| • | | Balanced mix of pay components and incentives.Balanced mix of pay components and incentives.We target a balanced mix of cash and equity compensation, and of annual and long-term incentives. The key elements of our program are salary, annual cash incentives under the PIP and long-term equity compensation consisting of stock-settled stock appreciation rights (“SARs”), stock-settled performance-based units (“Performance Units”), and stock-settled time-vested units (“TVUs”). Significant performance-based compensation tied to business strategy. We emphasize pay-for-performance to align executive compensation with the execution of our business strategy and the creation of long-term shareholder value. | | ◦ | Three-quarters of our programCEO’s target compensation in 2018 was performance-based. |
| | ◦ | We use performance metrics that are salary, annual cash incentives under the PIPaligned with and long-term equity compensation consisting of stock appreciation rights (“SARs”), stock-settled performance-based units (“Performance Units”), and time-vested units (“TVUs”).support BD’s business strategy. |
| • | ◦ | | Significant performance-based compensationWhile we emphasize “at risk” pay tied to business strategy. We emphasizepay-for-performance to align executive compensation with the execution ofperformance, we believe our business strategy and the creation of long-term shareholder value.program does not encourage excessive risk-taking by management. |
Three-quarters
Share retention guidelines and policy against pledging/hedging. Our executives are subject to robust share retention and ownership guidelines and are prohibited from pledging BD shares or hedging against the economic risk of their ownership.
Limited perquisites and no employment agreements. We offer our named executive officers very limited perquisites, and none of them have employment agreements.
Clawback policy. We have a compensation recovery policy that gives the Board the authority to recover incentive compensation paid to senior management in the event of a restatement of our CEO’s targetfinancial statements resulting from misconduct.
Change in control arrangements. We have “double-trigger” change in control agreements with our named executive officers to provide continuity of management in the event of an actual or potential change in control of BD. We have adopted a policy of eliminating excise tax gross-ups from future change in control agreements. Equity compensation awards made after January 1, 2015 also have a double-trigger accelerated vesting provision. Use of independent consultant. The Compensation Committee uses an independent consultant to assist it in 2017 was performance-based. We use performance metrics that are aligned withdesigning our compensation program and support BD’s business strategy.
While we emphasize “at risk” pay tiedmaking compensation decisions. The independent consultant did not provide any services to performance, we believe our program does not encourage excessive risk-taking by management.BD or BD management in 2018, per the policy of the Compensation Committee.
| • | | Share retention guidelines and policy against pledging/hedging. Our executives are subject to robust share retention and ownership guidelines and are prohibited from pledging BD shares or hedging against the economic risk of their ownership. |
| • | | Limited perquisites and no employment agreements. We offer our named executive officers very limited perquisites, and none of them have employment agreements. |
| • | | Clawback policy. We have a compensation recovery policy that gives the Board the authority to recover incentive compensation paid to senior management in the event of a restatement of our financial statements resulting from misconduct. |
| • | | Change in control agreements. We have “double-trigger” change in control agreements with our named executive officers to provide continuity of management in the event of an actual or potential change in control of BD. We have adopted a policy of eliminating excise taxgross-ups from future change in control agreements. Equity compensation awards made after January 1, 2015 also have a double-trigger accelerated vesting provision. |
| • | | Use of independent consultant. The Compensation Committee uses an independent consultant to assist it in designing our compensation program and making compensation decisions. The independent consultant did not provide any services to BD or BD management in 2017, per the policy of the Compensation Committee. |
Last year’ssay-on-pay vote Approximately 94%96% of the shares voted at last year’s annual meeting were cast in support of BD’s advisory vote on named executive officer compensation. The Compensation Committee views the results of this vote as broad general shareholder support for our executive compensation program. Based on oursay-on-pay vote and the Compensation Committee’s ongoing benchmarking of our compensation policies and practices, the Compensation Committee believes that our compensation program effectively aligns the interests of our named executive officers with those of our shareholders and the long-term goals of BD. Accordingly, the Compensation Committee did not make any significant changes to our program in 20172018 as a result of last year’s say-on-pay vote. say-on-pay vote.Changes to our program in 2017 During 2017,2018
For 2018, the Compensation Committee revised certain aspectsthe group of peer companies used to benchmark compensation practices to add two companies, Abbott Laboratories and Danaher Corporation, which are relatively larger than most of the PIPother companies included in the peer group. This change was made to better align plan incentivesreflect the significantly increased size and complexity of BD’s business following our recent acquisitions of CareFusion Corporation (“CareFusion”) and Bard. In addition, starting with our business strategy by increasing management focus on revenue growth. These changes included:increasingPerformance Unit grants made in 2018, the Compensation Committee changed the group of companies used to measure relative weighting of the revenue target from 25% to 40%,
raising the threshold performance level required to provide funding for the revenue target from 90% to 96% of target, and
revising the PIP funding formula to increase the funding resulting from above-target revenue performance (and, conversely, decrease funding in instances of below-target performance)total shareholder return (“TSR”).
We believe sustained revenue growth is a priority for our investors, and that these changes better align the PIP Beginning with the interests2018 grant, relative TSR performance will be measured by reference to those healthcare equipment and life companies included in the S&P 500 Healthcare Index. This change increases the number of our shareholders.
2017companies against which BD’s TSR is measured, compared to the custom peer group used for previous grants, which reduces the potential volatility in relative TSR performance that can arise when comparing BD’s performance to a smaller group of companies.
2018 operating performance and executive compensation decisions
While our reported revenues of approximately $12.1 billion declined 3.1%, this primarily reflects2018 was another transformational year for BD, as we completed the impactacquisition of the divestiture of our Respiratory Solutions business at the start of the fiscal year. After adjusting for divestitures and currency translation, our revenues grew 4.5%, in line with our expectations for the year.
Reported diluted earnings per share (“EPS”) were $4.60, an increase of 2.4%. After adjusting for acquisition-related charges and certain other items, EPS was $9.48, which represents 10.4% growth, or 13.2% on a currency-neutral basis.
We signed an agreement to acquire Bard, a leader in the fields of vascular, urology, oncology and surgical specialty products. The pendingBard acquisition will uniquely positionpositions BD to improve both the process of care and the treatment of disease for patients and healthcare providers.
In connection with While the financingacquisition and integration of Bard required significant management attention throughout the year, BD still delivered strong financial and operational performance in 2018, the highlights of which are described below:
Reported revenues increased 32.2% from the prior year, primarily due to the Bard acquisition. On a comparable, currency-neutral basis that includes the revenues of Bard in the current and prior year, our revenues grew 5.8%, which exceeded our expectations at the time we acquired Bard.
While reported diluted earnings per share decreased about 87%, primarily as a result of expenses relating to the Bard and other acquisitions, as well as additional tax expense resulting from U.S. tax reform, our adjusted diluted earnings per share grew 16.1%, or 12.3% on a currency-neutral basis, slightly above our expectations at the time of the Bard transaction,acquisition.
Substantial progress was made on the integration of Bard upon the completion of the acquisition, including creating a new "Interventional" segment and the recognition of cost synergies.
As part of our commitment to reduce our outstanding long-term debt, we successfully executedretired $1.2 billion of debt since the public salecompletion of approximately $5 billionthe Bard acquisition.
We continued to make strategic acquisitions and divestitures, including the acquisition of TVA Medical (a developer of minimally invasive vascular access solutions for patients with chronic kidney disease requiring hemodialysis), the divestiture of our remaining interest in equity securitiesthe Vyaire joint venture (our former Respiratory Solutions business), and nearly $10 billion in senior notes on favorable terms.the agreement to divest our Advanced Bioprocessing business.
We reached $250achieved our target of $350 million in annualized cost savings on a cumulative basissynergies relating to the CareFusion transaction, throughwell above our original estimate of $250 million at the end of 2017, and remain on track to achieve $350 million in total annualized cost synergies bytime the end of 2018.acquisition was announced.
We continued to drive significant underlying operating margin expansion as a result of operating efficiencies, cost leverage, and cost synergy capture. | • | | Cash flows remained strong, at approximately $2.8 billion, and we increased our dividend for the 45th consecutive year. |
Important progress was made on transformational programs were implemented throughout BD, including the company, including acompletion of Project TraCE (the previously announced change in the business model forof our dispensing business), and changes to our organization and internal management systems to further align them with our business (which we refer to as Project TraCE),strategy, increase efficiency and build new capabilities. These changes included the implementation of a new global supply chain organization plant rationalization and executiveprocess changes to enhance our product development programs.capabilities.
Net cash from operations remained strong, at approximately $2.9 billion, and we increased our dividend for the 46th consecutive year. Salary. Mr. Forlenza, our CEO, received a salary increase during the year from $1,120,000$1,165,000 to $1,165,000 in order$1,200,000 to recognize his continued performance and to keep his salary competitive with the median of peer companies. The other named executive officersMessrs. Reidy and Polen received salary increases that were in line with increases at BD generally. Mr. Polen’s salary was increased from $728,000 to $825,000 upon his being named BD’s President in April 2017.
PIP awards. For 2017,2018, we met or exceeded target performance for all three PIP performance measures—measures — adjusted earnings per share, revenue and free cash flow—flow — resulting in available funding for PIP awards at 109%of 110% of target. The PIP award made to Mr. Forlenza was 110% of his target award, and awards ranged from 109%110% to 142%132% of target for our other named executive officers, as discussed below. We believe that the 20172018 PIP awards appropriately reflect the individualrespective contributions of our named executive officers to BD’s strong financial performance during the year, as well as their efforts relating to the executioncompletion of the agreement to acquireacquisition and initial integration of Bard, the ongoing successful completion of the CareFusion integration, of CareFusion, and the progress made on important strategic initiatives at BD.
Equity compensation. Consistent with our past practice, equity compensation represented a significant component of total compensation in 2017. Among the changes2018. There were increases in equity compensation awards in 2017 was an increase in Mr. Polen’s total award value, which was madevalues in anticipation of his being named BD’s President later in2018 over the fiscal year.prior year for the awards granted to Messrs. Forlenza, Reidy and Polen to recognize their performance and reflect prevailing market practices. Objectives of Our Executive Compensation Program The objectives of our executive compensation program include: Aligning the interests of our executives with our shareholders through equity compensation and share retention guidelines. Driving superior business and financial results by setting clear, measurable short- and long-term performance targets that support our business strategy and the creation of long-term shareholder value, while at the same time taking care to ensure that our executives are not incentivized to take inappropriate risks. Maintaining a pay-for-performance philosophypay-for-performance philosophy by tying a significant portion of pay to performance against our performance targets. Offering competitive compensation that helps attract and retain high-performing executives who are essential to executing our strategy and creating long-term value for our shareholders.
In administering the program, the Compensation Committee seeks to provide transparency to BD executives and associates and to our shareholders of all aspects of BD’s compensation and benefits structure. This includes disclosure of performance targets and payout formulas, the benefits provided under the program, and the Compensation Committee’s use of discretion in determining award payouts. How We Set Executive Compensation The role of the Compensation Committee, its consultant and management The Compensation Committee oversees the compensation program for our executive officers. The Compensation Committee recommends compensation actions regarding the CEO for approval by the independent members of the Board, and sets the compensation of the other named executive officers. The Compensation Committee is assisted in fulfilling its responsibilities by its independent consultant, Pay Governance, and BD’s senior management. Additional information about our process for setting executive compensation, including the roles of Pay Governance and management, is found on pages 12-13.10-11. In order to maintain the independence of its outside consultant, the Compensation Committee has established a policy that prohibits its consultant from performing any services for BD or BD’s management without the Compensation Committee’s prior approval. In accordance with this policy, Pay Governance did not perform services for BD or BD management in 2017.2018. The use of market comparison data The Compensation Committee considers a number of factors in structuring our program, determining pay components and making compensation decisions. This includes the compensation practices of select peer companies in the healthcare industry, which we refer to as the “Comparison Group.” These companies wereare chosen by the Compensation Committee after considering the recommendations of Pay Governance and management and were selected because theyprior to the beginning of the fiscal year. It is the Compensation Committee’s intent to select companies that have significant lines of business that are similar to BD’s, are of comparable size in revenue and market capitalization, and are companies that we believe we compete with BD for executive talent. The Compensation Committee reviews the composition of the Comparison Group at least annually. The companies in the Comparison Group for 20172018 are below. For 2018, the Compensation Committee added Abbott Laboratories and Danaher Corporation to the Comparison Group and removed PerkinElmer, Inc. These changes were made in light of the substantial increase in the size and complexity of BD’s business following the acquisitions of CareFusion and Bard.Comparison Group | | | | Abbott Laboratories Agilent Technologies, Inc. Allergan plc
C.R. Bard, Inc.
Baxter International Inc.
Boston Scientific Corporation
| | Danaher Corporation Medtronic plc PerkinElmer, Inc.
Stryker Corporation
Thermo Fisher Scientific Inc.
Zimmer Biomet Holdings, Inc.
|
If the sample size from the Comparison Group is not large enough, data from a secondary peer group or, more broadly, general industry data may be used. Companies in the secondary peer group vary each year, depending on survey participation, and are selected based on similarities of industry and company size. The Comparison Group data was used for each named executive officer for each component of our compensation program in 2017.2018. In addition, secondary peer group data was used in setting pay levels for Mr. Conroy and general industry data was consulted in setting Mr. Polen’s pay.
Comparison Group Data | | | | | | | | | | | Revenue for the twelve months ended September 30, 2017 (in millions) | | | Market capitalization on September 30, 2017 (in millions) | | 25th Percentile | | $ | 5,240 | | | $ | 23,387 | | Median | | $ | 9,499 | | | $ | 37,108 | | 75th Percentile | | $ | 14,289 | | | $ | 64,668 | | BD | | $ | 12,158 | | | $ | 44,591 | | BD Percentile Rank | | | 67% | | | | 59% | |
| | | | | | | | | | | | Revenue for the twelve months ended September 30, 2018 (in millions) | | Market capitalization on September 30, 2018 (in millions) | 25th Percentile | $ | 9,875 |
| | | $ | 44,201 |
| | Median | $ | 14,598 |
| | | $ | 65,554 |
| | 75th Percentile | $ | 22,143 |
| | | $ | 92,745 |
| | BD | $ | 14,747 |
| | | $ | 69,834 |
| | BD Percentile Rank | | 51 | % | | | | 59 | % | |
We attempt to set the compensation of the named executive officers at levels that are competitive with the compensation (salary, annual cash incentive and equity compensation) paid to persons holding the same or similar positions at the companies listed above, using available market comparison data regarding these companies as a guide. The Compensation Committee (and the independent directors, as a group, in the case of our CEO) generally seek to set the compensation of our named executive officers for each of these elements within a competitive range of the median of this group, assuming payout of performance-based compensation at target. The use of market comparison data, however, is just one of the tools used to determine executive compensation, and the Compensation Committee and the independent directors retain the flexibility to set target compensation at levels deemed appropriate for an individual or for a specific element of compensation. Based on the market data provided by Pay Governance, the Compensation Committee believes that the total target compensation set for the named executive officers in 20172018 generally approximated median competitive levels. Because each compensation element is reviewed individually, compensation decisions made with respect to one element of compensation generally do not affect decisions made with respect to other elements. It is also for this reason that no specific formula is used to determine the allocation between cash and equity compensation, although it is the Compensation Committee’s intent that equity compensation represent the largest portion of total target compensation. In addition, because an executive’s compensation target is set by reference to persons with similar duties at peer companies, we do not establish any fixed relationship between the amount of compensation paid to our CEO and that paid to the other named executive officers. The Compensation Committee is fromtime-to-time provided a “tally sheet” report prepared by management for each named executive officer.officers. The tally sheet includes, among other things, total annual compensation, the value of unexercised or unvested equity compensation awards, and amounts payable upon termination of employment under various scenarios, including retirement or following a change in control. The Compensation Committee uses these tally sheets to providegain additional perspective on the value the executives have accumulated from prior equity awards and plan accruals and their retentive value. The Key Elements of Our Compensation Program The key elements of our executive compensation program are summarized in the table below. | | | | | | | Component | | Description | | | Purpose | | | | | Purpose
| | | | | Base salary | | Fixed cash compensation based on performance, scope of responsibilities, experience and competitive pay practices. | | | ) ) ) ) | Provide a fixed, baseline level of compensation. | | | | | PIP | | Annual variable cash payment tied to performance during the fiscal year. | | ) ) ) ) ) | | Drive business performance on an annual basis.
Reward individual contributions to BD’s performance.
| Long-term equity compensation: compensation: | | | | | | | | | | | | | • SARs | | Exercisable for shares based on difference between exercise price and BD stock price. SARs vest over four years and have a10-year term. | | ) ) ) ) ) ) ) ) ) ) ) ) ) | | Increase executive ownership to align interests with shareholders.
Promote executive retention.
Drive long-term, sustained business performance.
Reward creation of shareholder value.
| • Performance Units | | Performance-based restricted stock units, with payout tied to BD’s performance over three-year performance period. | | | • TVUs | | Restricted stock units that vest in three annual installments. | | |
Our Emphasis on Pay-for-PerformancePerformance-based compensation The compensation of our named executive officers is weighted towards performance-based compensation, where the actual amount received varies based on company and individual performance. The chartschart below showshows the performance-based portionand fixed portions of 2017 targetthe 2018 compensation paid to Mr. Forlenza and the other named executive officers.2017officers (excluding the cash retention and sign-on payments made to Messrs. Khichi and Kaltenbach upon joining BD).
2018 Total Target Compensation*
* | | * | Actual amounts received (and the percentage of total compensation coming from performance-based compensation) may differ from target amounts based on performance and BD’s stock price. |
“Performance-based” compensation includes PIP awards, Performance Units and SARs, while “Fixed” compensation includes salary and TVUs. We consider SARs performance-based compensation because they require stock price appreciation to deliver value to an executive.
How our performance metrics support BD’s business strategy BD remains focused on delivering sustainable growth and shareholder value, while making appropriate investments for the future. BD management operates the business consistent with the following core strategies: Increasing revenue growth by focusing on our core products, services and solutions that deliver greater benefits to patients, healthcare workers and researchers; Supplementing our internal growth through strategic acquisitions; Investing in research and development for platform extensions and innovative new products; Growing our operations in emerging markets; Improving operating effectiveness and balance sheet productivity; and Driving an efficient capital structure and strong shareholder returns. The Compensation Committee believes it is important that our compensation program reinforce and reward behaviors that support these business objectives. In addition, the Compensation Committee believes executive compensation should be based in part on how BD’s performance compares to peer companies facing the same market conditions as BD. These considerations inform the Compensation Committee’s selection of the performance measures for BD’s performance-based compensation.
