | | |||||
| Committee Chair: Vicki L. Sato, Ph.D.
Additional Members:
Laurie H. Glimcher, M.D. Thomas J. Lynch, Jr., M.D. | Key Responsibilities • Reviewing and advising our Board on the strategic direction of our research and development (R&D) programs and our progress in achieving near-term and long-term R&D objectives • Reviewing and advising our Board on our internal and external investments in science and technology • Identifying and discussing significant emerging trends and issues in science and technology and considering their potential impact on our company • Providing assistance to the Compensation and Management Development Committee in setting any pipeline performance metric under the company's incentive compensation programs and reviewing the performance results | | ||||
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In addition, on March 2, 2015, the Board established a Securities Issuance Committee to determine and approve the terms and provisions of securities issued by the company during the second quarter of 2015. The members of the Securities Issuance Committee were Lamberto Andreotti, Giovanni Caforio and Alan J. Lacy. The Securities Issuance Committee met once during 2015.
The Principles of Integrity adopted by our Board of Directors set forth important company policies and procedures in conducting our business in a legal, ethical and responsible manner. These standards are applicable to all of our employees, including the Chief Executive Officer, the Chief Financial Officer and the Controller.
In addition, the Audit Committee has adopted the Code of Ethics for Senior Financial Officers that supplements the Principles of Integrity by providing more specific requirements and guidance on certain topics. The Code of Ethics for Senior Financial Officers applies to the Chief Executive Officer, the Chief Financial Officer, the Controller, the Treasurer and the heads of major operating units.
Our Board has also adopted the Code of Business Conduct and Ethics for Directors that applies to all directors and sets forth guidance with respect to recognizing and handling areas of ethical issues.
The Principles of Integrity, the Code of Ethics for Senior Financial Officers and the Code of Business Conduct and Ethics for Directors are available on our website at www.bms.com/ourcompany/governance. We will post any substantive amendments to, or waivers from, applicable provisions of our Principles, our Code of Ethics for Senior Financial Officers, and our Code of Business Conduct and Ethics for Directors on our website at www.bms.com/ourcompany/governance within two days following the date of such amendment or waiver.
Employees are required to report any conduct they believe in good faith to be an actual or apparent violation of our Codes of Conduct. In addition, as required under the Sarbanes-Oxley Act of 2002, the Audit Committee has established procedures to receive, retain and treat complaints received regarding accounting, internal accounting controls, or auditing matters and the confidential, anonymous submission by company employees of concerns regarding questionable accounting or auditing matters.
The Board has adopted a written policy and procedures for the review and approval of transactions involving the company and related parties, such as directors, executive officers and their immediate family members. The policy covers any transaction or series of transactions (an "interested transaction") in which the amount involved exceeds $120,000, the company is a participant, and a related party has a direct or indirect material interest (other than solely as a result of being a director or less than 10% beneficial owner of another entity). All interested transactions are subject to approval or ratification in accordance with the following procedures:
BlackRock, Inc. (BlackRock), Wellington Management Group, LLP (Wellington) and The Vanguard Group (Vanguard) are each considered a "Related Party" under our related party transaction policy because they each beneficially own more than 5% of our outstanding common stock. The Governance Committee on Directors and Corporate Governance ratified and approved the following related party transactions in accordance with our policy and Bylaws:
The Governance Committee on Directors and Corporate Governance ratified the above relationships on the basis that these entities' ownership of our stock plays no role in the business relationship between us and them, and that the engagement of each entity was on terms no more favorable to them than terms that would be available to unaffiliated third parties under the same or similar circumstances.
On September 1, 2015, Dr. Lynch became the Chairman and Chief Executive Officer of the Massachusetts General Physicians Organization (MGPO) and a member of the Board of Directors of Massachusetts General Hospital (MGH). The MGPO and MGH comprise the operating structure of the General Hospital Corporation, which is the largest part of the parent corporation, Partners HealthCare, a not-for-profit healthcare system. The Companycompany has made both business and charitable payments to MGH for many years, including for research studies and grants led by principal investigators affiliated with the hospital. The Companycompany paid MGH $212,248approximately $316,000 in 2015,2016, which accounted for less than 0.01% of Partners HealthCare's revenues for the fiscal year ended September 30, 2015.2016. Dr. Lynch retired from the Board on March 15, 2017 and is our new Chief Scientific Officer.
On October 1, 2016, Dr. Glimcher became President and CEO of Dana-Farber Cancer Institute ("Dana-Farber"). The paymentscompany has made to
MGH in 2015 includeboth business and charitable payments as well as the final paymentsto Dana-Farber for two investigational studies that wereseveral years and entered into multiple research collaborations with Dana-Farber as recently as February 2016. The company paid Dana-Farber approximately $9.94 million in 2013.2016, which accounted for less than 2% of Dana-Farber's revenues for the 2016 fiscal year.
The Governance Committee on Directors and Corporate Governance ratified the above relationshiprelationships on the basis that Dr. Lynch and Dr. Glimcher did not initiate or negotiate any of the arrangements the Companycompany has with MGH,either of their affiliated organizations, all of the business dealings were entered into in the ordinary course of business prior to either Dr. Lynch joiningor Dr. Glimcher assuming the hospitalstated roles at the respective organizations and the engagement of MGH wassuch companies by BMS were on terms no more favorable to itthem than terms that would be available to unaffiliated third parties under the same or similar circumstances.
Disclosure Regarding Political Activities
We provide semi-annual disclosure on our website of all political contributions to political committees, parties or candidates on both state and federal levels that are made by our employee political action committee, as well as annual disclosure of the portion of our dues or other payments made to trade associations to which we give $50,000 or more that can be attributed to lobbying expenditures.
Communications with our Board of Directors
Our Board has created a process for anyone to communicate directly with our Board, any committee of the Board, the non-management directors of the Board collectively or any individual director, including our Chairman and Lead Independent Director. Any interested party wishing to contact our Board may do so in writing by sending a letter c/o Corporate Secretary, Bristol-Myers Squibb Company, 345 Park Avenue, New York, NY 10154.
Any matter relating to our financial statements, accounting practices or internal controls should be addressed to the Chair of the Audit Committee. All other matters should be addressed to the Chair of the Committee on Directors and Corporate Governance.Governance Committee.
Our Corporate Secretary or her designee reviews all correspondence and forwards to the addressee all correspondence determined to be appropriate for delivery. Our Corporate Secretary periodically forwards to the Governance Committee on Directors and Corporate Governance a summary of all correspondence received. Directors may at any time review a log of the correspondence we receive that is addressed to members of the Board and request copies of any such correspondence. Our process for handling communications to our Board has been approved by the independent directors.
Director Compensation Program
We aim to provide a competitive compensation program to attract and retain high quality directors. The Committee on Directors and Corporate Governance annually reviews our directors' compensation practices, including a review of the director compensation programs at our executive compensation peer group. Furthermore, in 2015for 2016 we again engaged an outside consultant, Frederic W. Cook & Co., Inc. (FWC), to review market data and competitive information on director compensation. FWC recommended that our executive compensation peer group should be the primary source for determining director compensation.
Based on this analysis, the Committee determined, to make no changes to the director compensation program for service as a director in 2015. The Committee also determined, in light of the fact that our director compensation program has been unchanged since 2013 and was below the 25th percentile of our peer group, among other reasons, to increase each of the annual retainer and the
annual equity award for service as a director infor 2016 by $10,000. The Committee submitted its recommendations for director compensation to the full Board for approval. Our employee directors do not receive any additional compensation for serving as directors.
The Committee believes the total compensation package for directors we offered in 20152016 was reasonable, and appropriately aligned the interests of directors with our shareholders by ensuring directors have a proprietary stake in our company.
In consideration of emerging corporate governance best practices, on March 2, 2017, our Board adopted an amendment to the Company's 2012 Stock Award and Incentive Plan, for the sole purpose of adding a limit on the amount of equity and cash compensation that can be paid to a non-employee director of the company in a calendar year. The amendment is subject to approval by our shareholders at the 2017 Annual Meeting. In setting the non-employee director compensation limit, the Board reviewed survey data covering companies within the Fortune 500, as well as data from our 2016 executive compensation peer group discussed below in the Compensation Discussion and Analysis.
The Components of our Director Compensation Program
In 2015,2016, non-management directors who served for the entirety of 20152016 received:
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| | Component | Value of Award | | |||
|---|---|---|---|---|---|---|
| | | | | | | |
| Annual Retainer | $ | | ||||
| Annual Equity Award | Deferred Share Units valued at | |||||
| | Committee Chair Retainer | $25,000 | | |||
| Committee Member (not Chair) Retainer – Audit, Compensation and Management Development, and Science and Technology Committees | $15,000 | |||||
| | Committee Member (not Chair) Retainer – Committee on Directors and Corporate Governance | $7,500 | | |||
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Annual Equity Award
On February 1, 2015,2016, all non-management directors serving on the Board at that time received an annual award of deferred share units valued at $160,000$170,000 under the 1987 Deferred Compensation Plan for Non-Employee Directors. These deferred share units are non-forfeitable at grant and are settleable solely in shares of company common stock. A new member of the Board who is eligible to participate in the Plan receives, on the date the Director joins the Board, a pro-rata number of deferred share units based on the number of share units payable to participants as of the prior February 1.
Compensation of our Lead Independent Director
Our Lead Independent Director receives an additional retainer of $35,000. Our Board has determined to award this retainer in light of the increased duties and responsibilities demanded by this role, which duties and responsibilities are described in further detail on page 20.18.
Compensation of our Non-Executive Chairman
Our Non-Executive Chairman hashad significantly greater responsibilities than other directors, including chairing the Office of the Chairman, meeting on a regular basis with the Chief Executive Officer on the most critical strategic issues and transactions, serving as a liaison between the Chief Executive Officer and the independent directors, and frequently discussing the strategy and direction of the company with senior management.
In addition to the regular Board retainer and annual equity award, in 20152016 Mr. Andreotti received an annual Non-Executive Chairman retainer of $200,000, (paid pro-rata beginning August 3, 2015), paid quarterly, of which 50% was paid in cash and 50% in shares of the company's common stock. Mr. Andreotti also received a pro-rated portion of his Transitional Non-Executive Chairman retainer of $225,000, (paid pro-rata beginning August 3, 2015), paid quarterly, of which 50% was paid in cash and 50% in shares of the company's common stock. Mr. Andreotti's Transitional Non-Executive Chairman retainer will end effectiveended May 3, 2016. Bristol-Myers Squibb also provides Mr. Andreotti with office space, supplies and administrative support for company-related work. Mr. Andreotti will retire from the Board effective after this Annual Meeting.
Share Retention Requirements
We have significantly increased the share retention requirements for non-management directors in 2016. All non-management directors are now required to acquire a minimum of shares and/or units of company stock valued at not less than five times their annual cash retainer within five years of joining the Board and to maintain this ownership level throughout their service as a director. We require that at least 25% of the annual retainer be deferred and credited to a deferred compensation account, the value of which is determined by the value of our common stock, until a non-management director has attained our share retention requirements.
Deferral Program
A non-management director may elect to defer payment of all or part of the cash compensation received as a director under our company's 1987 Deferred Compensation Plan for Non-Employee Directors. The election to defer is made in the year preceding the calendar year in which the compensation is earned. Deferred funds for compensation received in connection with service as a Director in 20152016 were credited to one or more of the following funds: a six-month United States Treasury bill equivalent fund, a fund based on the return on the company's invested cash or a fund based on the return on our common stock. Deferred funds for compensation received in connection with service as a Director in 2016 may be credited to one or more of the following funds: a United States total bond index, a short term fund, a total market index fund or a fund based on the return on our common stock. Deferred portions are payable in a lump sum or in a maximum of ten annual installments. Payments under the Plan begin when a participant ceases to be a director or at a future date previously specified by the director.
Charitable Contribution Programs
Each director who joined the Board prior to December 2009 participates in our Directors' Charitable Contribution Program. Upon the death of a director, we will donate up to an aggregate of $500,000 to up to five qualifying charitable organizations designated by the director. Individual directors derive no financial or tax benefit from this program since the tax benefit of all charitable deductions relating to the contributions accrues solely to us. In December 2009, the Board eliminated the Charitable Contributions Program for all new directors.
In addition, each director was able to participate in our company-wide matching gift program in 2015.2016. We matched dollar for dollar a director's contribution to qualified charitable and educational organizations up to $30,000.$30,000, except in the case of Mr. Andreotti, who received a match of $31,000 that was approved by the Board. This benefit was also available to all company employees. In 2015,2016, each of the following non-employee directors participated in our matching gift programs as indicated in the Director Compensation Table below: Messrs. Andreotti, Arduini, Campbell, Cornelius, Grobstein, Lacy, and Paliwal and Drs. GlimcherLynch and Lynch.
Table of ContentsSato.
Director Compensation Table
The following table sets forth information regarding the compensation earned by our non-employee directors in 2015.
2016.
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| | Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | Option Awards(3) | All Other Compensation(4) | Total | | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| L. Andreotti(5) | $ | 238,015 | $ | 308,015 | $ | 0 | $ | 31,000 | $ | 577,030 | | |||||||
| P. J. Arduini | $ | 84,931 | $ | 142,054 | $ | 0 | $ | 6,000 | $ | 232,985 | ||||||||
| L. B. Campbell(6) | $ | 47,308 | $ | 170,000 | $ | 0 | $ | 16,250 | $ | 233,558 | | |||||||
| L. H. Glimcher, M.D. | $ | 120,068 | $ | 170,000 | $ | 0 | $ | 0 | $ | 290,068 | ||||||||
| M. Grobstein | $ | 136,621 | $ | 170,000 | $ | 0 | $ | 30,000 | $ | 336,621 | | |||||||
| A. J. Lacy | $ | 132,500 | $ | 170,000 | $ | 0 | $ | 30,000 | $ | 332,500 | ||||||||
| T. J. Lynch, Jr., M.D. | $ | 122,500 | $ | 170,000 | $ | 0 | $ | 30,000 | $ | 322,500 | | |||||||
| D. C. Paliwal | $ | 122,500 | $ | 170,000 | $ | 0 | $ | 30,000 | $ | 322,500 | ||||||||
| V. L. Sato, Ph.D. | $ | 140,000 | $ | 170,000 | $ | 0 | $ | 25,000 | $ | 335,000 | | |||||||
| G. L. Storch | $ | 130,000 | $ | 170,000 | $ | 0 | $ | 0 | $ | 300,000 | ||||||||
| T. D. West, Jr. | $ | 172,465 | $ | 170,000 | $ | 0 | $ | 0 | $ | 342,465 | | |||||||
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| | Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | Option Awards(3) | All Other Compensation(4) | Total | | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| L. Andreotti(5) | $ | 124,415 | $ | 166,539 | $ | 0 | $ | 20,000 | $ | 310,954 | | |||||||
| L. B. Campbell | $ | 130,000 | $ | 160,000 | $ | 0 | $ | 30,000 | $ | 320,000 | ||||||||
| J. M. Cornelius(6) | $ | 65,887 | $ | 194,677 | $ | 0 | $ | 30,000 | $ | 290,564 | | |||||||
| L. H. Glimcher, M.D. | $ | 120,000 | $ | 160,000 | $ | 0 | $ | 20,000 | $ | 300,000 | ||||||||
| M. Grobstein | $ | 120,000 | $ | 160,000 | $ | 0 | $ | 30,000 | $ | 310,000 | | |||||||
| A. J. Lacy | $ | 122,500 | $ | 160,000 | $ | 0 | $ | 30,000 | $ | 312,500 | ||||||||
| T. J. Lynch, Jr., M.D.(6) | $ | 112,500 | $ | 160,000 | $ | 0 | $ | 25,500 | $ | 298,500 | | |||||||
| D. C. Paliwal | $ | 112,500 | $ | 160,000 | $ | 0 | $ | 25,000 | $ | 297,500 | ||||||||
| V. L. Sato, Ph.D. | $ | 130,000 | $ | 160,000 | $ | 0 | $ | 0 | $ | 290,000 | | |||||||
| G. L. Storch | $ | 120,000 | $ | 160,000 | $ | 0 | $ | 0 | $ | 280,000 | ||||||||
| T. D. West, Jr. | $ | 145,457 | $ | 160,000 | $ | 0 | $ | 0 | $ | 305,457 | | |||||||
| | | | | | | | | | | | | | | | | | | | |
(1)
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| | Name | Dollar Amount Deferred | Percentage of Deferred Amount Allocated to U.S. Treasury Bill Fund | Percentage of Deferred Amount Allocated to Company Investment Return Fund | Percentage of Deferred Amount Allocated to Deferred Share Units | Number of Deferred Share Units Acquired | | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| L. H. Glimcher, M.D. | $ | 120,000 | | 100 | % | | 0 | % | | 0 | % | | 0 | | ||||
| M. Grobstein | $ | 60,000 | 0 | % | 0 | % | 100 | % | 929 | |||||||||
| A. J. Lacy | $ | 122,500 | | 100 | % | | 0 | % | | 0 | % | | 0 | | ||||
| T. J. Lynch, Jr., M.D. | $ | 28,125 | 0 | % | 0 | % | 100 | % | 436 | |||||||||
| D. C. Paliwal | $ | 112,500 | | 0 | % | | 50 | % | | 50 | % | | 871 | | ||||
| G. L. Storch | $ | 120,000 | 0 | % | 0 | % | 100 | % | 1,859 | |||||||||
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| | | | | | | | | | | | | | | | | | | | | | | |
| | Name | Dollar Amount Deferred | Percentage of Deferred Amount Allocated to U.S. Total Bond Index | Percentage of Deferred Amount Allocated to Short Term Fund | Percentage of Deferred Amount Allocated to Total Market Index Fund | Percentage of Deferred Amount Allocated to Deferred Share Units | Number of Deferred Share Units Acquired | | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| P. J. Arduini | $ | 84,931 | | 0 | % | | 0 | % | | 0 | % | | 100 | % | | 1,398 | | ||||
| L. H. Glimcher, M.D. | $ | 120,068 | 50 | % | 50 | % | 0 | % | 0 | % | 0 | ||||||||||
| M. Grobstein | $ | 68,310 | | 0 | % | | 0 | % | | 0 | % | | 100 | % | | 1,110 | | ||||
| A. J. Lacy | $ | 132,500 | 0 | % | 0 | % | 0 | % | 100 | % | 2,150 | ||||||||||
| T. J. Lynch, Jr., M.D. | $ | 30,625 | | 0 | % | | 0 | % | | 0 | % | | 100 | % | | 497 | | ||||
| D. C. Paliwal | $ | 122,500 | 50 | % | 0 | % | 50 | % | 0 | % | 0 | ||||||||||
| G. L. Storch | $ | 130,000 | | 0 | % | | 0 | % | | 0 | % | | 100 | % | | 2,110 | | ||||
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| | Name | # of Deferred Share Units | | |||||
|---|---|---|---|---|---|---|---|---|
| L. | | | |||||
|
| |||||||
| | | | |||||
| L. H. Glimcher, M.D. | |||||||
| M. Grobstein | | | |||||
| A. J. Lacy | |||||||
| T. J. Lynch, Jr., M.D. | | | |||||
| D. C. Paliwal | |||||||
| V. L. Sato, Ph.D. | | | |||||
| G. L. Storch | |||||||
| T. D. West, Jr. | | | |||||
| | | | | | | | | |
|
| ||||||
| | | | | | | | | | | | | |
| | Award Date | Value | Fair Market Value | Shares of Common Stock Acquired | | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 9/30/2015 | $ | 34,274 | $ | 59.20 | 578 | | |||||
| 12/31/2015 | $ | 53,125 | $ | 68.79 | 772 | |||||||
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| | | | | | | | | | | | | | |
| | Award Date | Value | Fair Market Value | Shares of Common Stock Acquired | | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 3/31/2016 | $ | 53,125 | $ | 63.88 | | 831 | | |||||
| 6/30/2016 | $ | 34,890 | $ | 73.55 | 474 | ||||||||
| | 9/30/2016 | $ | 25,000 | $ | 53.92 | | 463 | | |||||
| 12/31/2016 | $ | 25,000 | $ | 58.44 | 427 | ||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | Award Date | Value | Fair Market Value | Shares of Common Stock Acquired | | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 3/31/2015 | $ | 25,000 | $ | 64.50 | 387 | | |||||
| 5/5/2015 | $ | 9,677 | $ | 65.03 | 148 | |||||||
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COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (CD&A) is intended to explain how our compensation program is designed and how it operates for our Named Executive Officers (NEOs). For 2015,The below table includes a list of our NEOs were2016 NEOs. As previously announced, on March 16, 2017, Dr. Thomas J. Lynch, Jr. succeeded Dr. Francis Cuss as Executive Vice President and Chief Scientific Officer. Dr. Cuss will retire from the following individuals:company after a three-month transition period.
| NAME | PRINCIPAL POSTION | ||
|---|---|---|---|
| | | | |
| Giovanni Caforio, M.D. | Chief Executive Officer & Chairman-Designate | ||
| Charles Bancroft | |||
| Francis Cuss, MB BChir, FRCP | EVP and Chief Scientific Officer | ||
| Sandra Leung | EVP and General Counsel | ||
| Murdo Gordon | |||
A. Introduction
Overview. Bristol-Myers Squibb hasCompany continues to recognize that aligning pay to the achievement of both our short-term and long-term goals, engagement, the achievement of our mission and the delivery of value to our shareholders is a cornerstone of our compensation philosophy and program structure. In 2016, we met or exceeded our financial and operational goals in key areas, including continued growth across our core priority brands, additional clinical and regulatory achievements, important business development activities, the evolution of our operating model and maintaining a strong balance sheet.
| Received strong shareholder support for executive compensation with 96% in favor of our 2016 "Say on Pay" vote | |||
| Strong commercial and operational execution resulted in significant top-line and bottom-line growth compared to 2015 | |||
| § | Opdivo sales grew over 300% | |||
| § | Eliquis continued to perform strongly growing by 80% in revenues and is becoming the leading oral anticoagulant within its approved indications | |||
| § | We also achieved significant growth across a number of our established in-line brands, including Orencia andSprycel, which grew by 20% and 13%, respectively | |||
| Continued to advance our long-term business strategy, focusing on key priorities | |||
| § | We continued to build on the unprecedented achievements in immuno-oncology experienced in 2015 | |||
| § | Opdivo received additional FDA approvals for treatment of classical Hodgkin lymphoma and head & neck cancer and an EU approval for classical Hodgkin lymphoma | |||
| § | Our CheckMate-026 study did not meet its primary endpoint. This study investigated the role ofOpdivo monotherapy compared to chemotherapy in patients with previously untreated advanced non-small cell lung cancer, whose tumors expressed a particular biomarker, PD-L1, at³ 5% | |||
| § | Opdivo reached a record ten U.S. indications in under 2 years | |||
| § | At the end of 2016,Opdivo was approved in over 61 countries | |||
| Key 2016 performance highlights | |||
| § | Total revenues increased by 17% on a GAAP basis | |||
| § | GAAP and non-GAAP earnings per share increased by 185% and 41%, respectively | |||
| § | Our strong financial and operational performance in 2016 continued to develop a strong platform for long-term value creation for shareholders, as evidenced by our 18% three-year total shareholder return, which exceeded our peer group | |||
| § | We began executing on our operating model evolution | |||
Although 2016 was an outstanding year financially, it nevertheless posed some unique challenges for us. We fully implemented significant compensation program changes (discussed in further detail below) that were approved by our Compensation and Management Development Committee (the "CMDC" or the "Committee") after extensive discussion with key shareholders. These changes were designed to provide the tools and flexibility to appropriately incentivize, reward and retain our executives, and reflect a holistic assessment of the company's and management's overall performance. Additionally, these changes were immediately tested by the events of 2016. Although we continued to deliver outstanding financial and operational results in virtually all key areas, share price declined 15.0% in 2016, primarily due to the market reaction to the disappointing results of the CheckMate-026 clinical trial. After reviewing all details of our financial and operational performance, our share price performance and the individual performance of our executives, our CMDC determined that the compensation of our executives under the new program design was appropriate. This determination reflects the Committee's assessment of the importance of balancing long-term and short-term elements of compensation and what each element of our compensation program is designed to accomplish.
Company Transformation & Evolution of Operating Model. We have successfully transitioned to a specialty biopharmaceutical company, with a strategy uniquely designed to leverage both the reach and resources of a major pharmaceutical company, as well asand the entrepreneurial spirit and agility of a biotech firm. After a multi-year strategic transformation,In 2016, this allowed us to continue to build on our acutefinancial and operational successes from the prior year. As we focus on executing againstthe future, we continue to make changes to the organization that align with our strategic goals resulted in record clinical, operationaltransformed company, including continuing to evolve our operating model to more effectively focus resources on key priorities and regulatory achievements that drove strong financial performance and created meaningful value for our shareholders in 2015.simplify execution to speed the delivery of transformational medicines to patients.
Our Compensation and Management Development Committee's (the "CMDC" or the "Committee") continualongoing review of our compensation program through our transformation, in light of both our business strategy and our extensive shareholder engagement efforts hashave allowed our executive compensation program to evolve while maintaining close alignment with our strategic focus and the perspectives of our shareholders. This executive summary includes an overview of the key components of our executive compensation program and recent changes approved by the Committeeand deployed that we believe further strengthen our executive compensation program practices andcontinue to support our company's evolution to a leading specialty biopharmaceutical company.
Responsiveness to Our Shareholders
B. Shareholder Engagement and our Executive Compensation Program
Following our 2015 Annual MeetingIn 2016, we held an annual advisory vote on executive compensation and approximately 96% of the votes cast voted in favor of our executive compensation program as disclosed in our 2016 Proxy Statement. We believe that this strong support for our executive compensation is directly related to the changes we engagedmade to our program over the last year, which resulted from our direct engagement with our shareholders.
2016 Compensation Program
In 2015, we received valuable feedback from our shareholders on our compensation practices, and this feedback directly informed the changes that our Committee made to our executive compensation program for 2016 in extensiveorder to further enhance the structural alignment between our incentive program and our strategy.
2016 Engagement
During our 2016 shareholder outreach, we had discussions with a diverse mix of institutional shareholders, reaching out to discuss our compensation programtop 30 institutions, and changesmeeting with shareholders representing over 30% of our Committee was considering for 2016. Through these conversations,shares outstanding, which included both major asset managers as well as the outreach we conductedpension funds. We continued to engage with our top 50 shareholders beforeinvestors on our 2015 Annual Meeting, we received important feedback that helped inform the Committee's review of ourexecutive compensation program, andreceiving generally positive feedback on the programstructural changes approved in 2015to the compensation program that became effective in 2016.
The changesfeedback received from shareholders was brought to the Committee approved in 2015and Board for discussion. We are specifically designedcommitted to enhanceongoing shareholder engagement and consideration of feedback as we continually evaluate our executive compensation program.
Our Financial and Operational Performance Continue to Create Value for Shareholders
Our overall philosophy to create shareholder value is primarily to focus on strong year-to-year financial and operational performance and on the alignmentdevelopment and advancement of our strategy for growthpipeline. Despite a 15.0% decline in stock price in 2016, our total shareholder return (stock price appreciation plus dividends), or TSR, has outperformed our peer group over both a three-year period (18% TSR) and a five-year period (92% TSR). While we are not satisfied with our pay program and respondshare price performance in 2016, we believe that our philosophy supports the right framework for delivering value to shareholders over the feedback we received from our shareholders. The most notable changes include instituting three-year performance measurement periods in our long-term incentive program, eliminating the use of non-GAAP EPS in our long-term incentive program, and altering the mix of performance metrics. We also have significantly enhanced our disclosure in this CD&A to reflect shareholder feedback on other topics, including the expansion of our discussion on the company's business and financial performance and our financial and pipeline target setting considerations.
Further detail on our shareholder outreach, the feedback received and the changes made to our compensation program are described later in this executive summary and in the body of our CD&A.long-term.
Key 2015 Performance HighlightsCumulative Indexed Total Shareholder Return
C. Our fourCompany Performance in 2016 andAdvancement of our Long-term Business Strategy
Building on the strategic foundation established by our transformation to a specialty biopharmaceutical company, our management's execution of our strategic priorities are to drive business performance while maintaining the highest ethical standards, maintain our leadership in immuno-oncology, maintain a diversified portfolio both within and outside of immuno-oncology, and continue our disciplined approach to capital allocation, with business development as a top priority. Management's execution of these four strategic priorities in 2015 resulted in significantcontinued profitable growth that wasin 2016 driven by strong performance of new and inline brands (products that are not expected to lose exclusivity for at leastin the U.S. between the next fewthree years, in the U.S. or EU)case ofSprycel, and the next ten years, in the case ofOpdivo), significantadditional clinical and regulatory achievements, particularly in immuno-oncology, important business development activities that supplement our innovative pipeline, the evolution of our operating model, and a strong balance sheet. For a discussion of our Board's involvement in the strategic planning process, please see "Board's Role in Strategic Planning and Risk Oversight" beginning on page 20.
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2015 Achievements in Immuno-Oncology Are Unprecedented
Our achievements in immuno-oncology in 2015, particularly with our new drugOpdivo, have been unprecedented not only for Bristol-Myers Squibb, but also within the industry more broadly. In 2015,Opdivo demonstrated an overall survival benefit in three large Phase III studies, which led to early study stops, with a total of fiveOpdivo Phase III trials stopped early because the data showed an overall survival benefit compared with standard of care therapy. Within 12 months ofOpdivo's first approval in the U.S. for metastatic melanoma in late December 2014, we worked with unprecedented speed with the FDA and received five additional U.S. approvals for indications across three different tumor types, leading the way in this transformative approach to cancer care in advanced non-small cell lung cancer, melanoma and kidney cancer. As of the end of 2015,Opdivo was approved in over 40 countries. As a result of the efficacy demonstrated in trials, the breadth of our innovative clinical development program across multiple tumor types simultaneously, and the innovation of our people, the timelines for clinical trials, regulatory approvals and market adoption ofOpdivo have all progressed with unprecedented speed.18.
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Core Components of Opdivo Success
*We continued to build off our success withOpdivo achievements in 2015, were unprecedented, receiving additional approvals and other regulatory milestones forOpdivo and strong commercial execution, described in more detail below. We achieved significant revenue growth inOpdivo, which grew by over 300% to $3.8 billion.
In 2016, we continued to build on the unprecedented achievements in immuno-oncology experienced in 2015.Our FinancialOpdivo continued to have success, gaining additional FDA approvals for treatment of classical Hodgkin lymphoma and Operationalhead & neck cancer and an EU approval for classical Hodgkin lymphoma. With these approvals,Opdivo reached a record ten U.S. indications in under 2 years. At the end of 2016,Opdivo was approved in over 61 countries.
Although we continued to deliver outstanding operating and financial results, the company announced that a pivotal Phase III clinical trial did not meet its primary endpoint. This clinical trial, CheckMate-026, studiedOpdivo alone compared to chemotherapy in patients with previously untreated advanced non-small cell lung cancer (NSCLC) whose tumors expressed a particular biomarker, PD-L1, at³ 5%. The company continues to investigateOpdivo in other comprehensive development programs for first-line NSCLC, including combination therapies withYervoy and other anti-cancer agents, while learning from the results of CheckMate-026. BeyondOpdivo andYervoy, we are building on the continued success of and remain strongly committed toEliquis,Orencia andSprycel. Additionally, we continued to use important business development activities to supplement and strengthen our early stage portfolio in immunoscience, cardiovascular and fibrotic diseases. We continue to believe that the breadth and depth of our portfolio, our disciplined approach to capital allocation as well as our complementary business development activities position us well for the execution of our long-term business strategy.
D. 2016 Pay Decisions Align with Company Performance Continues to Create Value for Shareholdersand Evolution
Key Considerations
Our total shareholder return (stockAs noted, when evaluating company and senior management performance and making its compensation decisions for 2016, the Committee considered our compensation philosophy and program structure, which underscores competitive compensation and pay for performance, striking the appropriate balance between (i) directly aligning executives' compensation with the achievement of our Mission and the delivery of value to our shareholders, (ii) making a substantial portion of our executives' compensation variable and at risk based on operational, financial, strategic and share price appreciation plus dividends), or TSR, reflectsperformance and (iii) attracting, retaining and engaging executives who are capable of leading our business in a highly competitive, complex, and dynamic business environment.
After reviewing all details of our financial and operational achievements in 2015 and continues to outpaceperformance, our peers.
Proactive Shareholder Engagement on our Executive Compensation Program
The Boardshare price performance, and the Committee take shareholder feedback and vote outcomes at our Annual Meeting very seriously. In 2015, we meaningfully increased our proactive shareholder engagement following a disappointing outcome on our advisory vote on compensation.
Both before and after our 2015 Annual Meeting, we engaged with shareholders representing over 40% of shares outstanding, which represented manyindividual performance of our top 50 investors and a numberexecutives, our CMDC determined that the compensation of smaller U.S. and European shareholders, and included both major asset managers as well as pension funds. We spoke with several investors twice during 2015—first to seek feedback on our compensationexecutives under the new program and later to seek feedback on potential changes to our program. Our Lead Independent Director, who also serves asdesign was appropriate. In reviewing the Chairdescription of the Committee, met with shareholders representing over 20%2016 compensation decisions made in light of the company's outstanding shares. In addition, membersmarket's reaction to results of management participatedthe CheckMate-026 clinical trial, it is important to keep in these discussionsmind the following:
Key compensation program themes that emerged from these discussions with our shareholders included:
The Committee believes that the changes madeassociated market reaction, resulting in lower bonuses for 2016 address each of these key feedback areas.
Compensation Program Changes for 2016
During 2015, our Board and management performed an in-depth review of our compensation program in the context of shareholder feedback, our pay philosophy, strategic goals and the evolution of our product portfolio as we enter a period of expected growth. As a result, the Committee decided to make a number of changes to our compensation program that became effective in 2016. These changes are intended to:
The Committee looked at how all the elements of our new compensation program design work together, noting the balance inherent in the 2016 re-design between long-term and short-term compensation and performance; top-line and bottom-line results; absolute and relative factors; and internal and market-based performance metrics. In evaluating 2016 performance, the Committee determined that the compensation of our executives appropriately reflects:
We believe that our core strategy will continue to create long-term value for shareholders, as evidenced by our 18% three-year total shareholder return that, despite our 2016 share price decline, still exceeds our peer group TSR over the same time period.
Other Key Factors Considered
As noted, our compensation program is guided by our compensation philosophy and principles and this is illustrated through the following elements of our program:
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The changes discussed above follow modifications the Committee made to the program in 2014, which included:
E. 2016 Annual Incentive Program Results & Incentive Plan Target Setting Considerations
Annual Incentive Program Results
Annual awards are determined based on a Company Performance Factor, which is calculated based on pre-defined financial and pipeline metric togoals, and an Individual Performance Factor, which is calculated based on individual achievements against pre-defined strategic and operational goals. When determining the individual component of our annual incentive planawards, the Committee considers each executive's contributions to the company's strategic achievements and a relative 3-year TSR modifierfinancial and operational performance. In addition, the Committee considers how each executive demonstrates the Company's Behaviors and his or her contributions to our PSU awards;company's culture of business integrity, ethics and compliance.
Specifically, for 2016, applying all elements of the newly designed compensation plan, the Committee's determination is reflected in the compensation of all current NEOs as follows:
A year-over-year comparison of key structural changes to our executive compensation and incentive programs is presented in the chart below. Key structural changes for 2016 are highlighted below inbold and underline font.
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| Annual Incentive | | | Annual Incentive | | ||||||||||||||
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| Max incentive opportunity is 251% of target | Max incentive opportunity is200% of target | |||||||||||||||||
Incentive calculation comprised of: | Incentive calculation comprised of: | |||||||||||||||||
| 1. | Company Performance Factor measured by: | 1. | Company Performance Factor measured by: | |||||||||||||||
• Non-GAAP EPS (50% weight) | • Non-GAAP EPS (50% weight) | |||||||||||||||||
• Total Revenues (ex-fx) (25% weight) | • Total Revenues (ex-fx) (25% weight) | |||||||||||||||||
• Pipeline (25% weight) | • Pipeline (25% weight) | |||||||||||||||||
2. | Individual Performance Factor | 2. | Individual Performance Factor | |||||||||||||||
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2015 Pay Decisions Align with Company Performance and Transformation
CEO Succession in 2015
On May 5, 2015, Dr. Caforio became the Chief Executive Officer of the company, succeeding Mr. Andreotti, who became our Chairman. Dr. Caforio's new compensation package as Chief Executive Officer, effective May 5, 2015, is detailed below:
Dr. Caforio's total compensation for 2015 is targeted at approximately the 25th percentile of Chief Executive Officers within our current proxy peer group. The Committee believes Dr. Caforio's compensation package positions him appropriately among his peers when taking multiple factors into consideration, principally Dr. Caforio's new tenure as Chief Executive Officer.
Mr. Andreotti's 2015 Compensation: Following his transition to Non-Executive Chairman on August 3, 2015, Mr. Andreotti's CEO compensation package terminated and he is compensated in line with our Non-Executive Chairman policy, which is described under "Compensation of our Non-Executive Chairman" beginning on page 29. Mr. Andreotti did not receive any PSU awards for his service as CEO in 2015. As part of the phasing out of our old PSU design, a portion of Mr. Andreotti's 2013 performance share unit award was deemed granted for accounting purposes in 2015. This is not an additional award, but a disclosure requirement of a prior award pursuant to the proxy disclosure rules.
2015 Incentive Plan Target Setting Considerations
At the beginning of each year, the Committee undertakes an incentive target setting process to establish targets that it believes will motivate our executives appropriately to deliver highthe performance that drives shareholder value creation in both the short and longer term.
Financial and strategic performance targets are:
Pipeline performance targets are:
In establishing targets and goals, the Committee considersconsideration, among other things, budget, operational priorities, long-term strategic plans, historical performance, product pipeline and other external factors, including external expectations, and an assessment of the competitive environment. The incentive targets set for 2015 reflected all of these considerations, as well as the evolution of our business and product portfolio in the context of our transition to a diversified specialty biopharmaceutical company.
Thecompany, the Committee set 20152016 incentive targets in consideration of anticipated performance, in line with guidance provided to the market in early 20152016 and in line with pipeline expectations. Later in the year, after the Committee set the targets, we achievedmet, or exceeded financial and operational goals in certain key areas, including significant growth across our priority brandsof both revenues and advanced our leadership in immuno-oncology with unprecedented clinical and regulatory achievements with our drug,Opdivo. As discussed above, the efficacy and safety profile, acceleration and number of regulatory approvals, speed of market adoption and growth ofOpdivo sales are unprecedented; the scale of this success could not be anticipated at the time non-GAAP EPS guidance for the year was announced and incentive targets established.
Timeline of Incentive Target Setting and Guidance Refinements
The Committee believes 2015 incentive awards appropriately reward our executives for their outstanding performance and the value created for shareholders in a yearHepatitis C portfolio, important business development activities, and the evolution of unprecedented achievement and delivery for our patients.
Key 2015 Compensation Decisions and Incentive Target Achievementsoperating model.
Our executive compensation program is highly performance-based and places a significant majorityFurther detail on annual target setting considerations for each of our executives' compensation at risk.
Annual Incentive Program
Annual awards are comprised of a company performance factor, whichNEOs is calculated basedincluded beginning on pre-defined financialpage 42, under "Financial and pipeline goals, and an individual performance factor, which is calculated based on individual achievements against pre-defined strategic and operational goals.Pipeline Metric Target Setting Considerations".
2015Year over Year Comparison of Financial and Pipeline Achievements for Company Performance Factor
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Performance Measure | | | Target | | | Actual | | | % of Target | ||||||||
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Non-GAAP Diluted Earnings Per Share(1)(2) | | $ | 1.57 | | $ | 1.95 | | | 124.2 | % | |||||||
Total Revenues, Net of Foreign Exchange ($=MM)(1) | $ | 15,638 | $ | 17,808 | 113.9 | % | |||||||||||
Pipeline Score | | | 3 | | | 4.8 | | | 160.0 | % | |||||||
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Performance Measure | | Target | | Actual | | % of Target | | Target | �� | | Actual | | % of Target | | ||||||||||||||||||
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Non-GAAP Diluted Earnings Per Share(1)(2) | $ | 1.57 | $ | 1.95 | | 124.2 | % | $ | 2.35 | $ | 2.83 | | 120.4 | % | ||||||||||||||||||
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Total Revenues, Net of Foreign Exchange ($=MM)(1) | $ | 15,638 | $ | 17,808 | | 113.9 | % | $ | 17,596 | $ | 19,494 | | 110.8 | % |
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Pipeline Score | | 3 | | 4.8 | | 160.0 | % | | 3 | | 2 | | 66.7 | % | ||||||||||||||||||
When determining the individual component of our annual incentive awards, the Committee considers each executive's contributions to the Company's strategic achievements and financial and operational performance. In addition, the Committee considers how each executive embodies the BioPharma Behaviors and his or her contributionsThe Individual Performance Factors applied to our Company's culture of business integrity, ethicsNEOs for 2016 ranged between 85% and compliance. In anticipation of105%. This range is significantly lower than the 2016 changes to our annual incentive program, the Committee used its discretion to limit the 2015 annual incentive payoutIndividual Performance Factors for our current NEOs to 200% of target. Accordingly, in 2015, individual performance factors for our NEOs ranged from 105% towhich were between 125% and 130%, resulting in annual incentive awards ranging from $1.02 million to $3.50 million..
Disclosure of our NEOs individual performance goals and achievements are detailed below beginning on page 50,44, under "2015"2016 Individual Performance Assessment". Further detail on annual incentive awards for each of our NEOs is detailedincluded on page 53,46, under "2015"2016 Annual Incentive Awards".
Long-Term Incentive ProgramTable of Contents
Long-term incentive awards, in the form of Performance Share Units and Market Share Units, were granted in line with target amounts as detailed on pages 55 and 59, under "Performance Share Unit Awards—2015 Performance Results" and "Market Share Unit Awards—Performance Results".
Our Compensation Governance Reflects Market Best Practices
We maintain a number of compensation governance best practices which support our overarching compensation philosophy and are fully aligned with our compensation principles, as discussed in the following section. Our compensation practices also align with input we have received from shareholders.
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| What We Do: | What We Don't Do: | |||||||||||||||
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ü | 100% performance-based annual and long-term incentives |  | ||||||||||||||
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ü | Caps on the payouts under our annual and long-term incentive award programs | | Prohibition on speculative and hedging transactions | |||||||||||||
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ü | Robust share ownership and share retention guidelines | | No employment contracts with our Named Executive Officers | |||||||||||||
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ü | Robust recoupment and clawback policies | | Prohibition on re-pricing or backdating of equity awards | |||||||||||||
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ü | Proactive shareholder engagement | | No guaranteed incentives with our Named Executive Officers | |||||||||||||
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ü | "Double-trigger" change-in-control agreements | | No tax gross-ups | |||||||||||||
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Executive Compensation Philosophy and Principles
Our executive compensation philosophy focuses on two core elements:
OurBased on this philosophy, our compensation program is designed with the following principles in mind:
Benchmarking Analysis and Peer Group
Benchmarking Approach
In general, our executive compensation program seeks to provide total direct compensation at the median of our primary peer group (as defined below) when targeted levels of performance are achieved. In any given year, however, we may target total direct compensation for a particular executive above or below the median of our primary peer group due to multiple factors, including competencies, qualifications, experience, responsibilities, contribution, individual performance, role criticality and/or potential. We may also target total direct compensation above the median of our primary peer group to attract and retain talent within the competitive biopharmaceutical industry marketplace. We define total direct compensation as base salary plus target annual incentive award plus the fair value of annual long-term incentive awards on the date of grant.
Paying at competitive levels when targeted levels of performance are achieved allows us to attract and retain the talent we need to continue driving performance, while enabling us to maintain a competitive cost base with respect to compensation expense.
Benchmarking Process
The Committee's independent compensation consultant annually conducts a review of the compensation for our Named Executive Officers, including compensation information compiled from publicly filed disclosures of our primary and extended peer groups. Pay levels of our peers are used as a reference point, among othersother factors, when determining individual pay decisions (i.e., base salary levels, the size of salary adjustments, if any, target annual incentive levels and long-term incentive award size).
20152016 Peer Groups
We regularly monitor the composition of our peer groups and make changes when appropriate. Our peer groups in 20152016 remained unchanged and consisted of the following companies:
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| | Primary Peer Group | Extended Peer Group(1) | | |||||
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| | AbbVie Inc. | Gilead Sciences Inc. | AstraZeneca PLC | | ||||
| Amgen Inc. | Johnson & Johnson | GlaxoSmithKline PLC | ||||||
| | Biogen | Merck & Co. | Roche Holding AG | | ||||
| Celgene Corporation | Pfizer, Inc. | Novartis AG | ||||||
| | Eli Lilly and Company | | Sanofi | | ||||
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(1)
Primary Peer Group: The Committee believes the companies included in our 20152016 primary peer group are appropriate given the unique nature of the biopharmaceutical industry. These companies represent our primary competitors for executive talent and operate in a similarly complex regulatory and research-driven environment.
In determining our primary peer group, we believe emphasis should be placed on whether a company competes directly with us for the specialized talent necessary to further drive our success as a diversified specialty biopharmaceutical company. We also consider company size in determining our peer group. The companies in our primary peer group all had annual revenues of at least $7 billion for 2015.$9 billion. BMS was slightly below the 25th percentile in revenue and slightly belowbetween the median and the 75th percentile in market capitalization amongst our primary peer group.
Extended Peer Group: We also review an extended peer group, which is comprised of the nine companies in our primary peer group plus five companies based outside the U.S. This extended peer group serves as an additional reference point for compensation practices, including understanding of the competitive pay environment as it relates to the global nature of both our business and the competition for talent.
20152016 Target Compensation Benchmarks
Target compensation for Dr. Caforio was at approximately the 25th percentilemedian of Chief Executive Officers within our current proxy peer group, principally in consideration ofgroup. The Committee believes Dr. Caforio's new tenure as Chief Executive Officer. In general,compensation package positions him appropriately among his peers when taking multiple factors into consideration. On average, our other executive officers were also at approximately the 50th percentilemedian of our current proxy peer group.group, with variation by position.
Components of Our 20152016 Compensation Program
Core components of our 20152016 executive compensation program:
The Committee believes this structure aligns with a continued commitment to emphasizing variable, or "at risk," compensation for our executives. The following charts provide an overview of the 20152016 executive compensation components for the CEO and other NEOs, and highlights the percentage of target compensation that is variable and at risk.
This target mix supports the core elements of our executive compensation philosophy by emphasizing long-term, stock-based incentives while providing competitive annual cash components, aligning our executive compensation program with our business strategy.
The following sections discuss the primary components of our executive compensation program and provide detail on how specific pay decisions were made for each NEO in 2015.2016.
Base Salary
Base salaries are used to help us attract talent in a highly competitive labor market. The salaries of our executives are primarily established on the basis of the pay levels of comparable positions within our primary peer group and the specialized qualifications, experience and criticality of the individual executive and/or his or her role. Salary increases for our executives are determined based on both the performance of an individual and the size of our annual increase budget in a given year, which is based in part on an assessment of market movement related to salary budgets for our peer companies and the general industry. We typically set our annual salary increase budgets based on the median of such forecasts. Salary adjustments may also be granted from time to time during the year, such as when an executive assumes significant increases in responsibility and/or is promoted. Salary adjustments also reflect movement in the market for individual executive roles, as was the case in both 2015 and 2016.
In 2015,2016, in accordance with our company-wide merit review process, employees, including the Named Executive Officers, were eligible for a merit increase provided their performance fully met or exceeded expectations on both results and behaviors. Employees rated below the fully-performing level typically receive a reduced merit increase or receive no salary increase depending on the extent to which they were rated below the fully-performing level. Effective April 1, 2015,2016, Dr. Caforio received a 10.7% increase, reflecting his first full year as Chief Executive Officer and bringing him closer to the median target pay compared to his peers; Mr. Bancroft received merit increasesan increase of 3%,4%; Ms. Leung received a meritan increase of 4%3%; and Dr. Cuss received a meritan increase of 5%6%. Dr. Caforio received a 43% salary increase effective May 5, 2015 in connection with his promotion from Chief Operating Officer to Chief Executive Officer. Mr. Gordon received a 13%10% salary increase effective January 16, 2015,April 1, 2016 and a subsequent 10% salary increase in connection withJune 2016, reflective of his promotion from Presidentappointment as Chief Commercial Officer to bring him closer to the median target pay compared to his peers and reflective of U.S. Pharmaceuticals to Head of Worldwide Markets.his increased responsibilities.
Annual Incentive Program
Our annual incentive program is designed to reward performance that supports our business strategy as a diversified specialty biopharmaceutical company and our missionMission to help patients prevail over serious diseases. The annual plan aligns with our business strategy and missionMission by sharpening management's focus on key financial and pipeline goals, as well as by rewarding individual performance (both results and behaviors), consistent with our pay-for-performance philosophy.
Each NEO's target annual incentive is expressed as a percentage of base salary. Annual incentive awards for each NEO are determined by evaluating both company performance (as measured by the Company Performance Factor) and individual performance (as measured by the Individual Performance Factor). The maximum incentive opportunity for each NEO in 2015 was 251% of target. Beginning in 2016, the maximum incentive opportunity for each Named Executive Officer will beis 200% of target.
Although the maximum incentive opportunity for each NEO was 251% of target in 2015, the Committee decided in its judgment to limit the 2015 incentive payout for our NEOs to 200% of target in anticipation of the 2016 changes to our annual incentive program. Accordingly, none of our NEOs received a payout of more than 200% of target in 2015.
The Company Performance Factor can range from 0% to 152%, based on financial achievements and pipeline results, and the Individual Performance Factor can range from 0% to 165%, based on individual performance (both results and behaviors)., subject to a 200% of target maximum. The graphic below illustrates the calculation used to determine annual incentive plan awards.
Annual Incentive Award Calculation for Named Executive Officers
Performance Metrics Underlying the Company Performance Factor
Our 20152016 incentive plan design has the following corporate-wide measures, which apply to all employees eligible to participate in the annual incentive plan, including our Named Executive Officers:
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Earnings Per Share (EPS) (50%) | Non-GAAP Diluted EPS (Net Incomedividedby outstanding shares of common stock) | A criticalmeasure of annual profitabilityaligning our employees' interests with those of our shareholders | | |||||||
Total Revenues (25%) | Total Revenues, net of foreign exchange (Total revenues minus reserves for returns, discounts, rebates and other adjustments) | Ameasure of top-line growththat creates a foundation of long-term sustainable growth and competitive superiority | ||||||||
Pipeline (25%) | • Near-Term Value (Submissions and approvals) • Long-Term Growth Potential | Increases BMS-wide focus on delivery of our late-stage pipeline and continued development of a robust pipelinethrough both internal efforts and business development | | |||||||
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Our pipeline metric highlights the importance of pipeline delivery to the near-term and long-term success of the company. This metric measures the sustainability and output of our R&D pipeline portfolio and is comprised of goals in two categories, Near-Term Value and Long-Term Growth Potential:Potential with a Qualitative Overlay:
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| | Metric | What It Is | Why It's Important | | |||||||
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Near-Term Value (50%) | Regulatory submissions and approvals for new medicines and new indications and formulations of key marketed products in the U.S., EU, China and Japan | Recognizes delivery of the late-stage pipeline, which drives near-term value | | ||||||||
Long-Term Growth Potential (50%) | • Development Candidates • First in Human • Proof of Confidence • Registrational Study Starts | Recognizes the progression and successes of the R&D pipeline at various stages of development, including internally and externally-sourced compounds | |||||||||
Qualitative Overlay | Reflects management's holistic evaluation of our pipeline performance, including such considerations as the performance of high value assets and the integration of acquired assets, among other factors. | | |||||||||
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Financial and Pipeline Metric Target Setting Considerations
At the beginning of each year, the Committee undertakes an incentive target setting process to establish targets that it believes will motivate our executives appropriately to deliver the high performance that drives shareholder value creation in both the short and longer term.
Financial and strategic performance targets are:
Pipeline performance targets are:
The S&T Committee also identifies those highest value assets and the integration of acquired assets, among other factors, the importance of which will inform the application of a qualitative overlay.
In establishing targets and goals each year, the Committee considers budget, operational priorities, long-term strategic plans, historical performance, product pipeline and other external factors, including external expectations, and an assessment of the competitive environment. The incentive targets set for 20152016 reflected all of these considerations, as well as the evolution of our business and product portfolio in the context of our transition to a diversified specialty biopharmaceutical company.
The Committee set 20152016 incentive targets in consideration of anticipated performance, in line with guidance provided to the market in early 20152016 and in line with pipeline expectations, including the loss of exclusivity forAbilify, our largest product in 2014, the divestiture of our diabetes business and the expiration or transfer of certain licensing and royalty rights.expectations. Later in the year, after the Committee set the targets, we achievedmet, or exceeded financial and operational goals in certain key areas, including significant growth acrossof both revenues and earnings as a result of better-than-expected sales results, particularly inEliquis and the Hepatitis C portfolio, important business development activities, and the evolution of our priority brands and advanced our leadership in immuno-oncology with unprecedented clinical and regulatory achievements with our drug,Opdivo. As discussed in the executive summary of this CD&A, the efficacy and safety profile, acceleration and number of regulatory approvals, speed of market adoption and growth ofOpdivosales are unprecedented; the scale of this success could not have been anticipated at the time our non-GAAP EPS guidance for the year was announced and incentive targets set.operating model.
20152016 Company Performance Factor Achievements
The table below shows the performance and resulting payout percentage of the performance measures used for our 20152016 annual incentive plan:
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| | Performance Measure | Target | Actual | % of Target | Resulting Payout Percentage | | ||||||||
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| Non-GAAP Diluted Earnings Per Share(1)(2) | $ | 1.57 | $ | 1.95 | 124.2% | 152.17% | | ||||||
| Total Revenues, Net of Foreign Exchange ($=MM)(1) | $ | 15,638 | $ | 17,808 | 113.9% | 152.17% | |||||||
| Pipeline Score | | 3 | | 4.8 | 160.0% | 146.96% | | ||||||
| Total | — | — | 130.6% | 150.87% | |||||||||
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| | Performance Measure | Target | Actual | % of Target | Resulting Payout Percentage | | ||||||||
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| Non-GAAP Diluted Earnings Per Share | $ | 2.35 | $ | 2.83 | 120.4% | 152.17% | | ||||||
| Total Revenues, Net of Foreign Exchange ($=MM) | $ | 17,596 | $ | 19,494 | 110.8% | 152.17% | |||||||
| Pipeline Score | | 3 | | 2 | 66.7% | 46.51% | | ||||||
| Total | — | — | 104.6% | 125.76% | |||||||||
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For the pipeline metric, after the performance period is complete, the Science and Technology Committee reviews our performance in the categories identified above, including a qualitative assessment of results, and determines a performance score using a scale of one to five, with three being target. For 2015,2016, the Science and Technology Committee recommended, and the CMDC approved, a pipeline score of 4.82 based on the following results:
Individual Performance Factor
Our executive compensation program is designed to reward executives for financial, operational, strategic, share price and individual performance while demonstrating high ethical standards. We believe this structure appropriately incentivizes our executives to focus on our long-term business strategy, to achieve our missionMission to help patients prevail over serious diseases, and to attain sustained long-term value creation for our shareholders.
| When determining individual award levels, the Committee considers (i) individual performance against strategic, financial and operational objectives that support our long-term business strategy and shareholder value creation ("Results") and (ii) an executive's demonstration of the behaviors defined in the Bristol-Myers Squibb Commitment and our BMS |   | |
2016 Individual Performance Assessment |
Process for Assessing Individual Performance: Three Powerful Conversations
Our performance management practices, known as "Three Powerful Conversations," provide an ongoing focus for managers and employees to connect individual objectives and behaviors to the business. This approach assists in ensuring that each executive's compensation is tied to the key strategic, financial and operational objectives of our company, to shareholder return, and to the executive's demonstration of the BMS BioPharma Behaviors and the values embodied in the Bristol-Myers Squibb Commitment. The Commitment can be found on our website (www.bms.com). The Committee conducts the assessment process for our CEO. The CEO conducts the assessment for all of our other Named Executive Officers and other members of senior management. The assessments for each Named Executive Officer and the other members of senior management are then reviewed and approved by the Committee.
2015 Individual Performance Assessment
When determining the individual component of the annual incentive awards, the Committee considered each executive's contributions to our company's strategic achievements and financial and operational performance.performance as well as his or her demonstration of company behaviors. The Committee evaluated our NEO's performance and behaviors against clear and pre-defined objectives established at the beginning of the year tied to the company's key strategic objectives.
As noted on page 34, while our annual incentive program is primarily focused on driving outstanding financial and operational performance, it also takes into account the advancement of our pipeline (through the pipeline metric) and the Committee's assessment of the individual performance of our NEOs. Accordingly, in ensuring that individual compensation reflects the holistic assessment of BMS' 2016 performance, the Committee determined to negatively affect the Individual Performance Factor applied to each of our NEOs to varying degrees to hold the leadership team accountable for the CheckMate-026 results and the associated impact on our market capitalization.
For the CEO, the Committee evaluated his contribution to meeting or significantly exceeding the following strategic objectives and achievements in determining his individual performance modifier:
20152016 CEO PERFORMANCE EVALUATION
| | | | |||
| STRATEGIC OBJECTIVE | EVALUATION | ||||
|---|---|---|---|---|---|
| Drive performance of the business: Achieve budgeted financial targets established at the beginning of the year, including | • Significantly exceeded targets for revenues, •
• Designed and began executing innovative and bold evolution of company operating model. | ||||
Enhance the value of the | •
• Exceeded launch metrics forOpdivo in • Additional indications approved forOpdivo, •
• Daklinza approved for use in three new patient populations in the U.S. and the EU. •
•
| ||||
| • Very strong • Continued to reinforce integrity and ethics across employee communications and events • Increased focus on the company's diversity and inclusion
• Robust management development plans in place and being executed in support of succession planning for critical positions.
| ||||
| Individual Performance Modifier Based on CMDC Evaluation: | |||||
In determining the individual 2015 modifier for our other NEOs,addition, the Committee noted the following contributions and performance highlights:that with respect to each of our other NEOs:
For Mr. Bancroft, the Committee considered: (i) his rolesignificant leadership in the achievement of strong financial results;operational results (both top-line and bottom-line growth compared to 2015—GAAP and non-GAAP earnings per share increasing by 185% and 41%, respectively, and Total Revenue by 17% on a GAAP basis) and maintaining a strong balance sheet; (ii) his leadership in driving a highly impactful strategic plan;the evolution of our operating model, and (iii) his effective management during a year when financial forecasts increased due to unprecedented clinicaloversight and regulatory success; and (iv) his oversight
Table of a highly successful year forContents
leadership in executing business development, including transactionsas discussed on page 33 our acquisitions of Cormorant Pharmaceuticals, Padlock Therapeutics, our exclusive worldwide license agreements with Flexus Biosciences, Bavarian Nordic, Rigel, Five Prime, uniQure, Cardioxyl, Promedior, Seattle Genetics, Eli Lilly & Co.,PsiOxus Therapeutics' NG-348 and Kyowa Hakka Kirin, among others, and the agreement to divest our HIV pipeline to ViiV Healthcare announced in December 2015, among other things.immuno-oncology collaboration with Enterome.
For Dr. Cuss, the Committee considered:considered (i) the unprecedented year in researchsignificant advancement of the pipeline, including both clinical and development under his leadership with multiple clinical studies stopped early for superiority, rapid regulatory achievements, notably 35 regulatory submissions and approvals, innovative regulatory filing approaches, high quality and robust data generation, particularly39 pipeline projects meeting transition milestones, the achievement of FDA approvals forOpdivo, for the treatment of classical Hodgkin lymphoma and record numberhead & neck cancer, and an accelerated EU approval for classical Hodgkin lymphoma, as well as breakthrough designation of publications inThe New England Journal of MedicineOpdivo; for bladder cancer, (ii) his role in challengingresponse and encouraging our researchmanagement following the CheckMate-026 results and development teams to use data effectively to accelerate regulatory actions across all therapeutic areas;associated impact on market capitalization, (iii) his significant investmentleadership in talent development, cooperation, speed of execution and qualitydriving the evolution of our business strategies;operating model within the R&D organization, and (iv) his continued strong cooperationpartnership with our commercial organization, among other things.and global manufacturing organizations, which has resulted in more seamless transitions and faster time-to-market for our products.
For Ms. Leung, the Committee considered: (i) her role in providing consistently sound legal advice to senior management and the Board of Directors, including critical support related to CEO and Board succession and the appointment of a new Lead Independent Director; (ii) her successful management of multiple, significant legal issues across all teams and functions;functions with particular focus on delivering a robust intellectual property and patent strategy, (iii) her role in supporting multiple product launches and business development transactions;transactions, including innovative partnerships and worldwide licensing agreements, (iv) her continued leadership in building a very strong and high-functioning legal leadership team that is recognized externally as a benchmark;benchmark, (v) her contributions and performance as a trusted and respected senior leader who provides valuable strategic advice and whose impact spans across all teams and functions;functions, and (vi) her strong example as an advocateadvocacy and champion forsponsorship of diversity and inclusion both internally and externally, among other things.externally.
For Mr. Gordon, the Committee considered: (i) his exemplary leadership role in achieving superior share gainsour strong commercial execution, specifically revenue growth in almost allOpdivo of over 300% to $3.8 billion,Eliquis' strong performance growing by 80% in revenues and becoming the leading oral anticoagulant within its approved indications, and significant growth across other key products, includingOrencia (20% growth) and new growth brands;Sprycel (13% growth), (ii) his role in leading the successful implementation of the worldwide commercial model; (iii) his leadership and facilitation of strong cooperation across a diverse set of teams and functions; and (iv) his strong partnership with other leadership team members in the commercial and research and development organizations, enabling effective executiondeployment of our brand strategies, among other things.
For Mr. Andreotti,new operating model within the Committee considered: (i) the successfulCommercial function to become more focused on key brands and seamless transition of CEO responsibilities and his mentoring of Dr. Caforio; (ii) his role in developing and executing the 2015 strategic plan;markets, and (iii) his leadershipacting as a champion for diversity and role in the achievementinclusion and his sponsorship of strong financial, regulatoryone of our innovative people and operational results in the first part of 2015, among other things.
Basedbusiness resource groups specifically focused on the above assessmentsdevelopment and after giving consideration to the recommendationsadvancement of our CEO, the Committee approved the individual awards for our other NEOs.
Table of Contentswomen.
20152016 Annual Incentive Awards
The actual annual incentive awards paid to our Named Executive Officers are shown in the table below and can also be found in the Summary Compensation Table under the Non-Equity Incentive Plan Compensation column:
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Executive | Target Incentive Award | Applying Company Performance Factor(1) | Actual Payout(2) | Executive | Target Incentive Award | Applying Company Performance Factor(1) | Actual Payout(2) | | |||||||||||||||||
| Giovanni Caforio, M.D. | $ | 1,782,671 | $ | 2,689,516 | $ | 3,496,370 | | Giovanni Caforio, M.D. | $ | 2,268,750 | $ | 2,853,180 | $ | 2,995,839 | | ||||||||||
| Charles Bancroft | $ | 1,040,415 | $ | 1,569,674 | $ | 1,962,093 | Charles Bancroft | $ | 1,159,165 | $ | 1,457,766 | $ | 1,530,654 | ||||||||||||
| Francis Cuss, MB BChir, FRCP | $ | 907,813 | $ | 1,369,617 | $ | 1,780,502 | | Francis Cuss, MB BChir, FRCP | $ | 960,094 | $ | 1,207,414 | $ | 1,026,302 | | ||||||||||
| Sandra Leung | $ | 890,950 | $ | 1,344,176 | $ | 1,747,429 | Sandra Leung | $ | 919,841 | $ | 1,156,792 | $ | 1,214,632 | ||||||||||||
| Murdo Gordon | $ | 520,000 | $ | 784,524 | $ | 1,019,881 | | Murdo Gordon | $ | 684,117 | $ | 860,346 | $ | 903,363 | | ||||||||||
| Lamberto Andreotti | $ | 1,700,085 | $ | 2,564,918 | $ | 2,693,164 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)
(2)
As set forth in the table above, the Company Performance Factor of 150.87%125.76% was applied to each Named Executive Officer's target incentive award. Then, an individual performance payout factor was applied to determine the actual payout. The Committee can approve an Individual Performance Factor up to 165% of the adjusted incentive. Basedincentive, subject to 200% of target maximum. Taking into consideration both the qualitative and quantitative elements of the pipeline performance metric in our annual incentive program, the Committee decided that the pipeline score would be a 2. Without the downward adjustment due to the qualitative overlay related to the CheckMate-026 clinical trial, the quantitative score would have yielded at 3.8 given the significant pipeline
achievements in 2016. This downward adjustment was based on management's recommendation to the Science and Technology Committee (S&T), and the S&T's concurrence with this assessment.
Accordingly, based on the performance highlighted above and the qualitative overlay applied to the pipeline score, the Committee approved Individual Performance Factors ranging between 105%85% and 130%105% for our Named Executive Officers. As discussed in further detail on page 46, in anticipation of the 2016 changesOfficers, which is significantly lower compared to our annual incentive program, the Committee used its discretion to limit the 2015 annual incentive payoutIndividual Performance Factors for our NEOs to 200% of target.current Named Executive Officers in 2015, which were between 125% and 130%.
Long-Term Incentive Program
Like our annual incentive plan, our long-term incentive program is designed to reward performance that supports our strategic objectives and creates value for our shareholders. A significant percentage of our executives' compensation is in the form of equity that vests over several years, which is designed to closely tie the interests of our executives to the interests of our shareholders. Our long-term incentive program also is designed to promote retention through multi-year vesting.
In 2015,2016, we continued to offer two long-term award vehicles, each of which served a different purpose:
We believe our long-term incentive program serves the best interests of our shareholders by focusing the efforts of our executives on key drivers of both short- and long-term success and on shareholder value. Key aspects of the long-term incentive program include:
20152016 Equity Incentive Program Summary
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Performance Share Units | Market Share Units | | Performance Share Units | Market Share Units | | |||||||||||
| | Proportion of Annual Grant | 60% | 40% | Proportion of Annual Grant | 60% | 40% | ||||||||||
| | | | | | | | | | | | | | | | | |
| | Metrics & Weighting | Non-GAAP EPS: 70% Total Revenues (ex-fx): 30% 3-Year Relative TSR: modifies award +/-20% | Share Price Performance | Metrics & Weighting | Non-GAAP Operating Margin: 33% Total Revenues (ex-fx): 33% 3-Year Relative TSR: 34% | Share Price Performance | ||||||||||
| | | | | | | | | | | | | | | | | |
| | Min / Max Payout (% of Target Units) | 0% / 201% | 0% / 200%* | Min / Max Payout (% of Target Units) | 0% / 200% | 0% / 200%* | ||||||||||
| | | | | | | | | | | | | | | | | |
| | Vesting | 3-year, cliff vesting | 4-year, ratable vesting | Vesting | 3-year, cliff vesting | 4-year, ratable vesting | ||||||||||
| | | | | | | | | | | | | | | | | |
* The number of shares earned from Market Share Units (MSUs) can increase or decrease, in proportion to the change in our share price over the one-, two-, three- and four-year performance periods. The minimum share price achievement required to earn any shares from MSUs is 60% of the grant date stock price. Accordingly, if 60% is not achieved, zero shares will vest. Both vehicles are designed to be performance-based within the meaning of Section 162(m) of the Internal Revenue Code.
As discussed in the executive summary of this CD&A, the Committee made several changes to the long-term incentive program that will serve to further align our incentive program with our strategic goals. These changes will be implemented in 2016 and are discussed in more detail below under '2016 PSU Program Changes.'