Performance Period and Metrics for Performance-based Compensation | | | | | | 1 Year (PIP awards) | | 3 years (Performance Units) | | 10 years (SARs) | | | | PIP Awards | | Performance Units | | SARs | Adjusted EPS* Revenues*
Free cash flow as a percentage of sales*
| | Average ROIC Relative TSR
| | Stock price appreciation |
* | | * | Adjusted by eliminating the effect of unbudgeted currency fluctuations. |
PIP. We evaluate corporate performance under the PIP using the following metrics: | • | | Adjusted EPS. “Adjusted EPS” is our GAAP EPS less acquisition-related purchase accounting adjustments and finance, integration, restructuring and transaction costs. We use Adjusted EPS because it is the primary basis on which BD sets performance expectations for the year and earnings is a widely-used measure of overall company performance. The use of Adjusted EPS is consistent with how we report our operating results to the financial community. |
| • | | Revenue. Revenue measures BD’s ability to innovate and compete in the global marketplace. This measure focuses management on achieving strong“top-line” growth, consistent with our business strategy. |
| • | | Free cash flow as a percentage of sales. This metric recognizes the importance of the efficient use of cash to our ability to fund ongoing investments in our business, including product development, innovation and geographic expansion. “Free cash flow” means cash flow from our operating activities, less capital expenditures and capitalized software. |
Together,
Adjusted EPS (weighted 40%). “Adjusted EPS” is our GAAP diluted earnings per share less acquisition-related purchase accounting adjustments and finance, integration, restructuring and transaction costs. We use Adjusted EPS because it is the primary basis on which BD sets performance expectations for the year and earnings is a widely-used measure of overall company performance. The use of Adjusted EPS is consistent with how we report our operating results to the financial community. Revenue (weighted 40%). Revenue measures BD’s ability to innovate and compete in the global marketplace. This measure focuses management on achieving strong “top-line” growth, consistent with our business strategy. Free cash flow as a percentage of sales (weighted 20%). This metric recognizes the importance of the efficient use of cash to our ability to fund ongoing investments in our business, including product development, innovation and geographic expansion. “Free cash flow” means net cash from operations, less capital expenditures and capitalized software. The Compensation Committee believes that, together, these three measures provide a balanced set of performance targets that focus on growth, profitability and operating efficiency. Adjusted EPS and revenue are each weighted 40%, and the free cash flow metric is weighted 20%. This represents a change from 2016, where Adjusted EPS was weighted 50% and the revenue and free cash flow metrics were each weighted 25%. The Compensation Committee made this change to better align incentives under the PIP with our business strategy by increasing management focus on revenue growth.
When measuring actual performance against the targets, adjustments are made to account for the impact of foreign currency exchange rates in effect during the year, whether favorable or unfavorable to BD, compared to the rates we budgeted when the targets were set. We eliminate this impact of foreign currency translation so that only BD’s underlying performance is considered in determining PIP awards.
Equity compensation. Equity compensation linksPerformance Units and SARs link executive compensation to BD’s performance against three-year performance goals and stock price appreciation.appreciation, respectively. Two metrics are used to measure performance under the Performance Units, each weighted 50%: | • | | Average return on invested capital (“ROIC”). This metric measures profitability and how effectively company assets are being used. This metric requires our executives to effectively manage a number of different aspects of the business, including new product introductions, productivity improvements and geographic expansion. |
| • | | Relative total shareholder return (“TSR”). This metric measures BD’s stock performance (assuming reinvestment of dividends) during the performance period against that of a group of 13 companies in the healthcare industry (the “TSR Group”). This measure compares BD’s performance, as reflected in our stock price over time, to peer companies facing similar business conditions and is directly tied to shareholder returns. The TSR Group is broader than the Comparison Group used for compensation market data in order to reduce the volatility in relative performance that can come from using a relatively smaller number of companies. | equally: Average return on invested capital (“ROIC”). This metric measures profitability and how effectively company assets are being used. This metric requires our executives to effectively manage a number of different aspects of the business, including new product introductions, productivity improvements and geographic expansion. Relative TSR. This metric measures BD’s stock performance (assuming reinvestment of dividends) during the performance period against that of a group of healthcare equipment and life sciences companies included in the S&P 500 Healthcare index (the “TSR Group”). This measure compares BD’s performance, as reflected in our stock price over time, to peer companies facing similar business conditions and is directly tied to shareholder returns. How performance goals are set The Compensation Committee considers BD’s business plan and the environment in which BD is operating when setting performance targets for the PIP and Performance Units. The healthcare industry continues to face challenges, and the Compensation Committee seeks to reward what it deems to be superior performance by management in light of current industry conditions and growth trends. The Compensation Committee sets what it believes are reasonably achievable performance targets for BD at the time, in light of the BD operating plans reviewed by the Board, and structures payouts so that they are aligned with BD’s performance against those targets. Our risk analysis of performance-based compensation While a significant portion of our executive compensation is performance-based, we do not believe that our program encourages excessive or unnecessary risk-taking. While risk-taking is a necessary part of operating and growing a business, the Compensation Committee focuses on aligning BD’s compensation practices with BD’s long-term strategy and attempts to avoid short-term rewards for management decisions that could pose long-term risks to BD. This includes: | • | | Limits on PIP awards. We do not overweight short-term incentives as a proportion of total pay. PIP awards are also capped at 200% of an executive’s target award to protect against disproportionately large short-term incentives, and the Compensation Committee has the discretion to set PIP awards based on any factors it deems appropriate, including whether management has taken unnecessary or excessive risk. |
| • | | Share retention and ownership guidelines. Our share retention and ownership guidelines ensure that our executives have a significant amount of their personal assets tied to the long-term success of BD, and we have a policy prohibiting pledging BD shares or hedging against the economic risk of their ownership. |
| • | | Use of long-term equity compensation. The largest portion of the compensation paid to our named executive officers is long-term equity compensation that vests over a period of years, which encourages our executives to focus on sustaining BD’s long-term performance. |
| • | | Use of Performance Units. A significant portion of executive equity compensation consists of Performance Units that have a three-year performance cycle. This focuses management on sustainable long-term performance. We also cap the payout of these awards at 200% of target. |
| • | | Use of multiple performance metrics. We use a number of different performance metrics in our performance-based compensation, with no overlapping metrics among our different compensation components, so that undue weight is not given to any one metric. |
Limits on PIP awards. We do not overweight short-term incentives as a proportion of total pay. PIP awards are also capped at 200% of an executive’s target award to protect against disproportionately large short-term incentives, and the Compensation Committee has the discretion to set PIP awards based on any factors it deems appropriate, including whether management has taken unnecessary or excessive risk.
Share retention and ownership guidelines. Our share retention and ownership guidelines ensure that our executives have a significant amount of their personal assets tied to the long-term success of BD, and we have a policy prohibiting pledging BD shares or hedging against the economic risk of their ownership.
Use of long-term equity compensation. The largest portion of the compensation paid to our named executive officers is long-term equity compensation that vests over a period of years, which encourages our executives to focus on sustaining BD’s long-term performance.
Use of Performance Units. A significant portion of executive equity compensation consists of Performance Units that have a three-year performance cycle. This focuses management on sustainable long-term performance. We also cap the payout of these awards at 200% of target.
Use of multiple performance metrics. We use a number of different performance metrics in our performance-based compensation, with no overlapping metrics among our different compensation components, so that undue weight is not given to any one metric.
The PIP provides our executives an opportunity to receive a cash award for BD’s performance for the fiscal year and their contribution to that performance, as part of our pay-for-performance philosophy. Target PIP awards for the named executive officers are expressed as a percentage of base salary earned during the year. The “Grants of Plan-Based Awards in Fiscal Year 2017”2018” table on page 4539 shows the range of possible awards under the PIP for 2017,2018, based on certain assumptions. The factors considered when setting actual PIP awards include BD’s overall performance against the pre-set performance targets and the resulting available funding (discussed below), the executive’s target award and the executive’s individual performance. Our CEO’s performance is measured against the individual goals for the year established by the independent directors. For our other named executive officers, performance is measured against the performance objectives set for the businesses, regions or functions they oversee. In each case, the performance objectives for a named executive officer involve a combination of quantitative and qualitative goals. However, no specific formula or weighting of individual performance objectives is used to determine a named executive officer’s PIP award, nor is the achievement of any particular individual performance objective a condition to receiving an award. Instead, the Compensation Committee and the independent directors use their business judgment to determine what it believes is an appropriate PIP award to recognize BD’s performance and the executive’s contribution to that performance. Available funding for PIP awards is determined by a formula. For each measure, the Compensation Committee reviews how BD performed against the target goal set by the Compensation Committee in order to arrive at a performance factor for that measure. For the revenue target, for every 1% of performance above target, funding with respect to that measure is increased 22.5% above target (up to a maximum of 190%), and for every 1% below target, funding decreases 12.5% below target (to a minimum of 50%). For the Adjusted EPS and free cash flow targets, for every 1% of performance above target, funding with respect to that measure is increased 5% above target (up to a maximum of 150%), and for every 1% below target, funding decreases 2.5% below target (to a minimum of 75% for Adjusted EPS and 50% for free cash flow). Performance
For revenues, performance below 96% of target for revenues results in no funding for the revenue measure, while performance below 90% of the Adjusted EPS target and 80% of the free cash flow target, respectively, results in no funding for those measures. The performance factors for the three measures are then weighted to arrive at an overall funding factor. Actual awards, as a percentage of a named executive officer’s target, may be more or less than the overall funding factor. To determine the funding factor, revenues and Adjusted EPS are each weighted 40%, and the free cash flow metric is weighted 20%. The funding formula for the revenue target has a steeper incremental payout curve than for the other two measures. This is intended to better align the incentives under the PIP with our business strategy by increasing management focus on revenue growth and rewarding higher levels of revenue performance. When comparing BD’s operating results to the performance targets, the Compensation Committee has the discretion to adjust BD’s results to account for unbudgeted acquisitions and divestitures during the year, and for other unbudgeted items that are not considered part of our ordinary operations. This ensures that business decisions are made based on what management believes is in the best interests of BD, rather than the possible effects on compensation. It also ensures that our executives are not unfairly penalized by or rewarded for these types of events.
Equity Compensation Awards We use a mix of equity compensation vehicles to promote the objectives of our program. | • | | SARs reward executives for the creation of shareholder value over the term of the award. |
| • | | Performance Units measure BD’s performance over a three-year period and are intended to reward sustained long-term financial performance. |
| • | | TVUs are the smallest portion of equity compensation and are used to reduce the volatility in amounts realized from equity compensation that can arise when purely performance-based equity compensation is used. |
SARs reward executives for the creation of shareholder value over the term of the award. Performance Units measure BD’s performance over a three-year period and are intended to reward sustained long-term financial performance. TVUs are the smallest portion of equity compensation and are used to reduce the volatility in amounts realized from equity compensation that can arise when purely performance-based equity compensation is used. Because they are equity-based and subject to vesting, each awardthese awards also servesserve to align the interests of our executives with those of our shareholders and to promote executive retention. The Compensation Committee determines the total grant date dollar value of the equity compensation to be paid to a named executive officer. SAR, Performance Unit and TVU awards are then made to the executive based on their estimated grant date values, with SARs and Performance Units each making up approximately 40% of the total award value, and TVUs the remaining 20%, consistent with prior years. The values given to equity compensation awards are only estimates and actual amounts realized from these awards may differ from these estimated values. Performance Unit payout formula The performance measures used for the Performance Units are average annual ROIC and relative TSR, each weighted 50%. A payout factor for each measure is calculated to determine a final share payout, which can range anywhere from zero to 200% of target.
ROIC. The payout factor for ROIC performance is determined by a scale, with threshold performance set at 5% below the ROIC target (resulting in a 50% payout factor), and maximum performance set at 5% above target (resulting in a 200% payout factor). Performance below the threshold level results in a zero payout factor for the ROIC measure.
Relative TSR. The payout factor for relative TSR performance is determined by the following table: | | | | BD’s Percentile Rank | | TSR Factor | ³≥85th85th
| | 200% | 75th 75th | | 165% | 50th 50th | | 100% | 25th 25th | | 35% | Less than 25th 25th | | 0 |
Relative TSR performance is measured by reference to those healthcare equipment and life sciences companies included in the S&P 500 Healthcare Index (approximately 20 companies). For 2018, this represents a change from prior years when a smaller, custom group of companies was used. This change was made to reduce the potential volatility in relative TSR performance that can arise when comparing BD’s performance to a smaller group of companies. If BD has a negative TSR for the performance period, the relative TSR factor is capped at 100%, regardless of where BD’s TSR ranks within the TSR Group. The Compensation Committee believes that in instances where BD has a negative TSR,this instance, BD’s executives should still be rewarded for superior relative TSR performance, but that it is appropriate that the payout be limited. Similar to the PIP, the Compensation Committee has the discretion to adjust BD’s average ROIC performance for acquisitions, divestitures and other unbudgeted items not considered part of our ordinary operations, and to remove companies from the TSR Group, or adjust the TSR of companies within the TSR Group or of BD, to account for acquisitions, mergers or other significant events, such as a change in capital structure.2017operations.
2018 Compensation Actions Below is a discussion of compensation actions taken in 20172018 with respect to the named executive officers. The base salaries of the named executive officers are reviewed each November, and any adjustments go into effect on January 1 of the following calendar year. Effective January 1, 2017,2018, Mr. Forlenza’s base salary was increased from $1,120,000$1,165,000 to $1,165,000$1,200,000 in order to reward him for outstandingrecognize his performance and to keep his base salary competitive with the median of the Comparison Group. The other named executive officersMessrs. Reidy and Polen received base salary increases that were in line with increases at BD generally. Mr. Polen’sMessrs. Kaltenbach and Khichi joined BD during the year, and information on their starting base salary was increased to from $728,000 to $825,000 upon his being named BD’s Presidentis discussed later in April 2017. this section. The threshold performance, target performance and maximum performance for each metric under the PIP for 2017,2018, along with BD’s adjusted performance during the year, are set forth on the following table. | | | | | | | | | | | | | | | | | | | | | | | | | | | Range of Performance | | | Adjusted Performance* | | | Percentage of Target Achieved | | | Funding Factor (rounded) | | Performance Metric | | Threshold | | | Target | | | Maximum | | | | | Adjusted EPS (40%) | | $ | 8.41 | | | $ | 9.34 | | | $ | 10.27 | | | $ | 9.57 | | | | 102.5 | % | | | 43% | | Revenues (40%) (in millions) | | $ | 11,556 | | | $ | 12,037 | | | $ | 12,519 | | | $ | 12,073 | | | | 100.3 | % | | | 45% | | Free cash flow as % of sales (20%) | | | 14.2% | | | | 15.8% | | | | 17.4% | | | | 16.0% | | | | 101.3 | % | | | 21% | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | | | | | | | | 109% | |
| | | | | | | | | | | | | | | | | | | | | | | | Range of Performance | | Reported Performance | |
Adjusted Performance* | | Percentage of Target Achieved (rounded)
| | Funding Factor (rounded) | Performance Metric | Threshold | | Target | | Maximum | | | | | Adjusted EPS (40%) | $ | 9.89 |
| | $ | 10.99 |
| | $ | 12.09 |
| | $0.60 | |
| $11.02 |
| | 100.3% | | 40.8% | Revenues (40%) (in millions) | $ | 15,233 |
| | $ | 15,868 |
| | $ | 16,503 |
| | $15,893 | |
| $16,037 |
| | 101.1% | | 49.6% | Free cash flow as % of sales (20%) | 12.8 | % | | 16.0 | % | | 17.6 | % | | 16.0% | | 16.0 | % | | 100% | | 20.0% | Total (Rounded) | | | | | | | | | | | | | 110.0% |
| | * | For additional detailinformation on how Adjusted Performance is calculated, see Appendix A. |
The Adjustedoriginal EPS target represents an increase of 10.7% over adjusted 2016 EPS on a currency-neutral basis, while theand revenue target represents an increase of 4.1% over adjusted 2016 revenues.targets for 2018 were $10.70 and $12.817 billion, respectively. These targets were set after taking intoadjusted upwards following our acquisition of Bard to account the estimated impact for the yearexpected contribution of the previously announced change in theBard business model of our dispensing business (Project TraCE), which we estimate negatively impacted earnings growth for the year by approximately 2% and revenue growth by approximately 0.5%. Thebalance of 2018. As BD owned Bard for most of 2018, the Compensation Committee believed it appropriate to measure PIP performance based on the performance of the combined company rather than just on BD stand-alone results. Including Bard’s results also incentivized management to focus on the successful integration of the company. No change was made to the free cash flow metric, as a percentage of sales target also represents an increase overit was not anticipated that the 2016 target, which was 14.9%. Our reported EPS for 2017 was $4.60, our reported revenues were $12,093 million, and our reported free cash flow as a percentage of revenues was 15%.Bard acquisition would impact BD's performance with respect to that metric. In reviewing BD’s 20172018 performance, the Compensation Committee made adjustments for unbudgeted items, including acquisitions the effect of the charge taken in connection with Project TraCE, the reversal of a litigation reserve and certain other matters that occurred during 2017.the fiscal year. The Compensation Committee made these adjustments to eliminate items that are not considered part of BD’s ordinary operations, so that the PIP funding factor appropriately reflected BD’s underlying operating results. These adjustments are generally consistent with how we reported our operating results to the financial community. Adjustments were also made for the impact (favorable or unfavorable) of foreign currency fluctuations in excess of what was budgeted when the targets were set, again so that only BD’s underlying performance is considered in determining PIP awards. The reconciliations on Appendix A provide additional detail on the adjustments made by the Compensation Committee. Based on BD’s results, the funding factor under the PIP was 109%110%. The following table shows the PIP awards granted to the named executive officers for 2017.2018. These awards are also set forth in the Summary Compensation Table on page 4237 under the heading “Non-Equity “Non-Equity Incentive Plan Compensation.” | | | | | | | | | Name | | Target Incentive Award ($) | | | Actual Incentive Award ($) | | Vincent A. Forlenza | | | 1,631,000 | | | | 1,800,000 | | Christopher R. Reidy | | | 667,918 | | | | 950,000 | | Alexandre Conroy | | | 465,468 | | | | 583,466 | | Thomas Polen | | | 701,250 | | | | 875,000 | | Ellen R. Strahlman, M.D. | | | 553,446 | | | | 603,256 | |
Certain named executive officers received
| | | | | | | Name | | Target Incentive Award ($) | | Actual Incentive Award ($) | Vincent A. Forlenza | | 1,800,000 |
| | 1,980,000 | Christopher R. Reidy | | 746,104 |
| | 902,785 | Patrick K. Kaltenbach | | 178,082 |
| | 205,685 | Samrat S. Khichi | | 337,500 |
| | 371,250 | Thomas E. Polen | | 858,000 |
| | 1,132,560 |
The PIP awards that, as a percentagemade to Messrs. Forlenza, Kaltenbach and Khichi were in-line or slightly above the PIP performance factor of their award target, exceeded the payout factor, as discussed below:110%. Mr. Reidy received an award of 142%121% of his target award in recognition of the role he played in helping BD achieve strong financial performance for the year, including significant underlying operating margin expansion.year. His award also reflectsrecognizes Mr. Reidy’s continued efforts in fully realizing the cost synergies from the CareFusion integration, which is on track to exceedexceeded our original estimates, and the progress made to date in recognizing synergies from the Bard transaction. It also reflects the continued progress made during the year in functional transformation at BD, including our shared service centers and IT function. The award also reflects his leadershipfunction, and Mr. Reidy’s significant role in reducing BD’s overall debt level and interest expense, the sale of our remaining interest in Vyaire, and the successful implementation of Project TraCE, the previously announced change in the financial analysis of the Bard transaction, and preparing for the integration of the two companies, including identifying potential cost synergies. Mr. Reidy was also recognized for developing a successful financing strategy for the Bard transaction, which resulted in the completion of approximately $15 billion in equity and debt financing on terms favorable to BD, despite a “split rating” from the rating agencies. Mr. Conroy’s award of 125% of his target award recognizes his role, as President, Americas and EMEA, in helping to deliver strong performance in emerging markets during the year that exceeded management’s expectations. It also reflects significant progress made during the year on important growth and innovation initiatives, includinggo-to-market strategies in Europe. The award also reflects Mr. Conroy’s successful transition to the leadership positionbusiness model of our Medication and Procedural Solutions unit in the second half of the year.dispensing business.
Mr. Polen received an award of 125%132% of target, reflecting his target award.outstanding leadership and performance during the year. This included his role in driving revenue growth across all three of our business segments. In this regard, Mr. Polen also led our Medical Segment for most of the year, and the segment finished ahead of budget for the year. The award also reflects Mr. Polen’s successful transition into the President role, the strong performance of our Medical segment during the year, the implementation of significant strategic initiatives (including Project TraCE and advanceskey roles in digital health), and steps he took to enhance BD’s organizational capabilities. The award also recognizes his significant role in forming the strategy that led to our agreement to acquire Bard and in preparing BD fordevelopment, the integration of the two companies,Bard acquisition (including the retention of key Bard executives), improvements in new product development and innovation processes across the company, and the successful completion of Project TraCE, as well as his leadership in overseeing a number of significant organizational changes throughout the year, including talent retention, culture and organizational design.the appointment of new leaders in each of our three segments. Equity compensation awards The Compensation Committee made the equity compensation awards to the named executive officers shown in the Summary Compensation Table on page 42Page 37 during 2018. There were increases in November 2017. Among the changes in equity compensation awards in 2017 was an increase in Mr. Polen’s total award value,values in 2018 over the prior year for the awards granted to Messrs. Forlenza, Reidy and Polen to recognize their performance and reflect prevailing market practices. The Summary Compensation Table also reflects awards made to Messrs. Kaltenbach and Khichi upon their joining BD, which was made in anticipation of his being named BD’s President later in the fiscal year.are discussed below. The Performance Units included in the awardsgranted to our named executive officers cover the 2017-20192018-2020 performance period, haveand originally had a target average ROIC of 16.7%18.4% (with threshold performance at 12.7%13.4% and maximum performance of 21.7%23.4%), and use the formula discussed earlier on page 36 for calculatingalong with the relative TSR payout factor.performance metric discussed earlier. Because the Bard transaction significantly increased BD’s asset base, the Compensation Committee subsequently lowered the ROIC target for these Performance Units to 12.2% to better reflect the anticipated ROIC of the combined company over the performance period. Adjustments were also made to the ROIC target for the Performance Units covering the 2016-2018 and 2017-2019 performance periods. Other Compensation Actions Compensation of Mr. Kaltenbach. In connection with his joining BD as President of our Life Sciences segment, Mr. Kaltenbach’s base salary was set at $650,000. Mr. Kaltenbach received a sign-on equity award of approximately $2.8 million and a sign-on cash award of $2 million, and will also receive an equity award of at least $2.8 million on the first anniversary of his employment with BD. These grants and payments are intended to compensate Mr. Kaltenbach for the equity awards from his former employer that he forfeited when he joined BD. BD may also make up to two discretionary cash payments of up to $750,000 each to Mr. Kaltenbach to the extent his former employer reports results that would have resulted in an above-target payouts of the performance-based equity awards Mr. Kaltenbach held with his former employer. These terms were the result of negotiations between BD and Mr. Kaltenbach in connection with his recruitment and were approved by the Compensation Committee, in consultation with its independent consultant, as a reasonable inducement for Mr. Kaltenbach to join BD. Compensation of Mr. Khichi. Mr. Khichi joined BD from Bard in connection with the Bard acquisition. Upon joining BD, Mr. Khichi’s base salary was set at $600,000, and he received an equity award of approximately $1.75 million in accordance with the terms of the Bard acquisition agreement and his retention agreement with BD. In exchange for Mr. Khichi waiving his rights to certain payments under his change-in-control agreement with Bard, BD also agreed to make three cash payments of approximately $1.05 million each to Mr. Khichi, the first of which was made upon the closing of the Bard transaction. The remaining payments will be made on the first and second anniversaries of Mr. Khichi’s employment with BD. Upon a termination of Mr. Khichi's employment without "cause" or by Mr. Khichi with "good reason" (as defined in Mr. Khichi's offer letter), or upon his death or disability, any remaining retention payments will be paid by BD.
Other Benefits Under Our Executive Compensation Program Our Restoration Plan is an unfunded, nonqualified plan that allows eligible associates to defer receipt of cash compensation and shares issuable under certain equity compensation awards on apre-tax basis in addition to what is allowed under ourtax-qualified 401(k) Plan. The Restoration Plan is offered as part of a competitive compensation program. We do not provide any guaranteed earnings on amounts deferred byunder the named executive officers,Restoration Plan, and earnings on these accounts are based on their individual investment elections. BD provides matching contributions on cash amounts deferred under the plan,Restoration Plan, subject to certain limits. Mr. Conroy is not eligible to participate in the Restoration Plan. A more complete description of the deferred compensation provisions of the Restoration Plan begins on page 52.45. We offer retirementpension benefits for all ofto our eligible U.S. BD associates. Because the Internal Revenue Code limits the maximum annual benefit that may be paid to an individual under our qualified Retirement Plan, we provide additional retirement benefits through our Restoration Plan. Together, the Retirement Plan and Restoration Plan are designed to provide a market-competitive level of income replacement for our retirement-eligible associates and reduce associate turnover. The named executive officers (other than Mr. Conroy) participate in these plans on the same basis as all eligible associates. We do not include the value of equity compensation in calculating pension benefits. A more complete description of these pension benefits and the French indemnity plan in which Mr. Conroy participates, begins on page 50.43. Company transportation Mr. Forlenza is encouraged to use BD aircraft for both personal and business travel in order to make more efficient use of his travel time, for personal security and to reduce business continuity risk. Mr. Forlenza has entered into a time-sharing arrangement under which he makes payments to BD for his personal use of BD aircraft. For 2018, Mr. Forlenza’s time-share payments exceeded BD’s incremental costs relating to his personal flights. Additional information on the time-sharing arrangement is set forth in the notes to the Summary Compensation Table on page 37. Change in control agreements We have entered into agreements with the named executive officers relating to their employment following a change in control. These agreements provide the executives with continued employment for a period of two years following a change in control of BD, and provide certain benefits to the executives in the event their employment is terminated without “cause” or they leave their employment for “good reason” (also known as a constructive termination) during such period. Generally, these benefits include a severance payment equal to a multiple of the executive’s salary and PIP award, and certain other benefits. A more complete description of the terms and potential payouts of our change in control agreements begins on page 54.47. General purpose. Our change in control agreements are intended to retain the executives and provide continuity of management in the event of an actual or potential change in control of BD. These change in control benefits are reviewed fromtime-to-time by the Compensation Committee to ensure that they are consistent with our compensation objectives and market practices. Based on information provided by Pay Governance, change in control arrangements are used by a substantial majority of the companies in the Comparison Group, and the terms of our agreements, including the severance multiple, are consistent with the prevailing practices at those companies. The Compensation Committee believes the benefits provided under these agreements are appropriate and consistent with our objective of attracting and retaining highly qualified executives.
Triggering events. Our agreements contain a “double-trigger”—that is, there must be a change in control of BD and a termination of the executive’s employment (either without cause by BD or for good reason by the executive) in order for any payments to be made. We opted for a double trigger, rather than a “single-trigger” that provides for severance payments solely on the basis of a change in control, since a double trigger is consistent with the purpose of encouraging the continued employment of the executive following a change in control.
Tax reimbursement payments.In certain instances, payments made to an executive upon termination may be subject to a 20% excise tax. Under the agreement with Mr. Forlenza, to offset the effect of this tax, we will reimburse him for any resulting excise tax. We provide for this payment because it allows him to recognize the full intended economic benefit of the agreement and eliminates unintended disparities between executives that the excise tax can arbitrarily impose, owing to the particular structure of this tax provision. However, while we believe tax reimbursement provisions serve a valid purpose, in light of trends in executive compensation practices, it has been our policy since 2011 that any new change in control agreements that we enter
into with executive officers will not contain these provisions. Company transportation
Mr. Forlenza is encouraged to use BD aircraft for both personal and business travel in order to make more efficient use of his travel time, for personal security and to reduce business continuity risk. Mr. Forlenza has entered into a time-sharing arrangement under which he makes payments to BD for his personal use of BD aircraft. For 2017, Mr. Forlenza’s time-share payments exceeded BD’s incremental costs relating to his personal flights. Additional information on The agreements with the time-sharing arrangement is set forth in the notes to the Summary Compensation Table on page 43. other named executive officers do not contain tax reimbursement provisions.Other change in control provisions The equity grants awarded in 20172018 include a double-trigger vesting provision upon a change in control. Under this provision, the awards will not automatically vest upon a change in control if the awards are either continued or replaced with similar awards. In those instances, the awards will automatically vest only if the executive is terminated without “cause” or terminates employment for “good reason” (as such terms are defined in the plan) within two years of the change in control. Awards granted to the named executive officers prior to January 1, 2015 immediately vest upon a change in control. Unlike the double-trigger discussed above, no termination of employment is required for the accelerated vesting of thethese awards. We originally provided for single-trigger vesting for awards because we believed it provided our associates with the same opportunity as our shareholders to realize the value created by the transaction, but moved to a double-trigger to align BD’s plan with what the Compensation Committee believes are best practices in this area. Significant Policies and Other Information Regarding We have a policy that gives the Board the discretion to require a member of the BD Leadership Team (which includes the top senior leaders at BD, including the named executive officers) to reimburse BD for any PIP award or Performance Unit payout that was based on financial results that were subsequently restated as a result of that person’s misconduct. The Board also has the discretion to cancel any equity compensation awards (or recover payouts under such awards) that were granted to such person with respect to the restated period, and to require the person to reimburse BD for any profits realized on any sale of BD stock occurring after the public issuance of the financial statements that were subsequently restated. The policy also gives the Board the authority to require members of the BD Leadership Team who were not involved in the misconduct to reimburse BD for the amount by which their PIP award or Performance Unit payouts exceeded the amount they would have received based on the restated results. Share retention and ownership guidelines To increase executive share ownership and promote a long-term perspective when managing our business, our named executive officers and certain other members of the BD Leadership Team are required to retain, in shares of BD stock, 75% of the net after-tax proceeds from any equity compensation awards granted to them after they become a member of the BD Leadership Team. They are subject to these requirements until they achieve and maintain the required ownership level. The required ownership levels are: | | | CEO; President | 5 times salary | Other Executive Officers | 3 times salary | Certain Other BD Leadership Team Members | 1 times salary |
| | | | Chief Executive Officer; President
| | | 5 times salary | | Other Executive Officers
| | | 3 times salary | | Other BD Leadership Team Members
| | | 1 times salary | |
| | | | | What counts as ownership | | What does not count as ownership | | • Shares held directly | | | • Unvested SARs | | • Shares held through 401(k) Plan, Restoration Plan and GSIP | | | • Unvested Performance Units | | • TVUs | | | | |
Messrs. Forlenza, Reidy and Conroy and Dr. StrahlmanKhichi have holdings in excess of their ownership requirement. Mr.Messrs. Polen hasand Kaltenbach have not yet attained histheir required ownership levels, as helevels. Mr. Polen was only appointed to the President position in April 2017.2017 and Mr. Kaltenbach joined BD in May 2018. Pledging and hedging policy We have a policy that prohibits our directors and associates from pledging BD shares, or engaging in options, puts, calls or other transactions that are intended to hedge against the economic risk of owning BD shares. The Compensation Committee has adopted a policy that prohibits the backdating of any equity compensation award and requires our annual equity compensation awards and any “off-cycle” “off-cycle” awards approved by our CEO to be made on fixed dates. The policy also prohibits manipulating the timing of either the public release of information or the grant of an award in order to increase the value of an award. Under the policy, the exercise price of any stock option or SAR award will be the closing price of BD stock on the grant date. Section 162(m) of the Internal Revenue Code precludes BD from taking a federal income tax deduction for compensation paid in excess of $1 million to itsour “covered employees” (which includes the CEO and itsour three other most highly-compensated executive officers, (otherother than the Chief Financial Officer)Officer, for years prior to 2018). For 2017, however,Prior to 2018 (and including tax years that began prior to January 1, 2018), this limitation did not apply to “performance-based” compensation. While the Compensation Committee has generally attemptsattempted to maximize the tax deductibility of executive compensation, the Compensation Committee believes that the primary purpose of our compensation program is to support BD’s business strategy and the long-term interests of our shareholders. Therefore, the Compensation Committee maintainshas maintained the flexibility to award compensation that may not be tax-deductible if doing so furthers the objectives of our executive compensation program.
Under the recent U.S. tax reform, the exception to Section 162(m) for performance-based compensation has been repealed for tax years beginning after December 31, 2017, subject to certain transition and grandfathering rules. In addition, the Chief Financial Officer will be included as a covered employee. Despite these new limits on the deductibility of performance-based compensation, the Compensation Committee continues to believe that a significant portion of our named executive officers’ compensation should be tied to BD’s performance. Therefore, it is not anticipated that the changes to Section 162(m) will significantly impact the design of our compensation program going forward. This Compensation Discussion and Analysis section includes a discussion of performance targets in the limited context of our executive compensation program. These targets are not statements of management’s expectations of our future results or other guidance. Investors should not use or evaluate these targets in any other context or for any other purpose.
COMPENSATION OF NAMED EXECUTIVE OFFICERS The following table shows the compensation provided by BD to each of the named executive officers in fiscal year 2017.2018. Fiscal Year 20172018 Summary Compensation Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary($) | | | Stock Awards ($)(1) | | | SAR Awards ($)(1) | | | Non-Equity Incentive Plan Compensation ($)(2) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | | | All Other Compensation ($)(4) | | | Total ($) | | Vincent A. Forlenza | | | 2017 | | | | 1,153,750 | | | | 5,641,827 | | | | 3,794,598 | | | | 1,800,000 | | | | 631,381 | | | | 37,284 | | | | 13,058,840 | | Chairman and Chief Executive | | | 2016 | | | | 1,105,000 | | | | 5,722,028 | | | | 4,572,671 | | | | 2,000,000 | | | | 485,787 | | | | 44,975 | | | | 13,930,461 | | Officer | | | 2015 | | | | 1,045,000 | | | | 5,381,613 | | | | 3,576,512 | | | | 1,662,080 | | | | 0 | | | | 44,827 | | | | 11,710,032 | | Christopher R. Reidy | | | 2017 | | | | 778,230 | | | | 1,642,074 | | | | 1,104,268 | | | | 950,000 | | | | 108,790 | | | | 41,000 | | | | 4,624,362 | | Executive Vice President, | | | 2016 | | | | 746,568 | | | | 1,526,731 | | | | 1,219,994 | | | | 886,300 | | | | 96,148 | | | | 48,725 | | | | 4,524,466 | | Chief Financial Officer and | | | 2015 | | | | 713,501 | | | | 1,361,651 | | | | 904,912 | | | | 712,788 | | | | 77,550 | | | | 48,725 | | | | 3,819,127 | | Chief Administrative Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Alexandre Conroy(5) | | | 2017 | | | | 576,242 | | | | 940,531 | | | | 632,450 | | | | 583,466 | | | | 3,343 | | | | 237,087 | | | | 2,973,119 | | President, Worldwide Medication | | | 2016 | | | | 530,334 | | | | 834,599 | | | | 666,858 | | | | 486,886 | | | | 17,498 | | | | 219,061 | | | | 2,755,236 | | and Procedural Solutions | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Thomas E. Polen(6) | | | 2017 | | | | 761,417 | | | | 1,492,748 | | | | 1,003,887 | | | | 875,000 | | | | 83,660 | | | | 36,000 | | | | 4,252,712 | | President | | | 2016 | | | | 651,000 | | | | 953,697 | | | | 762,112 | | | | 748,600 | | | | 101,723 | | | | 43,725 | | | | 3,260,857 | | Ellen R. Strahlman, M.D. | | | 2017 | | | | 686,771 | | | | 1,044,937 | | | | 702,707 | | | | 603,256 | | | | 86,237 | | | | 36,000 | | | | 3,159,908 | | Executive Vice President, | | | 2016 | | | | 664,427 | | | | 953,697 | | | | 762,112 | | | | 617,900 | | | | 82,929 | | | | 43,725 | | | | 3,124,790 | | Research and Development and | | | 2015 | | | | 637,301 | | | | 972,660 | | | | 646,362 | | | | 585,508 | | | | 66,642 | | | | 43,725 | | | | 2,952,198 | | Chief Medical Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary($) | | Bonus ($) | | Stock Awards ($)(1) | | SAR Awards ($)(1) | | Non-Equity Incentive Plan Compensation ($)(2) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | | All Other Compensation ($)(4) | | Total ($) | Vincent A. Forlenza | | 2018 | | 1,191,250 |
| | 0 |
| | 6,693,896 |
| | 4,423,618 |
| | 1,980,000 |
| | 646,672 |
| | 38,045 |
| | 14,973,481 |
| Chairman and | | 2017 | | 1,153,750 |
| | 0 |
| | 5,641,827 |
| | 3,794,598 |
| | 1,800,000 |
| | 631,381 |
| | 37,284 |
| | 13,058,840 |
| Chief Executive Officer | | 2016 | | 1,105,000 |
| | 0 |
| | 5,722,028 |
| | 4,572,671 |
| | 2,000,000 |
| | 485,787 |
| | 44,975 |
| | 13,930,461 |
| Christopher R. Reidy | | 2018 | | 818,200 |
| | 0 |
| | 1,992,275 |
| | 1,316,570 |
| | 902,785 |
| | 121,039 |
| | 28,575 |
| | 5,179,444 |
| Executive Vice President, | | 2017 | | 778,230 |
| | 0 |
| | 1,642,074 |
| | 1,104,268 |
| | 950,000 |
| | 108,790 |
| | 41,000 |
| | 4,624,362 |
| Chief Financial Officer and | | 2016 | | 746,568 |
| | 0 |
| | 1,526,731 |
| | 1,219,994 |
| | 886,300 |
| | 96,148 |
| | 48,725 |
| | 4,524,466 |
| Chief Administrative Officer | |
| |
| | | |
| |
| |
| |
| |
| |
| Patrick K. Kaltenbach(5) | | 2018 | | 216,667 |
| | 2,000,000(6) | | 1,664,189 |
| | 1,123,227 |
| | 205,685 |
| | 0 |
| | 8,809 |
| | 5,218,577 |
| Executive Vice President, | |
| |
| | | |
| |
| |
| |
| |
| |
| and President, Life Sciences | |
| |
| | | |
| |
| |
| |
| |
| |
| Samrat S. Khichi(5) | | 2018 | | 450,000 |
| | 1,051,343(7) | | 1,047,147 |
| | 692,864 |
| | 371,250 |
| | 0 |
| | 20,175 |
| | 3,749,878 |
| Executive Vice President | |
| |
| | | |
| |
| |
| |
| |
| |
| and General Counsel | |
| |
| | | |
| |
| |
| |
| |
| |
| Thomas E. Polen | | 2018 | | 849,750 |
| | 0 |
| | 2,231,614 |
| | 1,474,555 |
| | 1,132,560 |
| | 102,975 |
| | 37,675 |
| | 5,829,129 |
| President and | | 2017 | | 761,417 |
| | 0 |
| | 1,492,748 |
| | 1,003,887 |
| | 875,000 |
| | 83,660 |
| | 36,000 |
| | 4,252,712 |
| Chief Operating Officer | | 2016 | | 651,000 |
| | 0 |
| | 953,697 |
| | 762,112 |
| | 748,600 |
| | 101,723 |
| | 43,725 |
| | 3,260,857 |
| | | | | | | | | | | | | | | | | | | |
| | (1) | Stock Awards and SAR Awards. The amounts shown in the “Stock Awards” column (which includes Performance Units and TVUs) and “SAR Awards” column reflect the grant date fair value of the awards under FASB ASC Topic 718 (disregarding estimated forfeitures). For a description of the methodology and assumptions used to determine the amounts reflected in these columns, see Note 7 to the consolidated financial statements contained in our Annual Report on Form10-K for the fiscal year ended September 30, 2017.2018. |
The amounts included in the “Stock Awards” column for the Performance Units awarded in 20172018 reflect the grant date fair values of these awards at target payout, which we believe is the most probable outcome based on the applicable performance conditions. Below are the grant date fair values of these awards, assuming a maximum payout of 200% of target: | | | | | | | | | Name | | Grant Date Fair Value at Target Payout | | | Grant Date Fair Value at Maximum Payout | | Vincent A. Forlenza | | $ | 3,754,483 | | | $ | 7,508,966 | | Christopher R. Reidy | | | 1,092,725 | | | | 2,185,450 | | Alexandre Conroy | | | 625,864 | | | | 1,251,728 | | Thomas E. Polen | | | 993,371 | | | | 1,986,741 | | Ellen R. Strahlman | | | 695,307 | | | | 1,390,614 | |
| | | | | Name | Grant Date Fair Value at Target Payout ($) | | Grant Date Fair Value at Maximum Payout ($) | Vincent A. Forlenza | 4,488,813 | | 8,977,626 | Christopher R. Reidy | 1,335,971 | | 2,671,943 | Patrick K. Kaltenbach | 1,109,234 | | 2,218,468 | Samrat S. Khichi | 701,930 | | 1,403,861 | Thomas E. Polen | 1,496,440 | | 2,992,880 |
| | (2) | Non-Equity Incentive Plan Compensation. Includes amounts earned under BD’s PIP. These amounts are paid in January following the fiscal year in which they are earned, unless deferred at the election of the named executive officer. |
| | (3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings. |
Pension—Amounts shown are the aggregate changes in the actuarial present value of accumulated benefits under our defined benefit pension plans (including our nonqualified Restoration Plan). These amounts represent the difference between the present value of accumulated pension benefits (determined as of the first date on which the executives are eligible to retire and commence unreduced benefit payments) at the beginning and end of the fiscal years shown. A decreaseMessrs. Kaltenbach and Khichi do not participate in present value is shown as “0”.our defined benefit pension plans, which were closed to new participants effective January 1, 2018. Information regarding our retirement plans begins on page 50.43.