2015 Performance Share Unit Awards
 |
The structure of our 2015 financial metrics and three-year relative TSR modifier in our PSU program are detailed in the tables below.
| | | | | | | | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| PSU Payout Schedule | | ||||||||||
|
| Non-GAAP EPS (70%) | Total Revenues (ex-fx) (30%) | |||||||||
|
| Achievement | Payout | Achievement | Payout | |||||||
| Maximum | 115% | 167.50% | 105% | 167.50% | | ||||||
| Target | 100% | 100% | 100% | 100% | |||||||
| Threshold | 85% | 42.50% | 95% | 42.50% | | ||||||
| Below Threshold | <85% | 0% | <95% | 0% | |||||||
| | | | | | | | | | | | | |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3-Year Relative TSR Modifier Performance Measure | |||||||||||||||||||||||||||
| TSR Comparator | | BMS extended peer group (see page 44 for list of companies) | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 3-year TSR Modifier based on BMS' percentile rank versus extended peer group: | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TSR Payout Scale | | Percentile Rank | | < 20th | | 20th < 40th | | 40th < 60th | | 60th < 80th | | ³ 80th | | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | TSR Modifier | | –20% | | –10% | | 0% | | 10% | | 20% | | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Target Setting Considerations
The Committee set 2015 incentive targets in consideration of anticipated performance, in line with guidance provided to the market in early 2015 and in line with pipeline expectations. Later in the year, after the Committee set the targets, we achieved significant growth across our priority brands and advanced our leadership in immuno-oncology with unprecedented clinical and regulatory achievements with our drug,Opdivo. As discussed above, the efficacy and safety profile, accelerated regulatory approvals, speed of market adoption and growth ofOpdivo sales have been unprecedented; the scale of this success could not be anticipated at the time guidance for the year was announced and incentive targets set. For a more detailed discussion on incentive target setting considerations, see "Financial and Pipeline Metric Target Setting Considerations" on page 47.
2015 Performance Results
The following table summarizes the performance and payout results relating to the 2015 performance metrics applicable to PSU awards:
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | |
| Measure | Target | Performance(3) | % of Target | % Payout | ||||||||||
| Non-GAAP Diluted Earnings Per Share(1)(2) | $ | 1.57 | $ | 1.95 | | 124.2% | 167.5% | | ||||||
| Total Revenues, Net of Foreign Exchange ($=MM)(1) | $ | 15,638 | $ | 17,808 | 113.9% | 167.5% | ||||||||
| Annual Total | | | | | | | 167.5% | | ||||||
| | | | | | | | | | | | | | | | |
Reconciliation of Prior PSU Awards for Accounting Purposes
In 2014, the Committee introduced a new PSU design that simplified the administration, communication and executive understanding of the award by measuring financial performance in the first year only, subject to the three-year relative TSR modifier. This change also mitigates the volatility in total cost of PSU awards because the fair value for the entire award is fixed on the grant date. Prior to 2014, our performance goals for each three-year performance cycle were set annually. As such, under our old PSU awards, the fair value for accounting purposes could not be determined for the second and third year tranches of the award until performance conditions were set in later years.
Accordingly,As illustrated below, the reported 2015design of our LTI program generally magnifies the impact of changes in our stock incentiveprice and relative TSR performance. When our stock price declines, the value includes the fair values of the third tranche of the 2013-2015 PSU award and the entirety of the 2015-2017 PSU award. WhileMSU awards decreases in two ways: (i) the number of target shares (establishedearned goes down in 2013) did notproportion to the change in stock price and (ii) the value of those shares is less due to the third tranchelower stock price. Similarly, the value of PSU awards decreases in two ways: (i) the TSR metric reduces the number of shares earned (assuming our stock price declined more than our peers' did) and (ii) the value of those shares is also less. The illustration below shows how the decline in our stock price from March 2016 through the end of the 2013-2015year is magnified in the value of our 2016 LTI awards. For purposes of this illustration, we assume that the year-end closing price is the stock price at the end of each performance period and we assume target performance for the financial metrics.
Notes:
2016 PSU Program ChangesPerformance Share Unit Awards
Following extensive engagement with shareholders in 2015 and an in-depth review of our compensation program in the context of our strategic goals and current product portfolio, the Committee decided to make a number of changes to the PSU program that became effective in 2016. These changes include:
• Lengthening of the performance period of financial measures from one year to three years; • Incorporating the three-year relative TSR as a core performance measure rather than a modifier; and • Introducing a new mix of financial performance measures that create stronger alignment with our strategic goals and reduce the overlap of performance metrics in our annual and long-term incentive programs. Specifically, the performance measures for 2016 PSU awards |
|
The Committee believes that these changes both enhance the alignment betweenstructure of our 2016 financial metrics and three-year relative TSR modifier in our PSU program and our strategic goals as well as reflect the valuable input we received from our shareholders.are detailed below.
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2016-2018 PSU Payout Schedule | | ||||||||||||||
|
| 2016-2018 Cumulative Operating Margin (33%) | 2016-2018 Cumulative Total Revenues (ex-fx) (33%) | 3-Year Relative TSR (34%) | ||||||||||||
|
| Achievement | Payout | Achievement | Payout | TSR Percentile | Payout | |||||||||
| Maximum | 115% | 200% | 110% | 200% | 80%ile | 200% | | ||||||||
| Target | 100% | 100% | 100% | 100% | 50%ile | 100% | |||||||||
| Threshold | 85% | 50% | 90% | 50% | 35%ile | 50% | | ||||||||
| Below Threshold | <85% | 0% | <90% | 0% | <35%ile | 0% | |||||||||
| | | | | | | | | | | | | | | | | |
Market Share Unit Awards
MSUs comprise 40% of our executives' target long-term incentives. Each grant of MSUs vestvests 25% per year overon each of the first four yearsanniversaries of the grant date and the number of shares received by an executive upon payout is increased or
decreased depending on the performance of our stock price during the one-, two-, three- and four-year performance periods.
Upon vesting, a payout factor is applied to the target number of MSUs vesting on a given date to determine the total number of units paid out. If our stock price increases during the performance period, both the number of units and value of shares that vest increases. If our stock price declines during the performance period, both the number of units and value of shares that are eligible to vest will be reduced. The payout factor is a ratio of the ten-day average closing price on the measurement date divided by the ten-day average closing price on the grant date. Beginning with our 2013 annual MSU award grant, the measurement date is the February 28 immediately preceding the vesting date. For MSUs granted in prior years, the measurement date is the applicable anniversary of the grant date. The minimum payout performance factor that must be achieved to earn any payout is 60% and the maximum payout factor is 200%. If our stock price performance is below 60%, then the portion of the award scheduled to vest will be forfeited. The following chart shows the performance periods for the MSU awards granted to our executives in March 2015:2016:
For illustrative purposes, the following chart shows the payouts of the MSU award we granted on March 6, 2011, with a grant date share price of $25.54 (ten-day average closing price) and assuming a $1 million award value that is divided into four equal tranches of $250,000:
The total pre-tax value realized from the MSUs over the life of the award was $3,166,421 (total value paid out on all tranches), or a 217% increase over the initial pre-tax value. This compares to our TSR of 184% over the same period. MSU awards provide strong alignment of shareholders' interests and executives' incentives, as demonstrated by this illustration.
Performance Results
The following table summarizes the payout factors relating to the tranches that vested in 2015the first half of 2016 for MSU awards outstanding at that time:
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | |
Grant Date | Vesting Date | # of Years in Performance Period | Payout Factor | Grant Date | Vesting Date | # of Years in Performance Period | Payout Factor | |||||||||||||
| | March 1, 2011 | March 1, 2015 | 4 | 200.00% | | March 6, 2012 | March 6, 2016 | 4 | 195.14% | | ||||||||||
| March 6, 2012 | March 6, 2015 | 3 | 193.11% | March 10, 2013 | March 10, 2016 | 3 | 168.83% | |||||||||||||
| | March 10, 2013 | March 10, 2015 | 2 | 163.42% | | March 10, 2014 | March 10, 2016 | 2 | 114.15% | | ||||||||||
| March 10, 2014 | March 10, 2015 | 1 | 110.49% | March 10, 2015 | March 10, 2016 | 1 | 98.44% | |||||||||||||
| | | | | | | | | | | | May 5, 2015 | May 5, 2016 | 1 | 108.12% | | |||||
| | | | | | | | | | | | ||||||||||
Restricted Stock Units and Stock Options
In 2015,2016, we did not grant any service-based restricted stock units to executives as part of our annual long-term incentive program. Restricted stock units may be granted selectively to executives at other times of the year generally as inducement grants as part of an offer in attracting candidates to BMS, for purposes of attracting, retaining andemployees, or for providing special recognition, such as when an employee assumes significant increases in responsibility. During 2015,2016, no special restricted stock unit awards were granted to any of our Named Executive Officers. We have not granted any stock options to our executives since 2009.
Process for Annual Equity Award Grants
Annual equity awards are typically approved on the date the Committee and full Board meet during the first week of March with a grant effective date of March 10. We believe that consistent timing of equity award grants is a good corporate governance practice that reduces the risk of selecting a grant date with a preferential stock price.
Beginning with the equity awards granted in March 2014, the Committee established annual equity award guidelines for all executives at the company, including our Named Executive Officers other than the CEO, as a percentage of salary rather than a fixed dollar amount. The CEO's long-term incentive award level is assessed by the Committee annually. In addition, in 2014 we eliminated dividend equivalents under all of our annual equity awards, including our PSUs and MSUs.
Based upon individual performance, an executive other than the CEO may receive a long-term incentive award ranging from 0% to 150% of the target award. Once the grant value is established for each executive, 60% of the value is converted into PSUs and 40% into MSUs.
In determining the size of the individual long-term incentive awards granted to our Named Executive Officers in March 2015,2016, the Committee considered the prior year's performance of each executive as well as ways to motivate our Named Executive Officers to focus on the company's long-term performance over the next three years and beyond. Each Named Executive Officer, other than the CEO, had a target value for their long-term incentive award granted in March 2015.2016. The Committee approved individual awards ranging between 125%130% and 135%140% of the target value for these Named Executive Officers based on strong individual performance during 2014. In addition, the Committee approved an individual award for Dr. Caforio in his role as COO at 150% of the target value.2015. The CEO's long-term incentive award is not based on a target value and is determined annually by the Committee based on competitive benchmarks and individual performance and contributions. Dr. Caforio's award took into account his strong performance as COOCEO during 20142015 and, as discussed above, a long-term incentive opportunity that was commensurate with his new role as CEO and the competitive market pay for that position.
Other Elements of 20152016 Compensation
In addition to the components set forth above, our senior executives, including all of our Named Executive Officers, were entitled to participate in the following plans or arrangements in 2015:2016:
Other Elements of 20152016 NEO Compensation
Post-Employment Benefits
We offer certain plans which provide compensation and benefits to employees who have terminated their employment. These plans are periodically reviewed by the Committee to ensure that they are consistent with competitive practice. The plans offered are common within our primary peer group and enhance our ability to attract and retain key talent.
Change-in-Control Arrangements
We have entered into change-in-control agreements with certain executives including the CEO and other Named Executive Officers. These agreements enable management to evaluate and support potential transactions that might be beneficial to shareholders even though the result would be a change in controlchange-in-control of BMS. Additionally, the agreements provide for continuity of management in the event of a change in control.change-in-control. Our agreements require a "double-trigger" before any payments are made to an executive. This means that payments are only made in the event of a change in controlchange-in-control and subsequent involuntary termination or termination for good reason of the employee within 36 months after a change in controlchange-in-control for executives who became eligible for change-in-control benefits prior to September 1, 2010, or within 24 months after a change in controlchange-in-control for executives who became eligible for change-in-control benefits after September 1, 2010.
With respect to our Named Executive Officers, if payments made to a covered officer are subject to excise tax as excess parachute payments by the Internal Revenue Code, then the covered officer is eligible to have the compensation grossed up to fully offset the excise taxes. However, if the payment does not exceed the excise tax threshold by more than 10%, we will reduce the payment so that no portion of the payment is subject to excise tax and no gross-up would be made. As of September 1, 2010, we no longer gross up compensation on excess parachute payments for newly eligible executives. In December 2014, the Committee determined that it would eliminate the remaining excise tax gross-up provisions in change-in-control agreements for grandfathered executives, including all of our Named Executive Officers. This change became effective as of January 1, 2016.
If a change in controlchange-in-control occurs during the term of the agreement, the agreement will continue in effect for either 36 months or 24 months beyond the month in which such change in controlchange-in-control occurred depending on whether the executive became eligible for change-in-control benefits before or after
September 1, 2010. The value of this benefit for our Named Executive Officers is provided in the "Post-Termination Benefits" section.
Severance Plan
The Bristol-Myers Squibb Senior Executive Severance Plan provides a competitive level of severance protection for certain senior executives (including the Named Executive Officers) to help us attract and retain key talent necessary to run our Company. The value of this benefit for our Named Executive Officers is shown in the "Post-Termination Benefits" section beginning on page 77.64.
Defined Benefit Pension Plans
Our frozen defined benefit pension plans provide retirement income for U.S. employees who joined the Companycompany prior to December 31, 2009 following their retirement. The Retirement Income Plan is a tax-qualified plan, as defined under IRS regulations, and the Benefit Equalization Plan relating to the Retirement Income Plan is a non-qualified plan that provides pension benefits above those allowed under the contribution limits for tax-qualified plans. The Summary Compensation Table reflects the annual increase in the actuarial value of these benefits. Current accrued benefits for each of the participating Named Executive Officers are provided in the Pension Benefit Table. As of December 31, 2009, we discontinued service accruals under our qualified and non-qualified pension plans in the U.S. and Puerto Rico for active plan participants, including all of our Named Executive Officers, and closed the plans to new participants. For active plan participants at year-end 2009, we allowed five additional years of pay growth in our pension plans. Accordingly, 2014 was the last year of pay growth under our pension plans. These actions were taken to align our retirement program with our new biopharmaceutical business strategy and culture, to mitigate volatility risk to the Company,company, to respond to the competitiveness of a changing industry, and to meet the mobility and career expectations of an evolving workforce.
Savings Plans
Our savings plans allow U.S. employees to defer a portion of their total eligible cash compensation and to receive matching contributions from BMS to supplement their savings and retirement income. The Savings and Investment Program is a tax-qualified 401(k) plan, as defined under IRS regulations, and the Benefit Equalization Plan for the Savings and Investment Program is a non-qualified deferred compensation plan that allows employees to defer a portion of their total eligible cash compensation and to receive matching contributions from BMS in excess of the contributions allowed under the Savings and Investment Program. The savings plans are designed to allow employees to accumulate savings for retirement on a tax-advantaged basis. The Companycompany matching contribution under our savings plans equals 100% of the employee's contribution on the first 6% of eligible compensation that an employee elects to contribute. Employees are eligible for an additional automatic Companycompany contribution that is based on a point system of an employee's age plus service as follows: below 40 points, the automatic contribution is an additional 3% of total cash; between 40 and 59 points, the contribution is 4.5%; and at 60 points and above, the contribution is 6%. For those employees with 60 or more points who had 10 or more years of service at year-end 2009, we provided an additional automatic contribution of 2% for a five-year period. Accordingly, 2014 was the last year for this additional 2% automatic contribution for this group. As of December 31, 2009, each Named Executive Officer other than Drs. Cuss and Caforio had earned over 60 points and had more than ten years of service. All U.S. employees are eligible to participate in both savings plans. The Summary Compensation Table reflects Companycompany contributions to these plans during 20152016 in the All Other Compensation column. The Non-Qualified Deferred Compensation Table provides more detail on the Benefit Equalization Plan for the Savings and Investment Program.
Annual Incentive Deferral Plan
We maintain a non-qualified deferred compensation plan for our executives, including our Named Executive Officers. Until we discontinued new deferrals under the plan, effective January 1, 2010, the plan permitted executives to defer up to 100% of their annual cash incentive awards into a choice of two funds: a Bristol-Myers Squibb common stock unit fund and a U.S. Treasury Bill fund. Although we no longer permit new deferrals under the plan, we maintain the plan for executives who made deferrals prior to 2010. We do not pay above-market interest rates on these investments. Upon retirement or termination, plan participants are eligible to receive their deferred amounts based on a previously-selected payout schedule. The Non-Qualified Deferred Compensation Table provides more detail on this plan for those Named Executive Officers who participated in previous years.
Other Compensation
We generally do not provide perquisites or other personal benefits to our Named Executive Officers that are not otherwise available to all salaried employees. However, in 2016, our Named Executive Officers were provided benefits intended for business purposes that were in addition to the benefits offered to all salaried employees. In certain exigent circumstances, these benefits may be used for personal use, which would then be considered part of the Named Executive Officer's total compensation and would be treated as taxable income under the applicable tax laws. We do not reimburse the Named Executive Officers for any taxes paid on such income.
Additionally, all perquisites for each of our Named Executive Officers during 2016 did not exceed $10,000; therefore, "All Other Compensation" for 2016 does not include disclosure of any perquisite amounts as permitted under SEC rules.
Our Compensation Program Design Process
Compensation and Management Development Committee
The Committee is responsible for providing oversight of our executive compensation program for the Named Executive Officers as well as other members of senior management. The Committee is responsible for setting the compensation of the Chief Executive Officer and approving the compensation of all of the other Named Executive Officers and certain other members of senior management.
The Committee annually reviews and evaluates the executive compensation program to ensure that the program is aligned with our compensation philosophy and with our performance. The "Committees of our Board" section onSee page 22 discussesfor a discussion of the duties and responsibilities of the Committee in more detail. As noted above, in 2015 the Committee engaged in an extensive review and approved new designs effective in 2016.
Independent Compensation Consultant
The Committee has retained Compensation Advisory Partners, LLC (CAP) on an annual basis as its independent compensation consultant to provide executive compensation services to the Committee. CAP reports directly to the Committee, and the Committee directly oversees the fees paid for services provided by CAP. The Committee instructs CAP to give advice to the Committee independent of management and to provide such advice for the benefit of our Company and shareholders. CAP does not provide any consulting services to BMS beyond its role as consultant to the Committee.
In 2015,2016, CAP provided the following services:
The Committee reviews the independence of CAP annually in accordance with its charter, applicable SEC rules and NYSE listing requirements. After review and consultation with CAP, the Committee has determined that CAP is independent, and there is no conflict of interest resulting from retaining CAP currently or during the year ended December 31, 2015.2016.
Role of Company Management
The CEO makes recommendations to the Committee concerning the compensation of Named Executive Officers other than the CEO, as well as other members of senior management. In addition, the CEO, CFO and, in the case of our pipeline performance metric, the Chief Scientific Officer, are involved in recommending for the Committee's approval the performance goals for the annual and long-term incentive plans, as applicable. The Chief Human Resources Officer works closely with the Committee, its independent compensation consultant and management to (i) ensure that the Committee is provided with the appropriate information to make its decisions,
(ii) propose recommendations for Committee consideration, and (iii) communicate those decisions to management for implementation.
Executive Compensation Governance Practices
Share Ownership and Retention Policy
In order to preserve the link between the interests of our Named Executive Officers and those of shareholders, executives are expected to use the shares acquired upon the vesting of (i) restricted stock unit awards, if any, (ii) market share unit awards and (iii) performance share unit awards, after satisfying the applicable taxes, to establish and maintain a significant level of direct ownership. This same expectation applies to shares acquired upon the exercise of their previously granted stock options. We continue to maintain longstanding share ownership expectations for our senior executives. Our current Named Executive Officers must comply with the following ownership and retention requirements:
| | | | | | | | | | | | | | | |
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| Stock Ownership | Share Retention Policy—applied to all shares acquired, net of taxes | |||||||||||
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| Guideline as a Multiple of Salary | Prior to Achieving Guideline | After Achieving Guideline | with Share Ownership and Retention Policy | |||||||||
| Giovanni Caforio, M.D. | 6 x | | 100% | | 75% for 1 year | Yes | | ||||||
| Charles Bancroft | 3 x | 100% | 75% for 1 year | Yes | |||||||||
| Francis Cuss, MB | 3 x | | 100% | | 75% for 1 year | Yes | | ||||||
| Sandra Leung | 3 x | 100% | 75% for 1 year | Yes | |||||||||
| Murdo Gordon | | 100% | | 75% for 1 year | Yes | | |||||||
| | | | | | | | | | | | | | | |
Recoupment of Compensation
We maintain clawback provisions relating to stock options, restricted stock units, performance share units and market share units. Under these clawback provisions, executives that violate non-competition or non-solicitation agreements, or otherwise act in a manner detrimental to our interests, forfeit any outstanding awards, and any accrued and unpaid dividend equivalents underlying these awards, as of the date such violation is discovered and have to return any gains realized in the twelve months prior to the violation. These provisions serve to protect our intellectual property and human capital, and help ensure that executives act in the best interest of BMS and our shareholders.
In 2005, the Board adopted a policy wherein the Board will seek reimbursement of annual incentive awards paid to an executive if such executive engaged in misconduct that caused or partially caused a restatement of financial results. In such an event, we will seek to claw back the executive's entire annual incentive for the relevant period, plus a reasonable rate of interest. This policy may be viewed on our website at www.bms.com.
In December 2012, the Board adopted a policy that BMS will seek recoupment of any incentive and/or other compensation paid to executives and certain other employees after December 4, 2012 where:
In any instance where the employee misconduct occurred in a prior year, the Committee may elect to reduce a current or future incentive and/or other compensation award in lieu of requiring reimbursement of past compensation previously paid to such executive or other employee. This policy may be viewed on our website at www.bms.com.
Once the SEC has implemented Dodd-Frank legislation on clawback provisions, we will review and revise our policies, as appropriate, based on such rules.
Equity Grant Policy
The Committee's policy covering equity grants for the Named Executive Officers is as follows:
Approval of Awards
Grant Effective Date
Annual Awards
All Other Awards
In no case whatsoever will the grant effective date precede the approval date of a given award.
Grant Price
Policy Against the Repricing of Stock Options
We have always maintained a consistent policy against the repricing of stock options. We believe this is a critical element in maintaining the integrity of the equity compensation program and ensuring alignment of senior executives' interests with the interests of shareholders. The Board of Directors has adopted a formal policy prohibiting the repricing of stock options without shareholder approval. This policy may be viewed on our website at www.bms.com.
Policy Regarding Shareholder Approval of Severance
The Board has approved a policy that requires shareholder approval of any future agreements that provide for cash severance payments in excess of 2.99 times the sum of an executive's base salary plus annual incentive award. "Cash severance payments" exclude accrued incentive payments, the value of equity acceleration, benefits continuation or the increase in retirement benefits triggered by severance provisions or tax gross-up payments. This policy may be viewed on our website at www.bms.com.
Risk Assessment of Executive Compensation
The Committee annually reviews the compensation programs from a risk perspective. Based on that review of our executive compensation arrangements as detailed beginning on page 21,19, the Committee believes that our
compensation program does not encourage executives to take inappropriate risks that may harm shareholder value. Our compensation program achieves this by striking an appropriate balance between short-term and long-term incentives, using a diversity of metrics to assess performance under our incentive programs, using different forms of long-term incentives, placing caps on our incentive award payout opportunities, following equity grant practices that limit potential for timing awards and having stock ownership and retention requirements.
Tax Implications of Executive Compensation Program
Section 162(m) of the Internal Revenue Code includes potential limitations on the deductibility of compensation in excess of $1 million paid to certain Named Executive Officers. A significant portion of the compensation we pay to our Named Executive Officers qualifies as "performance-based compensation" for purposes of Section 162(m) and is, therefore, eligible to be fully deducted by BMS for federal income tax purposes. We view preserving tax deductibility as an important objective, but not the sole objective, in establishing executive compensation. In specific instances,Accordingly, we may authorize compensation arrangements that are not fully tax deductible, but which promote other important objectives that are in the best interest of the company.deductible. To the extent that compensation paid in 20152016 to certain Named Executive Officers, such as salary and distributions pursuant to the vesting of restricted stock units awarded without performance-based vesting conditions, does not qualify for an exception under Section 162(m) and exceeds $1 million in the aggregate, we will not be able to deduct such excess for federal income tax purposes.
Compensation and Management Development Committee Report
The Compensation and Management Development Committee of Bristol-Myers Squibb Company has reviewed and discussed with management the "Compensation Discussion and Analysis" on pages 3329 to 6556 of this Proxy Statement as required under Item 402(b) of Regulation S-K. Based on its review and discussions with management, the Committee recommended to the full Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Compensation and Management Development Committee
Togo D. West, Jr.,Michael Grobstein, ChairLewis B. CampbellMichael GrobsteinGerald L. Storch
Vicki L. Sato, Ph.D.Gerald L. StorchTogo D. West, Jr.
The following tables and notes present the compensation provided to Giovanni Caforio, M.D., Chief Executive Officer and Chairman-Designate, Charles A. Bancroft, Chief Financial Officer and Executive Vice President, Head of Global Business Operations and Chief Financial Officer, the three other most highly compensated Executive Officers, and Lamberto Andreotti, Former Chief Executive Officer.Officers.
Summary Compensation Table
For Fiscal Years Ended December 31, 2016, 2015 2014 and 20132014
Name and Principal Position | Year (1) | Salary (2) | Stock Awards (3) | Non-Equity Incentive Plan Compensation (4) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings (5) | All Other Compensation (6) | Total | | ||||||||||||||||
Giovanni Caforio, M.D. | | 2015 | $ | 1,290,323 | $ | 10,443,900 | $ | 3,496,370 | $ | 0 | $ | 409,844 | $ | 15,640,437 | ||||||||||
Chief Executive Officer | | 2014 | $ | 915,962 | $ | 3,999,630 | $ | 2,125,043 | $ | 0 | $ | 204,543 | $ | 7,245,178 | ||||||||||
| | 2013 | $ | 748,320 | $ | 1,587,106 | $ | 788,565 | $ | 0 | $ | 177,861 | $ | 3,301,852 | |||||||||||
Charles Bancroft | 2015 | $ | 966,342 | $ | 4,714,600 | $ | 1,962,093 | $ | 763,316 | $ | 303,893 | $ | 8,710,244 | |||||||||||
EVP and Chief Financial Officer | 2014 | $ | 910,520 | $ | 5,287,786 | $ | 1,566,095 | $ | 4,004,475 | $ | 285,408 | $ | 12,054,284 | |||||||||||
| 2013 | $ | 901,092 | $ | 4,778,079 | $ | 1,128,108 | $ | 759,507 | $ | 311,230 | $ | 7,878,016 | ||||||||||||
Francis Cuss, MB BChir, FRCP | | 2015 | $ | 941,971 | $ | 3,637,026 | $ | 1,780,502 | $ | 31,751 | $ | 315,284 | $ | 6,706,534 | ||||||||||
EVP and Chief Scientific Officer | | 2014 | $ | 875,000 | $ | 3,541,409 | $ | 1,685,600 | $ | 782,167 | $ | 194,805 | $ | 7,078,981 | ||||||||||
| | 2013 | $ | 736,102 | $ | 2,016,197 | $ | 748,372 | $ | 65,331 | $ | 153,035 | $ | 3,719,037 | ||||||||||
Sandra Leung | 2015 | $ | 925,146 | $ | 3,596,111 | $ | 1,747,429 | $ | 396,080 | $ | 265,992 | $ | 6,930,758 | |||||||||||
EVP and General Counsel | 2014 | $ | 849,750 | $ | 3,981,588 | $ | 1,291,456 | $ | 1,694,853 | $ | 237,158 | $ | 8,054,805 | |||||||||||
| 2013 | $ | 843,087 | $ | 2,883,914 | $ | 844,238 | $ | 0 | $ | 245,048 | $ | 4,816,287 | ||||||||||||
Murdo Gordon | | 2015 | $ | 669,519 | $ | 1,816,126 | $ | 1,019,881 | $ | 0 | $ | 148,677 | $ | 3,654,203 | ||||||||||
Head of Worldwide Markets | | | | | | | | |||||||||||||||||
Lamberto Andreotti(7) | 2015 | $ | 1,052,692 | $ | 3,619,025 | $ | 2,693,164 | $ | 0 | $ | 800,002 | $ | 8,164,883 | |||||||||||
Former Chief Executive Officer | 2014 | $ | 1,700,000 | $ | 18,032,703 | $ | 5,614,080 | $ | 945,611 | $ | 769,988 | $ | 27,062,382 | |||||||||||
| 2013 | $ | 1,686,539 | $ | 14,586,898 | $ | 3,799,913 | $ | 0 | $ | 774,396 | $ | 20,847,746 | ||||||||||||
Name and Principal Position | Year (1) | Salary (2) | Stock Awards (3) | Non-Equity Incentive Plan Compensation (4) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings (5) | All Other Compensation (6) | Total | | ||||||||||||||||
Giovanni Caforio, M.D.(7) | | 2016 | $ | 1,513,077 | $ | 11,823,808 | $ | 2,995,839 | $ | 0 | $ | 601,134 | $ | 16,933,858 | ||||||||||
Chief Executive Officer and | | 2015 | $ | 1,290,323 | $ | 10,443,900 | $ | 3,496,370 | $ | 0 | $ | 409,844 | $ | 15,640,437 | ||||||||||
Chairman-Designate | | 2014 | $ | 915,962 | $ | 3,999,630 | $ | 2,125,043 | $ | 0 | $ | 204,543 | $ | 7,245,178 | ||||||||||
Charles Bancroft | 2016 | $ | 966,115 | $ | 4,013,210 | $ | 1,530,654 | $ | 110,329 | $ | 351,385 | $ | 6,971,693 | |||||||||||
Chief Financial Officer & EVP, | 2015 | $ | 966,342 | $ | 4,714,600 | $ | 1,962,093 | $ | 763,316 | $ | 303,893 | $ | 8,710,244 | |||||||||||
Head of Global Business Operations | 2014 | $ | 910,520 | $ | 5,287,786 | $ | 1,566,095 | $ | 4,004,475 | $ | 285,408 | $ | 12,054,284 | |||||||||||
Francis Cuss, MB BChir, FRCP | | 2016 | $ | 960,306 | $ | 3,753,561 | $ | 1,026,302 | $ | 0 | $ | 328,897 | $ | 6,069,066 | ||||||||||
EVP and Chief Scientific Officer | | 2015 | $ | 941,971 | $ | 3,637,026 | $ | 1,780,502 | $ | 31,751 | $ | 315,284 | $ | 6,706,534 | ||||||||||
| | 2014 | $ | 875,000 | $ | 3,541,409 | $ | 1,685,600 | $ | 782,167 | $ | 194,805 | $ | 7,078,981 | |||||||||||
Sandra Leung | 2016 | $ | 919,945 | $ | 2,883,253 | $ | 1,214,632 | $ | 103,886 | $ | 320,085 | $ | 5,441,801 | |||||||||||
EVP and General Counsel | 2015 | $ | 925,146 | $ | 3,596,111 | $ | 1,747,429 | $ | 396,080 | $ | 265,992 | $ | 6,930,758 | |||||||||||
| 2014 | $ | 849,750 | $ | 3,981,588 | $ | 1,291,456 | $ | 1,694,853 | $ | 237,158 | $ | 8,054,805 | ||||||||||||
Murdo Gordon | | 2016 | $ | 737,225 | $ | 1,998,249 | $ | 903,363 | $ | 147,030 | $ | 204,480 | $ | 3,990,347 | ||||||||||
EVP and Chief Commercial Officer | | 2015 | $ | 669,519 | $ | 1,816,126 | $ | 1,019,881 | $ | 0 | $ | 148,677 | $ | 3,654,203 | ||||||||||
(1)
Statements for the specified years. For performance share unit awards, the following represents the aggregate value based on the maximum number of shares that can be earned for the awards granted in the specified yearyears.
| Performance Share Units | |||||||||||||||||||||
| Maximum Performance Share Units | | |||||||||||||||||||||
Name | 2013 | 2014 | 2015 | | 2014 | 2015 | 2016 | | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Giovanni Caforio, M.D. | $ | 1,436,011 | $ | 4,581,476 | $ | 10,869,950 | $ | 4,581,476 | $ | 10,869,950 | $ | 11,433,139 | ||||||||||
Charles Bancroft | $ | 4,741,036 | $ | 6,320,423 | $ | 5,246,562 | $ | 6,320,423 | $ | 5,246,562 | $ | 3,880,596 | ||||||||||
Francis Cuss, MB BChir, FRCP | $ | 1,867,635 | $ | 3,970,800 | $ | 3,849,699 | $ | 3,970,800 | $ | 3,849,699 | $ | 3,629,505 | ||||||||||
Sandra Leung | $ | 3,608,164 | $ | 4,767,532 | $ | 4,000,898 | $ | 4,767,532 | $ | 4,000,898 | $ | 2,787,993 | ||||||||||
Murdo Gordon(1) | | n.a. | | n.a. | $ | 1,936,940 | | n.a. | $ | 1,936,940 | $ | 1,932,229 | ||||||||||
Lamberto Andreotti | $ | 17,513,725 | $ | 22,316,150 | $ | 6,061,867 | ||||||||||||||||
(4)
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exchange rates from CAD to USD. Mr. Gordon commenced his participation in the U.S. pension plan effective July 1, 2003.
Additionally, Mr. Gordon was a participant in our KIP Supplemental Plan, payable in USD, and Canada RIP, payable in CAD, from August 1, 1989 through June 30, 2003. The change in value relating to the KIP Supplemental Plan and Canada RIP also reflects the difference in exchange rates used to convert the 2014, 2015 and 20152016 amounts from CAD into USD. These exchange rates were 0.8696 for 2014, and 0.7335 for 2015. Consequently,2015, and 0.7389 for Mr. Gordon,2016.
For all three Named Executive Officers, the decrease was due mainly to the decrease in the exchange rate from 2014 to 2015. The decrease was also due to (i) an increase in discount rates and (ii) updated annuity mortality assumptions and was partially offset by (i) expected updates toupdated annuity and lump sum mortality assumptionsprojection scales.