Deferred Compensation—Earnings on nonqualified deferred compensation are not included in this column, because no named executive officer earned above-market or preferential earnings (as defined in the rules of the SEC) on nonqualified deferred compensation during the fiscal years shown. Information on the named executive officers’ nonqualified deferred compensation accounts is on page 53.46. | | (4) | All Other Compensation. Amounts shown for fiscal year 20172018 include the following: |
| | | | | | | | | | | | | | | | | | | | | | | Vincent A. Forlenza | | | Christopher R. Reidy | | | Alexandre Conroy | | | Thomas E. Polen | | | Ellen R. Strahlman | | Matching contributions under plans | | $ | 36,000 | | | $ | 36,000 | | | $ | 6,670 | | | $ | 36,000 | | | $ | 36,000 | | Matching charitable gifts | | | — | | | | 5,000 | | | | — | | | | — | | | | — | | Term life insurance | | | 1,284 | | | | — | | | | — | | | | — | | | | — | | Relocation assistance | | | — | | | | — | | | | 230,417 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 37,284 | | | $ | 41,000 | | | $ | 237,087 | | | $ | 36,000 | | | $ | 36,000 | |
| | | | | | | | | | | | | | | | | Vincent A. Forlenza | | Christopher R. Reidy | | Patrick K. Kaltenbach | | Samrat S. Khichi | | Thomas E. Polen | Matching contributions under plans | 36,675 |
| | 28,575 |
| | — |
| | 9,625 |
| | 36,675 |
| Matching charitable gifts | — |
| | — |
| | — |
| | 10,550 |
| | 1,000 |
| Term life insurance | 1,370 |
| | — |
| | — |
| | — |
| | — |
| Relocation assistance | — |
| | — |
| | 8,809 |
| | — |
| | — |
| Total | 38,045 |
| | 28,575 |
| | 8,809 |
| | 20,175 |
| | 37,675 |
|
The following is a description of these benefits: | • | | Matching contributions under plans—The amounts shown reflect matching contributions made by BD pursuant to our defined contribution plans. Matching charitable gifts—The amounts shown are matching contributions made (or committed to be made) through the BD and Bard matching gift programs, under which BD matches contributions under plans—The amounts shown reflect matching contributions made by BD pursuant to our 401(k) Plan, the GSIP and the Restoration Plan, as applicable. |
| • | | Matching charitable gifts—The amounts shown are matching contributions made (or committed to be made) by BD through our Matching Gift Program, under which BD matches up to $5,000 of contributions per calendar year made to qualifying non-profit organizations.Term life insurance—BD provides incremental term life insurance benefits to Mr. Forlenza beyond those provided to BD associates generally. The amounts shown reflect the dollar value of the insurance premiums paid by BD for this incremental insurance. Relocation Assistance—BD provided Mr. Kaltenbach with mortgage subsidy assistance of $8,239 and tax assistance of $570 in connection with his hire. non-profit organizations.
|
| • | | Term life insurance—BD provides incremental term life insurance benefits to Mr. Forlenza beyond those provided to BD associates generally. The amounts shown reflect the dollar value of the insurance premiums paid by BD for this incremental insurance. |
| • | | Relocation assistance—Mr. Conroy relocated to New Jersey from France during 2016. In connection with his relocation, BD provided the following benefits to Mr. Conroy in 2017: |
| | | | | Cost of living allowance | | $ | 46,371 | | Housing allowance | | | 87,408 | | Utilities allowance | | | 1,250 | | Courier and Wire reimbursement | | | 360 | | Home allowance | | | 23,811 | | Automobile allowance | | | 14,217 | | State tax reimbursement | | | 40,000 | | Federal tax reimbursement | | | 17,000 | | | | | | | Total | | $ | 230,417 | |
Corporate aircraft. Pursuant to a policy adopted by the Board of Directors, Mr. Forlenza is encouraged to use BD aircraft for personal and business travel. The value of his personal use of BD aircraft is measured by the incremental variable costs incurred by BD in connection with his personal flights that are not reimbursed by him. These variable costs include fuel, trip-related maintenance, crew travel expenses,on-board catering, and landing and parking fees. If the aircraft flies empty before picking up or after dropping off Mr. Forlenza at a destination on a personal flight, the cost of the empty flight is included in the incremental cost. Since BD aircraft are used predominantly for business purposes, we do not include fixed costs that do not change in amount based on usage, such as depreciation and pilot salaries. Mr. Forlenza has entered into a time-sharing arrangement under which he makes time-share payments to BD for the personal use of BD aircraft. The payments are for the maximum amount permitted by Federal Aviation Administration regulations without subjecting BD to regulation as a charter carrier. Mr. Forlenza is responsible for the payment of any tax on any income imputed to him as a result of his personal use of corporate aircraft. For 2017,2018, Mr. Forlenza’s time-share payments exceeded BD’s incremental costs relating to his personal flights. Accordingly, no value is shown for his personal flights in the Summary Compensation Table. | | (5) | Compensation for fiscal year 2015 isyears 2016 and 2017 are not shown for Mr. ConroyMessrs. Kaltenbach and Khichi because he wasthey were not a named executive officerofficers of BD in those fiscal year 2015. Mr. Conroy is a French citizen and relocated from France to BD headquarters in New Jersey, effective April 1, 2016. The Euro-denominated compensationyears. |
| | (6) | Represents amount paid pursuant to Mr. Conroy during the fiscal year has been convertedKaltenbach's sign-on agreement. |
| | (7) | Represents retention payment made to U.S. Dollars for purposes of this and the other tables in this proxy statement using the exchange rate in effect on September 30, 2017.Mr. Khichi. |
(6) | Compensation for fiscal year 2015 is not shown for Mr. Polen because he was not a named executive officer in fiscal year 2015. |
Information Regarding Plan Awards in Fiscal Year 20172018 Set forth below is information regarding awards granted to the named executive officers in fiscal year 2017.2018. The non-equity incentive plan awards were made under the PIP. The equity compensation awards were made under BD’s 2004 Plan. Grants of Plan-Based Awards in Fiscal Year 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards(2) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | All Other SAR Awards: Number of Securities Underlying SARs (#) | | | Exercise or Base Price of SAR Awards ($/Sh)(4) | | | Grant Date Fair Value of Stock and SAR Awards($)(5) | | Name | | Award Type(1) | | Grant Date | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | | | | | Vincent A. Forlenza | | PIP | | N/A | | | 978,600 | | | | 1,631,000 | | | | 3,262,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PU | | 11/26/16 | | | | | | | | | | | | | | | 9,122 | | | | 21,464 | | | | 42,928 | | | | | | | | | | | | | | | | 3,754,483 | | | | TVU | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,444 | | | | | | | | | | | | 1,887,344 | | | | SAR | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 112,233 | | | | 170.69 | | | | 3,794,598 | | Christopher R. Reidy | | PIP | | N/A | | | 400,751 | | | | 667,918 | | | | 1,335,836 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PU | | 11/26/16 | | | | | | | | | | | | | | | 2,655 | | | | 6,247 | | | | 12,494 | | | | | | | | | | | | | | | | 1,092,725 | | | | TVU | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,331 | | | | | | | | | | | | 549,349 | | | | SAR | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 32,661 | | | | 170.69 | | | | 1,104,268 | | Alexandre Conroy | | PIP | | N/A | | | 276,513 | | | | 460,855 | | | | 921,710 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PU | | 11/26/16 | | | | | | | | | | | | | | | 1,521 | | | | 3,578 | | | | 7,156 | | | | | | | | | | | | | | | | 625,864 | | | | TVU | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,908 | | | | | | | | | | | | 314,667 | | | | SAR | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 18,706 | | | | 170.69 | | | | 632,450 | | Thomas E. Polen | | PIP | | N/A | | | 420,750 | | | | 701,250 | | | | 1,402,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PU | | 11/26/16 | | | | | | | | | | | | | | | 2,414 | | | | 5,679 | | | | 11,358 | | | | | | | | | | | | | | | | 993,371 | | | | TVU | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,028 | | | | | | | | | | | | 499,378 | | | | SAR | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 29,692 | | | | 170.69 | | | | 1,003,887 | | Ellen R. Strahlman | | PIP | | N/A | | | 332,068 | | | | 553,446 | | | | 1,106,892 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PU | | 11/26/16 | | | | | | | | | | | | | | | 1,689 | | | | 3,975 | | | | 7,950 | | | | | | | | | | | | | | | | 695,307 | | | | TVU | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,120 | | | | | | | | | | | | 349,630 | | | | SAR | | 11/26/16 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 20,784 | | | | 170.69 | | | | 702,707 | |
2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2) | | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | All Other SAR Awards: Number of Securities Underlying SARs (#) | | Exercise or Base Price of SAR Awards ($/Sh)(4) | | Grant Date Fair Value of Stock and SAR Awards($)(5) | Name | Award Type(1) | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | | | | Vincent A. Forlenza | PIP | | N/A | | 1,242,000 |
| | 1,800,000 |
| | 3,600,000 |
| |
| |
| |
| |
| |
| |
| |
| | PU | | 11/26/17 | |
| |
| |
| | 7,525 |
| | 17,707 |
| | 35,414 |
| |
| |
| |
| | 4,488,813 |
| | TVU | | 11/26/17 | |
| |
| |
| |
| |
| |
| | 10,009 |
| |
| |
| | 2,205,083 |
| | SAR | | 11/26/17 | |
| |
| |
| |
| |
| |
| |
| | 95,957 |
| | 226.28 |
| | 4,423,618 |
| Christopher R. Reidy | PIP | | N/A | | 514,812 |
| | 746,104 |
| | 1,492,208 |
| |
| |
| |
| |
| |
| |
| |
| | PU | | 11/26/17 | |
| |
| |
| | 2,240 |
| | 5,270 |
| | 10,540 |
| |
| |
| |
| | 1,335,971 |
| | TVU | | 11/26/17 | |
| |
| |
| |
| |
| |
| | 2,979 |
| |
| |
| | 656,303 |
| | SAR | | 11/26/17 | |
| |
| |
| |
| |
| |
| |
| | 28,559 |
| | 226.28 |
| | 1,316,570 |
| Patrick K. Kaltenbach | PIP | | N/A | | 119,600 |
| | 178,082 |
| | 346,666 |
| |
| |
| |
| |
| |
| |
| |
| | PU | | 6/1/18 | |
| |
| |
| | 2,054 |
| | 4,832 |
| | 9,664 |
| |
| |
| |
| | 1,109,234 |
| | TVU | | 6/1/18 | |
| |
| |
| |
| |
| |
| | 2,533 |
| |
| |
| | 554,955 |
| �� | SAR | | 6/1/18 | |
| |
| |
| |
| |
| |
| |
| | 22,923 |
| | 224.94 |
| | 1,123,227 |
| Samrat S. Khichi | PIP | | N/A | | 232,875 |
| | 337,500 |
| | 675,000 |
| |
| |
| |
| |
| |
| |
| |
| | PU | | 1/2/18 | |
| |
| |
| | 1,223 |
| | 2,877 |
| | 5,754 |
| |
| |
| |
| | 701,930 |
| | TVU | | 1/2/18 | |
| |
| |
| |
| |
| |
| | 1,627 |
| |
| |
| | 345,217 |
| | SAR | | 1/2/18 | |
| |
| |
| |
| |
| |
| |
| | 15,591 |
| | 217.84 |
| | 692,864 |
| Thomas E. Polen | PIP | | N/A | | 592,020 |
| | 858,000 |
| | 1,716,000 |
| |
| |
| |
| |
| |
| |
| |
| | PU | | 11/26/17 | |
| |
| |
| | 2,509 |
| | 5,903 |
| | 11,806 |
| |
| |
| |
| | 1,496,440 |
| | TVU | | 11/26/17 | |
| |
| |
| |
| |
| |
| | 3,337 |
| |
| |
| | 735,174 |
| | SAR | | 11/26/17 | |
| |
| |
| |
| |
| |
| |
| | 31,986 |
| | 226.28 |
| | 1,474,555 |
| | | | | | | | | | | | | | | | | | | | | | | | |
PIP = Performance Incentive Plan SAR = Stock Appreciation Right | | (2) | The amounts shown represent the range of possible dollar payouts that a named executive officer could earn under the PIP for fiscal year 2017,2018, based on certain assumptions. Actual payments to the named executive officers under the PIP are reflected in the“Non-Equity “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 42.37. The amount in the “Threshold” column assumes BD achieved the minimum performance levels for each performance measure, resulting in available funding for awards at 60% of target, and that the named executive officer received a payment equal to 60% of his or her award target. The “Maximum” column reflects an award at 200% of target, the maximum award an individual may receive under the PIP. |
| | (3) | The amounts shown represent the range of potential share payouts under Performance Unit awards. The amount in the “Threshold” column shows the number of shares that will be paid out assuming BD achieves the minimum performance level for each performance measure under the award. |
| | (4) | The exercise price is the closing price of BD common stock on the date of grant, as reported on the NYSE. |
| | (5) | The amounts shown in this column reflect the grant date fair value of the awards under FASB ASC Topic 718 used by BD for financial statement reporting purposes (disregarding estimated forfeitures). For a discussion of the assumptions made to determine the grant date fair value of these awards, see Note 7 to the consolidated financial statements that are included in our Annual Report on Form10-K for the fiscal year ended September 30, 2017.2018. |
The PIP provides an opportunity for eligible associates to receive annual cash incentive payments. A more detailed discussion of the PIP and the performance targets established under the PIP for fiscal year 20172018 appears in the Compensation Discussion and Analysis section of this proxy statement.
Equity compensation awards
Performance Units. Performance Units are performance-based restricted stock units that vest three years after grant. The potential payouts under these awards range from zero to 200% of target. The actual payout will be based on BD’s performance against the performance targets set for these awards over the three-year performance period covering fiscal years 2017-2019.2018-2020. A more detailed discussion of these performance targets appears in the Compensation Discussion and Analysis section of this proxy statement. Performance Units are not transferable, and holders may not vote any shares underlying the award until the shares have been distributed. Dividends do not accrue on these awards.
TVUs. TVUs are restricted stock units that represent the right to receive one share of BD common stock per unit upon vesting. TVUs vest in three annual installments, beginning one year from the grant date. TVUs are not transferable, and holders may not vote any shares underlying the award until the shares have been distributed. Dividends do not accrue on these awards.
SARs. A SAR represents the right to receive, upon exercise, shares of BD common stock equal in value to the difference between the BD common stock price at the time of exercise and the exercise price. SARs are not transferable. SARs have aten-year term, and become exercisable in four equal annual installments, beginning one year from the grant date.
Change in control. Performance Units, TVUs and SARs listed in the above table fully vest in the event of a termination of employment following a change in control under certain circumstances. See “Accelerated vesting of equity compensation awards upon a change in control” on page 55.48.
Outstanding Equity Awards The following table sets forth the outstanding equity awards held by the named executive officers at the end of fiscal year 2017.2018. Outstanding Equity Awards at 20172018 Fiscal Year-End | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Grant Date | | | Number of Securities Underlying Unexercised SARs (#) Exercisable (1) | | | Number of Securities Underlying Unexercised SARs (#) Unexercisable (1) | | | SAR Exercise Price ($/Sh) | | | SAR Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#)(2) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | | Vincent A. Forlenza | | | 11/24/2009 | | | | 24,742 | | | | 0 | | | $ | 75.63 | | | | 11/24/2019 | | | | | | | | | | | | | | | | | | | | | 11/23/2010 | | | | 85,372 | | | | 0 | | | $ | 76.64 | | | | 11/23/2020 | | | | | | | | | | | | | | | | | | | | | 11/22/2011 | | | | 181,794 | | | | 0 | | | $ | 72.12 | | | | 11/22/2021 | | | | | | | | | | | | | | | | | | | | | 11/20/2012 | | | | 202,758 | | | | 0 | | | $ | 76.18 | | | | 11/20/2022 | | | | | | | | | | | | | | | | | | | | | 11/26/2013 | | | | 118,857 | | | | 39,622 | | | $ | 108.89 | | | | 11/26/2023 | | | | | | | | | | | | | | | | | | | | | 11/25/2014 | | | | 72,048 | | | | 72,050 | | | $ | 134.73 | | | | 11/25/2024 | | | | | | | | | | | | | | | | | | | | | 11/26/2015 | | | | 41,284 | | | | 123,854 | | | $ | 150.12 | | | | 11/26/2025 | | | | | | | | | | | | | | | | | | | | | 11/26/2016 | | | | 0 | | | | 112,233 | | | $ | 170.69 | | | | 11/26/2026 | | | | | | | | | | | | | | | | | | | | | Various | | | | | | | | | | | | | | | | | | | | 96,439 | | | | 18,358,069 | | | | 93,290 | | | | 18,280,176 | | Christopher R. Reidy | | | 11/26/2013 | | | | 31,695 | | | | 10,566 | | | $ | 108.89 | | | | 11/26/2023 | | | | | | | | | | | | | | | | | | | | | 11/25/2014 | | | | 18,228 | | | | 18,231 | | | $ | 134.73 | | | | 11/25/2024 | | | | | | | | | | | | | | | | | | | | | 11/26/2015 | | | | 11,014 | | | | 33,045 | | | $ | 150.12 | | | | 11/26/2025 | | | | | | | | | | | | | | | | | | | | | 11/26/2016 | | | | 0 | | | | 32,661 | | | $ | 170.69 | | | | 11/26/2026 | | | | | | | | | | | | | | | | | | | | | Various | | | | | | | | | | | | | | | | | | | | 17,509 | | | | 3,294,462 | | | | 25,932 | | | | 5,081,375 | | Alexandre Conroy | | | 11/23/2010 | | | | 9,147 | | | | 0 | | | $ | 76.64 | | | | 11/23/2020 | | | | | | | | | | | | | | | | | | | | | 11/22/2011 | | | | 11,763 | | | | 0 | | | $ | 72.12 | | | | 11/22/2021 | | | | | | | | | | | | | | | | | | | | | 11/20/2012 | | | | 32,441 | | | | 0 | | | $ | 76.18 | | | | 11/20/2022 | | | | | | | | | | | | | | | | | | | | | 11/26/2013 | | | | 16,641 | | | | 5,547 | | | $ | 108.89 | | | | 11/26/2023 | | | | | | | | | | | | | | | | | | | | | 11/25/2014 | | | | 11,392 | | | | 11,395 | | | $ | 134.73 | | | | 11/25/2024 | | | | | | | | | | | | | | | | | | | | | 11/26/2015 | | | | 6,020 | | | | 18,063 | | | $ | 150.12 | | | | 11/26/2025 | | | | | | | | | | | | | | | | | | | | | 11/26/2016 | | | | 0 | | | | 18,706 | | | $ | 170.69 | | | | 11/26/2026 | | | | | | | | | | | | | | | | | | | | | Various | | | | | | | | | | | | | | | | | | | | 10,592 | | | | 1,990,234 | | | | 14,502 | | | | 2,841,667 | | Thomas E. Polen | | | 11/26/2013 | | | | 0 | | | | 2,775 | | | $ | 108.89 | | | | 11/26/2023 | | | | | | | | | | | | | | | | | | | | | 11/25/2014 | | | | 7,812 | | | | 7,813 | | | $ | 134.73 | | | | 11/25/2024 | | | | | | | | | | | | | | | | | | | | | 11/26/2015 | | | | 6,880 | | | | 20,643 | | | $ | 150.12 | | | | 11/26/2025 | | | | | | | | | | | | | | | | | | | | | 11/26/2016 | | | | 0 | | | | 29,692 | | | $ | 170.69 | | | | 11/26/2026 | | | | | | | | | | | | | | | | | | | | | Various | | | | | | | | | | | | | | | | | | | | 9,552 | | | | 1,813,225 | | | | 19,752 | | | | 3,870,404 | | Ellen R. Strahlman | | | 11/26/2013 | | | | 0 | | | | 6,869 | | | $ | 108.89 | | | | 11/26/2023 | | | | | | | | | | | | | | | | | | | | | 11/25/2014 | | | | 13,020 | | | | 13,022 | | | $ | 134.73 | | | | 11/25/2024 | | | | | | | | | | | | | | | | | | | | | 11/26/2015 | | | | 6,880 | | | | 20,643 | | | $ | 150.12 | | | | 11/26/2025 | | | | | | | | | | | | | | | | | | | | | 11/26/2016 | | | | 0 | | | | 20,784 | | | $ | 170.69 | | | | 11/26/2026 | | | | | | | | | | | | | | | | | | | | | Various | | | | | | | | | | | | | | | | | | | | 12,045 | | | | 2,262,768 | | | | 16,344 | | | | 3,202,607 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Grant Date | | Number Securities Underlying Unexercised SARs (#) Exercisable (1) | | Number of Securities Underlying Unexercised SARs (#) Unexercisable (1) | | SAR Exercise Price ($/Sh) | | SAR Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#)(2) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | Vincent A. Forlenza | | 11/24/2009 | | 24,742 |
| | 0 |
| | 75.63 | | 11/24/2019 | |
| |
| |
| |
| | | 11/23/2010 | | 85,372 |
| | 0 |
| | 76.64 | | 11/23/2020 | |
| |
| |
| |
| | | 11/22/2011 | | 181,794 |
| | 0 |
| | 72.12 | | 11/22/2021 | |
| |
| |
| |
| | | 11/20/2012 | | 202,758 |
| | 0 |
| | 76.18 | | 11/20/2022 | |
| |
| |
| |
| | | 11/26/2013 | | 158,479 |
| | 0 |
| | 108.89 | | 11/26/2023 | |
| |
| |
| |
| | | 11/25/2014 | | 108,072 |
| | 36,026 |
| | 134.73 | | 11/25/2024 | |
| |
| |
| |
| | | 11/26/2015 | | 82,568 |
| | 82,570 |
| | 150.12 | | 11/26/2025 | |
| |
| |
| |
| | | 11/26/2016 | | 25,058 |
| | 84,175 |
| | 170.69 | | 11/26/2026 | |
| |
| |
| |
| | | 11/26/2017 | | 0 |
| | 95,957 |
| | 226.28 | | 11/26/2027 | |
| |
| |
| |
| | | Various | |
| |
| |
| |
| | 79,773 |
| | 20,820,753 |
| | 78,342 |
| | 20,447,262 |
| Christopher R. Reidy | | 11/26/2013 | | 42,261 |
| | 0 |
| | 108.89 | | 11/26/2023 | |
| |
| |
| |
| | | 11/25/2014 | | 27,342 |
| | 9,117 |
| | 134.73 | | 11/25/2024 | |
| |
| |
| |
| | | 11/26/2015 | | 22,028 |
| | 22,031 |
| | 150.12 | | 11/26/2025 | |
| |
| |
| |
| | | 11/26/2016 | | 8,165 |
| | 24,496 |
| | 170.69 | | 11/26/2026 | |
| |
| |
| |
| | | 11/26/2017 | | 0 |
| | 28,559 |
| | 226.28 | | 11/26/2027 | |
| |
| |
| |
| | | Various | |
| |
| |
| |
| | 13,862 |
| | 3,617,982 |
| | 23,034 |
| | 6,011,874 |
| Patrick K. Kaltenbach | | 6/1/2018 | | 0 |
| | 22,923 |
| | 224.94 | | 6/1/2028 | |
| |
| |
| |
| | | 6/1/2018 | |
| |
| |
| |
| | 2,533 |
| | 661,113 |
| | 9,664 |
| | 2,522,304 |
| Samrat S. Khichi | | 7/16/2014 | | 14,093 |
| | 0 |
| | 95.03 | | 7/16/2024 | |
| |
| |
| |
| | | 12/10/2014 | | 12,286 |
| | 0 |
| | 110.04 | | 12/10/2024 | |
| |
| |
| |
| | | 12/9/2015 | | 14,822 |
| | 0 |
| | 121.49 | | 12/9/2025 | |
| |
| |
| |
| | | 12/14/2016 | | 12,505 |
| | 0 |
| | 143.07 | | 12/14/2026 | |
| |
| |
| |
| | | 1/2/2018 | | 0 |
| | 15,591 |
| | 217.84 | | 1/2/2028 | |
| |
| |
| |
| | | 1/2/2018 | |
| |
| |
| |
| | 1,627 |
| | 424,647 |
| | 5,754 |
| | 1,501,794 |
| Thomas E. Polen | | 11/25/2014 | | 11,718 |
| | 3,907 |
| | 134.73 | | 11/25/2024 | |
| |
| |
| |
| | | 11/26/2015 | | 13,760 |
| | 13,763 |
| | 150.12 | | 11/26/2025 | |
| |
| |
| |
| | | 11/26/2016 | | 7,423 |
| | 22,269 |
| | 170.69 | | 11/26/2026 | |
| |
| |
| |
| | | 11/26/2017 | | 0 |
| | 31,986 |
| | 226.28 | | 11/26/2027 | |
| |
| |
| |
| | | Various | |
| |
| |
| |
| | 10,767 |
| | 2,810,187 |
| | 23,164 |
| | 6,045,804 |
| | | | | | | | | | | | | | | | | | | |
| | (1) | SARs become exercisable in four equal annual installments, beginning one year following the date of grant. The Bard stock options that Mr. Khichi held at the time of the Bard acquisition in December 2017 converted to BD SARS and became fully vested to the extent not then already vested. |
Set forth below is the value of the exercisable SARs held by named executive officers at the end of fiscal year 2017.2018. The value represents the difference between $195.95,$261.00, the closing price of BD common stock on September 30, 2017,2018, and the exercise price of each exercisable SAR held by the named executive officer. These values may not reflect the value actually realized by the named executive officers upon exercise. | | | | | Name | | Value of Vested SARs | | Vincent A. Forlenza | | $ | 76,609,082 | | Christopher R. Reidy | | | 4,380,056 | | Alexandre Conroy | | | 8,855,480 | | Thomas E. Polen | | | 793,561 | | Ellen R. Strahlman | | | 1,112,395 | |
| | | | Name | Value of Vested SARs ($) | Vincent A. Forlenza | 141,307,211 |
| Christopher R. Reidy | 13,060,641 |
| Patrick K. Kaltenbach | 0 |
| Samrat S. Khichi | 7,736,242 |
| Thomas E. Polen | 3,675,712 |
|
| | (2) | The amounts shown in this column include grants of restricted stock unit awards that are not performance-based. These include, for each named executive officer,Messrs. Forlenza, Reidy and Polen, TVUs granted on November 25, 2014, which vest three years after grant, and on26, 2015, November 26, 20152016 and November 26, 2016,2017; for Mr. Kaltenbach, TVUs granted on June 1 2018; and for Mr. Khichi, TVUs granted on January 2, 2018, all of which vest in three annual installments beginning one year after grant. The amount shown for Mr. Forlenza also includes awards that vest at, or one year following, retirement. Also included in this column for Messrs. Forlenza, Reidy and Polen are shares payable under Performance Units granted on November 25, 2014,26, 2015, which cover the fiscal year 2015-20172016-2018 performance period and vested on November 25, 2017.26, 2018. |
| | (3) | Market value has been calculated by multiplying the number of unvested units by $195.95,$261.00, the closing price of BD common stock on September 30, 2017.2018. These values may not reflect the value ultimately realized by the named executive officers. |
| | (4) | The amounts in this columnshown represent the Performance Unit awards shownlisted below at maximum payout. The actual number of shares issued under these awards will be based on BD’s performance over the applicable performance period. |
| | | | | | | | | | | | | For Mr. Forlenza: | | | | | | | | | | | | Grant Date | | Number of Shares Issuable | | | Performance Period | | | Vesting Date | | 11/26/2015 | | | 50,362 | | | | Fiscal years 2016-2018 | | | | 11/26/2018 | | 11/26/2016 | | | 42,928 | | | | Fiscal years 2017-2019 | | 11/26/2019 | 11/26/2017 | 35,414 | | Fiscal years 2018-2020 | | 11/26/20192020 | | | | | | | | For Mr. Reidy: | | | | | | | | | | | | Grant Date | | Number of Shares Issuable | | | Performance Period | | | Vesting Date | | 11/26/2015 | | | 13,438 | | | | Fiscal years 2016-2018 | | | | 11/26/2018 | | 11/26/2016 | | | 12,494 | | | | Fiscal years 2017-2019 | | 11/26/2019 | 11/26/2017 | 10,540 | | Fiscal years 2018-2020 | | 11/26/20192020 | | | | | | | For Mr. Kaltenbach: | | | | | | For Mr. Conroy: | | | | | | | | | | Grant Date | | Number of Shares Issuable | | Performance Period | | Vesting Date | 6/1/2018 | 9,664 | | Fiscal years 2018-2020 | | 6/1/2021 | | | | | | | For Mr. Khichi: | | | | | | | | | | | | Grant Date | Number of Shares Issuable | | Performance Period | | | Vesting Date | | 11/26/20151/2/2018 | 5,754 | | Fiscal years 2018-2020 | 7,346 | 1/2/2021 | | | | | Fiscal years 2016-2018 | | For Mr. Polen: | | | | 11/26/2018 | | | | | | | | Grant Date | Number of Shares Issuable | | Performance Period | | Vesting Date | 11/26/2016 | | | 7,156 | | 11,358 | | Fiscal years 2017-2019 | | | | 11/26/2019 | | | For Mr. Polen: | | | | | | Grant Date
| | Number of Shares Issuable | | | Performance Period | | | Vesting Date | | 11/26/20152017 | | | 8,394 | | 11,806 | | Fiscal years 2016-2018 | | 2018-2020 | | 11/26/2018 | | 11/26/2016 | | | 11,358 | | | | Fiscal years 2017-2019 | | | | 11/26/2019 | | | For Dr. Strahlman: | | | | | | Grant Date
| | Number of Shares Issuable | | | Performance Period | | | Vesting Date | | 11/26/2015 | | | 8,394 | | | | Fiscal years 2016-2018 | | | | 11/26/2018 | | 11/26/2016 | | | 7,950 | | | | Fiscal years 2017-2019 | | | | 11/26/2019 | 2020 |
SAR Exercises and Vesting of Stock Units The following table contains information relating to the exercise of SARs, and the vesting of TVUs and Performance Units, during fiscal year 2017.2018. SAR Exercises and Stock Vested in Fiscal Year 2017 | | | | | | | | | | | | | | | | | | | SAR Awards | | | Stock Awards | | Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($)(1) | | | Number of Shares Acquired on Vesting (#)(2) | | | Value Realized on Vesting ($)(3) | | Vincent A. Forlenza | | | 0 | | | | 0 | | | | 57,878 | | | | 9,879,196 | | Christopher R. Reidy | | | 0 | | | | 0 | | | | 15,435 | | | | 2,634,600 | | Alexandre Conroy | | | 0 | | | | 0 | | | | 8,130 | | | | 1,387,710 | | Thomas E. Polen | | | 11,971 | | | | 1,178,616 | | | | 4,464 | | | | 761,960 | | Ellen R. Strahlman | | | 20,601 | | | | 1,839,983 | | | | 10,004 | | | | 1,707,583 | |
2018 | | | | | | | | | | | | | | | | | | SAR Awards | | | Stock Awards | | Name | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($)(1) | | Number of Shares Acquired on Vesting (#)(2) | | Value Realized on Vesting ($)(3) | Vincent A. Forlenza | 0 |
| | | 0 |
| | | 55,125 |
| | | 12,473,685 |
| | Christopher R. Reidy | 0 |
| | | 0 |
| | | 14,152 |
| | | 3,004,772 |
| | Patrick K. Kaltenbach | 0 |
| | | 0 |
| | | 0 |
| | | 0 |
| | Samrat S. Khichi | 0 |
| | | 0 |
| | | 0 |
| | | 0 |
| | Thomas E. Polen | 2,775 |
| | | 327,561 |
| | | 6,823 |
| | | 1,543,908 |
| | | | | | | | | | | | | |
| | (1) | Represents the difference between the exercise price and the BD common stock price at exercise. Mr. Polen’s exercise of 11,9712,775 SARs resulted in the acquisition of 5,971 shares. Dr. Strahlman’s exercise of 20,601 SARs resulted in the acquisition of 9,2831,443 shares. |
| | (2) | Shows the shares acquired under TVUs, and under Performance Units covering the fiscal year 2014-20162015-2017 performance period, that vested in fiscal year 2017.2018. Mr. Reidy elected to defer 873 shares from his vested TVU. |
| | (3) | Based on the closing price of BD stock on the vesting date. |
BD’s Retirement Plan is a non-contributory defined benefit plan. The Retirement Plan is generally available to all active full-time and part-time U.S. BD associates.The Internal Revenue Code limits the maximum annual benefit that may be paid to an individual under the Retirement Plan and the amount of compensation that may be recognized in calculating these benefits. BD makes supplemental payments to its nonqualified Restoration Plan to offset any reductions in benefits that result from these limitations. The Retirement Plan and the Restoration Plan generally provide retirement benefits on a “cash balance” basis. Under the cash balance provisions, an associate has an account that is increased by pay credits based on compensation, age and service, and by interest credits based on the ratea prescribed by the plans.rate. Prior to January 1, 2013, benefits were based on a “final average pay” formula for associates who were hired before April 1, 2007 and who did not elect to be covered under the cash balance formula. Effective January 1, 2013, all final average pay participants were converted to the cash balance formula, with an opening cash balance equal to the actuarial present value of the accrued final average pay benefit, based on service and pay through December 31, 2012. Upon retirement, the value of this opening cash balance (with interest credits) is compared to the value of the December 31, 2012 benefit accrued under the final average pay formula and the greater of the two is payable to the participant. Benefits accrued after December 31, 2012 are determined under the cash balance formula only. Messrs. Forlenza, Reidy and Polen and Dr. Strahlman participate in Prior to January 1, 2018, the Retirement Plan was generally available to all active full-time and part-time U.S. BD associates. Effective January 1, 2018, the Restoration Plan.Retirement Plan was frozen, and persons hired or rehired by BD after that date (including Messrs. Kaltenbach and Khichi) do not accrue pension benefits under the plan. As an employee of Bard, Mr. Conroy participatesKhichi participated in a FrenchBard's Supplemental Insurance/Retirement Plan, or “SIRP". The SIRP provided supplemental death and retirement indemnity planbenefits to selected key employees, including Mr. Khichi. In connection with the
Bard acquisition, Mr. Khichi's benefits under whichthe SIRP vested and were frozen, and he will receive a retirement benefit in a lump sum if he works at BD to age 62. This benefit will be calculated based on a formula using his years of service and salary ataccrues no additional benefits under the time of his retirement.plan. The following table shows the actuarial present value on September 30, 20172018 (assuming payment as a lump sum) of accumulated retirement benefits payable under our plans as of the first date on which the named executive officer is eligible to retire and commence unreduced benefit payments. For a description of the other assumptions used in calculating the present value of these benefits, see Note 8 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended September 30, 2017.PENSION BENEFITS AT 2017 FISCALYEAR-END
| | | | | | | | | Name | | Plan Name | | Number of Years Credited Service (#) | | Present Value of Accumulated Benefit ($) | | Vincent A. Forlenza | | Retirement Plan | | 37 | | | 1,767,981 | | | | Restoration Plan | | 37 | | | 9,639,055 | | Christopher R. Reidy | | Retirement Plan | | 5 | | | 80,399 | | | | Restoration Plan | | 5 | | | 250,551 | | Alexandre Conroy | | French Indemnity Plan | | 27 | | | 186,723 | | Thomas E. Polen | | Retirement Plan | | 17 | | | 266,656 | | | | Restoration Plan | | 17 | | | 241,035 | | Ellen R. Strahlman | | Retirement Plan | | 5 | | | 80,466 | | | | Restoration Plan | | 5 | | | 211,501 | |