For 2016, the change in the pension value was negative for Dr. Cuss ($160,965). For Dr. Cuss, the decrease reflects updated annuity and (ii) the fact that thatlump sum mortality projection scales and one less year of payments, as he is one year closer to ageover 60, the earliest age at which participants are eligible for an unreduced benefit. Mr. Andreotti receivedpartially offset by a full distribution of his Retirement Income Plan benefitdecrease in September, 2015. A full distribution of the Benefit Equalization Plan benefit, effective September 1, 2015, was paid in March, 2016. For more information with respect to Mr. Andreotti's pension values, please see the "Present Value of Accumulated Pension Benefits" table on page 75.
discount rates. Dr. Caforio is not a participant in any of the company's defined benefit pension plans.
(6)
All perquisites for each of our Named Executive Officers during 2016 did not exceed $10,000; therefore, the amounts indicated for 2016 do not include disclosure of any perquisite amounts as permitted under SEC rules. On occasion, a family member accompanied Dr. Caforio when traveling on the company's HeliFlite account on business. Dr. Caforio paid the taxes on the imputed income as calculated using the Standard Industry Fare Level (SIFL) rate. We did not reimburse Dr. Caforio for taxes he paid.
TableBoard with the effective date of Contents
May 2, 2017, the date of the company's annual meeting of shareholders.
Grants of Plan-Based Awards20152016 Fiscal Year
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | | Estimated Future Payouts Under Equity Incentive Plan Awards (shares) | | Grant Date Fair Value of Stock and | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | | Estimated Future Payouts Under Equity Incentive Plan Awards (shares) | | Grant Date Fair Value of Stock and | |||||||||||||||||||||||||||||||||||||||||||||
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Name | Award Type | | Grant Date(1) | | Approval Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | Option Awards | Award Type | | Grant Date(1) | | Approval Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | Option Awards | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Giovanni Caforio, M.D. | AIP | | | | | $ | 207,325 | $ | 1,782,671 | $ | 4,475,939 | | | | | | | | | AIP | | | | | $ | 263,856 | $ | 2,268,750 | $ | 4,537,500 | | | | | | | | | ||||||||||||||||||||||
| PSU | | 03/10/15 | | 03/02/15 | | | | | | | | 1,244 | | 9,757 | | 16,343 | (3)(5) | $ | 639,376 | (8) | PSU | | 03/10/16 | | 03/03/16 | | | | | | | | 18,001 | | 109,099 | | 218,198 | (3) | $ | 7,077,252 | (5) | ||||||||||||||||||
| PSU | | 03/10/15 | | 03/02/15 | | | | | | | | 4,315 | | 42,307 | | 85,037 | (4)(6) | $ | 2,744,455 | (9) | MSU | | 03/10/16 | | 03/03/16 | | | | | | | | 43,640 | | 72,733 | | 145,466 | (4) | $ | 4,746,556 | (6) | ||||||||||||||||||
| PSU | | 05/05/15 | | 03/02/15 | | | | | | | | 4,920 | | 48,240 | | 96,962 | (4a)(6) | $ | 3,105,691 | (10) | |||||||||||||||||||||||||||||||||||||||
| MSU | | 03/10/15 | | 03/02/15 | | | | | | | | 16,923 | | 28,205 | | 56,410 | (7) | $ | 1,894,530 | (9) | |||||||||||||||||||||||||||||||||||||||
| MSU | | 05/05/15 | | 03/02/15 | | | | | | | | 19,296 | | 32,160 | | 64,320 | (7a) | $ | 2,059,848 | (10) | |||||||||||||||||||||||||||||||||||||||
Charles Bancroft | AIP | $ | 121,000 | $ | 1,040,415 | $ | 2,612,279 | AIP | $ | 134,811 | $ | 1,159,165 | $ | 2,318,330 | ||||||||||||||||||||||||||||||||||||||||||||||
| PSU | 03/10/15 | 03/02/15 | 1,635 | 12,820 | 21,474 | (3)(5) | $ | 840,095 | (8) | PSU | 03/10/16 | 03/03/16 | 6,110 | 37,030 | 74,060 | (3) | $ | 2,402,136 | (5) | |||||||||||||||||||||||||||||||||||||||||
| PSU | 03/10/15 | 03/02/15 | 3,604 | 35,335 | 71,023 | (4)(6) | $ | 2,292,181 | (9) | MSU | 03/10/16 | 03/03/16 | 14,812 | 24,687 | 49,374 | (4) | $ | 1,611,074 | (6) | |||||||||||||||||||||||||||||||||||||||||
| MSU | 03/10/15 | 03/02/15 | 14,134 | 23,557 | 47,114 | (7) | $ | 1,582,324 | (9) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Francis Cuss, MB BChir, FRCP | AIP | | | | | $ | 105,579 | $ | 907,813 | $ | 2,279,341 | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||
| PSU | | 03/10/15 | | 03/02/15 | | | | | | | | 699 | | 5,479 | | 9,177 | (3)(5) | $ | 359,039 | (8) | |||||||||||||||||||||||||||||||||||||||
| PSU | | 03/10/15 | | 03/02/15 | | | | | | | | 3,049 | | 29,895 | | 60,089 | (4)(6) | $ | 1,939,289 | (9) | |||||||||||||||||||||||||||||||||||||||
Francis Cuss, MB | AIP | | | | | $ | 111,659 | $ | 960,094 | $ | 1,920,188 | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||
BChir, FRCP | PSU | | 03/10/16 | | 03/03/16 | | | | | | | | 5,715 | | 34,634 | | 69,268 | (3) | $ | 2,246,708 | (5) | |||||||||||||||||||||||||||||||||||||||
| MSU | | 03/10/15 | | 03/02/15 | | | | | | | | 11,958 | | 19,930 | | 39,860 | (7) | $ | 1,338,698 | (9) | MSU | | 03/10/16 | | 03/03/16 | | | | | | | | 13,854 | | 23,090 | | 46,180 | (4) | $ | 1,506,853 | (6) | ||||||||||||||||||
Sandra Leung | AIP | $ | 103,617 | $ | 890,950 | $ | 2,237,002 | AIP | $ | 106,978 | $ | 919,841 | $ | 1,839,682 | ||||||||||||||||||||||||||||||||||||||||||||||
| PSU | 03/10/15 | 03/02/15 | 1,244 | 9,757 | 16,343 | (3)(5) | $ | 639,376 | (8) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| PSU | 03/10/15 | 03/02/15 | 2,750 | 26,965 | 54,200 | (4)(6) | $ | 1,749,220 | (9) | PSU | 03/10/16 | 03/03/16 | 4,390 | 26,604 | 53,208 | (3) | $ | 1,725,801 | (5) | |||||||||||||||||||||||||||||||||||||||||
| MSU | 03/10/15 | 03/02/15 | 10,786 | 17,977 | 35,954 | (7) | $ | 1,207,515 | (9) | MSU | 03/10/16 | 03/03/16 | 10,642 | 17,736 | 35,472 | (4) | $ | 1,157,451 | (6) | |||||||||||||||||||||||||||||||||||||||||
Murdo Gordon | AIP | | | | | $ | 60,476 | $ | 520,000 | $ | 1,305,619 | | | | | | | | | AIP | | | | | $ | 79,563 | $ | 684,117 | $ | 1,368,234 | | | | | | | | | ||||||||||||||||||||||
| PSU | | 03/10/15 | | 03/02/15 | | | | | | | | 390 | | 3,061 | | 5,127 | (3)(5) | $ | 200,587 | (8) | PSU | | 03/10/16 | | 03/03/16 | | | | | | | | 3,042 | | 18,438 | | 36,876 | (3) | $ | 1,196,073 | (5) | ||||||||||||||||||
| PSU | | 03/10/15 | | 03/02/15 | | | | | | | | 1,503 | | 14,734 | | 29,615 | (4)(6) | $ | 955,795 | (9) | MSU | | 03/10/16 | | 03/03/16 | | | | | | | | 7,375 | | 12,292 | | 24,584 | (4) | $ | 802,176 | (6) | ||||||||||||||||||
| MSU | | 03/10/15 | | 03/02/15 | | | | | | | | 5,893 | | 9,822 | | 19,644 | (7) | $ | 659,744 | (9) | |||||||||||||||||||||||||||||||||||||||
Lamberto Andreotti(11) | AIP | $ | 197,720 | $ | 1,700,085 | $ | 4,268,582 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSU | 03/10/15 | 03/02/15 | 7,041 | 55,227 | 92,505 | (3)(5) | $ | 3,619,025 | (8) | |||||||||||||||||||||||||||||||||||||||||||||||||||
(1)
threshold payout on the least weighted metric only and the threshold adjustment factor with respect to the relative 3-year TSR. The maximum performance will result in a payout of 201%200% of target, which is the maximum potential payout of 167.50%, based on financial achievement, further adjusted by the maximum potential 3-year relative TSR modifier of 120%.target. These performance share unit awards do not accrue dividend equivalents.
Outstanding Equity Awards at Fiscal Year-End20152016 Fiscal Year
| | Option Awards | Stock Awards | | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||
| | Grant Date/ Performance Award | | Number of Securities Underlying Unexercised Options (#) | | Option Exercise | | Option Expiration | | Number of Shares or Units of Stock That Have Not Vested | | Market Value of Shares or Units of Stock That Have Not Vested | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights That Have Not Vested | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Rights That Have Not Vested | �� | | Grant Date/ Performance Award | | Number of Securities Underlying Unexercised Options (#) | | Option Exercise | | Option Expiration | | Number of Shares or Units of Stock That Have Not Vested | | Market Value of Shares or Units of Stock That Have Not Vested | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights That Have Not Vested | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Rights That Have Not Vested | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Period | | Exercisable(1) | | Unexercisable | | Price | | Date | | (#)(2) | | ($)(2)(3) | | (#) | | ($)(3) | | Period | | Exercisable (1) | | Unexercisable | | Price | | Date | | (#) (2) | | ($) (2)(3) | | (#) | | ($) (3) | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Giovanni Caforio, M.D. | | 3/7/2006 | | 20,125 | | 0 | $ | 22.89 | | 3/6/2016 | | | | | | | | | | 1/1/2014-2/28/2017 | | | | | | | | | | | | | | 41,431 | (5) | $ | 2,421,221 | |||||||||||||||||||
| | 3/6/2007 | | 21,615 | | 0 | $ | 27.01 | | 3/5/2017 | | | | | | | | | ||||||||||||||||||||||||||||||||||||||
| | 3/4/2008 | | 28,840 | | 0 | $ | 23.12 | | 3/3/2018 | | | | | | | | | ||||||||||||||||||||||||||||||||||||||
| | 1/1/2013-12/31/2015 | | | | | | | | | | 42,725 | (5) | $ | 2,939,029 | | | | | |||||||||||||||||||||||||||||||||||||
| | 1/1/2014-2/28/2017 | | | | | | | | | | | | | | 41,431 | (6) | $ | 2,850,052 | | 1/1/2015-2/28/2018 | | | | | | | | | | | | | | 121,333 | (6) | $ | 7,090,699 | ||||||||||||||||||
| | 1/1/2015-2/28/2018 | | | | | | | | | | | | | | 121,333 | (7) | $ | 8,346,496 | | 1/1/2016-2/28/2019 | | | | | | | | | | | | | | 54,550 | (7) | $ | 3,187,873 | ||||||||||||||||||
| | 3/6/2012 | | | | | | | | | | | | | | 5,778 | (8) | $ | 397,469 | | 3/10/2013 | | | | | | | | | | | | | | 9,758 | (8) | $ | 570,258 | ||||||||||||||||||
| | 3/10/2013 | | | | | | | | | | | | | | 19,514 | (8) | $ | 1,342,368 | | 3/10/2014 | | | | | | | | | | | | | | 22,808 | (8) | $ | 1,332,900 | ||||||||||||||||||
| | 3/10/2014 | | | | | | | | | | | | | | 34,212 | (8) | $ | 2,353,443 | | 3/10/2015 | | | | | | | | | | | | | | 12,692 | (9) | $ | 741,744 | ||||||||||||||||||
| | 3/10/2015 | | | | | | | | | | | | | | 16,923 | (9) | $ | 1,164,133 | | 5/5/2015 | | | | | | | | | | | | | | 48,240 | (8) | $ | 2,819,146 | ||||||||||||||||||
| | 5/5/2015 | | | | | | | | | | | | | | 19,296 | (9) | $ | 1,327,372 | | 3/10/2016 | | | | | | | | | | | | | | 43,640 | (9) | $ | 2,550,310 | ||||||||||||||||||
Charles Bancroft | 3/6/2007 | 22,598 | 0 | $ | 27.01 | 3/5/2017 | 3/6/2007 | 22,598 | 0 | $ | 27.01 | 3/5/2017 | ||||||||||||||||||||||||||||||||||||||||||||
| 3/4/2008 | 37,460 | 0 | $ | 22.14 | 3/3/2018 | 3/4/2008 | 37,460 | 0 | $ | 22.14 | 3/3/2018 | |||||||||||||||||||||||||||||||||||||||||||||
| 3/3/2009 | 52,884 | 0 | $ | 17.51 | 3/2/2019 | 3/3/2009 | 52,884 | 0 | $ | 17.51 | 3/2/2019 | |||||||||||||||||||||||||||||||||||||||||||||
| 11/1/2011 | 3,100 | (10) | $ | 213,249 | 12/2/2013 | 12,802 | (10) | $ | 748,149 | |||||||||||||||||||||||||||||||||||||||||||||||
| 12/2/2013 | 19,205 | (10) | $ | 1,321,112 | 1/1/2014-2/28/2017 | 49,620 | (5) | $ | 2,899,789 | |||||||||||||||||||||||||||||||||||||||||||||||
| 1/1/2013-12/31/2015 | 56,140 | (5) | $ | 3,861,842 | 1/1/2015-2/28/2018 | 47,349 | (6) | $ | 2,767,070 | |||||||||||||||||||||||||||||||||||||||||||||||
| 1/1/2014-2/28/2017 | 49,620 | (6) | $ | 3,413,356 | 1/1/2016-2/28/2019 | 18,515 | (7) | $ | 1,082,017 | |||||||||||||||||||||||||||||||||||||||||||||||
| 1/1/2015-2/28/2018 | 47,349 | (7) | $ | 3,257,131 | 3/10/2013 | 12,820 | (8) | $ | 749,201 | |||||||||||||||||||||||||||||||||||||||||||||||
| 3/6/2012 | 14,648 | (8) | $ | 1,007,636 | 3/10/2014 | 27,316 | (8) | $ | 1,596,347 | |||||||||||||||||||||||||||||||||||||||||||||||
| 3/10/2013 | 25,640 | (8) | $ | 1,763,776 | 3/10/2015 | 10,601 | (9) | $ | 619,511 | |||||||||||||||||||||||||||||||||||||||||||||||
| 3/10/2014 | 40,974 | (8) | $ | 2,818,601 | 3/10/2016 | 14,812 | (9) | $ | 865,625 | |||||||||||||||||||||||||||||||||||||||||||||||
| 3/10/2015 | 14,134 | (9) | $ | 972,292 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Francis Cuss, MB | | 7/1/2013 | | | | | | | | | | 10,963 | (10) | $ | 754,145 | | | | | |||||||||||||||||||||||||||||||||||||
| | 1/1/2013-12/31/2015 | | | | | | | | | | 23,992 | (5) | $ | 1,650,427 | | | | | |||||||||||||||||||||||||||||||||||||
Francis Cuss, MB | | 7/1/2013 | | | | | | | | | | 7,308 | (10) | $ | 427,080 | | | | | |||||||||||||||||||||||||||||||||||||
BChir, FRCP | | 1/1/2014-2/28/2017 | | | | | | | | | | | | | | 38,362 | (5) | $ | 2,241,882 | |||||||||||||||||||||||||||||||||||||
| | 1/1/2014-2/28/2017 | | | | | | | | | | | | | | 38,362 | (6) | $ | 2,638,930 | | 1/1/2015-2/28/2018 | | | | | | | | | | | | | | 40,059 | (6) | $ | 2,341,065 | ||||||||||||||||||
| | 1/1/2015-2/28/2018 | | | | | | | | | | | | | | 40,059 | (7) | $ | 2,755,679 | | 1/1/2016-2/28/2019 | | | | | | | | | | | | | | 17,317 | (7) | $ | 1,012,005 | ||||||||||||||||||
| | 3/6/2012 | | | | | | | | | | | | | | 6,020 | (8) | $ | 414,116 | | 3/10/2013 | | | | | | | | | | | | | | 5,480 | (8) | $ | 320,251 | ||||||||||||||||||
| | 3/10/2013 | | | | | | | | | | | | | | 10,958 | (8) | $ | 753,801 | | 3/10/2014 | | | | | | | | | | | | | | 21,118 | (8) | $ | 1,234,136 | ||||||||||||||||||
| | 3/10/2014 | | | | | | | | | | | | | | 31,678 | (8) | $ | 2,179,130 | | 3/10/2015 | | | | | | | | | | | | | | 8,969 | (9) | $ | 524,137 | ||||||||||||||||||
| | 3/10/2015 | | | | | | | | | | | | | | 11,958 | (9) | $ | 822,591 | | 3/10/2016 | | | | | | | | | | | | | | 13,854 | (9) | $ | 809,628 | ||||||||||||||||||
Sandra Leung | 3/7/2006 | 14,560 | 0 | $ | 22.73 | 3/6/2016 | 3/6/2007 | 116,100 | 0 | (4) | $ | 27.01 | 3/5/2017 | |||||||||||||||||||||||||||||||||||||||||||
| 12/1/2006 | 100,000 | 0 | (4) | $ | 24.74 | 11/30/2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/6/2007 | 116,100 | 0 | (4) | $ | 27.01 | 3/5/2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/4/2008 | 156,582 | 0 | (4) | $ | 22.14 | 3/3/2018 | 3/4/2008 | 156,582 | 0 | (4) | $ | 22.14 | 3/3/2018 | |||||||||||||||||||||||||||||||||||||||||||
| 3/3/2009 | 169,893 | 0 | (4) | $ | 17.51 | 3/2/2019 | 3/3/2009 | 169,893 | 0 | (4) | $ | 17.51 | 3/2/2019 | |||||||||||||||||||||||||||||||||||||||||||
| 1/1/2013-12/31/2015 | 42,725 | (5) | $ | 2,939,029 | 1/1/2014-2/28/2017 | 37,198 | (5) | $ | 2,173,869 | |||||||||||||||||||||||||||||||||||||||||||||||
| 1/1/2014-2/28/2017 | 37,198 | (6) | $ | 2,558,871 | 1/1/2015-2/28/2018 | 36,133 | (6) | $ | 2,111,618 | |||||||||||||||||||||||||||||||||||||||||||||||
| 1/1/2015-2/28/2018 | 36,133 | (7) | $ | 2,485,596 | 1/1/2016-2/28/2019 | 13,302 | (7) | $ | 777,369 | |||||||||||||||||||||||||||||||||||||||||||||||
| 3/6/2012 | 11,148 | (8) | $ | 766,871 | 3/10/2013 | 9,758 | (8) | $ | 570,258 | |||||||||||||||||||||||||||||||||||||||||||||||
| 3/10/2013 | 19,514 | (8) | $ | 1,342,368 | 3/10/2014 | 20,478 | (8) | $ | 1,196,734 | |||||||||||||||||||||||||||||||||||||||||||||||
| 3/10/2014 | 30,718 | (8) | $ | 2,113,091 | 3/10/2015 | 8,090 | (9) | $ | 472,768 | |||||||||||||||||||||||||||||||||||||||||||||||
| 3/10/2015 | 10,786 | (9) | $ | 741,983 | 3/10/2016 | 10,642 | (9) | $ | 621,895 | |||||||||||||||||||||||||||||||||||||||||||||||
Murdo Gordon | | 7/1/2011 | | | | | | | | | | 2,335 | (10) | $ | 160,625 | | | | | | 8/1/2013 | | | | | | | | | | 3,020 | (10) | $ | 176,489 | | | | | ||||||||||||||||||
| | 8/1/2013 | | | | | | | | | | 4,531 | (10) | $ | 311,687 | | | | | | 1/1/2014-2/28/2017 | | | | | | | | | | | | | | 13,357 | (5) | $ | 780,557 | ||||||||||||||||||
| | 1/1/2013-12/31/2015 | | | | | | | | | | 13,402 | (5) | $ | 921,915 | | | | | | 1/1/2015-2/28/2018 | | | | | | | | | | | | | | 19,744 | (6) | $ | 1,153,814 | ||||||||||||||||||
| | 1/1/2014-2/28/2017 | | | | | | | | | | | | | | 13,357 | (6) | $ | 918,798 | | 1/1/2016-2/28/2019 | | | | | | | | | | | | | | 9,219 | (7) | $ | 538,758 | ||||||||||||||||||
| | 1/1/2015-2/28/2018 | | | | | | | | | | | | | | 19,744 | (7) | $ | 1,358,159 | | 3/10/2013 | | | | | | | | | | | | | | 3,060 | (8) | $ | 178,826 | ||||||||||||||||||
| | 3/6/2012 | | | | | | | | | | | | | | 2,564 | (8) | $ | 176,378 | | 3/10/2014 | | | | | | | | | | | | | | 7,352 | (8) | $ | 429,651 | ||||||||||||||||||
| | 3/10/2013 | | | | | | | | | | | | | | 6,120 | (8) | $ | 420,995 | | 3/10/2015 | | | | | | | | | | | | | | 4,420 | (9) | $ | 258,316 | ||||||||||||||||||
| | 3/10/2014 | | | | | | | | | | | | | | 11,028 | (8) | $ | 758,616 | | 3/10/2016 | | | | | | | | | | | | | | 7,375 | (9) | $ | 431,007 | ||||||||||||||||||
| | 3/10/2015 | | | | | | | | | | | | | | 5,893 | (9) | $ | 405,393 | |||||||||||||||||||||||||||||||||||||
Lamberto Andreotti | 12/1/2006 | 100,000 | 0 | (4) | $ | 24.74 | 11/30/2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 3/6/2007 | 234,720 | 0 | (4) | $ | 27.01 | 3/5/2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/4/2008 | 305,909 | 0 | (4) | $ | 22.14 | 3/3/2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/3/2009 | 368,706 | 0 | (4) | $ | 17.51 | 3/2/2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/1/2013-12/31/2015 | 203,178 | (5) | $ | 13,976,584 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/1/2014-2/28/2017 | 81,739 | (6) | $ | 5,622,840 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)
(2)
Option Exercises and Stock Vesting20152016 Fiscal Year
| Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized On Exercise(1) ($) | Number of Shares Acquired on Vesting (#) | Value Realized On Vesting(2) ($) | Number of Shares Acquired on Exercise (#) | Value Realized On Exercise (1) ($) | Number of Shares Acquired on Vesting (#) | Value Realized On Vesting (2) ($) | ||||||||||||||
Giovanni Caforio, M.D. | 0 | $ | 0 | 7,500 | $ | 446,325 | (3) | 70,580 | $ | 3,168,363 | 0 | $ | 0 | (3) | ||||||||
| | | | 22,838 | $ | 1,484,636 | (4) | | | | 36,016 | $ | 2,388,344 | (4) | |||||||||
| | | | 22,851 | $ | 1,423,635 | (5) | | | | 42,992 | $ | 2,791,874 | (5) | |||||||||
Charles Bancroft | 0 | $ | 0 | 3,100 | $ | 203,825 | (3) | 0 | $ | 0 | 9,503 | $ | 515,792 | (3) | ||||||||
| 51,655 | $ | 3,316,189 | (4) | 38,706 | $ | 2,510,280 | (4) | |||||||||||||||
| 57,926 | $ | 3,608,776 | (5) | 56,490 | $ | 3,668,483 | (5) | |||||||||||||||
Francis Cuss, MB BChir, FRCP | 114,010 | $ | 4,797,490 | 0 | $ | 0 | (3) | 0 | $ | 0 | 3,655 | $ | 269,666 | (3) | ||||||||
| | | | 23,528 | $ | 1,515,486 | (4) | | | | 21,429 | $ | 1,390,248 | (4) | |||||||||
| | | | 23,803 | $ | 1,482,932 | (5) | | | | 24,142 | $ | 1,567,792 | (5) | |||||||||
Sandra Leung | 15,000 | $ | 522,898 | 0 | $ | 0 | (3) | 114,560 | $ | 5,169,266 | 0 | $ | 0 | (3) | ||||||||
| 39,226 | $ | 2,518,147 | (4) | 29,381 | $ | 1,905,500 | (4) | |||||||||||||||
| 44,084 | $ | 2,746,417 | (5) | 42,992 | $ | 2,791,874 | (5) | |||||||||||||||
Murdo Gordon | 0 | $ | 0 | 2,335 | $ | 158,009 | (3) | 0 | $ | 0 | 3,846 | $ | 287,399 | (3) | ||||||||
| | | | 10,029 | $ | 646,424 | (4) | | | | 9,600 | $ | 622,849 | (4) | |||||||||
| | | | 10,140 | $ | 631,743 | (5) | | | | 13,486 | $ | 875,755 | (5) | |||||||||
Lamberto Andreotti | 427,500 | $ | 17,047,070 | 0 | $ | 0 | (3) | |||||||||||||||
| 425,866 | $ | 27,622,826 | (4)(6) | |||||||||||||||||||
| 231,280 | $ | 14,408,746 | (5) | |||||||||||||||||||
(1)
Retirement Plan
As of December 31, 2009, we discontinued service accruals under the Retirement Income Plan and Benefit Equalization Plan (BEP)—Retirement Plan in the U.S. and Puerto Rico for active plan participants and we closed the plans to new entrants. For active plan participants at year-end 2009, we provided five additional years of pay growth in the pension plans. Accordingly, 2014 was the last year of pay growth under our pension plans.
The Retirement Income Plan is a tax-qualified defined benefit pension plan under Section 401(a) of the Internal Revenue Code that provides income for employees after retirement. The benefit is calculated based on the employee's final average compensation and years of service. All U.S. employees hired before January 1, 2010 who were not participants in a pension plan through a collective bargaining agreement were eligible for the Retirement Income Planto participate if they worked at least 1,000 hours per year. Employees whose pay or benefits exceeded the IRS qualified plan limits were eligible for the BEP—Retirement Plan.
The key plan provisions of the Retirement Income Plan are as follows:
The BEP—Retirement Plan is a non-qualified plan that provides income for employees after retirement in excess of the benefits payable under the Retirement Income Plan. The benefit is calculated using the same formula as the Retirement Income Plan, but without the limits on compensation and benefits imposed under Section 401(a)(17) and Section 415(b) of the Internal Revenue Code. Employees whose pay or benefits exceeded the IRS qualified plan limits were eligible for the BEP—Retirement Plan.
The provisions are the same as those above for the Retirement Income Plan, except for the following:
Key International Supplemental Program
The Key International Supplemental Program (KIP Supplemental Plan) is provided to supplement an employee's frozen retirement benefit under his or her Home Country Plan by providing an additional benefit that applies final average salary increases to the benefit formula used to determine his or her retirement benefit under his or her Home Country Plan for the period the employee is employed by a participant employer.
Specifically, the retirement income each KIP Supplemental Plan participant would be entitled to receive under the KIP Supplemental Plan is determined as follows:
Under the KIP Supplemental Plan, a Section 409A Participant means a U.S. Participant who accrued benefits under the Plan after December 31, 2004, that are subject to the requirements of Code section 409A.
The Pension Plan for Employees of Bristol-Myers Squibb Canada
The Pension Plan for Employees of Bristol-Myers Squibb Canada (Canada Retirement Income Plan) is a defined benefit plan. The plan was amended effective July 1, 2010 to close the defined benefit component of the plan for future benefit accruals and to create a defined contributions component for future benefit accruals.
The retirement benefit equals:
Present Value of Accumulated Pension Benefits20152016 Fiscal Year
Name | Plan Name | # of Years of Credited Service(1) | Present Value of Accumulated Benefits(2) | Payments During Last Fiscal Year | |||||||
Giovanni Caforio, M.D.(3) | Retirement Income Plan | 0.0 | $ | 0 | $ | 0 | |||||
| Benefit Equalization Plan | 0.0 | $ | 0 | $ | 0 | ||||||
Charles Bancroft(4) | Retirement Income Plan | 25.6 | $ | 1,531,867 | $ | 0 | |||||
| Benefit Equalization Plan | 25.6 | $ | 13,989,678 | $ | 0 | ||||||
Francis Cuss, MB BChir, FRCP(4) | Retirement Income Plan | 6.5 | $ | 455,520 | $ | 0 | |||||
| Benefit Equalization Plan | 6.5 | $ | 2,705,966 | $ | 0 | ||||||
Sandra Leung(4) | Retirement Income Plan | 17.8 | $ | 1,089,529 | $ | 0 | |||||
| Benefit Equalization Plan | 17.8 | $ | 7,861,774 | $ | 0 | ||||||
Murdo Gordon(5) | Retirement Income Plan | 6.5 | $ | 313,031 | $ | 0 | |||||
| Benefit Equalization Plan | 6.5 | $ | 858,814 | $ | 0 | ||||||
| KIP Supplemental Plan | 13.9 | $ | 883,317 | $ | 0 | ||||||
| Canada Retirement Income Plan | 13.9 | $ | 243,663 | $ | 0 | ||||||
Lamberto Andreotti(3)(4)(6) | Retirement Income Plan | 4.3 | $ | 0 | $ | (255,741 | ) | ||||
| Benefit Equalization Plan | 4.3 | $ | 6,175,364 | $ | 0 | ||||||
Name | Plan Name | # of Years of Credited Service (1) | Present Value of Accumulated Benefits (2) | Payments During Last Fiscal Year | |||||||
Giovanni Caforio, M.D. (3) | Retirement Income Plan | 0.0 | $ | 0.00 | $ | 0 | |||||
| Benefit Equalization Plan | 0.0 | $ | 0.00 | $ | 0 | ||||||
Charles Bancroft (4) | Retirement Income Plan | 25.6 | $ | 1,635,545 | $ | 0 | |||||
| Benefit Equalization Plan | 25.6 | $ | 13,996,329 | $ | 0 | ||||||
Francis Cuss, MB BChir, FRCP (4) | Retirement Income Plan | 6.5 | $ | 453,778 | $ | 0 | |||||
| Benefit Equalization Plan | 6.5 | $ | 2,546,742 | $ | 0 | ||||||
Sandra Leung (4) | Retirement Income Plan | 17.8 | $ | 1,166,924 | $ | 0 | |||||
| Benefit Equalization Plan | 17.8 | $ | 7,888,265 | $ | 0 | ||||||
Murdo Gordon (5) | Retirement Income Plan | 6.5 | $ | 341,353 | $ | 0 | |||||
| Benefit Equalization Plan | 6.5 | $ | 877,225 | $ | 0 | ||||||
| KIP Supplemental Plan | 13.9 | $ | 959,891 | $ | 0 | ||||||
| Canada Retirement Income Plan | 13.9 | $ | 267,385 | $ | 0 | ||||||
(1)
(2)
These assumptions are the same as those disclosed in conformity with generally accepted accounting principles. For active executives, payments are assumed to begin at age 60 for the Retirement Income and Benefit Equalization Plans and at age 62 for KIP Supplemental Plan and Canada Retirement Income Plan, the earliest age that employees are eligible for an unreduced pension, or current age if over age 60 or 62, respectively. The actual benefit received will vary based on age and interest rates at the time of retirement.
Non-Qualified Deferred Compensation Plan
The Benefit Equalization Plan (BEP)—Savings Plan is a non-qualified deferred compensation plan that allows employees to defer a portion of their total eligible cash compensation and to receive company matching contributions in excess of contributions allowed under the Savings and Investment Program. The Savings and Investment Program is a tax-qualified plan, as defined under Section 401(a) and Section 401(k) of the Internal Revenue Code. Employees who are eligible to participate in the Savings and Investment Program, and whose pay or benefits exceed the IRS qualified plan limits, are eligible for the BEP—Savings Plan. The key provisions of the BEP—Savings Plan are as follows:
defined under Section 409A of the Internal Revenue Code, is subject to 409A regulations and is therefore subject to a six-month deferraldelay following the executive's separation from service.
Non-Qualified Deferred Compensation Plan20152016 Fiscal Year
Name | Executive Contributions in 2015(1) | Registrant Contributions in 2015(2) | Aggregate Earnings in 2015(3) | Aggregate Withdrawals/ Distributions in 2015 | Aggregate Balance at December 31, 2015(2)(4) | |||||||||||
Giovanni Caforio, M.D.(5) | $ | 189,022 | $ | 378,044 | $ | 14,002 | $ | 0 | $ | 1,505,570 | ||||||
Charles Bancroft(5) | $ | 136,046 | $ | 272,093 | $ | 37,728 | $ | 0 | $ | 2,826,675 | ||||||
Francis Cuss, MB BChir, FRCP(5) | $ | 141,729 | $ | 283,484 | $ | (22,437 | ) | $ | 0 | $ | 1,723,617 | |||||
Francis Cuss, MB BChir, FRCP(6) | $ | 0 | $ | 0 | $ | 4,321 | $ | 0 | $ | 2,201,082 | ||||||
Sandra Leung(5) | $ | 306,845 | $ | 255,734 | $ | (56,241 | ) | $ | 0 | $ | 3,607,127 | |||||
Murdo Gordon(5) | $ | 75,916 | $ | 117,349 | $ | 1,987 | $ | 0 | $ | 505,914 | ||||||
Lamberto Andreotti(5)(7) | $ | 384,096 | $ | 768,202 | $ | 237,781 | $ | 0 | $ | 8,852,539 | ||||||
Lamberto Andreotti(8) | $ | 15,273,160 | $ | 0 | $ | 892,921 | $ | 0 | $ | 16,166,081 | ||||||
Name | Executive Contributions in 2016 (1) | Registrant Contributions in 2016 (2) | Aggregate Earnings in 2016 (3) | Aggregate Withdrawals/ Distributions in 2016 | Aggregate Balance at December 31, 2016 (2)(4) | |||||||||||
Giovanni Caforio, M.D. (5) | $ | 284,667 | $ | 569,334 | $ | 124,464 | $ | 0 | $ | 2,484,034 | ||||||
Charles Bancroft (5) | $ | 159,793 | $ | 319,585 | $ | 281,817 | $ | 0 | $ | 3,587,869 | ||||||
Francis Cuss, MB BChir, FRCP (5) | $ | 148,548 | $ | 297,097 | $ | 39,083 | $ | 0 | $ | 2,208,345 | ||||||
Francis Cuss, MB BChir, FRCP (6) | $ | 0 | $ | 0 | $ | 9,755 | $ | 0 | $ | 2,210,836 | ||||||
Sandra Leung (5) | $ | 374,461 | $ | 309,827 | $ | 312,429 | $ | 0 | $ | 4,603,844 | ||||||
Murdo Gordon (5) | $ | 117,349 | $ | 172,680 | $ | 73,533 | $ | 0 | $ | 869,476 | ||||||
| (1) The contribution amounts in this column reflect the deferral of a portion of 2016 base salary and the 2015 annual incentive award that was paid in March 2016. The base salary deferral amount is also included as 2016 Salary in the Summary Compensation Table. The 2015 annual incentive award deferral amount was also included as 2015 Non-Equity Incentive Plan Compensation in the previous year's summary compensation table, as applicable. |
| (2) The contribution amounts in this column are included as All Other Compensation in the Summary Compensation Table. Includes the additional annual registrant contributions earned in 2016 but paid in February 2017. |
| (3) Aggregate earnings are not reflected in the Summary Compensation Table and were not reflected in prior years' summary compensation tables. The company does not pay above-market interest rates on non-qualified deferred compensation. |
| (4) Portions of the aggregate balances in this column reflect amounts reported in the summary compensation tables in prior years as follows: Dr. Caforio, $260,015 for 2014 and for $567,066 for 2015; Dr. Cuss, $245,407 for 2014 and $425,213 for 2015; Mr. Bancroft, $360,926 for 2014 and $408,139 for 2015; Ms. Leung, $456,031 for 2014 and $562,579 for 2015; Mr. Gordon, $193,264 for 2015. |
| (5) Reflects 2016 activity and aggregate balances in the non-qualified BEP-Savings Plan. |
| (6) Reflects earnings and aggregate balances related to prior voluntary deferral of annual incentive award under the Annual Incentive Deferral Plan. The company ceased offering participation in the Annual Incentive Deferral Plan effective January 1, 2010. |
Following is a description of payments and benefits available under different termination scenarios:
Voluntary Termination
The company does not offer any payments or benefits to salaried employees, including the Named Executive Officers, upon a voluntary termination other than those that are vested at the time of termination unless the applicable plan or award agreement provides otherwise.