2018. Amounts shown are not subject to any further deduction for Social Security benefits or other offsets.
PENSION BENEFITS AT 2018 FISCAL YEAR-END | | | | | | | | Name | Plan Name | | Number of Years Credited Service (#) | | Present Value of Accumulated Benefit ($) | Vincent A. Forlenza | Retirement Plan | | 38 |
| | 1,854,661 |
| Restoration Plan | | 38 |
| | 10,199,047 | Christopher R. Reidy | Retirement Plan | | 6 |
| | 100,272 |
| Restoration Plan | | 6 |
| | 351,717 | Samrat S. Khichi | Bard SIRP | | N/A |
| | 3,992,764 | Thomas E. Polen | Retirement Plan | | 18 |
| | 271,517 |
| Restoration Plan | | 18 |
| | 339,149 |
Calculation of U.S. benefits
Final average pay provisions used to determine benefits accrued prior to January 1, 2013. The monthly pension benefit payable in cases of retirement at normal retirement age under the final average pay provisions is calculated using the following formula:(1% (1% of average final covered compensation, plus 1.5% of average final excess compensation)
multiplied by years and months of credited service service. For purposes of the formula, “average final covered compensation” was generally the portion of an associate’s covered compensation subject to Social Security tax, and “average final excess compensation” is the portion that is not subject to such tax. “Covered compensation” included salary and other forms of regular compensation, including commissions and PIP awards. As noted above, effective January 1, 2013, all final average pay participants were converted to the cash balance formula, with an opening cash balance equal to the actuarial present value of the accrued final average pay benefit accrued, based on service and pay through December 31, 2012. Cash Balance Provisions. Each month, an associate’s cash balance account is credited with an amount equal to a percentage of the associate’s total compensation for the month (generally, salary and other forms of regular compensation, including commissions and PIP awards). Such percentage is calculated as follows:
| | | | Age plus years of credited service as of the upcoming December 31 | | Credit percentage | Less than 40 | | 3% | 40-49 | | 4% | 50-59 | | 5% | 60-69 | | 6% | 70 or more | | 7% |
In addition, each month the associate’s account is credited with interest. The rate used during the calendar year is determined based on the 30-year U.S. Treasury rates in effect during the prior September, subject to a minimum rate.
Early retirement under U.S. plans. An associate is eligible to retire early and commence benefit payments if the associate is at least age 55 and has at least 10 years of credited service. Mr. Forlenza is currently eligible for early retirement under the plans. Participants may commence payment of benefits under the cash balance formula prior to early retirement eligibility at any age if the participant terminates with at least three years of service. Under the cash balance provisions, the amount of the associate’s benefit will be the associate’s vested account balance on the early retirement date. The associate may elect to begin payment of the account balance on the early retirement date or delay payment until the normal retirement date (age 65). For participants who formerly participated in the final average pay formula and were converted to cash balance, the portion of the cash balance account attributable to the converted final average pay benefit is compared to the final average pay benefit accrued through the date of conversion under the final average formula. The result that produces the higher benefit is payable.
Form of benefit under U.S. plans. Participants may elect to receive their benefits in various forms. Participants may select a single life annuity, in which pension payments will be payable only during the associate’s lifetime, or, if married, a joint and survivor annuity. Associates may also elect to receive their benefits in a single lump sum payment. Under the final average pay provisions, this lump sum is actuarially equivalent to the benefit payable under the single life annuity option. Under the cash balance provisions, the lump sum is equal to the associate’s account balance. French indemnity plan
The French retirement indemnity plan pays a specified number of months of salary as a lump sum for termination on or after age 62, based on years of service as summarized in the following schedule.
| | | Years of service
| | Benefit (months of pay) | 20-29
| | 3 | 30-34
| | 4 | 35-39
| | 5 | 40 or more
| | 6 |
Eligibility for this retirement indemnity begins when the participant becomes eligible for French Social Security benefits upon attaining age 62. If the participant is terminated before age 62, the participant forfeits the retirement indemnity.
DeferredDeferred compensation
Cash deferrals. The Restoration Plan also allows an eligible BD associate to defer receipt of up to 75% of salary and/or up to 100% of a PIP award until the date or dates elected by the associate. The amounts deferred are invested in a BD common stock account or in cash accounts that mirror the gains and/or losses of several different publicly available investment funds, based on the investment selections of the participants. The investment risk is borne solely by the participant. Participants are entitled to change their investment elections at any time with respect to prior deferrals, future deferrals or both. The investment options available to participants may be changed by BD at any time.
Deferral of equity awards. The Restoration Plan also allows associates to defer receipt of up to 100% of the shares issuable under their Performance Units and TVUs. These deferred shares are allocated to the participant’s BD stock account and must stay in such account until they are distributed.
Withdrawals and distributions. Participants may elect to receive deferred amounts either during their employment or following termination of employment. Participants may elect to receive distributions in installments or in a lump sum. Except in an unforeseen emergency, participants may not withdraw deferred amounts prior to their scheduled distribution date.
Matching contributions. BD provides matching contributions on cash amounts deferred under the Restoration Plan. These contributions are made in the first calendar quarter following the calendar year in which the compensation was deferred. BD matches 75% of the first 6% of salary and PIP award deferred by a participant under the Restoration Plan, subject to certain limits.
Unfunded liability. BD is not required to make any contributions to the Restoration Plan with respect to its obligations to pay deferred compensation. BD has unrestricted use of any cash amounts deferred by participants. Participants have an unsecured contractual commitment from BD to pay the amounts due under the Restoration Plan. When such payments are due, the cash and/or stock will be distributed from BD’s general assets. BD has purchased corporate-owned life insurance that mirrors the returns on cash amounts deferred under the plan to substantially offset this liability.
Account information. The following table sets forth information regarding activity during fiscal year 20172018 in the Restoration Plan accounts maintained by the named executive officers. Mr. Conroy is not eligible to participate in the Restoration Plan.
NONQUALIFIED DEFERRED COMPENSATION IN FISCAL YEAR 2017 | | | | | | | | | | | | | | | | | Name | | Executive Contributions in Last Fiscal Year ($)(1) | | | Registrant Contributions in Last Fiscal Year ($)(2) | | | Aggregate Earnings in Last Fiscal Year ($) | | | Aggregate Balance at Last Fiscal Year- End ($) | | Vincent A. Forlenza | | | 315,288 | | | | 23,850 | | | | 403,408 | | | | 3,261,068 | | Christopher R. Reidy | | | 65,383 | | | | 23,850 | | | | 43,642 | | | | 368,936 | | Thomas E. Polen | | | 90,494 | | | | 23,850 | | | | 6,314 | | | | 323,640 | | Ellen R. Strahlman | | | 130,428 | | | | 23,850 | | | | 54,557 | | | | 427,024 | |
2018 | | | | | | | | | | | | | Name | Executive Contributions in Last Fiscal Year ($)(1) | | Registrant Contributions in Last Fiscal Year ($)(2) | | Aggregate Earnings in Last Fiscal Year ($) | | Aggregate Balance at Last Fiscal Year- End ($)(3) | Vincent A. Forlenza | 299,058 |
| | 24,300 |
| | 420,918 |
| | 4,005,344 |
| Christopher R. Reidy | 233,891 |
| | 16,200 | | 79,692 |
| | 698,719 |
| Patrick K. Kaltenbach | 148,125 |
| | 9,750 | | 1,363 |
| | 149,488 |
| Samrat S. Khichi | 0 | | 0 | | 0 | | 0 | Thomas E. Polen | 103,447 |
| | 24,300 |
| | 8,520 |
| | 459,907 |
| | | | | | | | |
| | (1) | The following amounts are reported as compensation in the fiscal year 20172018 “Salary” column of the Summary Compensation Table appearing on page 42:37: Mr. Forlenza—$115,288;Forlenza - $119,058; Mr. Reidy—$12,205;Reidy - $36,349; Mr. Polen—$45,578;Kaltenbach - $148,125; and Dr. Strahlman—$68,638.Mr. Polen - $50,947. The remaining executive contributions for Messrs. Forlenza, Reidy and Polen relate to the deferral of fiscal year 20162017 PIP awards that were payable in 2017.2018, and, for Mr. Reidy, the deferral of TVUs that vested in 2018. |
| | (2) | Amounts in this column are included in the “All Other Compensation” column of the Summary Compensation Table and reflect matching credits that were earned by participants in 2017.2018. These amounts are not credited to participant accounts until 2018.2019. |
| | (3) | Reflects amounts in which the named executive officer is vested. BD matching contributions fully vest after a participant has been at BD for four years. |
Payments Upon Termination of Employment or Change In Control Payments upon termination of employment The following table shows the estimated payments and benefits that would be paid by BD to each of the named executive officers as a result of a termination of employment under various scenarios. The amounts shown assume termination of employment on September 30, 2017.2018. However, the actual amounts that would be paid to these named executive officers under each scenario can only be determined at the time of an actual termination. | | | | | | | | | | | | | | | | | | | | | Name | | Termination Without “Cause” or for “Good Reason” Following a Change in Control($)(1) | | | Termination due to Retirement($)(2) | | | Termination Without Cause($)(3) | | | Termination due to Disability($)(4) | | | Termination due to Death($)(5) | | Vincent A. Forlenza | | | 65,065,409 | | | | 50,498,086 | | | | 52,365,778 | | | | 48,869,741 | | | | 51,199,741 | | Christopher R. Reidy | | | 14,378,643 | | | | — | | | | 4,998,395 | | | | 8,447,678 | | | | 9,233,464 | | Alexandre Conroy | | | 8,579,244 | | | | — | | | | 3,728,713 | | | | 4,876,355 | | | | 5,458,192 | | Thomas E. Polen | | | 11,827,573 | | | | — | | | | 3,384,339 | | | | 4,883,588 | | | | 5,708,588 | | Ellen R. Strahlman | | | 10,204,058 | | | | — | | | | 3,666,836 | | | | 5,585,885 | | | | 6,277,693 | |
| | | | | | | | | | | | | | | | | | | | | Name | Termination Without “Cause” or for “Good Reason” Following a Change in Control($)(1) | | Termination due to Retirement($)(2) | | Termination Without Cause($)(3) | | Termination due to Disability($)(4) | | Termination due to Death($)(5) | Vincent A. Forlenza | 78,604,959 |
| | | 61,810,706 |
| | | 63,732,918 |
| | | 61,066,073 |
| | | 63,466,073 |
| | Christopher R. Reidy | 18,201,006 |
| | | 0 | | | 5,308,535 |
| | | 11,486,407 |
| | | 12,315,411 |
| | Patrick K. Kaltenbach | 4,722,865 |
| | | 0 | | | 1,240,130 |
| | | 1,592,899 |
| | | 2,242,899 |
| | Samrat S. Khichi | 10,342,073 |
| | | 0 | | | 3,368,208 |
| | | 3,367,281 |
| | | 3,967,281 |
| | Thomas E. Polen | 17,604,257 |
| | | 0 | | | 4,451,607 |
| | | 9,092,847 |
| | | 9,950,847 |
| | | | | | | | | | | | | | | | |
| | (1) | Includes amounts payable under change in control employment agreements (which are described below), and, for Mr. Forlenza, amounts distributable under BD’s retirement plans, assuming payout as a lump sum. Also includes the accelerated vesting of equity compensation awards, which is discussed below. Includes for Mr. Kaltenbach the accelerated vesting of company matching contributions under the Restoration Plan. Includes for Mr. Khichi the remaining retention payments under his agreement with BD. |
| | (2) | Includes amounts distributable under BD’s retirement plans, assuming payout as a lump sum, and the accelerated vesting of equity compensation awards upon retirement. Messrs. Reidy, ConroyKaltenbach, Khichi and Polen and Dr. Strahlman were not eligible for retirement as of September 30, 2017.2018. |
| | (3) | Includes amounts distributable under BD’s retirement plans, assuming payout as a lump sum, the accelerated vesting of equity compensation awards, outplacement services (with an assumed maximum cost of $100,000), health and welfare benefits and severance benefits (assuming payment in the amount 18 months’ severance, other thanas BD does not have a specific severance policy with respect to its executive officers). Includes for Mr. Conroy, whose severance is determined by a formula based on salary, years of service and age).Khichi the remaining retention payments under his agreement with BD. |
| | (4) | Includes amounts distributable under BD’s retirement plans, assuming payout as a lump sum, and the accelerated vesting of equity compensation awards. Includes for Mr. Khichi the remaining retention payments under his agreement with BD. |
| | (5) | Includes amounts distributable under BD’s retirement plans, assuming payout as a lump sum, the accelerated vesting of equity compensation awards and life insurance benefits. Includes for Mr. Khichi the remaining retention payments under his agreement with BD. |
The amounts shown in the above table do not include vested deferred compensation distributable upon termination, which is shown on page 53,46, the value of Mr. Khichi's vested SIRP benefit, which is shown on page 44, or the value of vested SARs held by the named executive officers as of September 30, 2017,2018, which appears on page 48.42. Payments upon termination under change in control agreements BD has entered into agreements with Messrs. Forlenza, Reidy, Conroy and Polen and Dr. Strahlmaneach of the named executive officers that provide for the continued employment of the executive for a period of two years following a change in control of BD. These agreements are designed to retain the executives and provide continuity of management in the event of an actual or potential change in control of BD. The following is a summary of the key terms of the agreements. The agreement provides that BD will continue to employ the executive for two years following a change in control, and that, during this period, the executive’s position and responsibilities at BD will be materially the same as those prior to the change in control. The agreement also provides for minimum salary, PIP awards and other benefits during this two-year period. “Change in control” is defined under the agreement generally as: the acquisition by any person or group of 25% or more of the outstanding BD common stock; the incumbent members of the Board ceasing to constitute at least a majority of the Board; certain business combinations; or shareholder approval of the liquidation or dissolution of BD. The agreement also provides that, in the event the executive is terminated without “cause” or the executive terminates his or her employment for “good reason” during the two years following a change in control, the executive would receive: a pro rata PIP award for the year of termination based on the greater of (i) the executive’s average PIP award for the last three fiscal years prior to termination, and (ii) the executive’s target PIP award for the year in which the termination occurs (the greater of the two being referred to herein as the “Incentive Payment”); a lump sum severance payment equal to three times, in the case of Messrs. Forlenza and Polen, or two times for the other named executive officers, the sum of the executive’s annual salary and his or her Incentive Payment; a lump sum payment equal to the present value of the increased pension benefits the executive would have received had the executive remained employed for an additional three years, in the case of Messrs. Forlenza, or two years for theMr. Reidy (the other named executive officers (other than Mr. Polen, whose agreement doesdo not containhave this provision)provision in their agreements); continuation of the executive’s health and welfare benefits (reduced to the extent provided by any subsequent employer) for a period of three years, in the case of Messrs. Forlenza and Polen, or two years for the other named executive officers; and outplacement services, subject to a limit on the cost to BD of $100,000. “Cause” is generally defined as the willful and continued failure of the executive to substantially perform his or her duties, or illegal conduct or gross misconduct that is materially injurious to BD. “Good reason” is generally defined to include (i) any significant change in the executive’s position or responsibilities, (ii) the failure of BD to pay any compensation called for by the agreement, or (iii) certain relocations of the executive.
Under the agreement with Mr. Forlenza, if any payments or distributions made by BD to Mr. Forlenza as a result of a change in control would be subject to an excise tax imposed by the Internal Revenue Code, BD will make a tax reimbursement payment to him. As a result of this payment, Mr. Forlenza would retain the same amount, net of all taxes, that he would have retained had the excise tax not been triggered. This provision applies to any payments or distributions resulting from the change in control, including the accelerated vesting of equity awards. However, if such payments and distributions do not exceed 110% of the level that triggers the excise tax, the payments will be reduced to the extent necessary to avoid the excise tax. The following table sets forth the estimated benefits the named executive officers would receive under his or her agreement in the event the executive was terminated without “cause” or terminated his or her employment for “good reason” following a change in control. The table assumes a termination date of September 30, 2017.2018. These estimates are based on salary rates in effect as of September 30, 2017,2018, and use the 20172018 target PIP awards of the named executive officers as the Incentive Payment. | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Incentive Payment($) | | | Severance Payment($) | | | Additional Retirement Benefits($) | | | Health and Welfare Benefits($) | | | Outplacement Services($) | | | Total($) | | Vincent A. Forlenza | | | 1,687,360 | | | | 8,557,080 | | | | 587,160 | | | | 42,000 | | | | 100,000 | | | | 10,973,600 | | Christopher R. Reidy | | | 754,345 | | | | 3,080,261 | | | | 174,444 | | | | 28,000 | | | | 100,000 | | | | 4,137,050 | | Alexandre Conroy | | | 465,468 | | | | 2,094,613 | | | | 0 | | | | 28,000 | | | | 100,000 | | | | 2,688,081 | | Thomas E. Polen | | | 701,250 | | | | 4,578,750 | | | | 0 | | | | 42,000 | | | | 100,000 | | | | 5,422,000 | | Ellen R. Strahlman | | | 578,328 | | | | 2,540,272 | | | | 149,431 | | | | 28,000 | | | | 100,000 | | | | 3,396,031 | |
| | | | | | | | | | | | | | | | | | | Name | Incentive Payment($) | | Severance Payment($) | | Additional Retirement Benefits($) | | Health and Welfare Benefits($) | | Outplacement Services($) | | Total($) | Vincent A. Forlenza | 1,820,693 |
| | 9,062,080 |
| | 630,000 |
| | 45,000 |
| | 100,000 |
| | 11,657,773 |
| Christopher R. Reidy | 849,696 |
| | 3,357,400 |
| | 200,826 |
| | 30,000 |
| | 100,000 |
| | 4,537,922 |
| Patrick K. Kaltenbach | 178,082 |
| | 1,656,165 |
| | 0 |
| | 30,000 |
| | 100,000 |
| | 1,964,247 |
| Samrat S. Khichi | 337,500 |
| | 3,977,686 |
| | 0 |
| | 26,000 |
| | 100,000 |
| | 4,441,186 |
| Thomas E. Polen | 858,000 |
| | 5,148,000 |
| | 0 |
| | 45,000 |
| | 100,000 |
| | 6,151,000 |
|
Accelerated vesting of equity compensation awards upon a change in control For awards granted prior to January 1, 2015, upon a change in control (as defined in our equity compensation plans), all unvested SARs become fully vested and exercisable, and all time-vested restricted stock units and Performance Units become fully vested and payable (with Performance Units being payable at their target amount). This accelerated vesting occurs with respect to all equity compensation awards granted by BD, not just those granted to the named executive officers. No termination of employment is required to trigger this acceleration. Awards made after January 1, 2015 will not automatically vest upon a change in control if the awards are either continued or replaced with similar awards. In those instances, the awards will automatically vest only if the associate is terminated without “cause” or the associate terminates employment for “good reason” (as such terms are defined in the 2004 Plan) within two years of the change in control. Equity compensation upon termination of employment Upon a named executive officer’s termination due to retirement: all unvested SARs held by the named executive officer become fully exercisable for their remaining term; all time-vested restricted stock units held by the named executive officer vest at, or on the first anniversary of, retirement; and all Performance Units held by the named executive officer vest pro rata based on the amount of the vesting period that had elapsed. The payments would be made after the end of the applicable vesting periods and would be based on BD’s actual performance for the applicable performance periods, rather than award targets. Upon a named executive officer’s termination due to involuntary termination without cause: the named executive officer is entitled to exercise his or her SARs for three months following termination, but only to the extent they were vested at the time of termination; all TVUs held by the named executive officer vest pro rata based on the amount of the vesting period that had elapsed and all other time-vested restricted stock units fully vest; and all Performance Units held by the named executive officer vest pro rata based on the amount of the vesting period that had elapsed. The payments would be made after the end of the applicable vesting periods and
would be based on BD’s actual performance for the applicable performance periods, rather than award targets. Upon a named executive officer’s termination due to death or disability: all unvested SARs held by the named executive officer become fully exercisable for their remaining term; all time-vested restricted stock units held by the named executive officer fully vest; and all Performance Units held by the named executive officer vest pro rata based on the amount of the vesting period that had elapsed. The payment would be based on award targets.
CEO Pay Ratio Under the rules of the SEC, we are required to disclose the ratio of our CEO’s annual total compensation to the median of the annual total compensation of all our other employees. For fiscal year 2018, the median annual total compensation of all our employees (other than Mr. Forlenza) was $44,118 and Mr. Forlenza’s annual total compensation (as reported in the Summary Compensation Table on page 37) was $14,973,481. Based on the foregoing, our estimate of the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all our other worldwide employees was 339 to 1. In accordance with SEC rules, we identified the median employee as of August 1, 2018 by (i) aggregating for each applicable employee (A) annual base salary for salaried employees (or hourly rate multiplied by expected annual work schedule, for permanent hourly employees), and (B) target incentive compensation (including bonus or commission), and (ii) ranking this compensation measure for our employees from lowest to highest. This calculation was performed for all employees, excluding Mr. Forlenza, whether employed on a full-time, part-time, or seasonal basis. For seasonal and non-permanent employees, we applied a reasonable estimate of hourly rate multiplied by their actual work schedule for the year. We then calculated the annual compensation of the median employee using the same methodology used to calculate Mr. Forlenza’s compensation for the Summary Compensation Table. BD believes that the pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, BD’s ratio may not be comparable to the ratios disclosed by other companies based on a number of factors, including differences in employee populations, different geographic distributions of employees, and the nature of the companies' businesses.
| | Proposal 2. | RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
Ernst & Young LLP (“E&Y”) has been selected by the Audit Committee to audit the accounts of BD and its subsidiaries for the fiscal year ending September 30, 2018.2019. The Audit Committee is solely responsible for the appointment, compensation, retention and oversight of BD’s independent registered public accounting firm (referred to herein as the “independent auditors”). Shareholders are being asked to ratify the Audit Committee’s selection of E&Y. If ratification is withheld, the Audit Committee will reconsider its selection. A representative of E&Y is expected to attend the 20182019 Annual Meeting to respond to appropriate questions and will have the opportunity to make a statement. Listed below are the fees billed to BD by E&Y for services rendered during fiscal years 20172018 and 2016. | | | | | | | | | | | | | 2017 | | | 2016 | | | | Audit Fees | | $ | 14,327,000 | | | $ | 11,678,000 | | | “Audit Fees” include fees associated with the annual audit of BD’s consolidated financial statements, reviews of BD’s quarterly reports on Form10-Q, registration statements filed with the SEC and statutory audits required internationally. | | | | | Audit Related Fees | | $ | 225,000 | | | $ | 204,000 | | | “Audit Related Fees” consist of assurance and related services that are reasonably related to the performance of the audit or interim financial statement review and are not reported under Audit Fees. These services include benefit plan audits and other audit services requested by management, which are in addition to the scope of the financial statement audit. | | | | | Tax Fees | | $ | 1,317,000 | | | $ | 1,000,000 | | | “Tax Fees” includes tax compliance, assistance with tax audits, tax advice and tax planning. | | | | | All Other Fees | | $ | 2,000 | | | $ | 27,000 | | | “All Other Fees” includes various miscellaneous services. | | | | | | | | | | | | Total | | $ | 15,871,000 | | | $ | 12,909,000 | | | |
2017. | | | | | | | | | | | 2018 | | 2017 | | Audit Fees | $ | 22,855,000 |
| | $ | 14,327,000 |
| “Audit Fees” include fees associated with the annual audit of BD’s consolidated financial statements, reviews of BD’s quarterly reports on Form 10-Q, registration statements filed with the SEC and statutory audits required internationally. | | | | | | Audit Related Fees | $ | 195,000 |
| | $ | 225,000 |
| “Audit Related Fees” consist of assurance and related services that are reasonably related to the performance of the audit or interim financial statement review and are not reported under Audit Fees. These services include benefit plan audits and other audit services requested by management, which are in addition to the scope of the financial statement audit. | | | | | | Tax Fees | $ | 829,000 |
| | $ | 1,317,000 |
| “Tax Fees” includes tax compliance, assistance with tax audits, tax advice and tax planning. | | | | | | All Other Fees | $ | 32,000 |
| | $ | 2,000 |
| “All Other Fees” includes various miscellaneous services. | | | | | | Total | $ | 23,911,000 |
| | $ | 15,871,000 |
| |
Pre-Approval of auditAudit and non-audit services Non-Audit Services The Audit Committee is responsible for appointing BD’s independent auditors and approving the terms of the independent auditors’ services. The Audit Committee has established a policy for the pre-approval of all audit and permissible non-audit services to be provided by the independent auditors, as described below. All of the services listed in the above table were approved pursuant to this policy.
Audit services.Services. Under the policy, the Audit Committee will appoint BD’s independent auditors each fiscal year andpre-approve the engagement of the independent auditors for the audit services to be provided.
Non-auditNon-Audit Services. services.In accordance with the policy, the Audit Committee has established detailedpre-approved categories ofnon-audit services that may be performed by the independent auditors during the fiscal year, subject to certain dollar limits. The Audit Committee has also delegated to the Chair of the Audit Committee, subject to certain dollar limits, the authority to approve additionalnon-audit services by the independent auditors that either are not covered by thepre-approved categories, or exceed thepre-approved dollar limits, provided that the full Audit Committee is informed of each service. All othernon-audit services are required to bepre-approved by the entire Audit Committee.The Audit Committee believes that the provision of the non-audit services described above by E&Y is consistent with maintaining the independence of E&Y. The Audit Committee periodically considers the rotation of the independent auditors. The Audit Committee believes that the continued retention of E&Y to serve as BD’s independent auditors is in the best interests of BD and its shareholders. ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
REPORT OF THE AUDIT COMMITTEE The Audit Committee reviews BD’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. The independent auditors are responsible for performing an independent audit of BD’s consolidated financial statements in accordance with generally accepted auditing standards and to issue a report thereon. The Committee monitors these processes. In this context, the Committee met and held discussions with management and the independent auditors. Management represented to the Committee that BD’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States, and the Committee reviewed and discussed the consolidated financial statements with management and the independent auditors. The Committee also discussed with the independent auditors the matters required to be discussed by the applicable auditing standards. In addition, the Committee discussed with the independent auditors the auditors’ independence from BD and its management, and the independent auditors provided to the Committee the written disclosures and the letter pursuant to the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Committee concerning independence. The Committee discussed with BD’s internal and independent auditors the overall scope and plans for their respective audits. The Committee met with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of BD’s internal controls, and the overall quality of BD’s financial reporting. Management has also reviewed with the Audit Committee its report on the effectiveness of BD’s internal control over financial reporting. The Audit Committee also received the report from the independent auditors on BD’s internal control over financial reporting. Based on the reviews and discussions referred to above, the Committee recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in BD’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017,2018, for filing with the Securities and Exchange Commission. Bertram L. Scott, Chair Basil L. Anderson
Catherine M. Burzik
Christopher Jones
R. Andrew Eckert Jeffrey W. Henderson David F. Melcher Rebecca W. Rimel
| | Proposal 3. | ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION |
The Compensation Discussion and Analysis beginning on page 2622 of this proxy statement describes BD’s executive compensation program and the compensation decisions made with respect to our CEO and the other individuals named in the Summary Compensation Table on page 4237 (who we refer to as the “named executive officers”). Pursuant to Section 14A of the Securities Exchange Act of 1934, the Board is asking shareholders to cast a non-binding advisory vote on the following resolution: “RESOLVED, that the shareholders of Becton, Dickinson and Company (“BD”) approve the compensation of the BD executive officers named in the Summary Compensation Table, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis, the executive compensation tables and the related footnotes and narrative accompanying the tables).” As we describe in the Compensation Discussion and Analysis, our executive compensation program embodies a pay-for-performance philosophy that supports BD’s business strategy and aligns the interests of our executives with those of our shareholders. At the same time, we believe our program does not encourage excessive risk-taking by management. We believe that the compensation actions discussed in the Compensation Discussion and Analysis appropriately reflected the performance of our named executive officers and BD during the year. For these reasons, the Board is asking shareholders to support this Proposal. While the advisory vote we are asking you to cast is non-binding, the Compensation Committee and the Board value the views of our shareholders and will take into account the outcome of the vote when considering our compensation program and future compensation decisions for our executive officers. The Board has adopted a policy of holding advisory votes to approve named executive officer compensation on an annual basis, and the next advisory vote will be held at our 20192020 Annual Meeting. Meeting of Shareholders. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 3. | | Proposal 4. | SHAREHOLDER PROPOSALAMENDMENT TO AMEND PROXY ACCESSBY-LAWBD’S RESTATED CERTIFICATE OF INCORPORATION |
Kenneth Steiner, 14 Stoner Avenue, 2M, Great Neck, NY, owner
The Board of not less than 500 sharesDirectors is recommending approval of an amendment (the “Amendment”) to BD’s Restated Certificate of Incorporation (the “Restated Certificate”) that would provide for approval of certain corporate actions by the affirmative vote of a majority of the votes cast by holders of BD common stock, has given notice that he intends to presentrather than the following stockholder proposal for actionaffirmative vote of two-thirds of the votes cast as currently required under the New Jersey corporation statute. To be approved, Proposal 4 requires the affirmative vote of at least two-thirds of the votes cast at the Annual Meeting:“Proposal 4—Shareholder Proxy Access Enhancement
RESOLVED: Stockholders askmeeting.
The New Jersey corporation statute provides that, for companies incorporated in New Jersey prior to 1969 (which includes BD), certain corporate actions must be approved by the affirmative vote of two-thirds of the votes cast by shareholders entitled to vote thereon. These corporate actions include: Amendments to the company’s certificate of incorporation; A plan of merger or plan of consolidation to which the company is a party, to the extent shareholder approval of the merger is required under the statute; A plan of exchange (that is, a plan by which the company’s shares are exchanged for shares of another company); A sale of all or substantially all of the company’s assets; and A dissolution of the company that was approved by the company’s board. The New Jersey corporation statute also provides that a company incorporated prior to 1969 may amend its certificate of incorporation to provide for shareholder approval of any of the actions described above by the affirmative vote of a majority of the votes cast by shareholders entitled to vote thereon. Pursuant to this authority, the Amendment being proposed would reduce the required vote needed for approval of each of the corporate actions listed above by holders of BD common stock from two-thirds of the votes cast to a majority of the votes cast. The Amendment would add a new Article XI to the Restated Certificate that would read as follows: ARTICLE XI. Any matter for which a vote of holders of the Corporation’s Common Stock shall be required under Section 14A:9-2 (amendment of certificate of incorporation), Section 14A:10-3 (plan of merger or plan of consolidation), Section 14A:10-11 (disposition of all, or substantially all, assets), Section 14A:10-13 (share exchange), and Section 14A:12-4 (dissolution by action of the board and shareholders) of directorsthe New Jersey
Business Corporation Act shall be approved by the affirmative vote of a majority of the votes cast by the holders of shares of Common Stock entitled to amend its proxy access bylaw provisions and any associated documents,vote thereon. If the Amendment is adopted, all matters to include the following change for the purposebe acted upon by holders of decreasing the average amount of CompanyBD common stock under BD’s Restated Certificate and BD’s By-Laws, and under the average memberNew Jersey corporation statute, would be approved by a majority of the votes cast by the common shareholders entitled to vote thereon. The only exceptions to this under the New Jersey corporation statute would be (1) approval of a nominating group would be requiredguarantee by BD that is not in furtherance of BD’s business interests, which requires approval by the affirmative vote of 100% of the votes cast, and (2) dissolution of BD by action of the shareholders without action of the BD Board, which requires the consent of all of the shareholders entitled to hold for3-years to satisfy the aggregate ownership requirements to form a nominating group:No limitation shall be placed on the number of stockholders that can aggregate their shares to achieve the 3% of common stock required to nominate directors under our Company’s proxy access provisions.
Proxy access for shareholders enables shareholders to put competing director candidates on the company ballot to see if they can get more votes than some of management’s director candidates. A competitive electionvote thereon.
The Board is good for everyone. This proposal can help ensure that our management will nominate directors with outstanding qualifications in order to avoid giving shareholders a reason to exercise their right to use proxy access.Even if the 20 largest public pension funds were able to aggregate their shares, they would not meet the current 3% criteria for a continuous3-years at most companies accordingputting forth this Proposal because it believes eliminating supermajority voting provisions to the Council of Institutional Investors. This proposal addresses the situation that our company now has with proxy access potentially for only the largest shareholders who are the least unlikely shareholders to make use of it.
Since no group of shareholders at any U.S. company has yet to make use of proxy access, itextent possible is important to make sure that the current limitation of 20 shareholders is not a deterrent to shareholders using proxy access.
Please vote to enhance shareholder value:
Shareholder Proxy Access Enhancement—Proposal 4”
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BOARD OF DIRECTORS’ RESPONSE
The Board recommends a vote AGAINST Proposal 4 for the following reasons.
The Board has carefully considered this proposal and believes that the proposal is unnecessary and notbest practice in the best interests of our shareholders. Accordingly, the Board recommends that shareholders vote “AGAINST” the proposal.
Last year, we adopted amendments to the BDBy-laws to implement a proxy access framework that we believe provides meaningful proxy access rights to our shareholders. Specifically, our existing proxy accessby-law permits any shareholder, or a group of up to 20 shareholders, owning 3% or more of BD’s outstanding common stock continuously for at least three years to nominate and include in BD’s annual meeting proxy materials director nominees constituting up to two individuals or 20% of the Board, whichever is greater, subject to the requirements specified in theBy-laws.
The Board continues to believe that the proxy access framework it adopted is the most appropriate framework for BD and our shareholders. Prior to the Board’s adoption of our existing proxy accessby-law, we reviewed prevailing practices of other companies that adopted proxy access, and based on our assessment, we
adopted a proxy access structure that provides shareholders with meaningful proxy access rights, balances the interests of all our shareholders, and is consistent with the prevailing practices of other large U.S. public companies with proxy access. Specifically, a20-shareholder aggregation limit has been widely adopted by companies that have proxy access.
We also believe that allowing an unlimited number of shareholders to form a group for purposes of accessing our proxy access provisions could prove unwieldy and result in an excessive administrative burden and expense for BD. In the absence of a reasonable limit, we could be required to make burdensome, time-consuming inquiries into the nature and duration of the share ownership of a large number of individual shareholders in order to verify their share ownership and confirm their eligibility under our proxy accessby-law. We believe that a reasonable aggregation limit that is consistent with prevailing best practices—such as the one contained in ourBy-laws—is appropriate in order to reduce potential administrative costs and help reduce the risk of abuse of proxy access rights.
In connection with our review of this Proposal, we reached out to many of our largest shareholders in order to understand their views on proxy access and the proposed amendment. Those institutional shareholders that we received feedback from did not support amending our current proxy access provisions as requested by the proponent.
For these reasons, we believecorporate governance. If this Proposal is unnecessary and not inapproved, it will be affected by the best interestsfiling of our shareholders.
a Certificate of Amendment to the Restated Certificate with the State of New Jersey promptly after the 2019 Meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINSTFOR PROPOSAL 4.