Voluntary Termination for Good Reason
Under the Bristol-Myers Squibb Senior Executive Severance Plan, certain senior executives (including the Named Executive Officers) are eligible to receive severance payments and benefits if they voluntarily terminate their employment for "good reason," where "good reason" is defined as:
A terminated executive who signs a general release will be eligible for the following:
Retirement and Death
The following benefits are generally available to all salaried employees including the Named Executive Officers:
Annual Incentive—Employees are eligible for a pro-rata award based on the number of months worked in the performance period.
Stock Options—Employees are eligible for accelerated vesting of stock options held at least one year from the grant date and have the full term to exercise vested stock options. All outstanding options held by our employees vested as of December 31, 2013.
Restricted Stock Units—Employees are eligible to vest in a pro-rata portion of restricted stock unit awards held at least one year from the grant date; provided that if an employee turns 65 on or prior to their retirement or death, then any unvested Restricted Stock Units held for at least one year will vest in full prior to their retirement or death.
Market Share Units—Employees are eligible to vest in a pro-rata portion of market share unit awards held at least one year from the grant date, subject to performance provisions; provided that if an employee turns 65 on or prior to their retirement or death, then any unvested Market Share Units held for at least one year will vest in full upon their retirement or death, subject to performance provisions.
Performance Share Units—
vest in a proportionate amount of the performance share units, subject to performance provisions (in the case of death, only performance provisions exclude the 3-year TSR Modifier).
Defined Benefit Pension Plans—Employees are eligible for benefits accrued under the Retirement Income Plan and the BEP—Retirement Plan.
Savings Plans—Employees are eligible for benefits accumulated under the Savings and Investment Program and the BEP—Savings Plan, as well as a pro-rata annual contribution (if applicable) on eligible compensation paid in the year of separation from service or death.
Post-Retirement Medical and Life Insurance—Employees age 55 or older with ten years of service or age 65 or over at the time of retirement are eligible for post-retirement medical and life insurance benefits. Employees retiring with less than 10 years of service are not eligible to receive a company subsidy for their post-retirement medical coverage.
Involuntary Termination Not for Cause
The following benefits are generally available to all salaried employees including the Named Executive Officers:
Annual Incentive—Employees are eligible for a pro-rata award based on the number of months worked in the performance period if the termination occurs on or after September 30th of the plan year. If an employee is eligible to retire, or the employee's age plus years of service equal or exceed 70, and the employee has at least 10 years of service, the employee is eligible for a pro-rata award based on the number of months worked in the performance period.
Stock Options—Upon signing a general release, an employee has three months to exercise. If an employee is eligible to retire, or the employee's age plus years of service equal or exceed 70 and the
employee has at least 10 years of service, the employee will have the full term to exercise. All outstanding options held by our employees vested as of December 31, 2013.
Restricted Stock Units—Upon signing a general release, employees are eligible to vest in a pro-rata portion of restricted stock unit awards held at least one year from the grant date; provided that if an employee turns 65 on or prior to their involuntary termination not for cause, then any unvested Restricted Stock Units held for at least one year will have vested in full prior to their involuntary termination not for cause.
Market Share Units—Upon signing a general release, employees are eligible to vest in a pro-rata portion of unvested market share unit awards held at least one year from the grant date, subject to performance provisions; provided that if an employee turns 65 on or prior to their involuntary termination not for cause, then any unvested Market Share Units held for at least one year will vest in full upon their involuntary termination not for cause, subject to performance provisions.
Performance Share Units—
Defined Benefit Pension Plans—Employees are eligible for benefits accrued under the Retirement Income Plan and the BEP—Retirement Plan. If the employee's age plus years of
service equal or exceed 70 and the employee has at least 10 years of service, the employee is not eligible for early retirement, and the employee signs a general release, the retirement benefits are payable following termination of employment based upon enhanced adjustment factors similar to those applied to employees eligible for early retirement.
Savings Plans—Employees are eligible for benefits accumulated under the Savings and Investment Program and the BEP—Savings Plan. If the employee is involuntarily terminated not for cause on or after September 30th and the employee is receiving severance and signs a general release, or the employee'semployee qualifies for Rule of 70 Benefits, age plus years of service equal or exceed 70 and the employee has at least 10 years of service the employee is not eligible for early retirement, employee is receiving severance, and the employee signs a general release, the employee is eligible for a pro-rata annual contribution (if applicable) based on eligible compensation paid in the year of separation from service.
Post-Retirement Medical Insurance—If the employee's age plus years of service equal or exceed 70 and the employee has at least 10 years of service, the employee is not eligible for early retirement, and the employee signs a general release, the employee is eligible for continued medical coverage beyond the severance and COBRA period, as long as no other group medical coverage is available, without company subsidy until age 55. Starting atAt age 55, they become eligible for company-subsidized, post-retirement medical benefits.
Under the Bristol-Myers Squibb Senior Executive Severance Plan, certain senior executives (including the Named Executive Officers) are eligible to receive severance payments and benefits if they are involuntarily terminated not for "cause," where "cause" is defined as:
A terminated executive who signs a general release will be eligible for the following:
Change in ControlChange-in-Control
As disclosed in the CD&A, the company has entered into change-in-control agreements with certain senior executives, including all of the Named Executive Officers. The current agreements will expire on December 31, 2016,2017, and may be extended with revisions, as appropriate, beginning on January 1, 2017,2018, in one-year increments unless either the company or the executive gives prior notice of termination of the agreement or a change in controlchange-in-control shall have occurred prior to January 1 of such year.
To trigger benefits, there must be both a change in controlchange-in-control of the company and either (i) a subsequent involuntary termination without cause by the company or (ii) a good reason termination by the employee. Good reason includes a reduction in job responsibilities or changes in pay and benefits as well as relocation beyond 50 miles. The executive has 120 days to assert a claim for payments under this provision. This protection extends for 36 months following a change in controlchange-in-control for our senior most executives, who became eligible for change-in-control benefits prior to September 1, 2010 (includingincluding all of theour Named
Executive Officers),Officers, or 24 months following a change in controlchange-in-control for other executives who became eligible for change-in-control benefits after September 1, 2010.
"Change in Control""Change-in-Control" means the earliest to occur of any one of the following dates:
Each of our Named Executive Officers is eligible to receive the following benefits if he or she is terminated in connection with a change in control:change-in-control:
Performance share units:
The following information describes the post-termination benefits for Mr. Andreotti in connection with his termination. To the extent payments and benefits are generally available to salaried employees on a non-discriminatory basis or are vested benefits, we have not quantified here the value of these payments or benefits.
Lamberto Andreotti
Mr. Andreotti retired from the company on August 3, 2015. In accordance with our various benefit plans and compensation programs, Mr. Andreotti was entitled to and received the following benefits on account of his retirement:
The following illustrates the potential payments and benefits under the company's plans and programs to the Named Executive Officers upon a termination of employment assuming an effective date of December 31, 2015.2016. To the extent payments and benefits are generally available to salaried employees on a non-discriminatory basis, they are excluded from the table.
Termination of Employment Obligations (Excluding Vested Benefits)20152016 Fiscal Year
Name | | Cash Severance (1) | | Restricted Stock Units (2)(5) | | Market Share Units (3)(5) | | Performance Share Units (4)(5) | | Retirement (6) | | Health (7) | | Retiree Medical (8) | | Total | | Gross-Up on Excise Taxes (9) | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Voluntary Termination for Good Reason | |||||||||||||||||||||||||||||
Giovanni Caforio, M.D.(11) | $ | 2,800,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 28,179 | $ | 92,467 | $ | 2,920,646 | $ | 0 |
| ||||||||||
Charles Bancroft(10) | $ | 1,875,672 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 27,877 | $ | 0 | $ | 1,903,549 | $ | 0 |
| ||||||||||
Francis Cuss, MB BChir, FRCP(10) | $ | 1,837,500 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 29,346 | $ | 0 | $ | 1,866,846 | $ | 0 |
| ||||||||||
Sandra Leung(10) | $ | 1,799,200 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 25,881 | $ | 0 | $ | 1,825,081 | $ | 0 |
| ||||||||||
Murdo Gordon | $ | 1,300,000 | $ | 0 | $ | 0 | $ | 0 | $ | 427,697 | $ | 25,519 | $ | 139,172 | $ | 1,892,388 | $ | 0 |
| ||||||||||
| |||||||||||||||||||||||||||||
Giovanni Caforio, M.D.(11) | $ | 2,800,000 | $ | 0 | $ | 1,223,499 | $ | 9,962,350 | $ | 0 | $ | 28,179 | $ | 92,467 | $ | 14,106,495 | $ | 0 |
| ||||||||||
Charles Bancroft(10) | $ | 1,875,672 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 27,877 | $ | 0 | $ | 1,903,549 | $ | 0 |
| ||||||||||
Francis Cuss, MB BChir, FRCP(10) | $ | 1,837,500 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 29,346 | $ | 0 | $ | 1,866,846 | $ | 0 |
| ||||||||||
Sandra Leung(10) | $ | 1,799,200 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 25,881 | $ | 0 | $ | 1,825,081 | $ | 0 |
| ||||||||||
Murdo Gordon | $ | 1,300,000 | $ | 163,583 | $ | 429,525 | $ | 2,519,838 | $ | 427,697 | $ | 25,519 | $ | 139,172 | $ | 5,005,333 | $ | 0 |
| ||||||||||
Qualifying Termination Within 3 Years Following a Change in Control |
| ||||||||||||||||||||||||||||
Giovanni Caforio, M.D.(11) | $ | 10,465,000 | $ | 0 | $ | 7,554,862 | $ | 9,962,350 | $ | 0 | $ | 85,430 | $ | 98,783 | $ | 28,166,425 | $ | 10,824,976 |
| ||||||||||
Charles Bancroft(12) | $ | 6,169,085 | $ | 1,194,332 | $ | 4,204,514 | $ | 0 | $ | 6,773,227 | $ | 84,512 | $ | 0 | $ | 18,425,670 | $ | 7,852,150 |
| ||||||||||
Francis Cuss, MB BChir, FRCP(12) | $ | 5,494,125 | $ | 544,817 | $ | 2,974,204 | $ | 0 | $ | 3,350,865 | $ | 88,868 | $ | 0 | $ | 12,452,879 | $ | 0 |
| ||||||||||
Sandra Leung(12) | $ | 5,379,608 | $ | 0 | $ | 3,188,623 | $ | 0 | $ | 4,880,181 | $ | 78,565 | $ | 0 | $ | 13,526,977 | $ | 0 |
| ||||||||||
Murdo Gordon | $ | 3,498,300 | $ | 472,312 | $ | 1,773,062 | $ | 2,519,838 | $ | 2,648,799 | $ | 77,479 | $ | 141,494 | $ | 11,131,284 | $ | 4,459,623 |
| ||||||||||
Name | Cash Severance (1) | Restricted Stock Units (2)(5) | Market Share Units (3)(5) | Performance Share Units (4)(5) | Retirement (6) | Health (7) | Retiree Medical (8) | Total | | |||||||||||||||||
Voluntary Termination for Good Reason | ||||||||||||||||||||||||||
Giovanni Caforio, M.D. (10) | $ | 3,100,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 26,715 | $ | 96,560 | $ | 3,223,275 |
| |||||||||
Charles Bancroft (9) | $ | 1,950,698 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 26,040 | $ | 0 | $ | 1,976,738 |
| |||||||||
Francis Cuss, MB BChir, FRCP (9) | $ | 1,947,750 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 27,913 | $ | 0 | $ | 1,975,663 |
| |||||||||
Sandra Leung (9) | $ | 1,853,176 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 23,778 | $ | 0 | $ | 1,876,954 |
| |||||||||
Murdo Gordon | $ | 1,573,000 | $ | 0 | $ | 0 | $ | 0 | $ | 458,115 | $ | 23,866 | $ | 142,866 | $ | 2,197,847 |
| |||||||||
Involuntary Termination Not for Cause |
| |||||||||||||||||||||||||
Giovanni Caforio, M.D. (10) | $ | 3,100,000 | $ | 0 | $ | 1,250,967 | $ | 9,246,254 | $ | 0 | $ | 26,715 | $ | 96,560 | $ | 13,720,496 |
| |||||||||
Charles Bancroft (9) | $ | 1,950,698 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 26,040 | $ | 0 | $ | 1,976,738 |
| |||||||||
Francis Cuss, MB BChir, FRCP (9) | $ | 1,947,750 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 27,913 | $ | 0 | $ | 1,975,663 |
| |||||||||
Sandra Leung (9) | $ | 1,853,176 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 23,778 | $ | 0 | $ | 1,876,954 |
| |||||||||
Murdo Gordon | $ | 1,573,000 | $ | 36,993 | $ | 317,505 | $ | 2,036,143 | $ | 458,115 | $ | 23,866 | $ | 142,866 | $ | 4,588,487 |
| |||||||||
Qualifying Termination Within 3 Years Following a Change-in-Control |
| |||||||||||||||||||||||||
Giovanni Caforio, M.D. (10) | $ | 11,586,250 | $ | 0 | $ | 7,467,171 | $ | 10,966,202 | $ | 0 | $ | 80,485 | $ | 100,930 | $ | 30,201,038 |
| |||||||||
Charles Bancroft (11) | $ | 6,415,846 | $ | 717,409 | $ | 2,632,254 | $ | 583,757 | $ | 7,286,488 | $ | 78,448 | $ | 0 | $ | 17,714,203 |
| |||||||||
Francis Cuss, MB BChir, FRCP (11) | $ | 5,823,773 | $ | 319,433 | $ | 2,260,927 | $ | 546,005 | $ | 3,466,541 | $ | 69,552 | $ | 0 | $ | 12,486,230 |
| |||||||||
Sandra Leung (11) | $ | 5,540,996 | $ | 0 | $ | 1,942,838 | $ | 419,424 | $ | 6,108,912 | $ | 71,710 | $ | 0 | $ | 14,083,880 |
| |||||||||
Murdo Gordon | $ | 4,703,270 | $ | 176,489 | $ | 1,426,696 | $ | 2,326,824 | $ | 3,544,665 | $ | 71,969 | $ | 143,308 | $ | 12,393,220 |
| |||||||||
(1)
(3)
state taxes, Medicare tax of 2.35%, and a tax of 1.03% to reflect the increase in the effective Federal marginal tax rate attributable to the phase-out of itemized deductions. These estimates do not take into account any mitigation for payments which could be shown (under the facts and circumstances) not to be contingent on a change in control or for any payments made in consideration of non-compete agreements or as reasonable compensation. The aggregate present value of a potential payment to Dr. Cuss and Ms. Leung upon a termination of employment as of December 31, 2015 in connection with a change-in-control would not exceed the safe harbor under Internal Revenue Code Section 280G. Consequently, no portion of such payments would constitute an excess parachute payment subject to excise tax. We eliminated remaining excise tax gross ups in change-in-control agreements for grandfathered executives including all of the Named Executive Officers listed above, effective January 1, 2016. Accordingly, this will be the last year for which the company reports any figures in this column.
(10) Dr. Caforio is not a participant in any of the company's pension plans.
ITEM 2—ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED
EXECUTIVE OFFICERS
As required by Section 14A of the Securities Exchange Act of 1934, as amended, we are providing shareholders the opportunity to advise the Compensation and Management Development Committee and the Board of Directors regarding the compensation of our Named Executive Officers, as such compensation is described in the "Compensation Discussion and Analysis" (CD&A) section, the tabular disclosure regarding such compensation and the accompanying narrative disclosure, beginning on page 33.29. We strongly encourage you to read these sections for a detailed description of our executive compensation philosophy and programs, the compensation decisions the Committee has made under those programs, the factors considered in making those decisions, the changes approved to such programs in 2015for 2016 and the feedback we received from our shareholder engagement. Accordingly, we are requesting your nonbinding vote on the following resolution:
"RESOLVED, that the shareholders of Bristol-Myers Squibb Company approve, on an advisory basis, the compensation of the Company's Named Executive Officers, as described in the Compensation Discussion and Analysis section, the tabular disclosure regarding such compensation and the accompanying narrative disclosure set forth in the Company's 2016 Proxy Statement."
| "RESOLVED, that the shareholders of Bristol-Myers Squibb Company approve, on an advisory basis, the compensation of the Company's Named Executive Officers, as described in the Compensation Discussion and Analysis section, the tabular disclosure regarding such compensation and the accompanying narrative disclosure set forth in the Company's 2017 Proxy Statement." |
Our executive compensation programs are designed to enable us to attract and retain talented executives capable of leading our business in the highly complex and competitive business environment in which we operate. We seek to accomplish this goal in a way that rewards performance and is aligned with our shareholders' long-term interests. A significant portion of each executive's pay depends on his or her individual performance against financial and operational objectives as well as key behaviors necessary to our continued evolution into a diversified specialty biopharmaceutical company. In addition, a substantial portion of an executive's compensation is in the form of equity awards that tie the executive's compensation directly to creating shareholder value and achieving financial and operational results.
We value input from our shareholders as expressed through their votes and other communications. As an advisory vote, this proposal is not binding on the company. However, consistent with our record of shareholder responsiveness, the Compensation and Management Development Committee will consider the outcome of the vote when making future executive compensation decisions.
Accordingly, the Board of Directors unanimously recommends a vote "FOR" the approval, on an advisory basis, of the compensation of our Named Executive Officers.
Equity Compensation Plan Information
The following table summarizes information concerning the company's equity compensation plans and outstanding and exercisable options as of December 31, 2015:2016:
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (in millions) | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (in millions) | Number of securities to be issued upon exercise of outstanding options, warrants and rights (in millions) | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (in millions) | ||||||||||||||
| (a) | (b) | (c) | (a) | (b) | (c) | |||||||||||||||
| Equity compensation plans approved by security holders | | 20.7 | (1) | $ | 21.62 | (1) | | 108.4 | | 16.6 | (1) | $ | 21.02 | (1) | | 105.7 | ||||
| Equity compensation plans not approved by security holders(2) | 0.0 | $ | N/A | 28.5 | 0.0 | $ | N/A | 28.5 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | ||
| | | 20.7 | $ | 21.62 | | 136.9 | | 16.6 | $ | 21.02 | | 134.2 | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | ||
ITEM 3—ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE TO APRROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
As required by Section 14A of the Securities Exchange Act of 1934, as amended, we are providing shareholders the opportunity to advise the Board of Directors regarding how frequently to conduct the advisory vote on executive compensation. Shareholders may indicate their preference for an annual, biennial (every two years) or triennial (every three years) advisory vote. We are required to hold at least once every six years an advisory vote to determine the frequency of the advisory stockholder vote on executive compensation.
Our Board of Directors has determined that an advisory vote on executive compensation that occurs every year is the most appropriate for BMS and such vote is currently occurring annually. Such a vote provides shareholders and advisory firms the opportunity to react promptly to emerging trends in compensation and to provide feedback before those trends become pronounced over time. In addition, an annual vote allows shareholders the opportunity to engage in thorough analysis each year, and encourages meaningful dialogue between shareholders and the Board regarding the company's executive compensation practices on a yearly basis, which allows the Board to more effectively implement changes to our compensation programs in a timely manner.
As an advisory vote, this proposal is not binding on the company. However, our Board will take into account our shareholders' preferences when considering the frequency of future advisory votes on executive compensation.
Accordingly, the Board of Directors unanimously recommends that the advisory vote on executive compensation be conducted every ONE year.
ITEM 4—RE-APPROVAL OF THE MATERIAL TERMS OF PERFORMANCE-BASED AWARDS UNDER THE COMPANY'S 2012 STOCK AWARD AND INCENTIVE PLAN (AS AMENDED)
We are seeking shareholder re-approval of the material terms of the performance-based awards under the Bristol-Myers Squibb Company 2012 Stock Award and Incentive Plan, as amended (the "Plan"), for purposes of preserving our ability to grant awards to covered employees under the Plan that potentially will qualify as performance-based compensation that is deductible without limitation under Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section 162(m)"). Under Section 162(m), shareholder approval of the material terms of performance-based awards must be obtained at five-year intervals to preserve our ability to claim federal income tax deductions for qualifying awards. The material terms of the original Plan were approved by
shareholders at our 2012 Annual Meeting as part of the initial approval of the Plan. The Plan, which replaced the similar 2007 Stock Award and Incentive Plan, provides for the granting of stock options, restricted stock units and a variety of other types of equity and cash-based incentive awards.
Important Facts About This Proposal
Under "Proposal 5: Approval of an Amendment to the Company's 2012 Stock Award and Incentive Plan" in this Proxy Statement, we are also proposing a limit on the amount of equity and cash compensation that can be paid to our non-employee directors in a calendar year under such plan. The non-employee director compensation limit, as described in Proposal No. 5, is separate from this Proposal No. 4, and is not conditioned on or a part of this Proposal.Shareholders are not being asked to approve any amendment to the 2012 Stock Award and Incentive Plan or to approve the Plan itself in this Proposal No. 4, but are only being asked to re-approve the material terms of performance-based awards for compliance with Section 162(m). A copy of the Plan is attached as Exhibit B to this Proxy Statement. Exhibit B also reflects the non-employee director compensation limit amendment described in Proposal No. 5.
The Board believes that it is in the best interests of the company and our shareholders to continue providing an incentive plan under which equity and cash-based compensation awards made to executive officers can be deducted by the company for federal income tax purposes. The Plan has been structured in a manner such that certain awards granted under it can satisfy the requirements for "performance-based compensation" within the meaning of Section 162(m). Section 162(m) limits the deductions a publicly held company can claim for compensation in excess of $1 million in a given year paid to the Chief Executive Officer and the three other most highly compensated executive officers serving on the last day of the fiscal year, excluding the chief financial officer. "Performance-based" compensation that meets certain requirements is not counted against the $1 million deductibility cap, and therefore remains fully deductible.
For purposes of Section 162(m), the material terms that must be approved by shareholders in order for certain awards to qualify as "performance-based compensation" include the employees eligible to receive the awards, a description of the business criteria on which the performance goals are based, and the maximum amount of compensation that could be paid to an individual employee under the performance-based award. Each aspect is discussed in "Description of the Amended 2012 Plan" in Proposal No. 5 (pages 72-80). In addition, Proposal 5 provides a summary of the Plan and other information you should review in evaluating this Proposal. Such summary and related information is qualified by reference to the complete text set forth in Exhibit B of this Proxy Statement.
Shareholder approval of this Proposal No. 4 is intended to constitute re-approval of each of these material terms of the Plan for purposes of the shareholder approval requirements of Section 162(m). If shareholders do not re-approve the material terms relating to performance-based awards under the Plan under this Proposal, grants of non-performance-based awards under the Plan to covered employees within the meaning of Section 162(m) (to the extent permitted) may not be fully tax deductible by Bristol-Myers Squibb under Section 162(m). Shareholder approval of the general business criteria used for performance-based compensation awards, without specific targeted levels of performance, will permit qualification of such awards for full tax deductibility for awards granted within a period of approximately five years following approval by shareholders under Section 162(m). Because the original approval of the Plan by shareholders in 2012 included approval of the specific performance goal inherent in stock options and SARs (increases in the market price of stock), which is not subject to the five-year re-approval requirement under Section 162(m), those awards and their related material terms are not within the scope of this Proposal.
The Board of Directors unanimously recommends a vote "FOR" the re-approval of the material terms of performance-based awards under our 2012 Stock Award and Incentive Plan.
ITEM 3—5—APPROVAL OF AN AMENDMENT TO THE COMPANY'S 2012 STOCK AWARD AND INCENTIVE PLAN
In consideration of emerging corporate governance best practices, on March 2, 2017, our Board adopted an amendment to the Company's 2012 Stock Award and Incentive Plan, for the sole purpose of adding a limit on the amount of equity and cash compensation that can be paid to a non-employee director of the company in a calendar year. The amendment is subject to approval by our shareholders at the 2017 Annual Meeting. In setting the non-employee director compensation limit, the Board reviewed survey data covering companies within the Fortune 500, as well as data from our 2016 executive compensation peer group discussed above in the Compensation Discussion and Analysis.
For purposes of this discussion, we refer to the 2012 Stock Award and Incentive Plan as the "Amended 2012 Plan," except when discussing terms that are currently in effect and are not changed by the amendment, in which case, we refer to the 2012 Stock Award and Incentive Plan as the "2012 Plan" or the "Plan."
We believe that the Amended 2012 Plan promotes the interests of the company and the creation of long-term value for our shareholders because it enhances our ability to attract, retain and motivate our non-employee directors and it aligns the interest of our non-employee directors with the interest of our shareholders. Shareholder approval of meaningful limits on non-employee director compensation also provides guidance to the Board as to the parameters within which director compensation can be set without undue risk of litigation challenging such director compensation. The Amended 2012 Plan is intended to permit flexibility in implementing a non-employee director compensation policy to align non-employee directors' compensation closely with the economic interests of our shareholders by use of equity based compensation awards.
The only change to the Amended 2012 Plan to be implemented by the proposed amendment is:
| Annual Non-Employee Director Individual Limit: | The Amended 2012 Plan provides in relevant part that the aggregate value of equity-based and cash compensation granted during any calendar year to any individual non-employee director, under the Amended 2012 Plan or otherwise paid, shall not exceed $600,000, provided that the aggregate value of equity-based and cash compensation during any calendar year for a Chairman of the Board or Lead Director shall not exceed $900,000. | |||||
|
The amendment to the 2012 Plan would not increase the aggregate number of shares reserved for grant under the 2012 Plan, increase compensation to participants or otherwise add to the company's costs under the 2012 Plan, or extend the termination date of the 2012 Plan. The compensation limit would not apply to compensation earned by an employee but payable after employment terminated and at a time such person served as a non-employee director.
The Amended 2012 Plan is the only plan or arrangement under which share-based compensation is provided to our non-employee directors, and no shares have been added to the Plan since it was originally approved by our shareholders in 2012. As of February 28, 2017, there were 106 million shares of our common Stock remaining available for awards under the Amended 2012 Plan and other continuing equity compensation plans. If approved by our shareholders, the proposed amendment, a copy of which is included in Exhibit B to this Proxy Statement, will become effective on the date of such approval.
The following is a summary of the basic features of the Amended 2012 Plan and related information, which is qualified by reference to the specific provisions of the full text of the 2012 Plan set forth in Exhibit B of this Proxy Statement.
Summary of the Amended 2012 Plan
The Board and shareholders previously approved the Plan to help us:
The Board and the Compensation and Management Development Committee (the "Committee") believe that awards linked to common stock and awards with terms tied to our performance provide incentives for the achievement of important performance objectives and promote the long-term success of Bristol-Myers Squibb. Therefore, they view the Amended 2012 Plan as an integral part of our overall compensation program.
Shares Committed for Equity Compensation
Information on the total number of shares available under our existing equity compensation plans and unissued shares deliverable under outstanding options, warrants and rights as of the end of the last fiscal year is presented on page 70 under the caption "Equity Compensation Plan Information."
Based on our equity award plans in effect and outstanding awards at February 28, 2017, the total number of shares subject to outstanding awards and available for future awards under the 2012 Plan and other continuing equity compensation plans, which will not change regardless of the outcome of the vote on Proposal 4 or 5, would be as follows:
| | | | | | | | |
| in millions | |||||||
|---|---|---|---|---|---|---|---|
| | Shares subject to outstanding awards | | 16 | | |||
| Shares available for future equity awards | 106 | ||||||
| | | | | | | | |
| | Total shares | | 122 | | |||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Percentage of outstanding shares* | 7.4 | % | |||||
| | | | | | | | |
* Outstanding shares (the denominator in this calculation) includes all common stock outstanding at February 28, 2017 and does not include issuance of unissued shares reserved for outstanding or future awards under any existing plans, including the 2012 Plan.
Overview of 2012 Plan Awards
The 2012 Plan authorizes a broad range of awards, including:
Restriction on Repricing and Loans
Consistent with the company's long-standing policy, the 2012 Plan includes a restriction providing that, without shareholder approval, we will not amend or replace options or SARs previously granted under the Amended 2012 Plan in a transaction that constitutes a "repricing." For this purpose, a "repricing" is defined as amending the terms of an option or SAR after it is granted to lower its exercise price, any other action that is treated as a repricing under generally accepted accounting principles, or canceling an option or SAR at a time when its strike price is equal to or greater than the fair market value of the underlying stock in exchange for another option, SAR, restricted stock, other equity, cash or other property, unless the cancellation and exchange occurs in connection with a merger, acquisition, spin-off or other similar corporate transaction. Adjustments to the exercise price or number of shares subject to an option or SAR to reflect the effects of a stock split or other extraordinary corporate transaction will not constitute a "repricing." The 2012 Plan does not authorize loans to participants.
Description of the Amended 2012 Plan
The following is a brief description of the material features of the Amended 2012 Plan. This description, including information summarized above, is qualified in its entirety by reference to the full text of the Amended 2012 Plan, a copy of which is attached to this Proxy Statement as Exhibit B.
Shares Available under the 2012 Plan. The number of shares available under the 2012 Plan as of a recent date is discussed above under the caption "Shares Committed to Equity Compensation." No increase is proposed for the aggregate number of shares reserved for grant under the 2012 Plan. Shares that remained available under the 2007 Stock Award and Incentive Plan (and an earlier plan incorporated into the 2007 Plan) and shares that are recaptured from outstanding awards under that plan are part of the shares available under the 2012 Plan. The 2012 Plan specifies that not more than 42 million shares would be available for tax-favored incentive stock options. Shares used for awards assumed in an acquisition do not count against the shares reserved under the 2012 Plan. The shares reserved may be used for any type of award under the 2012 Plan. The number of shares reserved under the 2012 Plan is subject to adjustment in the event of stock splits, stock dividends and other extraordinary items.
Only the number of shares actually delivered to participants in connection with an award after all restrictions have lapsed are counted against the number of shares reserved under the 2012 Plan. Thus, shares remain available for new awards if an award expires or is forfeited, canceled or settled in cash, if shares are withheld or separately surrendered to pay the exercise price of an option or to satisfy tax withholding obligations relating to an award, if fewer shares are delivered upon exercise of an SAR than the number of shares covered by the SAR, or if shares that had been issued as restricted stock are forfeited. These same rules apply to awards that were granted under the 2007 Plan, so that shares may become available under the 2012 Plan to the extent that shares are not in fact both delivered and vested in connection with those awards. Under the 2012 Plan, awards may be outstanding relating to a greater number of shares than the aggregate remaining available under the 2012 Plan so long as the Committee ensures that awards will not result in delivery and vesting of shares in excess of the number then available under the 2012 Plan. Shares delivered under the 2012 Plan may be either newly issued or treasury shares.
On February 28, 2017, the last reported sale price of Bristol-Myers Squibb's common stock in composite transactions for New York Stock Exchange-listed securities was $56.71 per share.
Per-Person Award Limitations. The 2012 Plan includes a limitation on the amount of awards that may be granted to any one participant in a given year in order to qualify awards as "performance-based" compensation not subject to the limitation on deductibility under Section 162(m). Under this annual per-person limitation, no participant may in any year be granted share-denominated awards under the 2012 Plan relating to more than his or her "Annual Limit". The Annual Limit equals three million shares plus the amount of the participant's unused Annual Limit relating to share-based awards as of the close of the previous year, subject to adjustment for splits and other extraordinary corporate events. In the case of cash-denominated awards, the 2012 Plan limits performance awards that may be earned by a participant to the participant's defined Annual Limit, which for this purpose equals $6 million plus the amount of the participant's unused cash Annual Limit as of the close of the previous year. The per-person limit for cash-denominated performance awards does not operate to limit the amount of share-based awards, and vice versa. These limits apply only to awards under the 2012 Plan, and do not limit our ability to enter into compensation arrangements outside of the 2012 Plan.
As discussed above in the introductory text describing this Proposal 5, the proposed amendment to the 2012 Plan to be voted upon under this Proposal will add an annual limit applicable to equity and cash compensation payable to each non-employee director.
Adjustments. Adjustments to the number and kind of shares subject to the share limitations and specified in the share-based Annual Limit are authorized in the event of a large and non-recurring dividend or distribution, recapitalization, stock split, stock dividend, reorganization, business combination, or other similar corporate transaction, equity restructuring as defined under applicable accounting rules, or other similar event affecting the common stock. We are also obligated to adjust outstanding awards upon the occurrence of these types of events to preserve, without enlarging, the rights of participants with respect to their awards. The Committee may adjust performance conditions and other terms of awards in response to these kinds of events or to changes in applicable laws, regulations, or accounting principles, except that adjustments to awards intended to qualify as "performance-based" generally must conform to requirements imposed by Section 162(m).
Eligibility. Executive officers and other employees of Bristol-Myers Squibb and its subsidiaries, and non-employee directors and others who provide substantial services to us, are eligible to be granted awards under the 2012 Plan. In addition, any person who has been offered employment by us may be granted awards, but such prospective grantee may not receive any payment or exercise any right relating to the award until he or she has commenced employment or the providing of services. Currently, we have approximately 25,300 employees and other service providers who would be potentially eligible for awards under the 2012 Plan. Under the current program, approximately 18,900 employees are eligible on an annual basis to receive awards, and in 2016, we granted equity awards under the 2012 Plan to approximately 8,200 persons.
Administration. The Committee administers the 2012 Plan, except that the Board may itself act to administer the 2012 Plan. References to the "Committee" here mean the Committee or the full Board exercising authority with respect to a given award. The 2012 Plan provides that the composition and governance of the Committee shall be established in the Committee's charter adopted by the Board. Subject to the terms and conditions of the 2012 Plan, the Committee is authorized to select participants, determine the type and number of awards to be granted and the number of shares to which awards will relate or the amount of a performance award, specify times at which awards will be exercisable or settled, including performance conditions that may be required as a condition of the award, set other terms and conditions of such awards, prescribe forms of award agreements, interpret and specify rules and regulations relating to the 2012 Plan, and make all other determinations which may be necessary or advisable for the administration of the 2012 Plan. Nothing in the 2012 Plan precludes the Committee from authorizing payment of other compensation, including bonuses based upon performance, to officers and employees, including the executive officers, outside of the 2012 Plan.
The Board or another committee of the Board may perform the functions of the Committee for purposes of granting awards under the 2012 Plan to non-employee directors, as the Board may at any time direct. The 2012 Plan authorizes the Committee to delegate authority to executive officers to the extent permitted by applicable law, but such delegation will not authorize grants of awards to executive officers without direct participation by the Committee. The 2012 Plan provides that members of the Committee and the Board shall not be personally liable, and shall be fully indemnified, in connection with any action, determination, or interpretation taken or made in good faith under the 2012 Plan.
Stock Options and SARs. The Committee is authorized to grant stock options, including both incentive stock options ("ISOs"), which can result in potentially favorable tax treatment to the participant, and non-qualified stock options. SARs may also be granted, entitling the participant to receive the excess of the fair market value of a share on the date of exercise over the SAR's designated "base price." The exercise price of an option and the base price of an SAR are determined by the Committee, but generally may not be less than the fair market value (i.e. closing price) of the shares on the date of grant. The maximum term of each option or SAR will be ten years. Subject to this limit, the times at which each option or SAR will be exercisable and provisions requiring forfeiture of unexercised options (and in some cases gains realized upon an earlier exercise) at or following termination of employment or upon the occurrence of other events generally are fixed by the Committee. Options may be exercised by payment of the exercise price in cash, shares having a fair market value equal to the exercise price or surrender of outstanding awards or other property having a fair market value equal to the exercise price. These exercise methods may include withholding of option shares to pay the exercise price if that would not result in additional accounting expense. We may impose limits on any of these methods of exercise and settlement and implement other methods, for both options and SARs. SARs may be exercisable for shares or for cash, as
determined by the Committee. Options and SARs may be granted on terms that cause such awards not to be subject to Section 409A of the Internal Revenue Code ("Section 409A"), or with terms that cause those awards to be deferral arrangements subject to Section 409A.
Restricted Stock and Stock Units. The Committee is authorized to grant restricted stock and stock units. Prior to the end of the restricted period, shares granted as restricted stock may not be sold, and will be forfeited in the event of termination of employment in specified circumstances. The Committee will establish the length of the restricted period for awards of restricted stock. Aside from the risk of forfeiture and non-transferability, an award of restricted stock entitles the participant to the rights of a shareholder of Bristol-Myers Squibb, including the right to vote the shares and to receive dividends, which dividends could be either forfeitable or non-forfeitable. Any of these rights may be limited by the Committee.
Stock units give a participant the right to receive shares at the end of a specified deferral period. Stock units subject to a risk of forfeiture upon termination of employment may be denominated as an award of "restricted stock units." The Committee will establish any vesting requirements for restricted stock units. Restricted stock units offer an advantage, as compared to restricted stock, in that the period during which the award is deferred as to settlement can be extended past the date the award becomes non-forfeitable, so the Committee can require or permit a participant to continue to hold an interest tied to common stock on a tax-deferred basis. Prior to settlement, stock units carry no voting or dividend rights or other rights associated with stock ownership, but the Committee may choose to authorize payment of dividend equivalents, which may be forfeitable or non-forfeitable, in connection with these awards.
Other Stock-Based Awards, Bonus Stock Awards, and Awards in Lieu of Other Obligations. The 2012 Plan authorizes the Committee to grant awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to common stock. The Committee will determine the terms and conditions of such awards, including the consideration to be paid to exercise awards in the nature of purchase rights, the periods during which awards will be outstanding, and any forfeiture conditions and restrictions on awards. In addition, the Committee is authorized to grant shares as a bonus free of restrictions, or to grant shares or other awards in lieu of obligations under other plans or compensatory arrangements, subject to such terms as the Committee may specify.
Performance-Based Awards. The Committee may grant performance awards, which may be awards of a specified cash amount or may be share-based awards (for example, performance shares). Generally, performance awards require satisfaction of pre-established performance goals, consisting of one or more business criteria and a targeted performance level with respect to such criteria as a condition of awards being granted or becoming exercisable or settleable, or as a condition to accelerating the timing of such events. Performance may be measured over a period of any length specified by the Committee. Therefore, for example, annual incentive awards may be granted under the 2012 Plan, payable in cash or in shares. If so determined by the Committee, in order to avoid the limitations on tax deductibility under Section 162(m), the business criteria used by the Committee in establishing performance goals applicable to performance awards to the Named Executive Officers will be selected from among the following: net sales; revenue; revenue growth or product revenue growth; operating income (before or after taxes); pre- or after-tax income (before or after allocation of corporate overhead and bonus); earnings per share; net income (before or after taxes); return on equity; total shareholder return; return on assets or net assets; appreciation in and/or maintenance at or above a specified level of the price of the shares or any other publicly-traded securities of the company; market share; gross profits; earnings (including earnings before taxes, earnings before interest and taxes or earnings before interest, taxes, depreciation and amortization); economic value-created models or equivalent metrics; comparisons with various stock market indices; reductions in costs; cash flow or cash flow per share (before or after dividends); return on capital (including return on total capital or return on invested capital); cash flow return on investment; improvement in or attainment of expense levels or working capital levels; operating margins, gross margins or cash margins; year-end cash; debt reductions and control of interest expense; shareholder equity; regulatory achievements; and implementation, completion or attainment of measurable objectives with respect to research, development, products or projects, production volume levels, acquisitions and divestitures, market penetration, total market capitalization, business retention, new product generation, geographic business expansion goals, cost controls and targets (including cost of capital), customer satisfaction, employee satisfaction, agency ratings, management of employment practices and employee benefits, supervision of litigation and information technology, implementation of business process controls, and recruiting and retaining personnel.
The Committee retains discretion to set the level of performance for a given business criteria that will result in the earning of a specified amount under a performance award. Performance goals may be based on our overall performance or the performance of a subsidiary, division, business segment, product line or business unit or function, or based on such performance as compared to the performance of other companies or an index or industry measure of performance. The Committee may also exclude charges or items from the measurement of performance, including those relating to (a) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (b) an event either not directly related to our operations or not within the reasonable control of our management, or (c) the effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles. The Committee may specify that a performance goal will incorporate additional business criteria (including business criteria not specified above) as a condition to the earning of all or a portion of a performance award, so long as the performance goal incorporates at least one of the business criteria specified above and the failure to achieve a specified level of performance with respect to that business criteria will result in forfeiture of the performance award.
Other Terms of Awards. Awards may be settled in cash, shares, other awards or other property, in the discretion of the Committee. The Committee may require or permit participants to defer the settlement of all or part of an award, including shares issued upon exercise of an option or SAR subject to compliance with Section 409A, in accordance with such terms and conditions as the Committee may establish, including payment or crediting of interest or dividend equivalents on any deferred amounts. The 2012 Plan allows vested but deferred awards to be paid out to the participant in the event of an unforeseeable emergency, as defined in Section 409A. The Committee is authorized to place cash, shares or other property in trusts or make other arrangements to provide for payment of our obligations under the 2012 Plan. The Committee may condition awards on the payment of taxes, and may provide for mandatory withholding of a portion of the shares or other property to be distributed in order to satisfy tax withholding obligations, or may permit a participant to elect to satisfy these tax obligations by having us withhold shares. Awards granted under the 2012 Plan generally may not be pledged or otherwise encumbered and are not transferable except by will or by the laws of descent and distribution, or to a designated beneficiary upon the participant's death, except that the Committee may permit transfers of awards other than incentive stock options on a case-by-case basis, but such transfers will be allowed only for estate-planning purposes and may not involve transfers to other third parties for value.
The 2012 Plan authorizes the Committee to provide for a forfeiture of awards and award gains realized by exercise or settlement of an award in the event a participant fails to comply with conditions relating to non-competition, non-solicitation, confidentiality, non-disparagement and other requirements for the protection of our business. The 2012 Plan also provides that awards may be subject to a "clawback" to the extent necessary to comply with applicable law or as otherwise determined by the Committee. Awards under the 2012 Plan may be granted without a requirement that the participant pay consideration in the form of cash or property for the grant (as distinguished from the exercise), except to the extent required by law. Subject to the requirement that any repricing transaction be approved by shareholders, the Committee may grant awards in substitution for, exchange for or as a buyout of other awards or rights to payment from us, and may exchange or buy out outstanding awards for cash or other property. The Committee also may grant awards in addition to and in tandem with other awards or rights. In granting a new award, the Committee may determine that the in-the-money value or fair value of any surrendered award may be applied to reduce the purchase price of any new award, subject to the requirement that repricing transactions must be approved by shareholders.
Dividend Equivalents. The Committee may grant dividend equivalents. These are rights to receive payments equal in value to the amount of dividends paid on a specified number of shares of common stock while an award is outstanding. These amounts may be in the form of cash or rights to receive additional awards or additional shares of common stock having a value equal to the cash amount. The awards may be granted on a stand-alone basis or in conjunction with another award, and the Committee may specify whether the dividend equivalents will be forfeitable or non-forfeitable, provided that all dividend equivalents relating to a performance award are forfeitable to the same extent as the underlying award is forfeitable due to failure to achieve the specified performance condition.
Vesting, Forfeitures, and Related Award Terms. The Committee will determine, in its discretion, the vesting schedule of awards, the circumstances resulting in forfeiture of awards, the post-termination exercise periods of options and SARs, and the events resulting in acceleration of the right to exercise and the lapse of restrictions, or the expiration of any deferral period, on any award.
The 2012 Plan provides that, in the event of a "change-in-control" (as defined in the 2012 Plan) of Bristol-Myers Squibb followed within two years (or such other period specified by the Committee) by a termination of the participant's employment by us not for cause or by the participant for "good reason" (as defined in the 2012 Plan) then, upon such termination, outstanding awards will immediately vest and be fully exercisable, any restrictions and forfeiture conditions of such awards will lapse, and goals relating to awards that remain subject to performance conditions will be deemed met at the specified target level. The Committee can provide for different treatment of an award upon a change-in-control, by so specifying at the date of grant. The Committee may also terminate outstanding awards in the event of a merger or other acquisition of Bristol-Myers Squibb, which would entitle the participant to the per-share consideration to be received by shareholders. The distribution of cash or shares in settlement of awards upon termination following a change-in-control may be limited by applicable restrictions under Section 409A.
Amendment and Termination of the 2012 Plan. The Board may amend, suspend, discontinue, or terminate the 2012 Plan or the Committee's authority to grant awards thereunder without shareholder approval, except as required by law or regulation or under the Listed Company Manual of the New York Stock Exchange. New York Stock Exchange rules require shareholder approval of any material amendment to plans such as the 2012 Plan. Under these rules, however, shareholder approval will not necessarily be required for all amendments that might increase the cost of the 2012 Plan or broaden eligibility. Unless earlier terminated, the authority of the Committee to make grants under the 2012 Plan will terminate ten years after the latest shareholder approval of the 2012 Plan; in this regard, approval of this Proposal will be deemed to be approval of a Plan amendment that does not extend this termination date beyond 2022. Otherwise, the 2012 Plan will terminate when we have no further rights or obligations with respect to any outstanding award or otherwise under the 2012 Plan.
Federal Income Tax Implications of the 2012 Plan
We believe that under current law the following Federal income tax consequences generally would arise with respect to awards under the 2012 Plan.
Options and SARs that are not deemed to be deferral arrangements under Section 409A would have the following tax consequences: The grant of an option or an SAR will create no federal income tax consequences for the participant or Bristol-Myers Squibb. A participant will not have taxable income upon exercising an option that is an ISO, except that the alternative minimum tax may apply.
Upon exercising an option that is not an ISO, the participant generally must recognize ordinary income equal to the difference between the exercise price and the fair market value of the freely transferable or non-forfeitable shares acquired on the date of exercise. Upon exercising an SAR, the participant must generally recognize ordinary income equal to the cash or the fair market value of the shares received.
Upon a disposition of shares acquired upon exercise of an ISO before the end of the applicable ISO holding periods, the participant must generally recognize ordinary income equal to the lesser of (i) the fair market value of the ISO shares at the date of exercise minus the exercise price or (ii) the amount realized upon the disposition of the ISO shares minus the exercise price. Otherwise, a participant's sale of shares acquired by exercise of any option generally will result in short-term or long-term capital gain or loss measured by the difference between the sale price and the participant's tax "basis" in such shares. The tax "basis" normally is the exercise price plus any amount he or she recognized as ordinary income in connection with the option's exercise. A participant's sale of shares acquired by exercise of an SAR generally will result in short-term or long-term capital gain or loss measured by the difference between the sale price and the tax "basis" in the shares, which normally is the amount he or she recognized as ordinary income in connection with the SAR's exercise.
We normally can claim a tax deduction equal to the amount recognized as ordinary income by a participant in connection with the exercise of an option or SAR, but no tax deduction relating to a participant's capital gains. Accordingly, we will not be entitled to any tax deduction with respect to an ISO if the participant holds the shares for the applicable ISO holding periods prior to selling the shares.
Awards other than options and SARs that result in a transfer to the participant of cash or shares or other property generally will be structured under the 2012 Plan with the intent that the awards meet applicable requirements under Section 409A. If no restriction on transferability or substantial risk of forfeiture applies to amounts distributed to a participant, the participant generally must recognize ordinary income equal to the cash or the fair market value of shares actually received. Thus, for example, if we grant an award of restricted stock units that
has vested or requires or permits deferral of receipt of cash or shares under a vested award, the participant should not become subject to income tax until the time at which shares or cash are actually distributed, and we will become entitled to claim a tax deduction at that time.
On the other hand, if a restriction on transferability and substantial risk of forfeiture applies to shares or other property actually distributed to a participant under an award (such as, for example, a grant of restricted stock), the participant generally must recognize ordinary income equal to the fair market value of the transferred amounts at the earliest time either the transferability restriction or risk of forfeiture lapses. In the usual case, we can claim a tax deduction in an amount equal to the ordinary income recognized by the participant, except as discussed below. A participant may elect to be taxed at the time of grant of restricted stock or other property rather than upon lapse of restrictions on transferability or the risk of forfeiture, but if the participant subsequently forfeits such shares or property he or she would not be entitled to any tax deduction, including as a capital loss, for the value of the shares or property on which he or she previously paid tax.
Any award that is deemed to be a deferral arrangement (excluding certain exempted short-term deferrals) will be subject to Section 409A. Participant elections to defer compensation under such awards and as to the timing of distributions relating to such awards must meet requirements under Section 409A in order for income taxation to be deferred upon vesting of the award and tax penalties avoided by the participant.
As discussed above, compensation that qualifies as "performance-based" compensation is excluded from the $1 million deductibility cap of Section 162(m), and therefore remains fully deductible by the company paying it. Under the 2012 Plan, options and SARs granted with an exercise price or base price at least equal to 100% of fair market value of the underlying stock at the date of grant, performance awards to employees the Committee expects to be Named Executive Officers at the time compensation is received, and certain other awards that are conditioned upon achievement of performance goals are intended to qualify as such "performance-based" compensation. A number of requirements must be met in order for particular compensation to so qualify, including in the case of future grants of awards (other than options and SARs) that Proposal 4 be approved by shareholders. Therefore, there can be no assurance that such compensation under the 2012 Plan will be fully deductible under all circumstances. In addition, other awards under the 2012 Plan, such as non-performance-based restricted stock and restricted stock units, generally will not qualify as performance-based compensation under Section 162(m), so that compensation paid to certain executives in connection with such awards, to the extent it and other compensation subject to Section 162(m)'s deductibility cap exceed $1 million in a given year, may not be deductible by us as a result of Section 162(m). Compensation to certain employees resulting from the earning or vesting of awards in connection with a change-in-control or termination following a change-in-control also may be non-deductible under Sections 4999 and 280G of the Internal Revenue Code.
The foregoing provides only a general description of the application of federal income tax laws to certain awards under the 2012 Plan. This discussion is intended for the information of shareholders considering how to vote at the Annual Meeting and not as tax guidance to participants in the 2012 Plan, as the consequences may vary with the types of awards made, the identity of the recipients and the method of payment or settlement. Different tax rules may apply, including in the case of variations in transactions that are permitted under the 2012 Plan (such as payment of the exercise price of an option by surrender of previously acquired shares). The summary does not address in any detail the effects of other federal taxes (including possible "golden parachute" excise taxes) or taxes imposed under state, local or foreign tax laws.
New Plan Benefits Under the Amended 2012 Plan
Because future awards under the 2012 Plan will be granted in the discretion of the Committee, the type, number, recipients, and other terms of such awards cannot be determined at this time. Information regarding our recent practices with respect to incentive awards and stock-based compensation, including under the 2012 Plan, is presented in the "Equity Compensation Plan Information Table," and in the "Summary Compensation Table" and these related tables: "Grants of Plan-Based Awards," "Outstanding Equity Awards at Fiscal Year-End," and "Options Exercises and Stock Vesting," elsewhere in this Proxy Statement, and in our financial statements for the fiscal year ended December 31, 2016, in the Annual Report that accompanies this Proxy Statement.
If shareholders decline to approve this Proposal, the 2012 Plan will remain in effect under its current terms without the addition of the proposed limitation on the amount of equity and cash compensation that can be paid to a non-employee director of the company in a calendar year.
The Board of Directors unanimously recommends a vote "FOR" approval of the proposed amendment to the 2012 Stock Award and Incentive Plan.
ITEM 6—RATIFICATION OF THE APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Our Board of Directors, upon the recommendation of its Audit Committee, has ratified the Audit Committee's appointment of Deloitte & Touche LLP (D&T) as our independent registered public accounting firm for the year 2016.2017. The Audit Committee and the Board believe that the continued retention of D&T to serve as our independent registered public accounting firm is in the best interests of the company and its shareholders. As a matter of good corporate governance, we are asking shareholders to ratify such appointment. In the event our shareholders fail to ratify the appointment, the Board of Directors and the Audit Committee will reconsider such appointment. It is understood that even if the appointment is ratified, the Audit Committee at its discretion, may direct the appointment of a new independent registered public accounting firm at any time during the year if the Audit Committee feels that such a change would be in the best interests of our company and our shareholders.
The Audit Committee is directly responsible for appointing, compensating and providing oversight of the performance of our independent registered public accounting firm for the purpose of issuing audit reports and related work regarding our financial statements and the effectiveness of our internal control over financial reporting. The Audit Committee is also responsible for approving the audit fees of our independent registered public accounting firm. In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered public accounting firm. Further, in conjunction with the mandated rotation of the audit firm's lead engagement partner, the Audit Committee and its chairperson participate in the process for the selection of D&T's new lead engagement partner.
Representatives from D&T will be present at the Annual Meeting to respond to appropriate questions and to make any statements as they may desire.
The Board of Directors unanimously recommends a vote "FOR" the ratification of the appointment of Deloitte & Touche LLP as Bristol-Myers Squibb's independent registered public accounting firm for 2016.
The following table presents aggregate fees for professional audit services rendered by D&T for the years ended December 31, 20152016 and 20142015 for the audits of our annual financial statements and internal control over financial reporting, and fees billed for other services rendered by D&T during those periods.
| | | | | | | | | | | | | | | | | | | | | |
| | | 2014 | 2015 | | | 2016 | 2015 | | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | (in millions) | | | (in millions) | | ||||||||||||||
| | Audit | $ | 10.78 | $ | 10.69 | | Audit | $ | 9.97 | $ | 10.69 | | ||||||||
| Audit Related | 0.99 | .84 | Audit Related | 0.84 | 0.84 | |||||||||||||||
| | Tax | | 6.48 | | 6.80 | | Tax | | 7.39 | | 6.80 | | ||||||||
| All Other | 0.44 | .19 | All Other | 0.11 | 0.19 | |||||||||||||||
| | | | | | | | | | | | | | | | | | ||||
| | Total | $ | 18.69 | $ | 18.52 | | Total | $ | 18.31 | $ | 18.52 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
Audit fees for 20142015 and 20152016 were for professional services rendered for the audits of our consolidated financial statements, including accounting consultation, and of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, statutory and subsidiary audits, timely reviews of quarterly financial statements, consents, and assistance with review of documents filed with the SEC.
Audit Related fees for 20142015 and 20152016 were primarily for agreed-upon procedures, special purpose financial statement audits, due diligence related to acquisitions, and other audit-related services that are not required by statute or regulation.
Tax fees for 20142015 and 20152016 were for services related to tax compliance, including the preparation of tax returns and claims for refund, tax planning (excluding planning related to transactions or proposals for which the sole purpose may be tax avoidance or for which tax treatment may not be supported by the Internal Revenue Code) and tax advice, including assistance with tax audits and appeals, advice related to acquisitions, preparation of individual income tax returns (excluding those of executive officers) and consultations relating to our international compensation matters, and requests for rulings or technical advice from tax authorities.
All Other fees for 20142015 and 20152016 related to subscription fees to an accounting and reporting research library and a pharmaceutical alliance database, as well as surveys, benchmarking, commercial strategy and training programs.
Pre-Approval Policy for Services Provided by our Independent Registered Public Accounting Firm
�� The Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm consistent with applicable SEC rules. Our independent registered public accounting firm is prohibited from providing tax consulting services relating to transactions or proposals in which the sole purpose may be tax avoidance or for which the tax treatment may not be supported by the Internal Revenue Code. Prior to the engagement of our independent registered public accounting firm for the next year's audit, a schedule of the aggregate of services expected to be rendered during that year for each of the four
categories of services described above is submitted to the Audit Committee for approval. Prior to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted by category of service and the Audit Committee receives periodic reports from our independent registered public accounting firm on actual fees versus the budget by category of service. During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging our independent registered public accounting firm.
The Audit Committee may delegate pre-approval authority to one or more of its members. The member or members to whom such authority is delegated is required to report, for informational purposes, any pre-approval decisions to the Audit Committee at its next regularly scheduled meeting. During 2015,2016, the Audit Committee did not delegate pre-approval authority to any of its members.
As the Audit Committee of the Board of Directors, we are composed of independent directors as required by and in compliance with the listing standards of the New York Stock Exchange. We operate pursuant to a written charter adopted by the Board of Directors that is published on the company's website.
Management has primary responsibility for the company's financial reporting process, principles and internal controls as well as preparation of its consolidated financial statements. The independent registered public accounting firm is responsible for performing an audit in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB) to obtain reasonable assurance that Bristol-Myers Squibb's consolidated financial statements are free from material misstatement and expressing an opinion on the conformity of such financial statements with accounting principles generally accepted in the United States. We are responsible for overseeing and monitoring D&T's auditing process on behalf of the Board of Directors.
As part of the oversight of the company's financial statements, we review and discuss with both management and D&T all annual and quarterly financial statements prior to their issuance. Management advised us that each set of financial statements reviewed was prepared in accordance with accounting principles generally accepted in the United States. We have reviewed with management significant accounting and disclosure issues and reviewed with D&T matters required to be discussed pursuant to auditing standards adopted by the PCAOB.
In addition, we have received the written disclosures and the letter from D&T required by PCAOB Ethics and Independence Rule 3526, "Communication with Audit Committees Concerning Independence", and have discussed with D&T their independence from Bristol-Myers Squibb and its management. We have determined that D&T's provision of non-audit services in 20152016 was compatible with, and did not impair, its independence. We have also received written materials addressing D&T's internal quality control procedures and other matters, as required by the New York Stock Exchange listing standards.
We have discussed with our internal auditors and D&T the overall scope and plans for their respective audits. We have met with the internal auditors and D&T, with and without management present, to discuss their evaluations of the company's internal control over financial reporting, and the overall quality of the company's financial reporting.
Based on the reviews and discussions described above, we recommended to the Board of Directors, and the Board has approved, that the audited consolidated financial statements for the year ended December 31, 20152016 be included in Bristol-Myers Squibb's Annual Report on Form 10-K for the year ended December 31, 20152016 for filing with the Securities and Exchange Commission.
In addition, we have confirmed there have been no new circumstances or developments since our respective appointments to the Committee that would impair any of our member's ability to act independently.
The Audit Committee
Alan J. Lacy, ChairLaurie H. Glimcher, M.D.Peter J. Arduini
Michael Grobstein
Dinesh C. Paliwal
Gerald L. Storch
We expect the following shareholder proposal (Item 4)7) to be presented at the 20162017 Annual Meeting. The Board of Directors has recommended a vote against this proposal for the policy reasons set forth following the proposal. The stock holdings of the proponent will be provided upon request to the Corporate Secretary of Bristol-Myers Squibb.
ITEM 4—7—SHAREHOLDER PROPOSAL ONTO LOWER THE SHARE OWNERSHIP THRESHOLD
TO CALL SPECIAL SHAREOWNERSHAREHOLDER MEETINGS
The proponent of this resolution is Mr. James McRitchie of 9295 Yorkship Court, Elk Grove, California, 95758.
Proposal 4—7—Special ShareownerShareholder Meetings
Resolved, Shareowners ask our board toRESOLVED:
The shareholders of Bristol-Myers Squibb (BMY) ('Company') hereby request that the Board of Directors take the steps necessary (unilaterally if possible) to amend our bylaws and each appropriate governing document to give holders in thewith an aggregate of 15% of our outstanding common stock the power to call a special shareowner meeting. This proposal does not impact our board's current power to call a special meeting.
A shareholder right for a group owning 15% of the shares of our company to call a special meeting is one method to equalize our lack of a right for shareholders to act by written consent. For instance a group owning 25% of the shares of our company is now needed to call a special meeting compared toSUPPORTING STATEMENT:
Delaware law which allows 10% of suchcompany shares to call a special meeting. If 15% of shares could call a special meeting, instead of our current 25% of shares—this would help make up for our lack of a right to act by written consent. Bristol-Myers shareholders gave 49% support to the written consent topic at a previous annual meeting.
A shareholder right to call a special meeting is a way to bring an important matter to the attention of both management and shareholders outside the annual meeting cycle. This is important because there could be 15-months between annual meetings.
A shareholder right to act by written consent and to call a special meeting are two complimentary ways to bring an important matter to the attention of both management and shareholders outside the annual meeting cycle. Both are associated with increased governance quality and shareholder value. Our Company offers no right of shareholders to act by written consent.
Currently, more than 60% of the companies in the S&P 500 have adopted company bylaws, articles of incorporation, or charter provisions to allow shareholders to call a special meeting
This proposal topic won more than 70% support at Edwards Lifesciences and SunEdison in 2013. It may be possible to adopt this proposal by simply incorporating this text into our governing documents:
"Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Chairman of the Board or the President, and shall be called by the Chairman of the Board or President or Secretary upon the order in writing of a majority of or by resolution of the Board of Directors, or at the request in writing of stockholders owning 15% of the entire capital stock of the Corporation issued and outstanding and entitled to vote."
Table We urge the Board to join the mainstream of Contentsmajor U.S. companies and establish a right for shareholders owning 15% of our outstanding common sock to call a special meeting.
Please vote to enhance shareholder value:
Special ShareownerShareholder Meetings—Proposal 47
The Board of Directors recommends a vote "AGAINST" this proposal for the following reasons:
After careful consideration, and informed by dialogue with our shareholders on this topic, the Board believes the shareholder proposal to lower the threshold for holders of our common stock to call a special meeting is not in the best interests of the company and its shareholders. The company's Bylaws currently provide that any person or persons holding at least 25% of the company's common stock outstanding and entitled to vote may call a special meeting upon written request to the company's Corporate Secretary. The Board believes that this 25% threshold is reasonable, appropriate and aligned with our shareholders' interests. The current threshold is designed to strike a balance between assuring that shareholders have the ability to call a special meeting and protecting against the risk that a small minority of shareholders, including those with special interests, could trigger the expense and distraction of a special meeting to pursue matters that are not widely viewed as requiring immediate attention or for reasons that may not be in the best interests of the company or all of our shareholders. The company's current threshold is well within the mainstream, with 25% emerging as the most common threshold for special meeting rights at public companies. In addition, the company's 25% threshold is equal to or lower than the comparable threshold adopted by approximately 73%69% of Delaware corporations in the S&P 500 Index that permit shareholders to call a special meeting.
We believe that a special shareholder meeting should only be convened to discuss extraordinary events when fiduciary, strategic or similar considerations dictate the matter be addressed prior to the next annual meeting. Convening a special meeting imposes substantial legal, administrative and distribution costs associated with, among other things, preparing the required disclosure documents, printing and mailing. In addition, preparing for and conducting a special meeting requires a significant commitment of time and focus from the company's Board and senior management, distracting them from their primary focus of maximizing long-term financial returns and operating the company's business in the best interests of shareholders. The Board believes that a 25% threshold establishes the appropriate balance between meaningful accountability and mitigation of risk that may be presented by a lower threshold, including significant costs, Board and management distraction and waste of corporate resources.
Our shareholders' ability to vote on significant matters is further ensured and protected by state law and other regulations. As a Delaware corporation, the company is required to have all major corporate actions, such as
mergers, a sale of all or substantially all of the company's assets or increases or decreases in authorized shares, approved by shareholders. As a New York Stock Exchange listed company, the company is also required to, among other things, obtain shareholder approval for equity compensation plans, significant issuances of securities to related parties or when such issuances represent more than 20% of the company's voting power.
The Board also believes that adoption of this proposal is unnecessary because the company is committed to high standards of corporate governance and has already taken a number of steps to achieve greater transparency and accountability to stockholders.shareholders. Following extensive engagement with our shareholders throughout 2015, our Board amended the company's Bylaws to adopt a proxy access shareholder right in February 2016. The Board took particular care to adopt a bylaw with provisions that reflect the input of our shareholders, the details of which are described on page 1311 of this Proxy Statement under the heading "Proxy Access Shareholder Right." In addition to engaging with our shareholders on a regular basis, our Board continually reassesses our corporate governance practices
to identify additional steps to further benefit our stockholders.shareholders. For example, our Board recommended, and our stockholdersshareholders approved, amendments to our governing documents to eliminate all supermajority provisions applicable to common stockholders.shareholders. In addition, the Board's Committee on Directors and Corporate Governance has created a process for stockholdersshareholders to communicate directly with our non-management directors outside the annual meeting cycle, which is described on page 2825 of this Proxy Statement under the heading "Communications with our Board of Directors." More information about the company's corporate governance practices and policies can be found beginning on page 1917 of this Proxy Statement under the heading "Corporate Governance and Board Matters."
The existing 25% threshold protects shareholder interests by ensuring that special meeting matters are (i) of concern to a significant number of shareholders, (ii) worth the significant expense to the company, and (iii) not an unnecessary distraction to the Board and management. As informed by ongoing dialogue with our shareholders on this topic, the Board continues to believe that a 25% threshold ensures that a meaningful percentage of our shareholders agree on the need for a special meeting before a special meeting is called.
In light of the strong shareholder rights the company already has in place, including the right for shareholders of 25% to call a special meeting, and the Board's demonstrated commitment to establishing good governance practices,the Board recommends that you vote against this proposal.
The Board of Directors unanimously recommends a vote "AGAINST" the proposal.
VOTING SECURITIES AND PRINCIPAL HOLDERS
At the close of business on March 11, 2016,14, 2017, there were 1,672,628,330.511,647,500,264.51 shares of $0.10 par value common stock and 4,1614,129 shares of $2.00 convertible preferred stock outstanding and entitled to vote.