SHAREHOLDER PROPOSALS OR DIRECTOR NOMINATIONS FOR 2019 Any proposal that a shareholder wishes to submit for inclusion in BD’s proxy materials for BD’s 20192020 Annual Meeting of Shareholders (the “2020 Annual Meeting”) pursuant to SEC Rule 14a-8 must be received by BD not later than August 16, 2018.15, 2019. A shareholder’s notice of nomination of one or more director candidates to be included in BD’s proxy statement and ballot pursuant to Article II. E of our By-laws (a “proxy access director nomination”) must be received by BD no earlier than July 17, 201816, 2019 and not later than August 16, 2018.15, 2019. Notice of any other business or director nomination (that is, other than a matter brought pursuant to SEC Rule 14a-8 or a proxy access director nomination) that a shareholder wishes to present for consideration at the 20192020 Annual Meeting pursuant to Article II. D. of our By-Laws must be received by BD not earlier than September 25, 201824, 2019 and not later than October 25, 2018.24, 2019. Any proposal or director nomination submitted by a shareholder in connection with the 20192020 Annual Meeting must satisfy the applicable information and other requirements specified in BD’sBy-Laws, which are available on BD’s website at www.bd.com/investors/ corporate_governance/. All proposals and nominations, and all supporting materials required by ourBy-Laws, must be addressed to: Corporate Secretary, Becton, Dickinson and Company, 1 Becton Drive, Franklin Lakes, New Jersey 07417-1880. BD will not consider any proposal or nomination that is not timely delivered or otherwise does not meet theBy-law and SEC requirements for submitting the proposal or nomination.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Presented below are reconciliations of non-GAAP financial measures discussed in the Compensation Discussion and Analysis section of this proxy statement to the comparable GAAP financial measure. All figures below are rounded, and totals may not add due to rounding.
2018 Comparable Currency-Neutral Revenue Growth 2018 Comparable Revenues | | | | | | | | | | | | | | A | | B | | C | | D | | E=A+B+C+D | | | BD Reported | | Bard Q1 (b) | | Intercompany Adjustment (c) | | Divestiture Adjustments (d) | | Comparable 2018 | | Total Revenues | | $15,983 | | $968 | | $(3) | | $(18) | | $16,930 |
2017 comparable currency-neutral revenue growth(amounts in millions of dollars)
| | | | | | | | | | | | | | | | | | | | | | | | | A | | | B | | | C | | | D=B+C | | | E | | | F=(A-D-E)/D | | | 2017 | | | 2016 | | | Divestiture revenue adjustment | | | Comparable 2016 | | | Comparable foreign exchange impact | | | Comparable currency-neutral growth | Total revenues | | $ | 12,093 | | | $ | 12,483 | | | $ | (842 | ) | | $ | 11,641 | | | $ | (69 | ) | | 4.5% |
2017 adjusted diluted earnings per share
| | | | | | | | | | | | | | | | | | | | | | | | | | | 2017 | | | 2016 | | | Growth | | | Foreign currency translation | | | Foreign currency- neutral growth | | | Growth % | | Foreign currency- neutral growth % | Reported diluted earnings per share(pre-tax) | | $ | 4.60 | | | $ | 4.49 | | | $ | 0.11 | | | $ | (0.23 | ) | | $ | 0.34 | | | 2.4% | | 7.6% | Purchase accounting adjustments(pre-tax) | | | 2.20 | | | | 2.42 | | | | | | | | | | | | | | | | | | Restructuring costs(pre-tax) | | | 0.38 | | | | 2.42 | | | | | | | | | | | | | | | | | | Integration costs(pre-tax) | | | 1.06 | | | | 0.88 | | | | | | | | | | | | | | | | | | Transaction costs(pre-tax) | | | 0.17 | | | | 0.04 | | | | | | | | | | | | | | | | | | Financing costs(pre-tax) | | | 0.58 | | | | — | | | | | | | | | | | | | | | | | | Losses on debt extinguishment(pre-tax) | | | 0.33 | | | | — | | | | | | | | | | | | | | | | | | Lease contract modification-related charge(pre-tax) | | | 3.34 | | | | — | | | | | | | | | | | | | | | | | | Litigation-related item(pre-tax) | | | (1.51 | ) | | | — | | | | | | | | | | | | | | | | | | Dilutive impact | | | 0.54 | | | | — | | | | | | | | | | | | | | | | | | Pension settlement charges(pre-tax) | | | — | | | | 0.03 | | | | | | | | | | | | | | | | | | Income tax benefit of special item | | $ | (2.21 | ) | | $ | (1.70 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted diluted earnings per share | | | 9.48 | | | | 8.59 | | | $ | 0.89 | | | $ | (0.24 | ) | | $ | 1.13 | | | 10.4% | | 13.2% |
Comparable Revenues | | | | | | | | | | | | | | A | | B | | C | | D | | E=A+B+C+D | | | BD Reported | | Bard (b) | | Intercompany Adjustment (c) | | Divestiture Adjustments (d) | | Comparable 2017 | | Total Revenues | | $12,093 | | $3,702 | | $(14) | | $(48) | | $15,732 |
Comparable Growth | | | | | | | | | | A | | B | | C | | D=(A-B-C)/B | | 2018 Comparable Revenues | | 2017 Comparable Revenues | | Foreign Exchange Impact | | Currency-Neutral Growth | | | $16,930 | | $15,732 | | $279 | | 5.8% |
______________________ | | (a) | Amounts in 2018 represent revenues for the quarter ended December 31, 2017; amounts in 2017 represent revenues for the quarterly periods included in BD's fiscal year 2017. Amounts presented in alignment with BD's current-period segment, organizational unit and regional reporting structure. Also reflects the elimination of revenues from the Peripheral Intervention unit related to a royalty income stream, reported as revenues by Bard, which BD reports as non-operating income in the current-year period. |
| | (b) | Represents the elimination of revenues from the Medication Delivery Solutions unit which BD previously recognized from Bard as third-party revenues and that would be treated as intercompany revenues in the current-year period. |
| | (c) | Represents adjustments for BD's divestiture of its soft tissue core needle biopsy product line and Bard's divestiture of its Aspira® product line. |
2018 Adjusted performance used underEarnings Per Share | | | | | | | | | | | | | | | | | | | | | | | Twelve Months Ended September 30, | | | 2018 | | 2017 | | Growth | | Foreign Currency Translation | | Foreign Currency Neutral Growth | | Growth % | | Foreign Currency Neutral Growth % | Reported Diluted Earnings per Share | | $ | 0.60 | | $ | 4.60 | | $ | (4.00) | | $ | 0.32 | | $ | (4.32) | | (87.0)% | | (93.9)% | Purchase accounting adjustments ($1.733 billion and $491 million pre-tax, respectively) (1) | | 6.55 | | 2.20 | | | | 0.01 | | | | | | | Restructuring costs ($344 million and $85 million pre-tax, respectively) (2) | | 1.30 | | 0.38 | | | | 0.01 | | | | | | | Integration costs ($344 million and $237 million pre-tax, respectively) (2) | | 1.30 | | 1.06 | | | | 0.01 | | | | | | | Transaction costs ($56 million and $39 million pre-tax, respectively) (3) | | 0.21 | | 0.17 | | | | 0 | | | | | | | Financing impacts ($49 million and $131 million pre-tax, respectively) (4) | | 0.19 | | 0.58 | | | | 0 | | | | | | | Hurricane recovery costs ($17 million pre-tax) | | 0.07 | | 0 | | | | 0 | | | | | | | Losses on debt extinguishment ($16 million and $73 million pre-tax, respectively) (5) | | 0.06 | | 0.33 | | | | 0 | | | | | | | Net impact of gain on sale of investment and asset impairments ($(151) million pre-tax) (6) | | (0.57) | | 0 | | | | 0.01 | | | | | | | Lease contract modification-related charge ($748 million pre-tax) (7) | | 0 | | 3.34 | | | | 0 | | | | | | | Litigation-related item ($(337) million pre-tax) (8) | | 0 | | (1.51) | | | | 0 | | | | | | | Dilutive Impact (9) | | 0.30 | | 0.54 | | | | 0 | | | | | | | Impact of tax reform and income tax benefit of special items ($265 million and $(495) million, respectively) (10) | | 1.00 | | (2.21) | | | | (0.01) | | | | | | | Adjusted Diluted Earnings per Share | | $ | 11.01 | | $ | 9.48 | | $ | 1.53 | | $ | 0.36 | | $ | 1.17 | | 16.1% | | 12.3% |
________________________ | | (1) | Includes adjustments related to the purchase accounting for acquisitions impacting identified intangible assets and valuation of fixed assets and debt. The amount in 2018 also included a fair value step-up adjustment of $478 million recorded relative to Bard's inventory on the acquisition date. |
| | (2) | Represents restructuring and integration costs associated with the Bard and CareFusion acquisitions, as well as restructuring costs associated with other portfolio rationalization initiatives. |
| | (3) | Represents transaction costs primarily associated with the Bard acquisition. |
| | (4) | Represents financing impacts associated with the Bard acquisition. |
| | (5) | Represents losses recognized upon the extinguishment of certain long-term senior notes. |
| | (6) | Represents the net amount recognized in the period related to BD's sale of its non-controlling interest in Vyaire Medical, partially offset by $81 million of charges recorded to write down the carrying value of certain intangible and other assets in the Biosciences unit as well as $58 million of charges to write down the value of fixed assets primarily in the Diabetes Care unit. |
| | (7) | Represents a non-cash charge resulting from a modification to our dispensing equipment lease contracts with customers. |
| | (8) | Represents the reversal of certain reserves related to an appellate court decision which, among other things, reversed an unfavorable antitrust judgment in the RTI case. |
| | (9) | Represents the dilutive impact of BD shares issued in May 2017, in anticipation of the Bard acquisition and BD shares issued as consideration transferred to acquire Bard. The adjusted diluted average shares outstanding (in thousands) was 260,758. |
| | (10) | Includes additional tax expense, net, of $640 million relating to new U.S. tax legislation. |
Adjusted Performance Used Under the PIP 2017
( amounts in millions of dollars) | | | | | Reported revenues | | $ | 12,093 | | Adjustment for favorable impact of acquisitions | | | (12 | ) | Adjustment for unbudgeted favorable foreign currency translation | | | (8 | ) | | | | | | Adjusted currency-neutral revenues | | $ | 12,073 | |
2017millions)
| | | Reported revenues | $15,983 | Adjustment for favorable impact of acquisitions | (14) | Adjustment for unbudgeted unfavorable foreign currency translation | 68 | Adjusted currency-neutral revenues | $16,037 |
2018 Adjusted EPS | | | | | Adjusted diluted earnings per share (see previous reconciliation) | | $ | 9.48 | | Adjustment for unbudgeted unfavorable foreign currency translation | | | 0.09 | | | | | | | Adjusted currency-neutral EPS | | $ | 9.57 | |
| | | Adjusted diluted earnings per share (see previous reconciliation) | $11.01 | Adjustment for unbudgeted favorable tax rate | (0.05) | Adjustment for unbudgeted unfavorable foreign currency translation | 0.06 | Adjusted currency-neutral EPS) | $11.02 |
2017 Free Cash Flow as a Percentage of Sales (amounts in millionsmillions)
| | | | | Reported net cash provided by operating activities | $2,865 |
| Capital expenditures | (895) |
| Free cash flow (reported) | $ | 1,970 |
| Restructuring costs (pre-tax) | 218 |
| Integration costs charges (pre-tax) | 344 |
| Transaction costs (pre-tax) | 56 |
| Financing costs (pre-tax) | 49 |
| Hurricane recovery costs | 17 |
| Income tax benefit of adjustments | (184) |
| Bard transaction-related costs (1) | 276 |
| Adjustment for unbudgeted favorable foreign currency translation | (32 | ) | Additional cash flow adjustments(2) | (153) |
| Adjusted free cash flow | $2,561 |
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_________________
(1) Includes litigation payments, benefit contributions and payments made to members of dollars) | | | | | Reported net cash provided by operating activities | | $ | 2,550 | | Capital expenditures/capitalized software | | | (737 | ) | | | | | | Free cash flow (reported) | | $ | 1,813 | | Transaction costs(pre-tax) | | | 39 | | Integration costs charges(pre-tax) | | | 237 | | Restructuring costs(pre-tax) | | | 28 | | Financing costs(pre-tax) | | | 131 | | Income tax benefit of adjustments | | | (147 | ) | Additional cash flow adjustments(1) | | | (175 | ) | Adjustment for unbudgeted unfavorable foreign currency translation | | | 5 | | | | | | | Adjusted free cash flow | | $ | 1,931 | |
(1) | Includes capital expenditure underspend compared to budget and the favorable impact of an accounting change and accounts payable timing, partially offset by unbudgeted early pension contributions. | Bard board of directors
(2) Includes capital expenditure underspend compared to budget and working capital timing. | | | | | Free cash flow as a % of sales (reported) ($1,813/1,938/$12,093) 15,983) | | | 15 | %12% | Adjusted currency-neutral free cash flow as a % of sales ($1,931/2,561/$12,073) 16,037) | | | 16 | %16% |
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| | | | | Electronic Voting Instructions
| | | | | Available 24 hours a day, 7 days a week! | | | | | Instead of mailing your proxy, you may choose one of the voting
methods outlined below to vote your proxy.
| | | | | | | Vote by Internet | | | | | | | • Go towww.envisionreports.com/BDX. | | | | | | | • Or scan the QR code with your smartphone. | | | | | | | • Follow the steps outlined on the secure website. | | | | |
| | Vote by telephone
| | | | | • Within the USA, US territories and Canada, call toll free1-800-652- | | | | | VOTE (8683) on a touch tone telephone.
| | | | | There is No CHARGE to you for the call.
| | | | | • Outside the USA, US territories and Canada, call 1-781-575-2300 on a | | | | | | | touch tone telephone. Standard rates will apply.
| | | | | VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
| Using ablack inkpen, mark your votes with anXas shown in this example. Please do not write outside the designated areas. | | ☒ | | | | Voting instructions submitted by GSIP participants must be received by 12:00 p.m., EST, on January 17, 2018. Voting instructions submitted by all other BD plan participants must be received by 12:00 p.m., EST, on January 19, 2018. All proxies submitted by record holders through the Internet or telephone must be received by 11:00 a.m., EST, on January 23, 2018. |
q IF YOU DO NOT VOTE VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
| | | | | A | | Proposals — The Board of Directors recommends a voteFOR all the nominees listed;FOR Proposals 2 and 3; andAGAINST Proposal 4. | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 1. Election of Directors: | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | + | | | 01 - Catherine M. Burzik | | ☐ | | ☐ | | ☐ | | 06 - Marshall O. Larsen | | ☐ | | ☐ | | ☐ | | 10 - Claire Pomeroy | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | 02 - R. Andrew Eckert | | ☐ | | ☐ | | ☐ | | 07 - Gary A. Mecklenburg | | ☐ | | ☐ | | ☐ | | 11 - Rebecca W. Rimel | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | 03 - Vincent A. Forlenza | | ☐ | | ☐ | | ☐ | | 08 - David F. Melcher | | ☐ | | ☐ | | ☐ | | 12 - Timothy M. Ring | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | 04 - Claire M. Fraser | | ☐ | | ☐ | | ☐ | | 09 - Willard J. Overlock, Jr. | | ☐ | | ☐ | | ☐ | | 13 - Bertram L. Scott | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | 05 - Christopher Jones | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | | | | 2. Ratification of selection of independent
registered public accounting firm.
| | ☐ | | ☐ | | ☐ | | | | 4. Shareholder proposal to amend the Company’s proxy access by-law.
| | ☐ | | ☐ | | ☐ | | | | | | | For | | Against | | Abstain | | | | | | | | | | | | | | | 3. Advisory vote to approve named executive
officer compensation.
| | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | |
| | | | | B | | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below | | |
| | | | | | | | | | | | | | | | | | | Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, custodian, or other representative capacity, please give full title. | | |
| | | | | | | Date (mm/dd/yyyy) — Please print date below.
| | Signature 1 — Please keep signature within the box.
| | Signature 2 — Please keep signature within the box.
| | |
Dear Shareholder/Plan Participant:
Becton, Dickinson and Company (“BD”) encourages you to take advantage of convenient ways by which you can vote or direct the voting of your shares. You can vote your shares 24 hours a day, 7 days a week, using either a touch-tone telephone or through the Internet. Your telephone or Internet vote authorizes the proxies named on the below proxy/voting instruction card in the same manner as if you marked, signed, dated and returned the proxy/voting instruction card. If you choose to vote your shares by telephone or through the Internet, there is no need to mail back your proxy/voting instruction card. To vote your shares electronically, please have this voting form in hand and follow the instructions outlined on the reverse side.
Your vote is important. Thank you for voting.
q IF YOU DO NOT VOTE VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
| | | Proxy / Voting Instruction Card — BECTON, DICKINSON AND COMPANY
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Proxy Solicited on Behalf of the Board of Directors for the Annual Meeting on January 23, 2018
The undersigned hereby appoints Vincent A. Forlenza, Christopher R. Reidy and Gary DeFazio, and any of them, with full power of substitution, as proxies to attend the Annual Meeting of Shareholders of the Company to be held at 1:00 p.m. EST on Tuesday, January 23, 2018 at the Four Seasons Hotel New York, 57 East 57th Street, New York, New York, and any adjournment thereof, and to vote all shares of the common stock of the Company which the undersigned is entitled to vote upon each of the matters referred to in this proxy and, in their discretion, upon such other matters as may properly come before the meeting. This does not apply to shares held through Company plans, which are addressed below.
Where no choice is made on the reverse side of this form, the proxies will vote FOR all Director nominees; FOR Proposals 2 and 3; and AGAINST Proposal 4.
For plan participants.This card constitutes voting instructions to the respective trustees for any shares of common stock allocated to the undersigned under the Company’s 1996 Directors’ Deferral Plan (“DDP”), the Company’s Deferred Compensation and Retirement Benefit Restoration Plan (“Restoration Plan”) and, when so provided, the Global Share Investment Program (“GSIP”), and also constitutes voting instructions to the respective trustees for a proportionate number of shares of common stock in the DDP, Restoration Plan and GSIP for which voting instructions are not received. To the extent the undersigned has been allocated shares of common stock through the Company’s 401(k) Plan, the undersigned is considered a named fiduciary. As a named fiduciary, this card constitutes instructions to the 401(k) Plan trustee as to how to vote those shares. Shares for which no voting instructions are received by the 401(k) Plan trustee will be voted in the same proportion as those shares for which timely instructions have been received.
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE. If you do not vote by telephone or over the Internet, please sign and return this card using the enclosed envelope.
(Items to be voted appear on reverse side.)
| | | | | | | Change of Address— Please print your new address below.
| | Comments— Please print your comments below.
| | Meeting Attendance
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| | | | | | | | | | | | | | | | | | | Mark the box to the right if you plan to attend the Annual Meeting (for record holders only). | | ☐ |
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| | IF VOTING BY MAIL, COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD. | | + |
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