Common Stock Ownership by Directors and Executive Officers
The following table sets forth, as of March 15, 2016,2017, beneficial ownership of shares of our common stock by each director, each of the named executive officersNamed Executive Officers and all directors and executive officers as a group.group, in each case, as of such date. Shares are beneficially owned when an individual has voting and/or investment power over the shares or could obtain voting and/or investment power over the shares within 60 days. Voting power includes the power to direct the voting of the shares and investment power includes the power to direct the disposition of the shares. Unless otherwise noted, shares listed below are owned directly or indirectly with sole voting and investment power. None of our directors and executive officers, individually or as a group, beneficially owns greater than 1% of our outstanding shares of common or preferred stock.
| | | | | | | | | | | | | | | | | | | | | | | | | |||
| | | Bristol-Myers Squibb Company | | | Bristol-Myers Squibb Company | | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Name | Total Common Shares Owned(1) | Common Shares Underlying Options or Stock Units(2) | Common Shares Underlying Deferred Share Units(3) | | Name | Total Common Shares Owned(1) | Common Shares Underlying Options or Stock Units(2) | Common Shares Underlying Deferred Share Units(3) | | ||||||||||||||||
| L. Andreotti | 1,573,350 | 1,009,335 | 4,021 | L. Andreotti | 1,251,959 | 0 | 7,574 | |||||||||||||||||||
| | P. J. Arduini | | 0 | | 0 | | 0 | | P. J. Arduini | | 7,112 | | 0 | | 7,112 | | ||||||||||
| C. Bancroft | 327,837 | 112,942 | 0 | C. A. Bancroft | 351,713 | 90,344 | 0 | |||||||||||||||||||
| | G. Caforio, M.D. | | 169,143 | | 58,495 | | 0 | | R. J. Bertolini | | 3,322 | | 0 | | 2,925 | | ||||||||||
| L. B. Campbell | 45,058 | 0 | 42,948 | G. Caforio, M.D. | 180,458 | 8,040 | 0 | |||||||||||||||||||
| | F. Cuss, MB BChir, FRCP | | 287,973 | | 0 | | 0 | | F. M. Cuss, MB BChir, FRCP | | 321,906 | | 0 | | 0 | | ||||||||||
| L. H. Glimcher, M.D. | 88,190 | 0 | 88,190 | M. W. Emmens | 3,185 | 0 | 2,925 | |||||||||||||||||||
| | M. Gordon | | 12,615 | | 0 | | 0 | | L. H. Glimcher, M.D. | | 93,924 | | 0 | | 93,924 | | ||||||||||
| M. Grobstein | 63,935 | 0 | 60,552 | M. Gordon | 27,241 | 0 | 0 | |||||||||||||||||||
| | A. J. Lacy | | 50,706 | | 0 | | 48,401 | | M. Grobstein | | 70,082 | | 0 | | 66,699 | | ||||||||||
| S. Leung | 892,821 | 542,575 | 0 | A. J. Lacy | 57,596 | 0 | 55,291 | |||||||||||||||||||
| | T. J. Lynch, Jr, M.D. | | 10,119 | | 0 | | 10,119 | | S. Leung | | 760,113 | | 326,475 | | 0 | | ||||||||||
| D. C. Paliwal | 14,083 | 0 | 10,826 | T. J. Lynch, Jr., M.D. | 14,336 | 0 | 14,336 | |||||||||||||||||||
| | V. L. Sato, Ph.D. | | 50,596 | | 0 | | 50,596 | | D. C. Paliwal | | 17,812 | | 0 | | 14,556 | | ||||||||||
| G. L. Storch | 29,050 | 0 | 29,050 | T. R. Samuels | 14,925 | 0 | 2,925 | |||||||||||||||||||
| | T. D. West, Jr. | | 45,858 | | 0 | | 45,858 | | V. L. Sato, Ph.D. | | 55,356 | | 0 | | 55,356 | | ||||||||||
| All Directors and Executive Officers as a Group(4) | 4,089,696 | 1,811,405 | 390,562 | G. L. Storch | 35,397 | 0 | 35,397 | |||||||||||||||||||
| | | | | | | | | | | | | | T. D. West, Jr. | | 50,495 | | 0 | | 50,495 | | ||||||
| All Directors and Executive Officers as a Group(4) | 3,713,183 | 461,413 | 409,513 | |||||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||
Principal Holders of Voting Securities
The following table sets forth information regarding beneficial owners of more than 5% of the outstanding shares of our common stock. There are no beneficial owners of more than 5% of the outstanding shares of our preferred stock.
| | | | | | | | | | | |
| | Name | Number of Shares Beneficially Owned | Percent of Class | | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| | Wellington Management Group LLP c/o Wellington Management Company LLP 280 Congress Street Boston, MA 02210 | | 137,704,551(1) | | 8.25%(1) | | ||||
| BlackRock, Inc. 55 East 52nd Street New York, NY 10022 | 103,949,993(2) | 6.2%(2) | ||||||||
| | The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | | 100,997,126(3) | | 6.05%(3) | | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Name | Number of Shares Beneficially Owned | Percent of Class | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| | Wellington Management Group LLP c/o Wellington Management Company LLP 280 Congress Street Boston, MA 02210 | | 148,243,588 (1) | | 8.87% (1) | | ||||
| The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | 114,811,204 (2) | 6.86% (2) | ||||||||
| | BlackRock, Inc. 55 East 52nd Street New York, NY 10022 | | 99,698,762 (3) | | 6.0% (3) | | ||||
| | | | | | | | | | | |
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act of 1934, our directors, executive officers and the beneficial holders of more than 10% of our common stock are required to file reports of ownership and changes in ownership with the SEC. To the best of our knowledge, during 20152016 all applicable Section 16(a) filing requirements were met, except that, due to an administrative error, a Form 4 was filed late for Lamberto Andreotti relating to the sale of 11,600831 shares of common stockawarded to Mr. Andreotti on October 5, 2015.March 31, 2016 for his service as Non-Executive Chairman.
Policy on Hedging and Pledging
Our insider trading policy prohibits all employees, including directors and executive officers, from engaging in any speculative or hedging transactions. Our insider trading policy also prohibits all employees, including directors and executive officers, from holding our securities in a margin account or pledging our securities as collateral for a loan except in certain limited circumstances pre-approved by our Corporate Secretary when a person wishes to pledge our securities as collateral for a loan and clearly demonstrates the ability to repay the loan without selling such securities. None of our directors or executive officers has pledged shares of our stock as collateral for a loan or holds shares of our stock in a margin account.
As set forth in our Bylaws, if you wish to propose any action, including the nomination of directors, at next year's annual meeting, you must deliver notice to BMS containing certain information set forth in our Bylaws, not less than 90 but not more than 120 days before the anniversary of the prior year's annual meeting. For our 20172018 Annual Meeting, we must receive this notice between January 3, 20172, 2018 and February 2, 2017.1, 2018. These requirements are separate and distinct from the SEC requirements that a shareholder must meet to have a shareholder proposal
included in our proxy statement. For further information on how a shareholder may nominate a candidate to serve as a director, please see pages 12 and 13.
Table of Contentspage 11.
Our Bylaws are available on our website at www.bms.com/ourcompany/governance. In addition, a copy of the Bylaw provisions discussed above may be obtained by writing to us at our principal executive offices, Bristol-Myers Squibb Company, 345 Park Avenue, New York, New York 10154, attention: Corporate Secretary.
20172018 Shareholder Proposals
Shareholder proposals relating to our 20172018 Annual Meeting of Shareholders must be received by us at our principal executive offices, Bristol-Myers Squibb Company, 345 Park Avenue, New York, New York 10154, attention: Corporate Secretary, no later than November 23, 2016.2017. Such proposals must comply with SEC regulations under Rule 14a-8 regarding the inclusion of shareholder proposals in company sponsored proxy materials. Shareholders are encouraged to contact the Office of the Corporate Secretary prior to submitting a shareholder proposal or any time they have a concern. At the direction of the Board of Directors, the Office of the Corporate Secretary acts as corporate governance liaison to shareholders.
Compensation Committee Interlocks and Insider Participation
There were no Compensation and Management Development Committee interlocks or insider (employee) participation in 2015.2016.
Availability of Corporate Governance Documents
Our Corporate Governance Guidelines (including the standards of director independence), Principles of Integrity, Code of Ethics for Senior Financial Officers, Code of Business Conduct and Ethics for Directors, additional policies and guidelines, committee charters and links to Reports of Insider Transactions are available on our corporate governance webpage at www.bms.com/ourcompany/governance and are available to anyone who requests them by writing to: Corporate Secretary, Bristol-Myers Squibb Company, 345 Park Avenue, New York, New York 10154.
Why am I receiving these materials?
This Proxy Statement is being delivered to all shareholders of record as of the close of business on March 11, 201614, 2017 in connection with the solicitation of proxies on behalf of the Board of Directors for use at the Annual Meeting of Shareholders on May 3, 2016.2, 2017. We expect our proxy materials, including this Proxy Statement and the Annual Report, to be first made available to shareholders on or about March 23, 2016.2017. Although the Annual Report and Proxy Statement are being delivered together, the Annual Report should not be deemed to be part of the Proxy Statement.
What is "Notice and Access" and how does it affect me?
The U.S. Securities and Exchange Commission (SEC) has adopted a "Notice and Access" model which permits us to provide proxy materials to our shareholders electronically by posting the proxy materials on a publicly accessible website. Delivering proxy materials electronically will conserve natural resources and save us money by reducing printing and mailing costs. Accordingly, we have sent to most of our shareholders a "Notice of Internet Availability of Proxy Materials." This Notice provides instructions on how to access our proxy materials online and, if you prefer receiving a paper copy of the proxy materials, how you can request one. Employees and pension plan participants who have given consent to receive materials electronically received a link to access our proxy materials by email. We encourage all of our shareholders who currently receive paper copies of the proxy materials to elect to view future proxy materials electronically if they have Internet access. You can do so by following the instructions when you vote your shares online or, if you are a beneficial holder, by asking your bank, broker or other holder of record how to receive proxy materials electronically.
What is "householding" and how does it work?
"Householding" is a procedure we adopted whereby shareholders of record who
have the same last name and address and who receive the proxy materials by mail will receive only one copy of the proxy materials unless we have received contrary instructions from one or more of the shareholders. This procedure reduces printing and mailing costs. If
you wish to receive a separate copy of the proxy materials, now or in the future, at the same address, or if you are currently receiving multiple copies of the proxy materials at the same address and wish to receive a single copy, you may contact us by writing to Shareholder Services, Bristol-Myers Squibb Company, 345 Park Avenue, New York, New York 10154, or by calling us at (212) 546-3309.
If you are a beneficial owner (your shares are held in the name of a bank, broker or other holder of record), the bank, broker or other holder of record may deliver only one copy of the Proxy Statement and Annual Report, or Notice of Internet Availability of Proxy Materials, to shareholders who have the same address unless the bank, broker or other holder of record has received contrary instructions from one or more of the shareholders. If you wish to receive a separate copy of the Proxy Statement and Annual Report, or Notice of Internet Availability of Proxy Materials, now or in the future, you may contact us at the address or phone number above and we will promptly deliver a separate copy. Beneficial owners sharing an address who are currently receiving multiple copies of the Proxy Statement and Annual Report, or Notice of Internet Availability of Proxy Materials, and wish to receive a single copy in the future, should contact their bank, broker or other holder of record to request that only a single copy be delivered to all shareholders at the shared address in the future.
Who can attend the Annual Meeting?
Only shareholders of Bristol-Myers Squibb as of the record date, March 11, 2016,14, 2017, their authorized representatives and guests of Bristol-Myers Squibb may attend the Annual Meeting. Admission will be by ticket only. A form of government-issued photograph identification will be required to enter the meeting. Large bags, backpacks, briefcases, cameras, recording
equipment and other electronic devices will not be permitted in the meeting, and attendees will be subject to security inspections. Our offices are wheelchair accessible. We will provide, upon request, wireless headsets for hearing amplification.
How do I receive an admission ticket?
If you are a registered shareholder (your shares are held in your name) and plan to attend the meeting, you should bring either the Notice of Internet
Availability of Proxy Materials or the top portion of the proxy card, both of which will serve as your admission ticket.
If you are a beneficial owner (your shares are held in the name of a bank, broker or other holder of record) and plan to attend the meeting, you can obtain an admission ticket in advance by writing to Shareholder Services, Bristol-Myers Squibb Company, 345 Park Avenue, New York, New York 10154. Please be sure to enclose proof of ownership, such as a bank or brokerage account statement. Shareholders who do not obtain tickets in advance may obtain them upon verification of ownership at the Registration Desk on the day of the Annual Meeting.
We may also issue tickets to other individuals at our discretion.
All holders of record of our $0.10 par value common stock and $2.00 convertible preferred stock at the close of business on March 11, 201614, 2017 will be entitled to vote at the 20162017 Annual Meeting. Each share is entitled to one vote on each matter properly brought before the meeting.
How do I vote if I am a registered shareholder?
Proxies are solicited to give all shareholders who are entitled to vote on the matters that come before the meeting the opportunity to do so whether or not they attend the meeting in person. If you are a registered holder, you can vote your shares by proxy in one of the following manners:
Choosing to vote via Internet or calling the toll-free number listed above will save us expense. In order to vote online or via telephone, have the voting form in hand and either call the number or go to the website and follow the instructions. If you vote via the Internet or by telephone, please do not return a signed proxy card.
If you received a paper copy of the proxy materials and choose to vote by mail, specify how you want your shares voted on each proposal by marking the appropriate boxes on the proxy card enclosed with the Proxy Statement, date and sign it, and mail it in the postage-paid envelope.
If you wish to vote in person, you can vote your shares at the Annual Meeting.
How do I vote if I am a beneficial shareholder?
If you are a beneficial shareholder, you have the right to direct your broker or nominee on how to vote the shares. You should complete a voting instruction card which your broker or nominee is obligated to provide you. If you wish to vote in person at the meeting, you must first obtain from the record holder a legal proxy issued in your name.
Under the rules of the New York Stock Exchange (NYSE), brokers that have not received voting instructions from their customers ten days prior to the meeting date may vote their customers' shares in the brokers' discretion on the proposals regarding routine matters, which in most cases includes the ratification of the appointment of the independent registered public accounting firm.
Under NYSE rules, the election of directors, the advisory votevotes relating to approve the compensation of our named executive officers,Named Executive Officers, the approval of two amendmentsproposals related to our Amended2012 Stock Award and Restated Certificate of IncorporationIncentive Plan and the approval of any shareholder proposals are considered "non-discretionary" items, which means that
your broker cannot vote your shares on these proposals.
What items will be voted upon at the Annual Meeting?
At the Annual Meeting, we will consider and act on the following items of business:
We do not know of any other matter that may be brought before the meeting. However, if other
matters are properly presented for action, it is the intention of the named proxies to vote on them according to their best judgment.
What are the Board of Directors' voting recommendations?
For the reasons set forth in more detail later in the Proxy Statement, our Board of Directors recommends a vote FOR the election of each director, FOR the advisory vote to approve the compensation of our named executive officers,Named Executive Officers, FOR a frequency of every 1 YEAR to hold the advisory vote on the compensation of our Named Executive Officers, FOR the re-approval of the material terms of the Performance-Based Awards under the Company's 2012 Stock Award and Incentive Plan, FOR the approval of the amendment to the Company's 2012 Stock Award and Incentive Plan, FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 20162017 and AGAINST the shareholder proposal.
How will my shares be voted at the Annual Meeting?
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Item | Proposal | Voting Options | Effect of Abstentions | Broker Discretionary Voting Allowed? | Effect of Broker Non- Votes | |||||||||||||
| | 1 | Election of Directors | FOR, AGAINST or ABSTAIN (for each director nominee) | No effect—not counted as a vote cast | No | No effect | | |||||||||||
| 2 | Advisory vote to approve the compensation of our | FOR, AGAINST or ABSTAIN | Treated as a vote AGAINST the proposal | No | No effect | |||||||||||||
| | 3 | Advisory vote on the frequency of the advisory vote to approve the compensation of our Named Executive Officers | 1 YEAR, 2 YEARS, 3 YEARS or ABSTAIN | No effect—not counted as a vote cast | No | No effect | | |||||||||||
| 4 | Re-approval of the material terms of the Performance-Based Awards under the Company's 2012 Stock Award and Incentive Plan (as amended) | FOR, AGAINST or ABSTAIN | Treated as a vote AGAINST the proposal | No | No effect | |||||||||||||
| | 5 | Approval of an Amendment to the Company's 2012 Stock Award and Incentive Plan | FOR, AGAINST or ABSTAIN | Treated as a vote AGAINST the proposal | No | No effect | | |||||||||||
| 6 | Ratification of the appointment of an independent registered public accounting firm | FOR, AGAINST or ABSTAIN | Treated as a vote AGAINST the proposal | Yes | Not applicable | |||||||||||||
| | Shareholder proposal | FOR, AGAINST or ABSTAIN | Treated as a vote AGAINST the proposal | No | No effect | | ||||||||||||
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How many votes are needed to elect the directors and to approve each of the proposals?
Director Elections: A majority of votes cast with respect to each director's election at the meeting is required to elect each director. A majority of the votes cast means that the number of votes cast "for" a director must exceed the number of votes cast "against" that director in order for the director to be elected. Abstentions
will not be counted as votes cast for or against the director and broker non-votes will have no effect on this proposal.
Advisory Vote to Approve Compensation of our Named Executive Officers: The affirmative vote of a majority of our outstanding shares present in person or by proxy and entitled to vote on the matter is required for the approval of the advisory vote to approve the compensation of our named executive officers.Named Executive Officers. Because your vote is advisory, it will not be binding upon our Board of Directors.
Abstentions will be counted as votes against this proposal and broker non-votes will have no effect on this proposal.
Advisory Vote on the Frequency of the Advisory Vote to Approve Compensation of our Named Executive Officers: The affirmative vote of a majority of our outstanding shares present in person or by proxy and entitled to vote on the matter is required for the approval of the advisory vote to approve the frequency of the advisory vote to approve compensation of our Named Executive Officers. Because your vote is advisory, it will not be binding upon our Board of Directors. Abstentions will not be counted as votes cast for or against this proposal and broker non-votes will have no effect on this proposal.
Re-approval of the Material Terms of the Performance-Based Awards under the Company's 2012 Stock Award and Incentive Plan (as amended): The affirmative vote of a majority of our outstanding shares present in person or by proxy and entitled to vote on the matter is required for the re-approval of the material terms of the performance-based Awards under the Company's 2012 Stock Award and Incentive Plan for purposes of 162(m) of the Internal Revenue Code.
Approval of an Amendment to the Company's 2012 Stock Award and Incentive Plan: The affirmative vote of a majority of our outstanding shares present in person or by proxy and entitled to vote on the matter is required for the approval of the Amendment to the Company's 2012 Stock Award and Incentive Plan. Abstentions will be counted as votes against this proposal and broker non-votes will have no effect on this proposal.
Ratification of our Auditors: The affirmative vote of a majority of our outstanding shares present in person or by proxy and entitled to vote on the matter is required for the ratification of the appointment of our independent registered public accounting firm. Abstentions will be counted as votes against this proposal. As described above, a broker or other nominee may generally vote on routine
matters such as this one, and therefore no broker non-votes are expected to exist in connection with this proposal.
Shareholder Proposal: The affirmative vote of a majority of our outstanding shares present in person or by proxy and entitled to vote on the matter is required for the approval of the shareholder proposal, if presented at the meeting. Abstentions will be counted as votes against thisthe proposal and broker non-votes will have no effect on thisthe proposal.
In accordance with the laws of Delaware, our Amended and Restated Certificate of Incorporation and our Bylaws, for all matters being submitted to a vote of shareholders, only proxies and ballots that indicate votes "FOR," "AGAINST" or "ABSTAIN" on the proposals, or that provide the designated proxies with the right to vote in their judgment and discretion on the proposals are counted to determine the number of shares present and entitled to vote. Broker non-votes are not counted as shares present and entitled to vote but will be counted for purposes of determining quorum (whether enough votes are present to hold the Annual Meeting).
Can I change my vote after I return the proxy card, or after voting by telephone or electronically?
If you are a shareholder of record, you can revoke your proxy at any time before it is voted at the meeting by taking one of the following three actions:
If you are a beneficial owner of shares, you may submit new voting instructions by contacting your bank, broker or other holder of record. You may also vote in person at the Annual Meeting if you obtain a legal proxy.
All shares that have been properly voted and not revoked will be voted at the Annual Meeting.
If you wish to give your proxy to someone other than the persons named as proxies in the
enclosed form of proxy, you may do so by crossing out the names of all three persons named as proxies on the proxy card and inserting the name of another person. The signed card must be presented at the meeting by the person you have designated on the proxy card.
An independent agent tabulates the proxies and the votes cast at the meeting. In addition, independent inspectors of election certify the results of the vote tabulation.
Yes, any information that identifies a shareholder or the particular vote of a shareholder is kept confidential.
Who will pay for the costs involved in the solicitation of proxies?
We will pay all costs of preparing, assembling, printing and distributing the proxy materials as well as the solicitation of all proxies. We have retained Georgeson Shareholder Communications Inc. to assist in soliciting proxies for a fee of $18,000, plus reasonable out-of-pocket expenses. We may solicit proxies on behalf of the Board of Directors through the mail, in person, electronically, and by telecommunications. We will, upon request, reimburse brokerage firms and others for their reasonable expenses incurred for forwarding solicitation material to beneficial owners of stock.
EXHIBIT A
Categorical Standards of Independence
In determining director independence, the Board has adopted the following categorical standards to assist it in determining which relationships will be considered immaterial:
EXHIBIT B
BRISTOL-MYERS SQUIBB COMPANY
2012 STOCK AWARD AND INCENTIVE PLAN, AS AMENDED
1. Purpose. The purpose of this 2012 Stock Award and Incentive Plan, as amended (the "Plan") is to aid Bristol-Myers Squibb Company, a Delaware corporation (together with its successors and assigns, the "Company"), in attracting, retaining, motivating and rewarding employees, non-employee directors, and other service providers of the Company or its subsidiaries or affiliates, to provide for equitable and competitive compensation opportunities, to recognize individual contributions and reward achievement of Company goals, and to promote the creation of long-term value for stockholders by closely aligning the interests of Participants with those of stockholders. The Plan authorizes stock-based and cash-based incentives for Participants.
2. Definitions. In addition to the terms defined in Section 1 above and elsewhere in the Plan, the following capitalized terms used in the Plan have the respective meanings set forth in this Section:
(a) "Acquisition Events" shall have the meaning specified in Section 9(d).
(b) "Annual Limit" shall have the meaning specified in Section 5(b).
(c) "Award" means any Option, SAR, Restricted Stock, Stock Unit, Stock granted as a bonus or in lieu of another award, Dividend Equivalent, Other Stock-Based Award, or Performance Award, together with any related right or interest, granted to a Participant under the Plan.
(d) "Beneficiary" means the person, persons, trust or trusts designated as being entitled to receive the benefits under a Participant's Award upon and following a Participant's death. Unless otherwise determined by the Committee, a Participant may designate a person, persons, trust or trusts as his or her Beneficiary, and in the absence of a designated Beneficiary the Participant's Beneficiary shall be as specified in Section 11(b)(ii). Unless otherwise determined by the Committee, any designation of a Beneficiary other than a Participant's spouse shall be subject to the written consent of such spouse.
(e) "Board" means the Company's Board of Directors.
(f) "Change in Control" and related terms have the meanings specified in Section 9.
(g) "Code" means the Internal Revenue Code of 1986, as amended. References to any provision of the Code or regulation thereunder shall include any successor provisions and regulations, and reference to regulations includes any applicable guidance or pronouncement of the Department of the Treasury and Internal Revenue Service.
(h) "Committee" means the Compensation and Management Development Committee of the Board, the composition and governance of which is established in the Committee's Charter as approved from time to time by the Board and subject to other corporate governance documents of the Company. No action of the Committee shall be void or deemed to be without authority due to the failure of any member, at the time the action was taken, to meet any qualification standard set forth in the Committee Charter or this Plan. The full Board may perform any function of the Committee hereunder (subject to applicable requirements of New York Stock Exchange rules and Code Section 162(m)), in which case the term "Committee" shall refer to the Board.
(i) "Covered Employee" means an Eligible Person who is a Covered Employee as specified in Section 11(j).
(j) "Dividend Equivalent" means a right, granted under this Plan, to receive cash, Stock, other Awards or other property equal in value to all or a specified portion of the dividends paid with respect to a specified number of shares of Stock.
(k) "Effective Date" means the effective date specified in Section 11(q).
(l) "Eligible Person" shall have the meaning specified in Section 5.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as amended. References to any provision of the Exchange Act or rule (including a proposed rule) thereunder shall include any successor provisions and rules.
(n) "Fair Market Value" means the fair market value of Stock, Awards or other property as determined in good faith by the Committee or under procedures established by the Committee. Unless otherwise determined by the Committee, the Fair Market Value of Stock on a given day shall mean the last sale price of a share of stock before the 4 p.m. Eastern Time closing time (or equivalent earlier time for partial trading days) on that day or, if there was not trading on that day, on the last preceding day on which the Stock was traded, as reported on the composite tape for securities listed on the New York Stock Exchange. Fair Market Value relating to the exercise price or base price of any Non-409A Option or SAR and relating to the market value of Stock measured at the time of exercise shall conform to applicable requirements under Code Section 409A.
(o) "409A Awards" means Awards that constitute a deferral of compensation under Code Section 409A granted to or held by a person who is subject to United States federal income tax. "Non-409A Awards" means Awards other than 409A Awards. Although the Committee retains authority under the Plan to grant Options and SARs on terms that will qualify those Awards as 409A Awards, Options, and SARs are intended to be Non-409A Awards unless otherwise expressly specified by the Committee.
(p) "Full-Value Award" means an Award relating to Stock other than (i) Options and SARs and (ii) Awards for which the Participant pays (at any time) a stated price specified in the Award for each share of Stock issued upon exercise of the Award at least equal to 100% of the Fair Market Value of the underlying Stock valued at the grant date, either directly or by forgoing a right to receive a cash payment from the Company.
(q) "Incentive Stock Option" or "ISO" means any Option designated as an incentive stock option within the meaning of Code Section 422 and qualifying thereunder.
(r) "Non-Employee Director" means an individual who is a member of the Board but who is not an employee of the Company or a subsidiary or affiliate.
(s) "Option" means a right to purchase Stock granted under Section 6(b).
(t) "Other Stock-Based Awards" means Awards granted to a Participant under Section 6(h).
(u) "Participant" means a person who has been granted an Award under the Plan which remains outstanding, including a person who is no longer an Eligible Person.
(v) "Performance Award" means a conditional right, granted to a Participant under Sections 6(i) or 7, to receive cash, Stock or other Awards or payments.
(w) "Protected Period" shall have the meaning specified in Section 9(a).
(x) "Restricted Stock" means Stock granted under this Plan which is subject to certain restrictions and to a risk of forfeiture.
(y) "Retirement" means a Participant's termination of employment with the Company or a subsidiary or affiliate in the following circumstances:
noncompetition, nonsolicitation and other commitments for the protection of the Company's business as then may be required by the Committee and not otherwise prohibited by law.
(z) "Section 409A" shall have the meaning specified in Section 11(k)(i).
(aa) "Stock" means the Company's Common Stock, par value $0.10 per share, and any other equity securities of the Company that may be substituted or resubstituted for Stock pursuant to Section 11(c).
(bb) "Stock Units" means a right, granted under this Plan, to receive Stock or other Awards or a combination thereof at the end of a specified period. Stock Units subject to a risk of forfeiture may be designated as "Restricted Stock Units" as provided in Section 6(e)(ii).
(cc) "Stock Appreciation Rights" or "SAR" means a right granted to a Participant under Section 6(c).
(dd) "2007 Plan" shall have the meaning specified in Section 4(a).
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the Committee, which shall have full and final authority, in each case subject to and consistent with the provisions of the Plan, to select Eligible Persons to become Participants; to grant Awards; to determine the type and number of Awards, the dates on which Awards may be exercised and on which the risk of forfeiture or deferral period relating to Awards shall lapse or terminate, the acceleration of any such dates, the expiration date of any Award, whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, Stock, other Awards, or other property, and other terms and conditions of, and all other matters relating to, Awards; to prescribe documents evidencing or setting terms of Awards (such Award documents need not be identical for each Participant or each Award), amendments thereto, and rules and regulations for the administration of the Plan and amendments thereto; to construe and interpret the Plan and Award documents and correct defects, supply omissions or reconcile inconsistencies therein; and to make all other decisions and determinations as the Committee may deem necessary or advisable for the administration of the Plan. Decisions of the Committee with respect to the administration and interpretation of the Plan shall be final, conclusive, and binding upon all persons interested in the Plan, including Participants, Beneficiaries, transferees under Section 11(b) and other persons claiming rights from or through a Participant, and stockholders. The foregoing notwithstanding, the Board or another committee of the Board may perform the functions of the Committee for purposes of granting Awards under the Plan to non-employee directors, as the Board may at any time direct.
(b) Manner of Exercise of Committee Authority. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may act through subcommittees, including for purposes of perfecting exemptions under Rule 16b-3 or qualifying Awards under Code Section 162(m) as performance-based compensation, in which case the subcommittee shall be subject to and have authority under the charter applicable to the Committee, and the acts of the subcommittee shall be deemed to be acts of the Committee hereunder. The Committee may delegate to one or more officers or managers of the Company or any subsidiary or affiliate, or committees thereof, the authority, subject to such terms as the Committee shall determine, to perform such functions, including administrative functions, as the Committee may determine, to the extent that such delegation (i) will not result in the loss of an exemption under Rule 16b-3(d) for Awards granted to Participants subject to Section 16 of the Exchange Act in respect of the Company, (ii) will not cause Awards intended to qualify as "performance-based compensation" under Code Section 162(m) to fail to so qualify, (iii) will not result in a related-person transaction with an executive officer required to be disclosed under Item 404(a) of Regulation S-K (in accordance with Instruction 5.a.ii thereunder) under the Exchange Act, and (iv) is permitted under Section 157 and other applicable provisions of the Delaware General Corporation Law.
(c) Limitation of Liability. The Committee and each member thereof, and any person acting pursuant to authority delegated by the Committee, shall be entitled, in good faith, to rely or act upon any report or other information furnished by any executive officer, other officer or employee of the Company or a subsidiary or affiliate, the Company's independent auditors, consultants or any other agents assisting in the administration of the Plan. Members of the Committee, any person acting pursuant to authority delegated by the Committee, and any officer or employee of the Company or a subsidiary or affiliate acting at the direction or on behalf of the Committee or a delegee shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, by the Company's certificate of incorporation or by the
Company's bylaws, be fully indemnified and protected by the Company with respect to any such action or determination.
4. Stock Subject To Plan.
(a) Overall Number of Shares Available for Delivery. Subject to adjustment as provided under Section 11(c), the total number of shares of Stock reserved and available for delivery in connection with Awards under the Plan shall be (i) the number of shares that, immediately prior to the Effective Date, remain available for new awards under the 2007 Stock Award and Incentive Plan (the "2007 Plan"), plus (ii) the number of shares subject to awards under the 2007 Plan that become available in accordance with Section 4(b) after the Effective Date; provided, however, that the total number of shares with respect to which ISOs may be granted shall not exceed 42 million shares; and provided further, that shares issuable in connection with awards of acquired businesses that are assumed or substituted for by Awards shall not count against the shares of Stock reserved under the Plan. Any shares of Stock delivered under the Plan shall consist of authorized and unissued shares or treasury shares.
(b) Share Counting Rules. The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute Awards) and make adjustments in accordance with this Section 4(b). Shares shall be counted against those reserved to the extent such shares have been delivered and are no longer subject to a risk of forfeiture. Accordingly, (i) to the extent that an Award under the Plan or an award under the 2007 Plan is canceled, expired, forfeited, settled in cash, settled by delivery of fewer shares than the number underlying the Award or award, or otherwise terminated without delivery of shares to the Participant, the shares retained by or returned to the Company will not be deemed to have been delivered under the Plan or the 2007 Plan and will be available for Awards under the Plan; and (ii) shares that are withheld from such Award or award or separately surrendered by the Participant in payment of the exercise price or taxes relating to such Award or award shall be deemed to constitute shares not delivered and will be available for Awards under the Plan. The Committee may determine that Awards may be outstanding that relate to more shares than the aggregate remaining available under the Plan so long as Awards will not in fact result in delivery and vesting of shares in excess of the number then available under the Plan. In addition, in the case of any Award granted in assumption of or in substitution for an award of a company or business acquired by the Company or a subsidiary or affiliate or with which the Company or a subsidiary or affiliate combines, shares delivered or deliverable in connection with such assumed or substitute Award shall not be counted against the number of shares reserved under the Plan.
5. Eligibility; Per-Person Award Limitations.
(a) Eligibility. Awards may be granted under the Plan only to Eligible Persons. For purposes of the Plan, an "Eligible Person" means (i) an employee of the Company or any subsidiary or affiliate, including any executive officer or employee director of the Company or a subsidiary or affiliate, (ii) any person who has been offered employment by the Company or a subsidiary or affiliate, provided that such prospective employee may not receive any payment or exercise any right relating to an Award until such person has commenced employment with the Company or a subsidiary or affiliate, (iii) any non-employee director of the Company, and (iv) any person who provides substantial services to the Company or a subsidiary or affiliate. An employee on leave of absence may be considered as still in the employ of the Company or a subsidiary or affiliate for purposes of eligibility for participation in the Plan. For purposes of the Plan, a joint venture in which the Company or a subsidiary has a substantial direct or indirect equity investment shall be deemed an affiliate, if so determined by the Committee. Holders of awards granted by a company or business acquired by the Company or a subsidiary or affiliate, or with which the Company or a subsidiary or affiliate combines, are eligible for substitute Awards granted in assumption of or in substitution for such outstanding awards in connection with such acquisition or combination transaction.
(b) Per-Person Award Limitations. In each calendar year during any part of which the Plan is in effect, an Eligible Person may be granted Awards under the Plan intended to qualify as "performance-based compensation" under Code Section 162(m) up to his or her Annual Limit. A Participant's Annual Limit, in any year during any part of which the Participant is then eligible under the Plan, shall equal three million shares plus the amount of the Participant's unused Annual Limit as of the close of the previous year, subject to adjustment as provided in Section 11(c). In the case of an Award which is not valued in a way in which the limitation set forth in the preceding sentence would operate as an effective limitation satisfying applicable law (including Treasury Regulation § 1.162-27(e)(4)), an Eligible Person may not be granted Awards under the Plan authorizing the earning during any calendar year of an amount that exceeds the Eligible Person's Annual Limit. For this purpose, a Participant's Annual Limit, in any year during any part of which the Participant is then eligible under the Plan, shall equal $6 million plus the amount of the Eligible Person's unused cash Annual Limit as of the close of the previous
year (this limitation is separate and not affected by the number of Awards granted during such calendar year which are subject to the limitation in the preceding sentence, and the Annual Limits are subject to Section 11(h)). For this purpose, (i) "earning" means satisfying performance conditions so that an amount becomes payable, without regard to whether it is to be paid currently or on a deferred basis or continues to be subject to any service requirement or other non-performance condition, (ii) a Participant's Annual Limit is used to the extent an amount or number of shares may be potentially earned or paid under an Award, regardless of whether such amount or shares are in fact earned or paid, and (iii) the Annual Limit applies to Dividend Equivalents under Section 6(g) only if such Dividend Equivalents are granted separately from and not as a feature of a Full-Value Award.
(c) Non-Employee Director Limitations. The maximum number of shares of Stock that may be covered by Awards granted during a single calendar year to any Non-Employee Director, taken together with any cash fees paid and projected to be paid to such Non-Employee Director during the calendar year, shall not exceed $600,000 in total value (calculating the value of any such Awards based on the grant date fair value of such Awards for financial reporting purposes), except that such limit for a non-employee Chairman of the Board or Lead Director shall be $900,000.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth in this Section 6. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Sections 11(e) and 11(k)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of employment or service by the Participant and terms permitting a Participant to make elections relating to his or her Award. The Committee shall retain full power and discretion with respect to any term or condition of an Award that is not mandatory under the Plan, subject to Section 11(k) and the terms of the Award agreement. The Committee shall require the payment of lawful consideration for an Award to the extent necessary to satisfy the requirements of the Delaware General Corporation Law, and may otherwise require payment of consideration for an Award except as limited by the Plan.
(b) Options. The Committee is authorized to grant Options to Participants on the following terms and conditions:
(c) Stock Appreciation Rights. The Committee is authorized to grant SARs to Participants on the following terms and conditions:
(d) Restricted Stock. The Committee is authorized to grant Restricted Stock to Participants on the following terms and conditions:
(e) Stock Units. The Committee is authorized to grant Stock Units to Participants, subject to the following terms and conditions:
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized to grant to Participants Stock as a bonus, or to grant Stock or other Awards in lieu of obligations of the Company or a subsidiary or affiliate to pay cash or deliver other property under the Plan or under other plans or compensatory arrangements, subject to such terms as shall be determined by the Committee,provided that no Stock or other Award shall be granted in lieu of any obligation of the Company, subsidiary or affiliate where such obligation is or relates to a 409A Award or otherwise constitutes deferred compensation subject to Code Section 409A.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents to a Participant, which may be awarded on a free-standing basis or in connection with another Award. The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Stock, Awards, or other investment vehicles, and subject to restrictions on transferability, risks of forfeiture and such other terms as the Committee may specify. All dividend equivalents relating to a Performance Award or other Award subject to performance conditions shall remain forfeitable to the same extent as the underlying Award is forfeitable due to failure to achieve the specified performance.
(h) Other Stock-Based Awards. The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock or factors that may influence the value of Stock, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of the Company or business units thereof or any other factors designated by the Committee, and Awards valued by reference to the book value of Stock or the value of securities of or the performance of specified subsidiaries or affiliates or other business units. The Committee shall determine the terms and conditions of such Awards. Stock delivered pursuant to an Award in the nature of a purchase right granted under this Section 6(h) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Stock, other Awards, or other property, as the Committee shall determine. Cash awards, as an element of or supplement to any other Award under the Plan, may also be granted pursuant to this Section 6(h).
(i) Performance Awards. Performance Awards, denominated in cash or in Stock or other Awards, may be granted by the Committee in accordance with Section 7.
7. Performance Awards.
(a) Performance Awards Generally. Performance Awards may be denominated as a cash amount, number of shares of Stock, or specified number of other Awards (or a combination) which may be earned upon achievement or satisfaction of performance conditions specified by the Committee. In addition, the Committee may specify that any other Award shall constitute a Performance Award by conditioning the right of a Participant to exercise the Award or have it settled, and the timing thereof, upon achievement or satisfaction of such performance conditions as may be specified by the Committee. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to reduce or increase the amounts payable under any Award subject to performance conditions, except as limited under Section 7(b) in the case of a Performance Award intended to qualify as "performance-based compensation" under Code Section 162(m).
(b) Performance Awards Granted to Covered Employees. If the Committee determines that a Performance Award to be granted to an Eligible Person who is designated by the Committee as likely to be a Covered Employee should qualify as "performance-based compensation" for purposes of Code Section 162(m), the grant, exercise and/or settlement of such Performance Award shall be contingent upon achievement of a preestablished performance goal and other terms set forth in this Section 7(b).
(c) Written Determinations. Determinations by the Committee as to the establishment of performance goals, the amount potentially payable in respect of Performance Awards, the level of actual achievement of the specified performance goals relating to Performance Awards, and the amount of any final Performance Award shall be recorded in writing in the case of Performance Awards intended to qualify under Code Section 162(m). Specifically, the Committee shall certify in writing, in a manner conforming to applicable regulations under Code Section 162(m), prior to settlement of each such Award granted to a Covered Employee, that the performance objective relating to the Performance Award and other material terms of the Award upon which settlement of the Award was conditioned have been satisfied.
8. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any award granted under another plan of the Company, any subsidiary or affiliate, or any business entity to be acquired by the Company or a subsidiary or affiliate, or any other right of a Participant to receive payment from the Company or any subsidiary or affiliate; provided, however, that a 409A Award may not be granted in tandem with a Non-409A Award, and a substitution or exchange relating to any Award must comply with requirements under Code Section 409A; and provided further, that a substitution or exchange will be subject to the restrictions relating to a "repricing" under Section 11(e). Awards granted in addition to or in tandem with other Awards or awards may be granted either as of the same time as or a different time from the grant of such other Awards or awards. Subject to Section 11(k), the Committee may determine that, in granting a new Award, the in-the-money value or fair value of any surrendered Award or award or the value of any other right to payment surrendered by the Participant may be applied to the purchase of any other Award. Any transaction otherwise authorized under this Section 8(a) remains subject to the restriction on repricing under Section 11(e).
(b) Term of Awards. The term of each Award shall be for such period as may be determined by the Committee, subject to the express limitations set forth in Sections 6(b)(ii), 6(c)(ii) and 8 or elsewhere in the Plan.
(c) Form and Timing of Payment under Awards; Deferrals. Subject to the terms of the Plan (including Section 11(k)) and any applicable Award document, payments to be made by the Company or a subsidiary or affiliate upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as the Committee shall determine, including, without limitation, cash, Stock, other Awards or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis. The settlement of any Award may be accelerated, and cash paid in lieu of Stock in connection with such settlement, in the discretion of the Committee or upon occurrence of one or more specified events, subject to Section 11(k). Subject to Section 11(k), installment or deferred payments may be required by the Committee (subject to Section 11(e)) or permitted at the election of the Participant on terms and conditions established by the Committee. Payments may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents or other amounts in respect of installment or deferred payments
denominated in Stock. In the case of any 409A Award that is vested and no longer subject to a risk of forfeiture (within the meaning of Code Section 83), such Award will be distributed to the Participant, upon application of the Participant, if the Participant has had an unforeseeable emergency within the meaning of Code Sections 409A(a)(2)(A)(vi) and 409A(a)(2)(B)(ii), in accordance with Code Section 409A(a)(2)(B)(ii).
9. Change in Control.
(a) Effect of "Change in Control." In the event that there occurs a Change in Control of the Company, if the Participant's employment with the Company and its subsidiaries and affiliates terminates in an event constituting a "Qualifying Termination" (as defined in Section 9(c)) during the Protected Period the following provisions shall apply to the Participant's Awards upon such Qualifying Termination, unless otherwise provided by the Committee in the Award document (in language specifically negating the effect of this Section 9(a) if the effect of such language is to restrict the Participant's rights hereunder):
The Company and any successor that has assumed an Award in connection with a Change in Control must acknowledge and agree to be bound by the provisions hereof during the Protected Period following the Change in Control in a legally binding agreement with the Participant. For purposes of this Section 9(a), the "Protected Period" means the two-year period following the Change in Control, or such other period specified by the Committee in a Participant's Change-in-Control Agreement or Change-in-Control Plan, as applicable, or such other specific period (not less than one year) specified by the Committee at the time of grant of a Participant's Award in the resolutions authorizing the grant of such Award.
(b) Definition of "Change in Control." "Change in Control" means the occurrence of any one of the following events after the Effective Date:
(c) Qualifying Termination. For purposes of this Section 9, a "Qualifying Termination" shall be deemed to have occurred under the following circumstances:
A Participant's death or voluntary resignation without good reason will not constitute a Qualifying Termination.
(d) Termination of Awards Upon Acquisition Events. In the event of a merger or consolidation in which the Company is not the surviving entity or in the event of any transaction that results in the acquisition of substantially all of the Company's outstanding common shares by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of all or substantially all of the Company's assets to such a person, entity or group of persons and/or entities (together, "Acquisition Events"), then the Company may, by action of the Committee, terminate any outstanding Award, effective as of the date of the Acquisition Event. In such case, the Company shall deliver notice of termination of each Award to each affected Participant at least 30 days before the date of the Acquisition Event, and at the consummation of the Acquisition Event each then outstanding Award shall be automatically exercised and/or settled by payment of the per-share consideration to be received by stockholders less any applicable exercise price or similar payment obligation or deduction under the terms of the Award for each share subject to the Award, provided that (i) if the net amount payable is zero or less the Award will be terminated without payment; and (ii) the affected Awards shall be deemed to be fully vested, except that Awards subject to performance conditions will be deemed earned on a pro rata basis as provided under Section 9(a)(ii), treating the Participant as though he or she had a Qualifying Termination at the date of the Acquisition Event.
10. Additional Award Forfeiture Provisions; Clawbacks.
(a) The Committee may condition a Participant's right to receive a grant of an Award, to exercise the Award, to receive a settlement or distribution with respect to the Award or to retain cash, Stock, other Awards, or other property acquired in connection with an Award, upon compliance by the Participant with specified conditions that protect the business interests of the Company and its subsidiaries and affiliates from harmful actions of the Participant, including but not limited to conditions relating to non-competition, confidentiality of information relating to or possessed by the Company, non-solicitation of customers, suppliers, and employees of the Company, cooperation in litigation, non-disparagement of the Company and its subsidiaries and affiliates and the officers, directors and affiliates of the Company and its subsidiaries and affiliates, and other restrictions upon or covenants of the Participant, including during specified periods following termination of employment or service to the Company. Accordingly, an Award may include terms providing for a "clawback" or forfeiture from the Participant of the profit or gain realized by a Participant in connection with an Award, including cash or other proceeds received upon sale of Stock acquired in connection with an Award.
(b) Notwithstanding any provisions in this Plan or any Award agreement to the contrary, any compensation, payments, or benefits provided hereunder (or profits realized from the sale of Stock relating to Awards), whether in the form of cash or otherwise, shall be subject to a "clawback" to the extent necessary to comply with the requirements of any applicable law, including but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Section 304 of the Sarbanes-Oxley Act of 2002, or any regulations promulgated thereunder.
11. General Provisions.
(a) Compliance with Legal and Other Requirements. The Company may, to the extent deemed necessary or advisable by the Committee and subject to Section 11(k), postpone the issuance or delivery of Stock or payment of other benefits under any Award until completion of such registration or qualification of such Stock or other required action under any federal or state law, rule or regulation, listing or other required action with respect to any stock exchange or automated quotation system upon which the Stock or other securities of the Company are listed or quoted, or compliance with any other obligation of the Company, as the Committee may consider
appropriate, and may require any Participant to make such representations, furnish such information and comply with or be subject to such other conditions as it may consider appropriate in connection with the issuance or delivery of Stock or payment of other benefits in compliance with applicable laws, rules, and regulations, listing requirements, or other obligations. The foregoing notwithstanding, in connection with a Change in Control, the Company shall take or cause to be taken no action, and shall undertake or permit to arise no legal or contractual obligation, that results or would result in any postponement of the issuance or delivery of Stock or payment of benefits under any Award or the imposition of any other conditions on such issuance, delivery or payment, to the extent that such postponement or other condition would represent a greater burden on a Participant than existed on the 90th day preceding the Change in Control.
(b) Limits on Transferability; Beneficiaries.
and the term "Beneficiary" as used in the Plan shall include such person or persons. This provision applies to payments and benefits distributable upon vesting or after expiration of any mandatory or elective deferral period, and also to the right to exercise any option or SAR during any period in which the Award is outstanding and exercisable.
applicable to such Participant, except as otherwise determined by the Committee, and to any additional terms and conditions deemed necessary or appropriate by the Committee.
(c) Adjustments. In the event that any large and non-recurring dividend or other distribution (whether in the form of cash or property other than Stock), recapitalization, forward or reverse split, Stock dividend, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, liquidation, dissolution or other similar corporate transaction or event affects the Stock such that an adjustment is determined by the Committee to be appropriate or, in the case of any outstanding Award, which is necessary in order to prevent dilution or enlargement of the rights of the Participant, then the Committee shall, in an equitable manner as determined by the Committee, adjust any or all of (i) the number and kind of shares of Stock which may be delivered in connection with Awards granted thereafter, including the number of shares available under Section 4, (ii) the number and kind of shares of Stock by which annual per-person Award limitations are measured under Section 5, (iii) the number and kind of shares of Stock subject to or deliverable in respect of outstanding Awards (iv) the exercise price, grant price or purchase price relating to any Award or, if deemed appropriate, the Committee may make provision for a payment of cash or property to the holder of an outstanding Option, and (v) performance goals based on per-share measures of performance (in all cases subject to Sections 11(k) and 11(l)). In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including Performance Awards and performance goals and any hypothetical funding pool relating thereto) in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence, as well as acquisitions and dispositions of businesses and assets) affecting the Company, any subsidiary or affiliate or other business unit, or the financial statements of the Company or any subsidiary or affiliate, or in response to changes in applicable laws, regulations, accounting principles, tax rates and regulations or business conditions or in view of the Committee's assessment of the business strategy of the Company, any subsidiary or affiliate or business unit thereof, performance of comparable organizations, economic and business conditions, personal performance of a Participant, and any other circumstances deemed relevant; provided that no such adjustment shall be authorized or made if and to the extent that the existence of such authorization (i) would cause Options, SARs, or Performance Awards granted under the Plan to Participants designated by the Committee as Covered Employees and intended to qualify as "performance-based compensation" under Code Section 162(m) and regulations thereunder to otherwise fail to qualify as "performance-based compensation" under Code Section 162(m) and regulations thereunder, (ii) would cause the Committee to be deemed to have authority to change the targets, within the meaning of Treasury Regulation 1.162-27(e)(4)(vi), under the performance goals relating to Options or SARs granted to Covered Employees and intended to qualify as "performance-based compensation" under Code Section 162(m) and regulations thereunder, or (iii) would cause a Non-409Award to become subject to Code Section 409A or, as to a 409A Award, would cause it to violate Code Section 409A. In furtherance of the foregoing, in the event of an "equity restructuring" as defined in FASB ASC Topic 718 which affects the Stock, a Participant shall have a legal right to an adjustment to the Participant's Award which shall preserve without enlarging the value of the Award, with the manner of such adjustment to be determined by the Committee in its discretion, and subject to any limitation on this right set forth in the applicable Award agreement.
(d) Tax Provisions.
Committee in writing prior to the making of such election. In any case in which a Participant is permitted to make such an election in connection with an Award, the Participant shall notify the Company of such election within ten days of filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any filing and notification required pursuant to regulations issued under Code Section 83(b) or other applicable provision.
(e) Changes to the Plan. The Board may amend, suspend or terminate the Plan or the Committee's authority to grant Awards under the Plan without the consent of stockholders or Participants; provided, however, that any amendment to the Plan shall be submitted to the Company's stockholders for approval not later than the earliest annual meeting for which the record date is at or after the date of such Board action if such stockholder approval is required by any federal or state law or regulation or the rules of the New York Stock Exchange, or if such amendment would materially increase the number of shares reserved for issuance and delivery under the Plan, and the Board may otherwise, in its discretion, determine to submit other amendments to the Plan to stockholders for approval. The Committee is authorized to amend the Plan if and to the extent that its actions are within the scope of the Committee's authority under its Charter, and subject to all other requirements that would apply if the amendment were adopted by the Board. The Committee is authorized to amend outstanding awards, except as limited by the Plan. The Board and Committee may not amend outstanding Awards (including by means of an amendment to the Plan) without the consent of an affected Participant if such an amendment would materially and adversely affect the rights of such Participant with respect to the outstanding Award (for this purpose, actions that alter the timing of federal income taxation of a Participant will not be deemed material unless such action results in an income tax penalty on the Participant, and any discretion that is reserved by the Board or Committee with respect to an Award is unaffected by this provision). Without the approval of stockholders, the Committee will not amend or replace previously granted Options or SARs in a transaction that constitutes a "repricing," which for this purpose means any of the following or any other action that has the same effect:
provided, however, that the foregoing transactions shall not be deemed a repricing if pursuant to an adjustment authorized under Section 11(c). With regard to other terms of Awards, the authority of the Committee to waive or modify an Award term after the Award has been granted does not permit waiver or modification of a term that would be mandatory under the Plan for any Award newly granted at the date of the waiver or modification.
(f) Right of Setoff. The Company or any subsidiary or affiliate may, to the extent permitted by applicable law, deduct from and set off against any amounts the Company or a subsidiary or affiliate may owe to the Participant from time to time, including amounts payable in connection with any Award, owed as wages, fringe benefits, or other compensation owed to the Participant, such amounts as may be owed by the Participant to the Company, including but not limited to amounts owed under Section 10, although the Participant shall remain liable for any part of the Participant's payment obligation not satisfied through such deduction and setoff. By accepting any Award granted hereunder, the Participant agrees to any deduction or setoff under this Section 11(f). The foregoing notwithstanding, no setoff is permitted against a 409A Award except at the time of distribution pursuant to such 409A Award and, if so required by Code Section 409A, may not apply to any obligation of the Participant that arose more than 30 days before the date of distribution.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute an "unfunded" plan for Federal income tax purposes (except in the case of Restricted Stock). With respect to any payments not yet made to a Participant or obligation to deliver Stock pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company; provided that the Committee may authorize the creation of trusts and deposit therein cash, Stock, other Awards or other property, or make other arrangements to meet the Company's obligations under the Plan.
Such trusts or other arrangements shall not adversely affect the status of the Plan and any Award as unfunded for Federal income tax purposes unless the Committee otherwise determines with the consent of each affected Participant.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements, apart from the Plan, as it may deem desirable, including incentive arrangements and awards which do not qualify under Code Section 162(m), and such other arrangements may be either applicable generally or only in specific cases.
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless otherwise determined by the Committee, in the event of a forfeiture of an Award with respect to which a Participant paid cash consideration, the Participant shall be repaid the amount of such cash consideration. No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
(j) Compliance with Code Section 162(m). It is the intent of the Company that Options and SARs granted to Covered Employees and other Awards designated as Awards to Covered Employees subject to Section 7 shall constitute qualified "performance-based compensation" within the meaning of Code Section 162(m) and regulations thereunder, unless otherwise determined and expressly provided by the Committee. Accordingly, the terms of Sections 7(b) and (c), including the definitions of Covered Employee and other terms used therein, shall be interpreted in a manner consistent with Code Section 162(m) and regulations thereunder. The foregoing notwithstanding, because the Committee cannot determine with certainty whether a given Participant will be a Covered Employee with respect to a fiscal year that has not yet been completed, the term Covered Employee as used herein shall mean only a person designated by the Committee as likely to be a Covered Employee with respect to a specified fiscal year. If any provision of the Plan or any Award document relating to a Performance Award that is designated as intended to comply with Code Section 162(m) does not comply or is inconsistent with the requirements of Code Section 162(m) or regulations thereunder, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements, and no provision shall be deemed to confer upon the Committee or any other person discretion to increase the amount of compensation otherwise payable in connection with any such Award upon attainment of the applicable performance objectives.
(k) Certain Limitations on Awards to Ensure Compliance with Code Section 409A Notwithstanding any provision of the Plan or an Award to the contrary:
employee" as defined in Code Section 409A, settlement under this Section 11(k)(i)(C) shall instead occur at the expiration of the six-month period required under Code Section 409A(a)(2)(B)(i). In the case of installments, this delay shall not affect the timing of any installment otherwise payable after the six-month delay period. With respect to any 409A Award, a reference in any agreement or other governing document to a "termination of employment" which triggers a distribution shall be deemed to mean a "separation from service" within the meaning of Code Section 409A;
eligibility for grants of Non-409A Options/SARs or a separation from service by any Participant (where the use of the following modified definition is based upon legitimate business criteria), in applying Code Sections 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporations under Code Section 414(b), the language "at least 20 percent" shall be used instead of "at least 80 percent" at each place it appears in Sections 1563(a)(1), (2) and (3), and in applying Treasury Regulation § 1.414(c)-2 (or any successor provision) for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c), the language "at least 20 percent" shall be used instead of "at least 80 percent" at each place it appears in Treasury Regulation §1.414(c)-2.
(l) Certain Limitations Relating to Accounting Treatment of Awards. At any time that the Company is accounting for Awards that constitute "share-based payment arrangements" under FASB ASC Topic 718, the Company intends that, with respect to such Awards, the compensation measurement date for accounting purposes shall occur at the inception of the arrangement, unless the Committee specifically determines otherwise. Therefore, other provisions of the Plan notwithstanding, in order to preserve this fundamental objective of the Plan, if any authority granted to the Committee hereunder or any provision of the Plan or an Award agreement would result, under FASB ASC Topic 718, in an Award inadvertently being classified as a "liability" or a measurement date other than the date of inception of the arrangement, if the Committee was not specifically aware of such accounting consequence at the time such Award was approved, such authority shall be limited and such provision shall be automatically modified and reformed to the extent necessary to preserve the accounting treatment of the award intended by the Committee, subject to Section 11(e) of the Plan. This provision shall cease to be effective if and at such time as the Company is no longer accounting for equity compensation under FASB ASC Topic 718.
(m) Governing Law. The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan and any Award document shall be determined in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of laws, and applicable provisions of federal law.
(n) Awards to Participants Outside the United States. Other provisions of the Plan to the contrary notwithstanding, in order to foster and promote achievement of the purposes of the Plan or to comply with provisions of laws and customary business practices in other countries in which the Company and its subsidiaries and affiliates operate or have employees, the Committee shall have the power and authority to (i) determine which Participants employed outside the United States or subject to non-United States tax laws are eligible to participate in the Plan, (ii) modify the terms and conditions of Awards granted to or held by such Participants, (iii) establish subplans, modify exercise procedures and other terms and procedures relating to Awards granted or held by such Participants to the extent such actions may be necessary or advisable, and (iv) take such other actions as the Committee may deem necessary or appropriate so that the value and other benefits of an Award to such a Participant, as affected by foreign tax laws and other applicable restrictions, shall be comparable to the value of such an Award to a Participant who is resident or employed in the United States. An Award may be modified under this Section 11(n) in a manner that is inconsistent with the express terms of the Plan, so long as such modifications will not contravene any applicable law or regulation or result in actual liability under Section 16(b) for the Participant whose Award is modified.
(o) Limitation on Rights Conferred under Plan. Neither the Plan nor any action taken hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ or service of the Company or a subsidiary or affiliate, (ii) interfering in any way with the right of the Company or a subsidiary or affiliate to terminate any Eligible Person's or Participant's employment or service at any time (subject to the terms and provisions of any separate written agreements), (iii) giving an Eligible Person or Participant any claim to be granted any Award under the Plan or to be treated uniformly with other Participants and employees, or (iv) conferring on a Participant any of the rights of a stockholder of the Company unless and until the Participant is duly issued or transferred shares of Stock in accordance with the terms of an Award or an Option or SAR is duly exercised. Except as expressly provided in the Plan and an Award document, neither the Plan nor any Award document shall confer on any person other than the Company and the Participant any rights or remedies thereunder. Any Award shall not be deemed compensation for purposes of computing benefits under any retirement plan of the Company or any subsidiary or affiliate and shall not affect any benefits under any other benefit plan under which the availability or amount of benefits is related to the level of compensation (unless required by any such other plan or arrangement with specific reference to Awards under this Plan).
(p) Severability; Entire Agreement. If any of the provisions of this Plan or any Award document is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability, and the remaining provisions shall not be affected thereby; provided, that, if any of such provisions is finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope determined to be acceptable to permit such provision to be enforceable, such provision shall be deemed to be modified to the minimum extent necessary to modify such scope in order to make such provision enforceable hereunder. The Plan and any Award documents contain the entire agreement of the parties with respect to the subject matter thereof and supersede all prior agreements, promises, covenants, arrangements, communications, representations and warranties between them, whether written or oral with respect to the subject matter thereof. No rule of strict construction shall be applied against the Company, the Committee, or any other person in the interpretation of any terms of the Plan, Award, or agreement or other document relating thereto.
(q) Plan Effective Date and Termination. The Plan will become effective if, and at such time as, the stockholders of the Company have approved it by the affirmative votes of the holders of a majority of the voting securities of the Company present, or represented, and entitled to vote on the subject matter at a duly held meeting of stockholders, provided that the total vote cast on the proposal represents over fifty percent (50%) in interest of all securities entitled to vote on the proposal. The date of such stockholder approval will be the Effective Date. Upon such approval of the Plan by the stockholders of the Company, no further awards will be granted under the 2007 Plan, but any outstanding awards under that plan will continue in accordance with their terms. Unless earlier terminated by action of the Board of Directors, the authority of the Committee to make grants under the Plan will terminate on the date that is ten years after the latest date upon which stockholders of the Company have approved the Plan (except that, for Awards under Section 7(b), such authority will terminate earlier at the date five years after the latest stockholder approval of the business criteria for such Awards under Section 7(b)(ii)), and the Plan will remain in effect until such time as the Company has no further rights or obligations with respect to outstanding Awards or otherwise under the Plan.
Exhibit A
Deferral Election Rules
If a participant in a plan, program or other compensatory arrangement (a "plan") of Bristol-Myers Squibb Company (the "Company") is permitted to make an election resulting in the deferral of compensation as defined by Section 409A of the Internal Revenue Code (the "Code"), which with regulations and administrative guidance, is referred to as "Section 409A," any such election must be received by the Company prior to the date specified by or at the direction of the administrator of such plan (the "Administrator"). For purposes of compliance with Code Section 409A, and notwithstanding any provision of such plan to the contrary, any such election to defer shall be subject to the rules set forth below, subject to any additional restrictions as may be specified by the Administrator. Under no circumstances may a participant elect to defer compensation to which he or she has attained, at the time of deferral, a legally enforceable right to current receipt of such compensation.
EXHIBIT C
DIRECTIONS TO OUR PLAINSBOROLAWRENCE TOWNSHIP OFFICE AT777 SCUDDERS MILL ROAD3401 PRINCETON PIKEPLAINSBORO, NJ 08536LAWRENCE TOWNSHIP, NEW JERSEY 08648
By Car:
From New York:the North:
Take the Lincoln Tunnel.US-1 S to County Rd 533/Quakerbridge Rd in West Windsor Township
Take the New Jersey Turnpike South/Newark Exit.Exit Left onto I-95 South.County Rd 533 N exit from US-1 S
Merge onto NJ-18 North Via Exit 9 toward US-1/New Brunswick/Princeton.County Rd 533/Quakerbridge RdMerge onto US-1 South toward Trenton.Take ramp onto Scudders Mill Rd.Our offices are approximately 11/2 mile onUse the left side of the road.2 lanes to turn left onto Province Line Rd
Turn left onto Princeton Pike
Turn right onto BMS Drive
From Philadelphia:Southern New Jersey:
Access I-295 N
Continue on I-295 N to Lawrence Township
Take exit 8B from I-95 North.SMergeMake left at light onto US-1BMS Drive
From Western NJ / Pennsylvania
Access I-95 N
Take exit 7B onto 206 North via Exit 67A toward New Brunswick.Turn Slight RightBear right onto Scudders Mill Road.Franklin Corner RoadOur offices are approximately 11/2 mile0.2 miles make left onto Lewisville Rd
Go to end of Lewisville Road make right onto Princeton Pike
BMS Princeton Pike immediately on the left side of the road.right
By Train:
New Jersey Transit and Amtrak train service is available to Princeton Junction, New Jersey. Our PlainsboroLawrence Township office is approximately a 1015 minute car drive from the station.
Parking:
Free parking for shareholders attending the 20162017 Annual Meeting is available. Please go directly to the parking area reserved for shareholders.
Y O U R V O T E I S I M P O R T A N T
P L E A S E V O T E Y O U R P R O X Y
VOTE BY INTERNET - www.proxyvote.com Use the internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time, either on (i) Thursday, April 28, 201627, 2017 for shares in employee benefit plans or (ii) Monday, May 2, 20161, 2017 for all other shares. Have your proxy card in hand when you access the website and follow the instructions to vote the shares. P.O. BOX 4000 PRINCETON, NJ 08540 ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS If you would like to reduce the costs incurred by Bristol-Myers Squibb Company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time, either on (i) Thursday, April 28, 201627, 2017 for shares in employee benefit plans or (ii) Monday, May 2, 20161, 2017 for all other shares. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Bristol-Myers Squibb Company, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. We recommend you mail your proxy by April 25, 201624, 2017 to ensure timely receipt of your proxy. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E01285-TBDE22761-P86099-Z69327 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. BRISTOL-MYERS SQUIBB COMPANY THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH DIRECTOR UNDER ITEM 1. For Against Abstain 1. Election of Directors Nominees: For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1A) L. AndreottiP. J. Arduini 1B) R. J. Bertolini THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 2 AND 3.ITEM 2. For Against Abstain 1B) P. J. Arduini ! ! ! ! ! !1C) G. Caforio, M.D. 2. Advisory Vote to Approve the Compensation of our Named Executive Officers 1D) M. W. Emmens THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR "1 YEAR" on ITEM 3. 1 Year 2 Years 3 Years Abstain 1E) L. H. Glimcher, M.D. 3. Advisory Vote on the Frequency of the Advisory Vote to Approve the Compensation of our Named Executive Officers ! ! ! ! 1F) M. Grobstein 1G) A. J. Lacy THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 4, 5 and 6. For Against Abstain 1H) D. C. Paliwal 4. Re-approval of the Materials Terms of the Performance-Based Awards under the Company's 2012 Stock Award and Incentive Plan (as amended) Approval of an Amendment to the Company's 2012 Stock Award and Incentive Plan Ratification of the Appointment of Independent Registered Public Accounting Firm 1C)! ! ! ! ! ! ! ! ! 1I) T. R. Samuels 5. 1J) G. Caforio, M.D. 3. 1D) L. H. Glimcher, M.D. 1E) M. GrobsteinStorch 1K) V. L. Sato, Ph.D. 6. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEM 4.7. For Against Abstain 1F) A. J. Lacy ! ! ! 4. Special Shareowner Meetings 1G) T. J. Lynch, Jr., M.D. 1H) D. C. Paliwal 1I) V. L. Sato, Ph.D. 1J) G. L. Storch 1K) T. D. West, Jr. For address changes and/or comments, please check this box and write them on the back where indicated. Please indicate if you plan to attend this meeting. ! Yes ! No ! ! ! 7. Shareholder Proposal to Lower the Share Ownership Threshold to Call Special Shareholder Meetings Note: Please sign as name appears on this card. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date V.1.1
ADMISSION TICKET 20162017 Annual Meeting of Shareholders Tuesday, May 3, 20162, 2017 10:00 A.M. Bristol-Myers Squibb Company 777 Scudders Mill Road Plainsboro,3401 Princeton Pike Lawrence Township, New Jersey PHOTO IDENTIFICATION WILL BE REQUIRED This is your admission ticket to the meeting. This ticket admits only the shareholder(s) listed on the reverse side of this card and is not transferable. Bristol-Myers Squibb Company is located at 777 Scudders Mill Road, Plainsboro,3401 Princeton Pike, Lawrence Township, New Jersey. Directions to the facility can be found on the inside back cover of the Proxy Statement or you can call the company at 609-897-2000.609-302-3000. Free parking for shareholders attending the 20162017 Annual Meeting is available at Bristol-Myers Squibb. Important Notice Regarding the Availability of Proxy Materials for the 20162017 Annual Meeting: The Notice of 20162017 Annual Meeting, Proxy Statement and Annual Report are available at www.proxyvote.com. E01286-TBDE22762-P86099-Z69327 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS, MAY 3, 20162, 2017 The undersigned hereby appoints Giovanni Caforio, M.D., Charles Bancroft, and Katherine R. Kelly, and each of them proxies, with full power of substitution in each of them, for and on behalf of the undersigned to vote as proxies, as directed and permitted herein, at the Annual Meeting of Shareholders of the company to be held at Bristol-Myers Squibb Company, 777 Scudders Mill Road, Plainsboro,3401 Princeton Pike, Lawrence Township, New Jersey, on May 3, 20162, 2017 at 10:00 A.M., and at any adjournments or postponements thereof upon matters set forth in the Proxy Statement and, in their judgment and discretion, upon such other business as may properly come before the meeting. This proxy also provides voting instructions for shares held by the Trustee of the Bristol-Myers Squibb Company Savings and Investment Program, the Bristol-Myers Squibb Company Employee Incentive Thrift Plan, and the Bristol-Myers Squibb Puerto Rico, Inc. Savings and Investment Program, and directs such Trustee to vote at the Annual Meeting all of the shares of common stock of Bristol-Myers Squibb Company which are allocated to the undersigned’s employee plan account in the manner directed on the reverse side of this card. If no direction is given or if direction is received after April 28, 2016,27, 2017, the Trustee will vote the shares in the same proportion as to which it has received instructions. When properly executed, your proxy will be voted as you indicate, or where no contrary indication is made, will be voted FOR Items 1, 2, 4, 5, 6 and 1 YEAR on Item 3 and AGAINST Item 4.7. The full text of the items and the position of the Board of Directors on each appear in the Proxy Statement and should be reviewed prior to voting. (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) V.1.1 Address Changes/Comments:
