UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement |
☐ | ||
Confidential, for Use of the Commission Only (as permitted byRule 14a-6(e)(2)) | ||
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant toSection 240.14a-12 |
Merck & Co., Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. | |||
☐ | ||||
| ||||
| ||||
| ||||
| ||||
| ||||
Fee paid previously with preliminary materials. | ||||
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act | |||
| ||||
| ||||
| ||||
0-11 |
Creating Long-Term Value for
Patients and Shareholders
Making Progress on Our Strategic Priorities
| ||
|
| ||
|
|
| ||
| ||
|
| 1 |
Notice of Annual Meeting
of Shareholders
To the Merck Shareholders:You are invited to the Annual Meeting of Shareholders of Merck & Co., Inc. on
Tuesday, May 26, 2020, at 9:00 a.m., at the Bridgewater Marriott, located at
700 Commons Way, Bridgewater, New Jersey 08807.
We will broadcast the Annual Meeting as a live webcast athttps://investors.merck.com/events-and-presentations.
To Merck Shareholders: You are invited to the Annual Meeting of Shareholders of Merck & Co., Inc. on Tuesday, May 24, 2022, at 9:00 a.m. www.virtualshareholdermeeting.com/MRK2022. The purposes of the meeting are to: • Elect the • Consider and act upon a proposal to approve, by non-binding advisory vote, the compensation of our Named Executive Officers; • Consider and act upon a proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for • Consider and act upon a shareholder proposal • Consider and act upon a shareholder proposal regarding • Consider and act upon a shareholder proposal regarding lobbying expenditure disclosure, if properly presented at the meeting; and • Transact such other business as may properly come before the meeting. By order of the Board of Directors, Kelly E. W. Grez Corporate Secretary We have adopted a virtual format for the 2022 Annual Meeting of Shareholders to provide a safe, consistent and convenient experience to all shareholders regardless of location. Vote Right Away—Advance voting methods and deadlines We encourage all shareholders of record to read this proxy statement with care and vote right away using any of the following methods, even if they intend to attend the Annual Meeting. In all cases, have your proxy card or voting instruction form in hand and follow the instructions. In the U.S. or Canada dial toll-free with your (may require free app) Only shareholders listed on the Company’s records at the close of business on March 25, 2022 are entitled to vote. Merck began distributing its Notice of Internet Availability of Proxy Materials, proxy statement, the 2021 Annual Report on Form 10-K and proxy card/voting instruction form, as applicable, to shareholders and to employee benefit and stock purchase plan participants on April 4, 2022. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON May The Notice of Annual Meeting of Shareholders, proxy statement and the The principal executive offices of the Company are located at 2000 Galloping Hill Road, K1-4157, Kenilworth, New Jersey 07033 U.S.A.** * The telephone and internet voting facilities will close at 11:59 p.m. Eastern Time on May 23, 2022. ** You will need the 16-digit control number included on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials. If your shares are held in a stock brokerage account or by a bank or other nominee, your ability to vote by telephone or over the internet depends on your broker’s voting process. Please follow the directions provided to you by your broker, bank or nominee. *** Effective May 1, 2022, the Company’s headquarters will be relocated to Rahway, N.J. and the principal executive offices of the Company will be located at 126 East Lincoln Avenue, Rahway, N.J. 07065 U.S.A. Merck & Co., Inc. Dear Merck Shareholders, It is The For more than 130 years, Merck has used the power of leading-edge science to deliver products that save and improve lives. We remain committed to this purpose as we continue to positively impact global health today and for generations to come. As the COVID-19 pandemic continued throughout 2021, we prioritized protecting the safety of our employees and their families, sustaining the supply of our medicines and vaccines, and supporting patients in our clinical trials. Our inspiration, innovation and ingenuity enabled us to play a leading role in bringing forward important medicines and vaccines to address many of the world’s most challenging diseases, including our investigational antiviral drug molnupiravir, adding to the short list of important medicines that are part of the global effort in the fight against COVID-19. Throughout last year, we continued to transform our business, driving greater focus on our innovative portfolio and increasing our operational efficiency. The successful spin-off of Organon is just one notable example. Today, as a result of our strategic and dynamic actions, our company is more focused, more efficient and faster-growing. Guided by our business and capital allocation strategy, we continued to invest in the discovery, development, production and commercialization of medicines and vaccines. This strengthened the short- and long-term sustainability of our business, and accelerated and augmented our pipeline and portfolio. From a commercial standpoint, our teams executed at the highest levels, achieving strong growth across our key performance drivers, including KEYTRUDA – an established and foundational asset in our portfolio – as well as in vaccines with GARDASIL and GARDASIL 9, and in Animal Health. Overall, it has been a year of significant achievement for Merck in the face of an extraordinarily challenging environment. We advanced our oncology portfolio and made substantial progress in executing our strategy to become the leading oncology company by 2025. We were pleased to receive FDA approvals in several women’s cancers, as well as renal cell carcinoma (adjuvant and advanced) and melanoma (adjuvant) for KEYTRUDA. We are excited that Merck has more than 90 potential approvals in oncology on the horizon. In 2022, our work in women’s and earlier stage therapies continues with additional focus on advancing prostate and colorectal cancer treatments. We are proud that upon receiving Emergency Use Authorization from the FDA in late December 2021, we successfully delivered initial molnupiravir shipments to the U.S. government and to other countries where molnupiravir has been authorized for use, including the UK and Japan. This is a testament to Merck’s agility and ability to establish critical partnerships with governments, public health agencies, key global stakeholders, and across various links in the international supply chain. Our ground-breaking access strategy has been a priority from the start and has accelerated the timely distribution of molnupiravir to patients in need globally. Merck & Co., Inc. 3 In line with our access strategy, we allocated up to 3 million courses of molnupiravir to UNICEF throughout the first half of 2022 for distribution in more than 100 low- and middle-income countries. This was in addition to our agreements with the Medicines Patent Pool and other generic manufacturers to make molnupiravir available following local regulatory authorizations or approvals. Our Animal Health business continues to expand with growth across species and geographies. Growth in companion animal product sales were led by the BRAVECTO parasiticide line and our line of companion vaccines, while livestock animal product sales showed higher demand globally in the poultry, ruminant and swine sectors. The Animal Health business remains very well positioned to grow faster than the overall market well into the future. We are confident in the strength and durability of Merck’s business model for this decade and beyond, and we are laser-focused on executing to achieve our goals for long-term growth and sustainability. We have important growth drivers with our durable products that include GARDASIL and GARDASIL 9, which we believe can double sales by 2030. In addition to our HPV vaccines, our vaccines portfolio and pipeline are growing, including with VAXNEUVANCE, which is under priority review by the FDA to expand its use to infants and children for the prevention of invasive pneumococcal disease. We further strengthened our late-stage pipeline through our acquisition of Acceleron Pharma, bringing in sotatercept which addresses pulmonary arterial hypertension, as well as other compounds designed to address areas of serious unmet need in cardiovascular disease. These new additions complement our growing internal cardiometabolic pipeline of new drugs. In addition to Acceleron, we also completed the acquisition of Pandion Therapeutics, which enabled us to bring in an early-stage asset, leverage our immunology learnings from our immuno-oncology research and begin to extend our focus into autoimmune diseases. Business development will remain an imperative strategic priority that helps bolster and augment our pipeline, drives stronger performance, and enhances our long-term potential. We will continue to aggressively pursue compelling external science to supplement our internal pipeline, leveraging a science-driven and portfolio-informed approach. Merck will continue improving patient outcomes and contributing to a healthier world, while also delivering value for our shareholders and all stakeholders. We are proud of our legacy and passionate about our future, as we work with speed, urgency, and agility to bring forward innovations that address unmet needs. For over a century, Merck has been propelled by bold ideas and innovation that advance human health. We know the world needs more of what Merck can deliver now – this is what inspires us to continue helping and healing patients around the world as we move forward. Thank you for your confidence and support of our Company. We hope you will participate in the Annual Meeting by attending virtually or by voting, as promptly as possible, through other acceptable means as described in this proxy statement. Your participation is important, so please exercise your right to vote. Kenneth C. Frazier Robert M. Davis Merck & Co., Inc. A Message from Merck’s Independent Lead Dear Merck Shareholders, My fellow Directors and I In addition to management succession planning, the independent members of the Board regularly review the Board’s leadership structure and will do so again in 2022. Our Board We Independent Lead Merck & Co., Inc. 5 11 12 13 14 17 18 19 20 20 Criteria for Board Membership and Director Nomination Process 21 23 23 24 26 Political Contributions and Lobbying Expenditure Oversight and Disclosure 27 27 27 28 29 30 30 31 33 41 44 45 46 47 48 51 61 Compensation and 61 Merck & Co., Inc. 6 This summary highlights information contained elsewhere in this proxy statement and does not contain all of the information that you should consider. You should read the entire proxy statement carefully before voting. Date and Time Tuesday, May 9:00 a.m. ET Record Date March Location Voting Matters Board’s Recommendation Proposal 1 Election of Directors Proposal 2 Non-binding Advisory Vote to Approve the Compensation of our Named Executive Officers (Say-on-Pay) Proposal 3 Ratification of Appointment of Independent Registered Public Accounting Firm for Shareholder Proposals Proposal 4 Shareholder Proposal Proposal 5 Shareholder Proposal Regarding Proposal 6 Shareholder Proposal Regarding Lobbying Expenditure Disclosure Business Highlights in $ Capital AnnualizedTotal Shareholder Return(1) Year-End 2019 Year-End 2021 9.8% (1) Relative Total Shareholder Return, a component of our Performance Share Unit program that is described on page 55, is calculated on a different basis. Merck & Co., Inc. Proxy Summary 7 Below is a list of our Annual Base Salary$ Target Annual Incentive% Target Long-Term Target TDC Increase%(1) 2021 NEOs Robert M. Davis Chief Executive Officer, President and Former Chief Financial Officer ......................................................................................................................................................... Kenneth C. Frazier Executive Chairman and Former Chief Executive Officer ......................................................................................................................................................... Caroline Litchfield Executive Vice President and Chief Financial Officer ......................................................................................................................................................... Frank Clyburn Former Executive Vice President and President, Human Health(4) ......................................................................................................................................................... Richard R. DeLuca, Jr. Executive Vice President and President, Merck Animal Health ......................................................................................................................................................... Dean Li, M.D., Ph.D. Executive Vice President and President, Merck Research Laboratories Target Total Direct Compensation (“TDC”) is defined as the sum of annual base salary, target annual cash incentive and target long-term incentive. This column reflects the increase in Target TDC from 2020 to 2021 for those who were NEOs in 2020. Mr. Clyburn resigned from his position as Executive Vice President and President, Variable Compensation is Merck’s compensation programs are designed to align the interests of our executives with the interests of our Annual Cash Incentive The Company Scorecard (described in more detail on page Merck & Co., Inc. Proxy Summary Long-Term Incentive (“LTI”) The long-term incentive program, consisting of a mix of PSUs and stock options, provides our NEOs with the opportunity to own Merck stock, directly linking a substantial portion of their compensation to the returns realized by our shareholders. The 2019 PSU program (described in more detail on page 57) paid out at 140% based on achievement of cumulative two-year OCF, cumulative two-year EPS and three-year R-TSR metrics during the performance period, weighted at 25%, 25% and 50%, respectively. As previously disclosed, cumulative two-year OCF and EPS metrics were used due to the complexities associated with disentangling our Organon business from a multi-year financial plan. Organon was successfully spun off in June 2021. Say-On-Pay Advisory Vote(Page In 2021, shareholders continued their support for our executive compensation programs with approximately 91% of the votes cast voting in favor of approving the say-on-pay proposal. Consistent with the Company’s strong interest in shareholder engagement and our pay-for-performance approach, the Compensation and Management Development Committee continues to evaluate our executive compensation program to ensure alignment between the respective interests of our executives and shareholders. The C&MD Committee did not make significant changes to our executive compensation program in 2021 as a direct result of the most recent say-on-pay vote. We ask that our shareholders approve, on an advisory basis, the compensation of our NEOs as further described in Proposal 2 on page 42. For additional information, please refer to the CD&A beginning on page 43 of Shareholder Engagement and Feedback(Page Merck communicates regularly with shareholders to better understand their perspectives and has established a shareholder engagement program that is both proactive and cross-functional. In addition, our Lead Director, We will continue to engage with shareholders on a regular basis to better understand and consider their views on our executive compensation programs, Board Composition and Refreshment In selecting Director nominees, the Board considers its composition, including its diversity, and the skills, areas of expertise and experience Considering the factors noted above, Merck & Co., Inc. Proxy Summary 9 Nominees for Director(Page The following provides summary information about each Director nominee. Each Director stands for election annually. Detailed information about each individual’s background, Leslie A. Brun Lead Independent Director Kenneth C. Frazier Management Penn Integrates Knowledge Professor of Health Equity and Health Policy, University of Pennsylvania Thomas W. Smith Professor of Medicine and Genetics, Harvard Medical School, and Director, Cardiovascular Genetics Center, Brigham and Women’s Hospital Chairman, Chief Executive Officer and President, Northrop Grumman Corporation Number of Meetings in 2019 Robert M. Davis Management Kenneth C. Frazier Management Thomas H. Glocer Lead Director Penn Integrates Knowledge Professor of Health Equity and Health Policy, University of Pennsylvania Bren Professor of Biology and Chemistry, California Institute of Technology Paul B. Rothman, M.D. Dean of Medical Faculty and Vice President for Medicine, The Johns Hopkins University, and CEO, Johns Hopkins Medicine Chairman, Hewlett Packard Enterprise Company; Former Chief Executive Officer and Director, Alcatel-Lucent Thomas W. Smith Professor of Medicine and Genetics, Harvard Medical School, and Director, Cardiovascular Genetics Center, Brigham and Women’s Hospital Former Chairman of the Board, President and Chief Executive Officer, 3M Company Chairman, Chief Executive Officer and President, Northrop Grumman Corporation Number of Meetings in 2021 9 5 6 5 * Merck & Co., Inc. Proxy Summary Our Our Director nominees possess broad expertise, skills, experience and perspectives that will facilitate the strong oversight and strategic direction required to govern the Company’s business and strengthen and support senior management. As illustrated by the following Board CEO Leadership Financial Scientific Health Care Industry Global Strategy & Operations Marketing or Public Relations Digital/Technology Public Company Governance Public Policy & Regulation Talent Management Capital Markets Experience Merck & Co., Inc. 11 The Board has the legal responsibility for overseeing the affairs of the Company and for the overall performance of the Company. The Board’s primary mission is to represent and protect the interests of our shareholders. To that end, the Board selects and oversees the senior management team, which is charged with conducting Merck’s daily business. The Board has adopted corporate governance principles (the “Policies of the Board”) that, together with our Restated Certificate of Incorporation, By-Laws and Board committee charters, form the governance framework for the Board and its committees. The Policies of the Board cover a wide range of subjects, including the philosophy and functions of the Board, the composition of the Board, the independent Lead Director’s responsibilities, categorical independence standards, Director qualifications, assessment of the Board, committee responsibilities, Director transition and retirement, service on other boards, Director compensation, stock ownership guidelines, chairmanship of meetings, Director orientation and continuing education, incumbent Director resignation and related person transactions. From time to time, the Board revises the Policies of the Board and Board committee charters in response to changing regulatory requirements, evolving best practices and the perspectives of our shareholders and other constituents. Most recently, in Governance Materials The following items relating to corporate governance at Merck are available on our website at We believe good corporate governance is essential to achieving long-term shareholder value. We are committed to governance policies and practices that serve the interests of our Company and its many stakeholders. For this reason, we devote considerable time and resources to making sure that our policies reflect our values and business goals, we have an effective corporate governance structure, and we operate in an open, honest and transparent way. In addition, we evaluate our practices against prevailing best practices as well as emerging and evolving topics identified in a variety of ways, including through shareholder engagement and corporate governance organizations. Merck & Co., Inc. 2022 Proxy Statement Corporate Governance Board Leadership Structure We highlight some significant aspects of our corporate governance practices below. Independence • We have a strong independent Lead Director. • Our independent Directors convene regular executive sessions. • All four of our standing Board committees (Audit, Compensation and Management Development, Governance and Research) are comprised solely of independent Directors. • Twelve of our fourteen Director nominees are independent. Accountability • Every Director stands for re-election every year. • Directors are elected by majority vote. • An incumbent director who does not receive a majority vote must tender his/her resignation, and the Governance Committee must promptly make a recommendation as to the tendered resignation. The Board must act on the Governance Committee’s recommendation within 90 days after certification of the vote and publicly disclose its decision and rationale. Best practices • Our Board of Directors as a whole, and each individual • The Board actively engages in CEO succession planning. • The Board is diverse in terms of gender, ethnicity, • Our Board policies include an express Diversity Policy. Transparency • We have strong control over our political spending and disclose corporate political activity and contributions in the U.S., Canada and Australia. • We disclose aspects of our public policy engagement, including our key lobbying/advocacy issues. Board oversight • The full Board and each individual Board committee is responsible for overseeing risk. • The full Board oversees corporate strategy. Alignment with shareholder interests • Our officers and directors are prohibited from engaging in hedging, pledging or short sale transactions involving Company stock. • Executives and Directors must hold prescribed meaningful amounts of Company stock. • We have a robust shareholder engagement program. • We have a proxy access provision in our By-Laws under which shareholders who own 3% of our stock for at least three years may nominate up to 20% of the members of our Board. • Holders of 15% of our shares may call a special meeting. • We do not have a shareholder rights plan (also known as a poison pill). • We do not have any supermajority voting provisions. Compensation practices • We have conducted an annual say-on-pay advisory vote since 2011. • All incentive compensation paid to executives is subject to a clawback policy. • Our incentive compensation awards are designed to align pay with performance. • Our Compensation and Management Development Committee uses an independent compensation consultant. Operating Responsibly • We have a longstanding commitment to operating responsibly. • All of our employees must adhere to a robust Code of Conduct. The Board is highly empowered and engaged, and the independent Directors evaluate our Board leadership structure at least annually. The Board believes that the Company and our shareholders are best served by allowing the Board to exercise its judgment regarding the most appropriate leadership structure for the Company and the Board at a given time. The Board’s discretion should not be unduly constrained in advance because the most appropriate leadership structure at any given time will depend on a variety of factors, including the leadership, skills and experience of each of the CEO, the independent Lead Director and the other members of the Board, as well as the needs of the business and other factors. Currently, the Board is led by Kenneth C. Frazier, who serves as the Executive Chairman of the Board, and by Thomas H. Glocer, an independent Director, who serves as the Board’s Lead Director. Merck & Co., Inc. 2022 Proxy Statement Corporate Governance Lead Director 13 The current structure is the result of the Board’s CEO succession planning and regular evaluation of the Company’s leadership structure. In February 2021, the Board unanimously elected Robert M. Davis to succeed Mr. Frazier as CEO and also to become a member of the Board, effective July 1, 2021. The Board also determined that Mr. Frazier will continue to serve as Executive Chairman for a transition period to be determined by the Board. Mr. Glocer was elected independent Lead Director by the independent members of the Board in September 2021 following the resignation of Les Brun due to his decision to become chairman and chief executive officer of Ariel Alternatives, LLC, a subsidiary of Ariel Investments, LLC, a private equity initiative being created to help scale minority-owned businesses to serve as tier 1 suppliers to Fortune 500 companies. Having an independent Lead Director vested with key duties and responsibilities and four independent Board committees chaired by independent Directors promotes strong independent oversight of the Executive Chairman, the CEO and the rest of our management team. As Executive Chairman, Mr. Frazier presides over meetings of the Board and shareholders and focuses on Board operations and governance matters. He serves as the liaison between the Board and management, working closely with the independent Lead Director and our CEO. Mr. Davis is in charge of the general supervision, direction and control of the business and affairs of the Company subject to the Board’s overall oversight. The Board meets in executive session without Mr. Frazier and Mr. Davis at each regular Board meeting. During these executive sessions led by the independent Lead Director, the Directors discuss topics such as the Board’s leadership structure, succession planning for the CEO and key management positions, and points of follow-up with management on strategic issues. Merck’s independent Lead Director is appointed by the independent members of the Board of Directors to a three-year term. The position of Lead Director has a clear mandate and significant authority and responsibilities set forth in the Policies of the Board, including: Board Meetings and Executive Sessions • The authority to call meetings of the independent members of the Board. • Presiding at all meetings of the Board at which the Executive Chairman is not present, including executive sessions of the independent members of the Board. Communicating with Management • Serving as the principal liaison on Board-wide issues between the independent members of the Board, the Executive Chairman and the CEO. Agendas • Approving meeting agendas and information sent to the Board, including supporting material for meetings. Meeting Schedules • Approving meeting schedules to ensure there is sufficient time for discussion of all agenda items. Communicating with Shareholders and Stakeholders • Being available for consultation and direct communication with major shareholders, as appropriate. • Serving as a liaison between the Board and shareholders on investor matters. Board Performance Evaluation • Leading the annual performance evaluation of the Board. Chairman and CEO Performance Evaluations • Leading the annual performance evaluation of the Executive Chairman and the CEO. CEO Succession • Leading the CEO succession planning process. As further described below, the Board’s four standing committees, each of which is composed solely of independent Directors, also play an active role in the Board’s leadership structure. The independent chairs of each of these committees provide strong leadership to guide the important work of the Board. They work with the Company’s senior executives to ensure the committees are discussing key strategic risks and opportunities of the Company. The Board believes the Company and its shareholders are well-served by the current leadership structure for all the foregoing reasons. Merck & Co., Inc. 2022 Proxy Statement Corporate Governance Board Meetings and Committees In 2021, the Board of Directors met seven times. Under the Policies of the Board, Directors are expected to attend regular Board meetings, applicable Board committee meetings and annual shareholder meetings. The independent Directors of the Board met in 12 executive sessions in 2021. The Lead Director of the Board presided over the executive sessions. All 13 Directors nominated for election at the 2021 Annual Meeting of Shareholders attended the meeting. All Directors attended at least 75% of the meetings of the Board and of the committees on which they served in 2021. The Board of Directors has four standing committees, each of which is made up solely of independent Directors: Audit Committee; Compensation and Management Development (C&MD) Committee; Governance Committee; and Research Committee. In addition, the Board from time to time establishes special purpose committees. All of our standing committees are governed by Board-approved charters, which are available on our website at www.merck.com/company-overview/leadership/board-of-directors/. The committees evaluate their performance and review their charters annually. Additional information about the committees is provided below. As non-independent directors, Mr. Frazier and Mr. Davis are not members of any Board committee, but may participate in meetings at the request of the committees. Audit Committee Pamela J. Craig Chair Overview The Audit Committee oversees our accounting and financial reporting processes, internal controls and audits and consults with management, the internal auditors, and the independent auditors on, among other items, matters related to the annual audit, the published financial statements and the accounting principles applied. The Audit Committee has established policies and procedures for the pre-approval of all services provided by the independent auditors (as described on page 83 of this proxy statement) and for the approval of the annual internal audit plan as executed by the internal audit organization. The Audit Committee’s Report is included on page 83 of this proxy statement. The Primary Functions of this Committee are to: • Appoint, evaluate and retain our independent auditors; • Maintain direct responsibility for the compensation, termination and oversight of our • Oversee the Company’s compliance with legal & regulatory requirements, including monitoring compliance with the Foreign Corrupt Practices Act and the Company’s policies on ethical business practices and reporting on these items to the Board; • Establish procedures for the receipt, retention and treatment, on a confidential basis, of • Oversee the Enterprise Risk Management process; • Regularly meet with the Chief Information Officer regarding the Company’s information technology and have primary responsibility for overseeing the Company’s cybersecurity risk management program; and • Review any significant issues concerning litigation and contingencies with management, counsel, and the independent public accountants. Other Members Mary Ellen Coe Stephen L. Mayo, Ph.D. Paul B. Rothman, M.D. Christine E. Seidman, M.D. Kathy J. Warden Number of Meetings in 2021: 9 Financial Experts on Audit Committee The Board has determined that each of Ms. Craig and Ms. Warden is an “audit committee financial expert” as defined by the SEC and has accounting or related financial management expertise as required by NYSE Corporate Governance Listing Standards. Merck & Co., Inc. 2022 Proxy Statement Corporate Governance Board Meetings and Committees 15 Compensation and Management Development Committee Patricia F. Russo Chair Overview The C&MD Committee annually reviews and approves corporate goals and objectives relevant to the TDC opportunity for the Executive Chairman, the CEO and certain other officers; evaluates their performance against these goals and objectives; and, based on this evaluation, sets their target TDC and determines payouts under our variable compensation plans. The details of the processes and procedures involved are described in the Compensation Discussion and Analysis section of this proxy statement beginning on page 43. The independent members of the full Board ultimately make the final decisions regarding the Executive Chairman and the CEO’s TDC. In 2021, the name of the C&MD Committee was changed from the Compensation and Benefits Committee to better reflect the role it plays in assisting the Board in its oversight of the Company’s broader human capital matters. The C&MD Committee Report is included on page 61 of this proxy statement. The Primary Functions of this Committee are to: • Establish and maintain a competitive portfolio of fair and equitable compensation and benefits policies, practices and programs designed to attract, engage and retain a workforce that helps the Company achieve immediate and long-term success; • Discharge the Board’s responsibilities for compensating our officers; • Oversee/monitor – The competence and qualifications of our executive officers, – Officer succession, – The soundness of the organizational structure, – The Company’s programs, policies and practices related to its management of human capital resources including talent management, culture, diversity, equity and inclusion, and provide input on the same, and – Other related matters necessary to ensure the effective management of the business; and • Review the Compensation Discussion and Analysis for inclusion in our proxy statement. Other Members Thomas H. Glocer Risa J. Lavizzo-Mourey, M.D. Inge G. Thulin Peter C. Wendell Number of Meetings in 2021: 5 Compensation and Management Development Committee Interlocks and Insider Participation There were no C&MD Committee interlocks or insider (employee) participation during 2021. Governance Committee Thomas H. Glocer Chair | Lead Director Overview The Governance Committee oversees the Company’s corporate governance, including the practices, policies and procedures of the Board and its committees. Further, the Governance Committee annually reviews the size, structure and needs of the Board and Board committees, reviews possible candidates for the Board and recommends Director nominees to the Board for approval. The details of the review process and assessment of candidates are described under “Criteria for Board Membership and Director Nomination Process” beginning on page 21 of this proxy statement. The Primary Functions of this Committee are to: • Coordinate an annual evaluation of Board performance, and review Board compensation, related person transactions and D&O indemnity and fiduciary liability insurance coverage for the Company’s officers and non-employee Directors; • Oversee the Board’s Incumbent Director Resignation Policy; • Review the Company’s: Good Manufacturing Practice compliance, including with respect to internal and external manufacturing as well as internal and external audits; worker safety practices; and privacy policies and practices; • Review social, political and economic trends that affect our business; review the positions and strategies we pursue to influence public policy; and • Assist the Board in its oversight of the Company’s ESG matters and strategy related thereto, including: (i) reviewing public policy positions, strategy regarding political engagement, and corporate responsibility initiatives with significant financial and/or reputational impact, as appropriate, and monitoring and evaluating the Company’s corporate responsibility programs and activities, including the support of charitable, political and educational organizations and political candidates and causes, (ii) reviewing the Company’s environmental sustainability practices, its supply chain manufacturing strategy and governance, as well as its third-party sourcing programs, and (iii) ensuring that applicable ESG matters are subject to review by Board committees with relevant areas of competency. Other Members Pamela J. Craig Patricia F. Russo Inge G. Thulin Kathy J. Warden1 Number of Meetings in 2021: 6 (1) Ms. Warden was appointed to the Governance Committee as of March 22, 2022. She previously served on the Research Committee. Merck & Co., Inc. 2022 Proxy Statement Corporate Governance Board Meetings and Committees Research Committee Paul B. Rothman, M.D. Chair Overview The Research Committee oversees the overall strategy, direction and effectiveness of the The Primary Functions of this Committee are to: • Identify areas and activities that are critical to the success of our product and vaccine • Keep the Board apprised of this evaluation process and findings and make appropriate • Assist the Board in its oversight responsibilities to ensure compliance with the highest Other Members Mary Ellen Coe Risa J. Lavizzo-Mourey, M.D.1 Stephen L. Mayo, Ph.D. Christine E. Seidman, M.D. Peter C. Wendell Number of Meetings in 2021: 5 (1) Dr. Lavizzo-Mourey was appointed to the Research Committee as of March 22, 2022. She previously served on the Governance Committee. Merck & Co., Inc. 2022 Proxy Statement Corporate Governance Board’s Role in Strategic Planning 17 Board’s Role in Strategic Planning The Board — acting both as a whole and through its four standing committees — is fully engaged and involved in the Company’s strategic planning process. All of our Directors have an obligation to keep informed about the Company’s business and strategies, so they can provide guidance to management in formulating and developing plans and knowledgeably exercise their decision-making authority on matters of importance to the Company. The Board’s oversight and guidance are inextricably linked to the development and review of the Company’s strategic plan. By exercising sound and independent business judgment on the strategic issues that are important to the Company’s business, the Board facilitates Merck’s long-term success. Our Strategic Planning Cycle Merck & Co., Inc. Corporate Governance Risk Oversight Overseeing risk is an important component of the Board’s engagement on strategic planning. The Board’s approach to overseeing risk management leverages the Board’s leadership structure and ensures the Board oversees risk through both a Company-wide approach and specific areas of competency. A summary of this risk oversight approach follows: Board of Directors Oversees risk through Company-wide Enterprise Risk Management (“ERM”) process and functioning of Board Committees. Audit Committee Responsibility for reviewing ERM process to ensure it is robust and functioning effectively. Primary responsibility for overseeing the Company’s risk management program related to its cybersecurity. Oversees risk relating to finance, business integrity and Sarbanes-Oxley reporting through its interactions with the Chief Financial Officer, Chief Ethics and Compliance Officer, Controller and the head of internal audit. Compensation & Management Development Committee Evaluates relationships between risk and rewards as it relates to our executive compensation program. When setting incentive plan targets each year, the C&MD Committee is aware of the risk associated with drug pricing, among other things, and ensures our plans do not incentivize risky behavior in order to meet targets. Oversees the Company’s programs, policies and practices related to its management of human capital resources. Management Identification, assessment and management of risk through Company-wide ERM process. Governance Committee Oversees the Company’s corporate governance, including the practices, policies and procedures of the Board and its committees, considers the size, structure and needs of the Board, reviews possible candidates for the Board, and recommends Director nominees to the Board for approval. Plays a role in compliance oversight, including in the areas of manufacturing quality, privacy, and worker safety. Assists the Board in its oversights of ESG matters and strategy. Research Committee Oversees overall strategy, direction and effectiveness of the Company’s research and development operations. The ERM process allows for full Board oversight of the most significant risks facing the Company and was established to ensure a complete Company-wide approach to evaluating risk over six distinct but overlapping risk areas: Responsibility and Reputation Risks that may impact the well-being of the Company, its employees, customers, patients, communities or reputation Strategy Macro risks that may impact our ability to achieve long-term business objectives Operations Risks in operations and cybersecurity that may impact our ability to achieve business objectives Compliance Risks related to compliance with laws, regulations and Company values, ethics and policies Reporting Risks to maintaining accurate financial statements and timely, complete financial disclosures Safety Risks to employee, patient or community health and safety Merck & Co., Inc. 2022 Proxy Statement Corporate Governance 19 Our ERM process seeks to identify emerging risks and address them appropriately to limit negative consequences to the Company or the data it maintains. Its goal is to provide an ongoing review, implemented across the Company and aligned to Company values and ethics, to identify and assess risk and to monitor risk and agreed-upon mitigating action. Furthermore, if a risk transforms into an incident, the ERM process ensures that effective response and business continuity plans are in place. If the ERM process identifies a material risk, it will be elevated through the CEO and the Executive Team to the full Board for consideration. Through the ERM process, each Board committee oversees specific areas of risk relevant to the committee through direct interactions with the CEO, members of the Company’s Executive Team and the heads of business divisions, compliance and corporate functions. A committee may address risks directly with management or, where appropriate, may elevate a risk for consideration by the full Board or another Board committee. The Board committees also oversee risk based on their specific areas of competency. Additional detail with respect to certain key areas of oversight are provided below. As our Company becomes more dependent on technology and data, the need for a robust cybersecurity, privacy, and technology risk management program is increasingly critical. We have developed and implemented a comprehensive program designed to protect the confidentiality of sensitive information, ensure the integrity of critical data and automated processes, and safeguard the availability of our information technology capabilities. Cybersecurity has been an area of management attention for over two decades and we have aligned our cybersecurity program to the National Institute of Standards and Technology (NIST) Cybersecurity Framework and the Payment Card Industry Data Security Standard (PCI-DSS). We have implemented appropriate policies, processes, and technology to reduce the likelihood or impact of a breach and have cyber insurance. We have an employee awareness program to regularly educate our workforce on the cybersecurity risks they face and how they can operate safely. We regularly assess our cybersecurity capabilities using third party security firms including an annual assessment of our adherence to the PCI-DSS standard. We have also developed and continually evolve our Global Privacy Program to promote organizational accountability for privacy, data governance, and data protection across our business and with our collaborative partners and suppliers. The program helps us uphold our commitment to data security and privacy, including maintaining 100% compliance to regulatory requirements for active incident monitoring, risk/harm analysis, and on-time notification of data breaches. Our commitment applies not only to our Company’s information, but also to the information entrusted to us by others. We were the first company in the world to obtain regulatory certification in the European Union for Binding Corporate Rules based in part on our existing Asia Pacific Economic Cooperation Cross Border Privacy Rules certification. We are aware that we must continuously evolve our controls to address new threats, adhere to changing laws and standards, and reduce the risk associated with the introduction of new, innovative technology. While everyone at the Company plays a part in information security, cybersecurity, and data privacy, oversight responsibility is shared by the Board, its committees, and management. Responsible Party Board Participates in periodic reviews and discussions dedicated to the Company’s risks related to the protection of our data and systems including cybersecurity and privacy. Audit Committee Primarily responsible for overseeing the Company’s risk management program related to cybersecurity. The Audit Committee provides feedback on the Company’s framework for assessing, prioritizing and mitigating cybersecurity risk and receives periodic updates based on this framework, including from third-party and internal audit assessments. Governance Committee Responsible for oversight in the area of privacy and receives periodic updates regarding the Company’s Global Privacy Program. Management Responsible for implementing and managing the Company’s framework for assessing, prioritizing and mitigating cybersecurity risk. Manages the Company’s Global Privacy Program. Responds to incidents and issues in a timely manner. Provides periodic updates to the Board and or its committees, as applicable. Merck & Co., Inc. 2022 Proxy Statement Corporate Governance A Strategic Approach to ESG Environmental, Social and Governance (“ESG”) Matters The work to address our environmental footprint and social impact begins with the Board, which as a whole and through its committees, has responsibility for overseeing the Company’s ESG matters. In general: Responsible Party Board Provides oversight with respect to the Company’s ESG matters and strategy related thereto. Governance Committee Monitors and assists the Board in its oversight of the Company’s ESG matters, including ensuring that applicable ESG matters are subject to review by Board committees with relevant areas of competency, by monitoring and evaluating corporate responsibility programs and activities, reviewing strategy regarding political engagement and reviewing environmental sustainability practices. Compensation & Management Development Committee Assists the Board with its oversight of human capital management, including the Company’s policies and practices related to talent management, culture, diversity, equity and inclusion. This includes maintaining fair hiring and promotion practices and a commitment to sustain pay equity for Merck employees of all genders, races and ethnicities. Audit Committee Monitors compliance with the Company’s policies on ethical business practices. Research Committee Monitors compliance with the highest standards of scientific integrity in the conduct of the Company’s research and development. Management Management is responsible for reviewing, refining, and implementing long-term ESG strategy, including through its Public Policy & Responsibility Council comprising diverse cross-functional members, and for updating the Board and its committees, as applicable, on ESG matters. A Strategic Our ESG strategy applies our global resources and investments to the priority areas that matter most to society and to our business: Access to Health Employees Environmental Sustainability Ethics & Values Addressing these focus areas enables us to better reach those in need with our medicines and vaccines; to help to build robust, durable health systems worldwide; to develop a diverse, inclusive and healthy global workforce; to demonstrate our environmental stewardship in our operations and in our supply chain; to enhance our relationships with key stakeholders; and to continue to contribute toward the UN Sustainable Development Goals (“SDGs”). This commitment to a high level of ESG performance helps to drive sustainable value for our business and for society. Advancing Health Equity is Key to our Access Strategy As a research-intensive biopharmaceutical company, our role is to discover and develop innovative medicines and vaccines that address unmet medical needs and some of the world’s greatest health threats. As part of this pursuit, we have a responsibility to an increasingly diverse set of patients, including addressing the systemic issues that have long impacted underrepresented groups. Our global approach to Access to Health is one of our four ESG focus areas. Our strategy is driven by our Access to Health Guiding Principles, which span the areas of discovery and invention, availability, affordability, and strengthening systems and addressing inequity. In addressing access, we are focused on improving people’s health, contributing to social and economic development and helping to achieve the United Nations’ Sustainable Development Goal for Good Health and Well-Being (SDG 3) through our health equity efforts. Corporate Governance Criteria for Board Membership and Director Nomination Process 21 Pursuing health equity, the idea that everyone has a fair and just opportunity to be as healthy as possible, is key to our access strategy. Addressing preventable differences in the burden of disease and health outcomes with people who are underserved can make a meaningful, measurable and lasting impact in patients’ lives. In December 2021, we further underscored our legacy of catalyzing solutions that improve health equity by announcing an additional $150 million commitment through Merck for Mothers. This program promotes safe, high-quality, and respectful maternal care in underserved communities, and we aim to reach 25 million women through these initiatives and services by 2025. Merck for Mothers will continue to focus efforts on countries where the need is great, including India, Nigeria, Kenya and the U.S., bringing on new collaborators and strategic investments that further scale the impact of the current 100+ programs across 50+ global sites. We also pursue strategies to provide direct access to our products to those who need them. A recent example are the non-exclusive voluntary licensing agreements we have entered into with the Medicines Patent Pool and established generic manufacturers. We aim to accelerate and facilitate affordable global access to molnupiravir—our investigational oral antiviral COVID-19 medicine—in more than 100 low- and middle-income countries following approvals or emergency authorization by local regulatory agencies. When market-based solutions are inadequate or unavailable, we also pursue programs to provide direct access to our medicines and vaccines, including product donations and patient assistance programs. This includes our longstanding support of the Mectizan® Donation Program (“MDP”). The MDP provides our Company’s product Mectizan—as much as needed, for as long as needed—with the goal to help eliminate river blindness and lymphatic filariasis and provide equitable solutions in remote communities where health services are limited. Through these initiatives, we continue to challenge ourselves to innovate, make ambitious commitments, and form collaborative partnerships to advance health equity. $1 Billion Bond Issued to Support ESG Strategy In December 2021, we announced a $1 billion sustainability bond to support eligible projects and partnerships, including: Access to essential health care services (affordability and addressing barriers to health, infectious disease R&D) Socioeconomic advancement and empowerment (employee/supplier diversity and inclusion, health literacy) Renewable energy generation Energy efficiency Green buildings Sustainable water and wastewater management Pollution prevention and control For more information on this bond, please see our Company’s Investor Relations page at www.merck.com/investor-relations/. Criteria for Board Membership and Director Nomination Process The Governance Committee is responsible for screening and nominating director candidates to be considered for election by the Board. As part of this process, the Governance Committee considers the composition of the Board at the time, including the depth of experience, balance of professional skills, expertise and diversity of perspectives represented by its members at the time. The Governance Committee evaluates prospective nominees identified on its own initiative as well as candidates recommended by other Board members, management, shareholders or search consultants. In 2021, the Governance Committee retained a search firm to identify possible candidates who meet the Board’s qualifications, to interview and screen such candidates (including conducting reference checks) and to assist in scheduling candidate interviews with Board members. Merck & Co., Inc. 2022 Proxy Statement Corporate Governance Criteria for Board Membership and Director Nomination Process To be considered for membership on the Board, a candidate must meet the following minimum criteria: be of proven integrity with a record of substantial achievement in an area of relevance to the Company; have demonstrated ability and sound judgment that usually will be based on broad experience; be able and willing to devote the required amount of time to the Company’s affairs, including attendance at Board meetings, Board committee meetings and annual shareholder meetings; possess a judicious and critical temperament that will enable objective appraisal of management’s plans and programs; and be committed to building sound, long-term Company growth. Individual Experience, Qualifications, Attributes and Skills In its regular discussions regarding Board composition — and especially in conjunction with the annual Board and committee evaluations — the Governance Committee works with the Board to determine the appropriate mix of professional experience, expertise, educational background and other qualifications that are particularly desirable in light of our current and future business strategies. The Governance Committee uses this input in its planning and Director search process. In addition to the five broad criteria listed above, the following chart highlights the background, experience and skills the Board considers for future candidates. These attributes are amply represented by our current Director nominees. Director Nominee Skills CEO Leadership Experience serving as a chief executive officer at a publicly traded or private organization Financial Experience or expertise in financial accounting and reporting processes or the financial management of a major organization Scientific Scientific expertise related to the health care industry and the Company’s long-term commitment to research and development strategies Health Care Industry Experience with complex issues within the health care industry Global Strategy & Operations Leadership experience overseeing and/or driving strategic direction and growth of an organization globally Marketing or Public Relations Experience in digital marketing, advertising, social media and consumer insight functions, including product development and brand building Digital/Technology Experience or expertise in information technology (including cybersecurity and data privacy) or the use of digital media or technology to facilitate business objectives Public Company Governance Experience as a board member of another publicly-traded company Public Policy & Regulation Experience with public policy and regulation in the healthcare industry or other highly-regulated industries Talent Management Experience in executive recruiting, succession planning and talent management, including retaining key talent and driving employee engagement Capital Markets Experience Experience in corporate lending or borrowing, capital market transactions, significant mergers or acquisitions, private equity or investment banking Diversity As a Company, Merck knows that diversity and inclusion are fundamental to the Company’s success and core to future innovation. As a Board, diversity is an important factor considered when identifying prospective nominees for our Board, and the Policies of the Board include a formal diversity policy. The policy reflects the Board’s longstanding commitment to Merck & Co., Inc. 2022 Proxy Statement Corporate Governance 23 ensuring that Directors represent diverse perspectives and areas of expertise important to fostering the Company’s business success. The policy provides that the Board does not discriminate against potential Directors on the basis of gender, race, age, sexual orientation or ethnic and national background and that having a board composed of diverse individuals is an important contributor to the Board’s overall effectiveness. Shareholder Recommendations of Director Candidates The Governance Committee will consider recommendations for Director candidates made by shareholders and will evaluate those individuals using the same criteria applied to other candidates. Shareholder recommendations must be sent to the Office of the Secretary, Merck & Co., Inc., 2000 Galloping Hill Road, K1-4157, Kenilworth, New Jersey 07033 U.S.A., and must include detailed background information regarding the recommended candidate that demonstrates how that candidate meets the Board membership criteria. Candidates are evaluated initially based on materials submitted by them or on their behalf. If a proposed or recommended candidate continues to be of interest to the Governance Committee, we obtain additional information through inquiries to various sources and, if warranted, interviews. Management Succession Planning Succession planning and talent development are important at all levels within the Company. The Board regularly reviews short- and long-term succession plans for the CEO and other executive officers. In assessing possible CEO candidates, the independent Directors identify the skills, experience and attributes they believe are required for an effective CEO in light of the Company’s global business strategies, opportunities and challenges. More broadly, the Board engages with the Company’s leadership team on matters of talent and culture, including around the development of the Company’s talent pipeline and advancing diversity and inclusion efforts across the enterprise. The Board’s succession planning activities are strategic, long-term and supported by the Board’s committees and external consultants, as needed, and Directors have substantial opportunities to engage with possible succession candidates. Most recently, this succession planning process resulted in a new leadership structure for the Company’s Human Health business to enable the Company to develop our internal talent and expand our high performing senior leadership team following the departure of Frank Clyburn, former Executive Vice President and President, Human Health. Effective February 28, 2022, Arpa Garay leads Human Health Global Marketing, Jannie Oosthuizen leads Human Health U.S., and a third role will lead Human Health International. The Board provided guidance regarding the new leadership structure. The Board also approved the appointments of Ms. Garay and Mr. Oosthuizen and will be responsible for approving the appointment of the third role. The Board also considers its own composition and succession plans. In Director succession planning, the Governance Committee and the Board consider, among other things, the needs of the Board and the Company in light of the overall composition of the Board, with a view toward achieving a balance of the skills, experience and attributes that are essential to the Board’s oversight role. In particular, the Board is deliberate in ensuring the Board has the right mix of diverse perspectives, skills and expertise to address the Company’s current and anticipated needs as opportunities and challenges facing the Company evolve. Such considerations have resulted in the election of five new Board members over the last three years and the nomination in this proxy statement of a new Director. In addition, in November of 2021, the Board amended the Policies of the Board to provide that Directors may not be nominated for re-election to the Board after they reach the age of 75. The Board believes that, in addition to its ongoing review of the overall composition of the Board, this policy promotes regular refreshment of the Board and is considered as part of overall succession planning. Merck & Co., Inc. 2022 Proxy Statement Corporate Governance Annual Board Evaluation The Board conducts an evaluation of its performance and effectiveness, as well as that of its four standing committees, on an annual basis. The purpose of the evaluation is to track progress in certain areas targeted for improvement, identify ways to enhance the overall effectiveness of the Board and its committees and provide opportunities to discuss other important topics, such as Board composition, succession plans and priority agenda topics. The independent Lead Director leads the evaluation process. The Governance Committee may also from time to time engage an independent third party to manage the process. In 2021, the evaluation was conducted in 3 phases. Board Evaluation Process The Board evaluation process resulted in a number of recommendations, including recommendations regarding priority agenda topics for the Board to address in 2022. Shareholder Engagement and Feedback Merck regularly communicates with shareholders to better understand their perspectives and has established a shareholder engagement program that is proactive and cross-functional. Throughout the year, members of Investor Relations, the Office of the Secretary, Human Resources and the ESG Strategy and Engagement Team, as well as other subject-matter experts within the Company, engage with our shareholders to remain well-informed regarding their perspectives on current issues and to address any questions or concerns. These teams serve as liaisons between shareholders, members of senior management and the Board. In addition, we conduct an extensive shareholder outreach program twice a year focused on governance, executive compensation and ESG matters. We believe it is most productive to discuss these matters well in advance of the Annual Meeting to enable management and the Board to gather information about investor perspectives and make educated and deliberate decisions that are balanced and appropriate for Merck’s diverse shareholder base and in the Company’s best interests. Given our large shareholder base, we concentrate our outreach efforts on our largest 30 shareholders, which represented approximately 40% of our ownership as of December 31, 2021, based on filings made by our shareholders with the SEC on or before March 1, 2022. During 2021, we held discussions with a number of our shareholders in the spring before the Annual Meeting and once again in late fall. Our Lead Director, who is also Chair of the Governance Committee, participated in substantive engagements with some of the Company’s shareholders. We also regularly seek to take advantage of other engagement opportunities and events. Merck & Co., Inc. 2022 Proxy Statement Corporate Governance Shareholder Engagement and Feedback 25 Topics Discussed with Shareholders during 2021 • COVID-19 priorities • Company strategy • Board leadership, composition and refreshment • Management succession • Board and management diversity • Human capital management • ESG reporting • Global access to Merck products • Commitment to racial and ethnic diversity • Risk oversight • Cybersecurity • Executive compensation programs • Policy and pricing environment • Shareholder proposals • Lobbying expenditures • Climate initiatives • Merck Animal Health • Director tenure • Merck culture • Reputation • Director onboarding • Board evaluation process Some key themes emerged as part of our various engagements as set forth below. Shareholders are increasingly interested in hearing more about ESG strategy and oversight. • The Company hosted a virtual Investor Event in February 2022 in which our senior management team discussed the Company’s long-term ESG strategies. • This proxy statement includes on page 20 a description of the Board’s oversight of ESG matters. • The Governance Committee reviewed the Policies of the Board and the charters of each Board committee to ensure the committees’ oversight of applicable ESG matters was appropriately identified. Following that review, the Governance Committee recommended, and the Board approved, amendments to the Policies of the Board and the Governance Committee charter, which are available on our website at www.merck.com/company-overview/leadership/board-of-directors/. Shareholders are interested to know more about the Company’s global access strategy for COVID-19 therapeutics. • Merck has been transparent about our commitment to providing timely global access to molnupiravir, the investigational oral antiviral COVID-19 medicine being developed in collaboration with Ridgeback Biotherapeutics, as well as our comprehensive supply approach to fulfilling that commitment. Information regarding our approach is available on our website at www.merck.com/research-and-products/covid-19/. Proxy Access After engaging with a number of our largest shareholders, our Board proactively amended our By-Laws in 2015 to give shareholders a right to proxy access for Director nominations. Our By-Laws allow a shareholder (or a group of no more than twenty shareholders) who has maintained continuous qualifying ownership of at least 3% of the Company’s outstanding common stock for at least three years to include Director nominees constituting up to 20% of the Board in the Company’s proxy materials for an annual meeting of shareholders. Our By-Laws, which prescribe additional requirements for proxy access, are available on our website at www.merck.com/company-overview/leadership/board-of-directors/. Merck & Co., Inc. 2022 Proxy Statement Corporate Governance Shareholder Communications with the Board Shareholder Communications with the Board The Board of Directors welcomes input from shareholders and other interested parties and has established a process to receive these communications. Shareholders and interested parties may communicate directly with the Board, the independent Lead Director, the non-management or independent Directors as a group or other members of the Board by emailing office.secretary@merck.com, or by writing to the following address: Board of Directors Merck & Co., Inc. 2000 Galloping Hill Road, K1-4157 Kenilworth, NJ 07033 U.S.A. In order to manage efficiently the volume of correspondence received, communications will be reviewed by the Office of the Secretary for the purpose of determining whether the contents are appropriate for submission to the entire Board, the Chairman, the independent Lead Director or the Chair of a particular committee. The Office of the Secretary will not transmit: communications that advocate that the Company engage in illegal activity; communications that, under community standards, contain offensive or abusive content; communications that have no relevance to the role of the Board or to the business of the Company; resumes or other job-related inquiries; and mass mailings, solicitations and advertisements. Comments or questions regarding the nomination of Directors and other corporate governance matters will be referred to the Chair of the Governance Committee. Comments or questions regarding executive compensation will be referred to the Chair of the C&MD Committee. In addition, the Audit Committee has established procedures for the receipt, retention and treatment, on a confidential basis, of complaints regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. These procedures are described in the Merck Code of Conduct — Our Values and Standards. The Merck Code of Conduct is available on our website atwww.merck.com/company-overview/culture-and-values/code-of-conduct/values-and-standards/ . Merck & Co., Inc. 2022 Proxy Statement Corporate Governance Political Contributions and Lobbying Expenditure Oversight and Disclosure 27 Political Contributions and Lobbying Expenditure Oversight and Disclosure Merck is committed to participating constructively and responsibly in the political process and to providing clarifying analysis and information regarding the issues that affect our business and patient care. The Company advocates for public policies that foster research into innovative medicines and improve access to medicines, vaccines and health care. Our participation in the political process is guided by the following principles: improving patient access to healthcare, including access to medicines and vaccines, improving access to animal health products, and encouraging innovation. The Company’s public policy positions are determined by senior management with oversight by the Governance Committee. Our political contributions are made in accordance with all applicable laws and Company policies and procedures and are overseen by senior management. The Governance Committee monitors all such contributions, and the full Board receives a bi-annual report. In addition, the Company publicly discloses and regularly updates information regarding its public policy positions and advocacy expenditures on our website at www.merck.com/company-overview/responsibility/transparency-disclosures/. This information includes the Company’s contributions, categorized by state, candidate and amount, for our corporate political and political action committee contributions in the U.S., Canada and Australia. These disclosures include information for the past 5 years. In addition, this information includes a list of U.S. industry and trade groups in which we are members where our dues are greater than $25,000 and the portion of our dues that these groups use for advocacy and/or political activities. Governance and Transparency around Drug Pricing In order to provide information about the Company’s pricing practices, the Company annually posts on its website its Pricing Transparency Report for the United States. The report provides the Company’s average annual list price, net price increases and average discounts across the Company’s U.S. portfolio dating back to 2010. In 2021, the Company’s gross U.S. sales were reduced by 43.5% as a result of rebates, discounts and returns. Our process around pricing our products includes regular presentations to the Board on drug pricing strategies. In addition, on balance, over the last few years, our revenue growth has been primarily attributable to increased volume arising from increased demand for our products rather than price increases. The Policies of the Board require that a substantial majority of our Directors be independent. In making independence determinations, the Board observes all relevant criteria established by the U.S. Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange (the “NYSE”), as well as categorical independence standards set forth in the Policies of the Board. The Board considers all relevant facts and circumstances in making an independence determination. To be considered independent, an outside director must meet the bright line independence tests established by the NYSE, and the Board must affirmatively determine that the director has no direct or indirect material relationship with the Company. The Board also rigorously considers all relevant heightened independence requirements for members of the Audit Committee and the Independence Determinations In accordance with the NYSE Corporate Governance Listing Standards and the categorical standards reflected in the Policies of the Board, the Board reviewed relationships between the Company and each Merck & Co., Inc. 2022 Proxy Statement Corporate Governance Related Person Transactions and the Governance Committee is independent within the meaning of the NYSE Corporate Governance Listing Standards and the rules of the SEC. In making these determinations, the Board considered relationships that exist between the Company and other organizations where Drs. Related Person Transaction Policy The Board Pursuant to the Policy, management determines whether a transaction requires review by the Governance Committee, in which case the transaction, along with all material information, will be disclosed to the Governance Committee for review, approval, ratification or termination. In the event a related person transaction is approved by the Governance Committee, such transaction will be subject to ongoing monitoring to ensure that the transaction remains fair and reasonable to the Company. For additional information, the full Policy is available on the Company’s website at Certain Related Person Transactions Each Director After review of the D&O Questionnaires by the Office of the Secretary, the responses are collected, summarized and distributed to responsible areas within the Company to identify any potential transactions. All relevant relationships and any transactions, along with payables and receivables, are compiled for each person and affiliation. Management submits a report of the affiliations, relationships, transactions and appropriate supplemental information to the Governance Committee for its review. Based on this information for Merck & Co., Inc. Corporate Governance Compensation Consultants 29 Role of Compensation Consultants The C 2000 Galloping Hill Road, K1-4157 Kenilworth, NJ 07033 U.S.A. In order to manage efficiently the communications that advocate that the communications that, under community standards, contain offensive or abusive content; communications that resumes or other job-related inquiries; and mass mailings, solicitations and advertisements. Comments or questions regarding the nomination of Directors and other corporate governance matters will be referred to the Chair of the Governance Committee. Comments or questions regarding executive compensation will be referred to the Chair of the C In addition, the Audit Committee has established procedures for the receipt, retention and treatment, on a confidential basis, of complaints regarding accounting, internal accounting controls or auditing matters, and the Merck & Co., Inc. Corporate Governance 27 Merck is committed to participating constructively and responsibly in the political process and to providing clarifying analysis and information regarding the issues that affect our business and patient care. The Company advocates for public policies that foster research into innovative medicines and improve access to medicines, vaccines and health care. Our participation in the political process is guided by the following principles: improving patient access to healthcare, including access to medicines and vaccines, improving access to animal health products, and encouraging innovation. The Company’s public policy positions are determined by senior management with oversight by the Governance Committee. Our political contributions are made in accordance with all applicable laws and Company policies and procedures and are overseen by senior management. The Governance Committee monitors all such contributions, and the full Board receives a bi-annual report. In addition, the Company publicly discloses and regularly Governance and Transparency around Drug Pricing In order to provide information about the The Policies of the To be considered independent, an outside director must meet the bright line independence tests established by the NYSE, and the Board The Board also rigorously considers all relevant heightened independence requirements for members of the Audit Committee and Independence Determinations In accordance with the NYSE Corporate Governance Listing Standards and the categorical standards reflected in the Merck & Co., Inc. 2022 Proxy Statement Corporate Governance Related Person Transactions and the Governance Committee is independent within the meaning of the NYSE Corporate Governance Listing Standards and the rules of the SEC. In making these determinations, the Board considered relationships that exist between the Company and other organizations where Directors serve, as well as the fact that in the ordinary course of business, transactions may occur between such organizations and the Company or one of our subsidiaries. The Board also evaluated whether there were any other facts or circumstances that might impair a Director’s independence. Drs. Lavizzo-Mourey, Rothman and Seidman are employed at medical or academic institutions with which the Company engages in purchase and/or sale transactions in the ordinary course of business. Ms. Coe is employed by Google Inc., and, in 2020, the Company engaged in a purchase transaction with Google Inc. in the ordinary course of business. In addition, Mr. Thulin was employed by 3M Company until June 1, 2019, and the Company engages in routine business transactions with 3M Company. The Board reviewed transactions with each of these entities and determined that the applicable individual Director had no role with respect to the Company’s decision to make any of the purchases or sales, and the aggregate amounts in each case were less than 2% of the consolidated gross revenues of the other organization and the Company. Related Person Transaction Policy The Board has adopted a written Related Person Transaction Policy (the “Policy”) that is incorporated into the Policies of the Board and administered by the Governance Committee. The Policy governs the review and approval of any transactions involving amounts exceeding $120,000 to which the Company or a subsidiary is a party and in which a “related person” has a direct or indirect material interest. A “related person” is any Director, Director nominee, executive officer or holder of more than 5% of any outstanding class of the Company’s voting securities, as well as immediate family members or certain affiliated entities of any of the foregoing persons. Pursuant to the Policy, management determines whether a transaction requires review by the Governance Committee, in which case the transaction, along with all material information, will be disclosed to the Governance Committee for review, approval, ratification or termination. In the event a related person transaction is approved by the Governance Committee, such transaction will be subject to ongoing monitoring to ensure that the transaction remains fair and reasonable to the Company. For additional information, the full Policy is available on the Company’s website at www.merck.com/company-overview/leadership/board-of-directors/in the Policies of the Board. Certain Related Person Transactions Each Director and executive officer of Merck annually, and each Director nominee before such nominee’s nomination, completes and submits to the Company a Director & Officer (“D&O”) Questionnaire. The D&O Questionnaire requests, among other things, information regarding whether any Director, Director nominee, executive officer or their immediate family members had an interest in any transaction or proposed transaction with Merck or its subsidiaries or has a relationship with a company that has entered or proposes to enter into such a transaction. After review of the D&O Questionnaires by the Office of the Secretary, the responses are collected, summarized and distributed to responsible areas within the Company to identify any potential transactions. All relevant relationships and any transactions, along with payables and receivables, are compiled for each person and affiliation. Management submits a report of the affiliations, relationships, transactions and appropriate supplemental information to the Governance Committee for its review. Based on this information for 2021, the Governance Committee has determined that no transactions require disclosure under Item 404(a) of SEC Regulation S-K. Merck & Co., Inc. 2022 Proxy Statement Corporate Governance Compensation Consultants 29 The C&MD Committee retains the services of a compensation consultant to serve as an objective third-party advisor on the reasonableness of compensation levels and on the appropriateness of the compensation program structure in supporting our business strategy and human resource objectives. Since 2008, the C&MD Committee has retained FW Cook as its compensation consultant. In addition, the Governance Committee periodically retains FW Cook to assist with a Board of Directors Merck & Co., Inc. 2000 Galloping Hill Road, K1-4157 Kenilworth, NJ 07033 U.S.A. In order to manage efficiently the volume of correspondence received, communications will be reviewed by the Office of the Secretary for the purpose of determining whether the contents are appropriate for submission to the entire Board, the Chairman, the independent Lead Director or the Chair of a particular committee. The Office of the Secretary will not transmit: communications that advocate that the Company engage in illegal activity; communications that, under community standards, contain offensive or abusive content; communications that have no relevance to the role of the Board or to the business of the Company; resumes or other job-related inquiries; and mass mailings, solicitations and advertisements. Comments or questions regarding the nomination of Directors and other corporate governance matters will be referred to the Chair of the Governance Committee. Comments or questions regarding executive compensation will be referred to the Chair of the C In addition, the Audit Committee has established procedures for the receipt, retention and treatment, on a confidential basis, of complaints regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. These procedures are described in the Merck Code of Conduct — Our Values and Standards. The Merck Code of Conduct Merck & Co., Inc. Corporate Governance Political Contributions and Lobbying Expenditure Oversight and Disclosure 27 Political Contributions and Lobbying Expenditure Oversight and Disclosure Merck is committed to participating constructively and responsibly in the In addition, the Company publicly discloses and regularly updates information regarding its public policy positions and advocacy expenditures on our website at Governance and Transparency around Drug Pricing In order to provide information about the Company’s pricing practices, the Company annually posts on its website its Pricing Transparency Report for the United States. The report provides the Company’s average annual list price, net price increases and average discounts across the Company’s U.S. portfolio dating back to 2010. In The Policies of the Board require that a substantial majority of our Directors be independent. In making independence determinations, the Board observes all relevant criteria established by the U.S. Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange (the “NYSE”), as well as categorical independence standards set forth in the Policies of the Board. The Board considers all relevant facts and circumstances in making an independence determination. To be considered independent, an outside director must meet the bright line independence tests established by the NYSE, and the Board must affirmatively determine that the director has no direct or indirect material relationship with the Company. The Board also rigorously considers all relevant heightened independence requirements for members of the Audit Committee and the C&MD Committee. The Governance Committee reviews the Board’s approach to determining director independence periodically and recommends changes, as appropriate, for consideration and approval by the full Board. Independence Determinations In accordance with the NYSE Corporate Governance Listing Standards and the categorical standards reflected in the Policies of the Board, the Board reviewed relationships between the Company and each Director. As a result of that review, the Board has determined that, with the exception of Robert M. Davis, our CEO and President, and Kenneth C. Frazier, our Executive Chairman, each Director has only immaterial relationships with the Company, and accordingly, each is independent under these standards. The Board also has determined that each member of the Audit Committee, the C&MD Committee Merck & Co., Inc. Corporate Governance and the Governance Committee is independent within the meaning of the NYSE Corporate Governance Listing Standards and the rules of the SEC. In making these determinations, the Board considered relationships that exist between the Company and other organizations where Directors serve, as well as the fact that in the ordinary course of business, transactions may occur between such organizations and the Company or one of our subsidiaries. The Board also evaluated whether there were any other facts or circumstances that might impair a Director’s independence. Drs. Lavizzo-Mourey, Rothman and Seidman are employed at medical or academic institutions with which the Company engages in purchase and/or sale transactions in the ordinary course of business. Ms. Coe is employed by Google Inc., and, in 2020, the Company engaged in a purchase transaction with Google Inc. in the ordinary course of business. In addition, Mr. Thulin was employed by 3M Company until June 1, 2019, and the Company engages in routine business transactions with 3M Company. The Board reviewed transactions with each of these entities and determined that the applicable individual Director had no role with respect to the Company’s decision to make any of the purchases or sales, and the aggregate amounts in each case were less than 2% of the consolidated gross revenues of the other organization and the Company. Related Person Transaction Policy The Board has adopted a written Related Person Transaction Policy (the “Policy”) that is incorporated into the Policies of the Board and administered by the Governance Committee. The Policy governs the review and approval of any transactions involving amounts exceeding $120,000 to Pursuant to the Policy, management determines whether a transaction requires review by the Governance Committee, in which case the transaction, along with all material information, will be disclosed to the Governance Committee for review, approval, ratification or termination. In the event a related person transaction is approved by the Governance Committee, such transaction will be subject to ongoing monitoring to ensure that Certain Related Person Transactions Each Director and Merck & Co., Inc. Corporate Governance 29 The C&MD Committee retains the services of a compensation consultant to Independence of Compensation Consultant The C&MD Committee annually reviews the services provided by FW Cook and has concluded that FW Cook is independent in In particular, the C&MD Committee noted that (i) FW Cook provided no other services to Services Performed During 2021 During 2021, FW Cook supported the C&MD Committee by: Since 2010, management has retained Pay Governance LLC to provide consulting services on an as-needed basis. Although Pay Governance did not provide any services during 2021, they will perform their biennial risk assessment of our compensation programs in November 2022. Merck & Co., Inc. Stock Ownership of Directors and Officers The table below reflects the number of shares of Merck common stock beneficially owned by (a) each of our Directors; (b) each of our executive officers named in theSummary Compensation Name of Beneficial Owner Shares Beneficially Owned(2) Right to Acquire Beneficial Ownership Under Exercisable/Distributable Within 60 Days(3) Percent of Class Phantom Stock Units(4) Shares Beneficially Owned(1) Right to Acquire Beneficial Exercisable/Distributable Within 60 Days(2) Percent of Class Phantom Stock Units(3) Kenneth C. Frazier Leslie A. Brun Thomas R. Cech Robert M. Davis Mary Ellen Coe Pamela J. Craig Thomas H. Glocer Rochelle B. Lazarus(5) Risa J. Lavizzo-Mourey Stephen L. Mayo Paul B. Rothman Patricia F. Russo Christine E. Seidman Inge G. Thulin Wendell P. Weeks(6) Kathy Warden Peter C. Wendell Sanat Chattopadhyay Frank Clyburn(4) Robert M. Davis Richard R. DeLuca, Jr. Roger M. Perlmutter Dean Li Jennifer Zachary Caroline Litchfield All Directors and Executive Officers as a Group All Directors and Executive Officers as a Group (28 individuals) Less than 1% of the Company’s outstanding shares of common stock. Includes equivalent shares of common stock held by the Trustee of the Merck U.S. Savings Plan, for the accounts of individuals as follows: Mr. Frazier — This column reflects the number of shares that could be acquired within 60 days of February Represents phantom shares denominated in Merck common stock under the Plan for Deferred Payment of Directors’ Compensation or the Merck Deferral Program. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act, as amended, requires our executive officers, directors, and beneficial owners of more than 10% of our common stock to file stock ownership reports and reports of changes in ownership with the SEC. Based on a review of those reports and written representations from the reporting persons, to our knowledge, all such reports for 2021 Merck & Co., Inc. Stock Ownership Information Stock Ownership of Certain Beneficial Owners 31 were filed on a timely basis, except: (1) one Form 4 by Richard R. DeLuca, Jr. reporting a special one-time Restricted Stock Unit retention grant due on May 6, 2021, but filed on November 4, 2021, (2) one Form 4 by Frank Clyburn also reporting a special one-time Restricted Stock Unit retention grant due on May 6, 2021, but filed on November 4, 2021, and (3) one Form 4 by David M. Williams reporting the vesting of Restricted Stock Units due on February 12, 2021, but filed on February 11, 2022. Stock Ownership of Certain Beneficial Owners The table below reflects the number of shares beneficially owned by persons or entities known to us to own more than 5% of the outstanding shares of Merck common stock as of December 31, Name and Address of Beneficial Owner The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355 BlackRock, Inc. 55 East 52nd Street, New York, NY 10055 As reported on Amendment No. As reported on Amendment No. Merck & Co., Inc. 32 Election of Directors The Board has recommended All Any Director nominee who does not receive a majority of the votes cast with respect to his or her election will not be re-elected as a Director of the Company. However, under the New Jersey Business Corporation Act, incumbent Directors who are not re-elected in an uncontested election because of a failure to receive a majority of the votes cast in favor of their re-election will be “held over” and continue as Directors of the Company until they resign, or their successors are elected at the next election of directors. Our Incumbent Director Resignation Policy, included in the Policies of the Board, provides that an incumbent Director who is not re-elected must promptly submit a resignation. The Governance Committee will evaluate whether to accept such resignation and make a recommendation to the full Board. The Board If any Director nominee becomes unavailable for election (which we do not expect), votes will be cast for such substitute Director nominee or nominees as may be designated by the Board, There are no family relationships among Merck’s executive officers and Directors. We provide below biographical information for each Director nominee, FOR The Board of Directors recommends that the shareholders vote FOR the election of each of the Director Nominees. Merck & Co., Inc. Proposal 1 Election of Directors 33 Independent Age: Director Committees:(1) Compensation and Management Development Governance Experience Mr. Career Highlights • Executive Chairman (2021-present)(2) • Chairman and Chief Executive Officer • Other Public Directorships Current • • Former • If elected, Mr. Baker will serve on these committees. Mary Ellen Coe Independent Age: Director Since: 2019 Committees: Audit Research Experience Ms. Coe has a deep understanding of the digital and technology landscape, as well as global strategy and operations, due to her experience as a senior leader at Google Inc. She also has extensive Career Highlights Google Inc. • President, Google Customer Solutions (2017-present) • Vice President, Go-to-Market Operations and Strategy (2012-2017) Other Public Directorships Current • None Former • Whole Foods Market, Inc. (2016-2017) Merck & Co., Inc. 2022 Proxy Statement Proposal 1 Election of Directors Pamela J. Craig Independent Age: Director Since: 2015 Committees: Audit (Chair) Governance Experience Ms. Craig has extensive finance, management, operational, technology and international business expertise, including her history of accomplishment and executive ability as Chief Financial Officer of Accenture plc. In addition, her directorships at other public companies, including her service as a member of the Audit and Career Highlights Accenture plc, global management consulting, technology services and outsourcing company • Chief Financial Officer (2006-2013) • Senior Vice President, Finance (2004-2006) • Group Director, Business Operations and Services (2003-2004) • Managing Partner, Global Business Operations (2001-2003) Other Public Directorships Current • Progressive Insurance (since 2018) • 3M Company Inc. (since 2019) • Former • Akamai Technologies, Inc. (2011-2019) • Wal-Mart Stores, Inc. (2013-2017) Management Age: Director Since: Experience Mr. Davis, Merck’s Chief Executive Officer and President, has extensive management, financial, and operational expertise. During his tenure at Merck, Mr. Davis served as President, with responsibility for Merck’s operating divisions, Human Health, Animal Health, Manufacturing and Merck Research Laboratories. He also served as Merck’s Chief Financial Officer and Executive Vice President, Global Services, with broad responsibilities, including with respect to finance, risk management, real estate operations, corporate strategy, business development, information technology and procurement. In addition, Mr. Davis’ service on the board of directors of Duke Energy, including his roles as Chair of the Finance & Risk Management Committee and member of the Corporate Governance Committee, has provided him with valuable experience on governance issues facing public companies. Prior to joining Merck in 2014, Mr. Davis held leadership roles at Baxter International, Inc., including as Corporate Vice President and President of Medical Products and Corporate Vice President and Chief Financial Officer. Career Highlights Merck & Co., Inc. • Chief Executive Officer and President (2021-present) • Chief Financial Officer and Executive Vice President, Global Services (2016-2021) • Chief Financial Officer and Executive Vice President (2014-2016) Baxter International, Inc. • Corporate Vice President and President, Medical Products (2010-2014) • Corporate Vice President and Chief Financial Officer (2006-2010) • Corporate Vice President and Treasurer (2004-2006) Other Public Directorships Current • Duke Energy (since 2018) Former • C.R. Bard (2015-2017) Merck & Co., Inc. 2022 Proxy Statement Proposal 1 Election of Directors 35 Kenneth C. Frazier Management Age: 67 Director Since: 2011 Experience Mr. Frazier has broad managerial and operational expertise and deep institutional knowledge, as well as a track record of achievement, integrity and sound judgment demonstrated prior to, and during, his long tenure with Merck. In addition, his role as the Chair of the Board Affairs Committee of Exxon Mobil Corporation has provided him with important experience on governance issues facing public companies. Career Highlights Merck & Co., Inc. • Executive Chairman • Chief Executive Officer • President • Executive Vice President and President, Global Human Health (2007-2010) • Executive Vice President and General Counsel (2006-2007) • Senior Vice President and General Counsel (1999-2006) Other Public Directorships Current • Exxon Mobil Corporation (since 2009) Former • None Thomas H. Glocer Independent Lead Director Age: Director Since: 2007 Committees: Compensation and Governance (Chair) Experience Mr. Glocer has extensive management, operational, technology and international business expertise, including his history of accomplishment and executive ability as CEO and a Director of Thomson Reuters Corporation. In addition, his directorships at other public companies, including his service as Lead Director and as a member of the Operations and Technology Committee at Morgan Stanley, provide him with valuable experience on governance issues facing public companies. Career Highlights Angelic Ventures LP,a family office investing in early-stage technology and data companies • Founder and Managing Partner(2012-present) Thomson Reuters Corporation,multi-national media and information firm • Chief Executive Officer (2008-2011) • Chief Executive Officer, Reuters Group PLC (2001-2008) Other Public Directorships Current • Morgan Stanley (since 2013) • Publicis Groupe (since 2016) Former • None Merck & Co., Inc. Proposal 1 Election of Directors Risa J. Lavizzo-Mourey, M.D. Independent Age: Director Committees: Compensation and Research Experience Dr. Lavizzo-Mourey has extensive health policy experience, serving as Career Highlights University of Pennsylvania • Penn Integrates Knowledge Professor of Health Equity and Health Policy Robert Wood Johnson Foundation • President Emerita (2017-present) • President and Chief Executive Officer (2003-2017) • Senior Vice President and Director (2001-2002) Other Public Directorships Current • General Electric Company (since 2017) • • Better Therapeutics (since 2021) Former • Stephen L. Mayo, Ph.D. Independent Age: 60 Director Since: 2021 Committees: Audit Research Experience Dr. Mayo has extensive scientific experience relevant to the biopharmaceutical industry, including being the Bren Professor of Biology and Chemistry, Merkin Institute Professor and former Chair of the Division of Biology and Biological Engineering at the California Institute of Technology (“Caltech”) and co-founder of Xencor, a public antibody engineering company. In addition, in his role as the former Vice Provost at Caltech, Dr. Mayo oversaw Caltech’s technology licensing program. Elected to the National Academy of Sciences in 2004 for his pioneering contributions in the field of protein design, Dr. Mayo has also served as a presidential appointee on the National Science Foundation’s National Science Board and as an elected board member for the American Association for the Advancement of Science. Dr. Career Highlights California Institute of Technology • Merkin Institute Professor (2021-present) • Bren Professor of Biology and Chemistry (2007–present) • Chair, Division of Biology and Biological Engineering (2010–2020) • Vice Provost for Research (2007–2010) Howard Hughes Medical Institute, non-profit medical research organization • Investigator (1994–2007) Other Public Directorships Current • Sarepta Therapeutics (since 2021) Former • None Merck & Co., Inc. 2022 Proxy Statement Proposal 1 Election of Directors 37 Paul B. Rothman, M.D. Independent Age: Director Since: 2015 Committees: Audit Research (Chair) Experience Dr. Rothman has extensive expertise in patient care, science and medicine relevant to the pharmaceutical industry, including through his positions as the CEO of Johns Hopkins Medicine and the Dean of Medical Faculty and Vice President for Medicine, The Johns Hopkins University, and his past experience as Dean and Head of Internal Medicine at Carver College of Medicine at the University of Iowa. In addition, his vast operational and management experience of a large-scale medical organization provide him with a deep understanding of the complexities of the U.S. healthcare delivery system and policy environment. Career Highlights Johns Hopkins University • Dean of the Medical Faculty and Vice President for Medicine (2012-present) Johns Hopkins Medicine • Chief Executive Officer (2012-present) Carver College of Medicine at the University of Iowa • Dean (2008-2012) • Head of Internal Medicine (2004-2008) Other Public Directorships Current • None Former • None Patricia F. Russo Independent Age: Director Since: 1995(1) Committees: Compensation and Governance Experience Ms. Russo has extensive management, operational, international business and financial expertise, as well as a broad understanding of the technology industry, which includes her career achievements during her tenure as CEO and Director of Alcatel-Lucent and Lucent Technologies Inc. In addition, her directorships at other public companies, including her roles as the Non-executive Chairman of Hewlett Packard Enterprise Company and the Independent Lead Director and Chair of the Governance and Corporate Responsibility Committee of General Motors, provide her with deep experience on governance issues facing large public companies. Career Highlights Hewlett Packard Enterprise Company, technology company • Non-executive Chairman (2015-present) Alcatel-Lucent, global telecommunications equipment company • Chief Executive Officer and Director (2006-2008) • Chairman, Lucent Technologies Inc. (2003-2006) • President and Chief Executive Officer, Lucent Technologies Inc. (2002-2006) Other Public Directorships Current • General Motors Company (since 2009). Independent Lead Director (2010-2014; 2021-present) • Hewlett Packard Enterprise Company (since 2015), Non-executive Chairman (2015) • KKR Management Inc. (the managing partner of KKR & Co., L.P.) (since 2011) Former • Arconic, Inc. (2016-2018) formerly Alcoa, Inc. (2008-2016) Ms. Russo was on the Board of Directors of Schering-Plough Corporation from 1995 until 2009 when the Company became Merck & Co., Inc. Merck & Co., Inc. 2022 Proxy Statement Proposal 1 Election of Directors Christine E. Seidman, M.D. Independent Age: Director Since: 2020 Committees: Audit Research Experience Dr. Seidman has extensive scientific experience relevant to the biopharmaceutical industry, including being the Thomas W. Smith Professor of Medicine and Genetics at Harvard Medical School and the director of the Cardiovascular Genetics Center. In addition, her role leading the Seidman Laboratory, a research laboratory that focuses on integrating clinical medicine and molecular technologies to define disease-causing gene mutations and genetic variations that increase disease risk, provides Dr. Seidman with managerial experience relevant to scientific research. The recipient of many honors, Dr. Seidman was elected to the American Society for Clinical Investigation, the National Academy of Sciences, American Academy of Arts and Sciences and the National Academy of Medicine. Awards • The Ray C. Fish Award for Scientific Achievement (2020) • American Heart Association Medal for Genomic and Precision Medicine (2019) • Vanderbilt Prize in Biomedical Sciences (2019) Career Highlights Harvard Medical School/Brigham and Women’s Hospital (Harvard University) • Thomas W. Smith Professor of Medicine and Genetics (2005-present) • Professor of Genetics and Medicine (1998-2005) • Professor of Medicine (1997-1998) Howard Hughes Medical Institute,non-profit medical research organization • Investigator (1994-present) Brigham and Women’s Hospital • Director, Cardiovascular Genetics Center (1992-present) • Attending Physician, Cardiovascular Division (1987-present) Other Public Directorships Current • None Former • None Inge G. Thulin Independent Age: Director Since: 2018 Committees: Compensation and Governance Experience Mr. Thulin has extensive management, operational, technology and international business expertise, as demonstrated by a track record of success leading 3M Company. Mr. Thulin possesses broad industry experience drawn from 3M’s diverse businesses, commitment to research and strong life sciences division. He also brings valuable insight into driving innovation, based on his experience with new product development and manufacturing. In addition, his previous directorships at other public companies provide him with deep experience on governance issues facing large public companies. Career Highlights 3M Company, global technology company • Executive Chairman (2018-2019) • Chairman, President and Chief Executive Officer (2012-2018) • President and Chief Executive Officer (2012) • Executive Vice President and Chief Operating Officer (2011-2012) • Executive Vice President, International Operations (2004-2011) Other Public Directorships Current • None Former • 3M Company (2012-2019) • Chevron Corporation (2015-2019) Merck & Co., Inc. 2022 Proxy Statement Proposal 1 Election of Directors 39 Kathy J. Warden Independent Age: Director Since: 2020 Committees: Audit Governance Experience Ms. Warden has broad experience in operational leadership at Northrop Grumman Corporation, an innovative company using science, technology and engineering to create and deliver products and services. Ms. Warden has extensive expertise in strategy, performance and business development in government and commercial markets, as well as cybersecurity expertise. Prior to joining Northrop Grumman, Ms. Warden held leadership roles at General Dynamics and Career Highlights Northrop Grumman Corporation,global security company • Chairman, Chief Executive Officer and President (2019-present) • President and Chief Operating Officer (2018) • Corporate Vice President and President, Mission System Sector (2016-2017) • Corporate Vice President and President, Information Systems Sector (2013-2015) • Vice President, Cyber Intelligence Division (2011-2012) Other Public Directorships Current • Northrop Grumman Corporation Former • None Peter C. Wendell Independent Age: Director Since: 2003 Committees: Compensation and Research Experience Mr. Wendell has extensive management, financial and venture capital expertise as demonstrated by his Career Highlights Sierra Ventures, technology-oriented venture capital firm • Managing Director (1982-present) Stanford University • Faculty, Stanford University Graduate School of Business (1991-present) Other Public Directorships Current • None Former • None Merck & Co., Inc. Our non-employee Directors receive cash compensation, as well as cash-settled equity compensation in the form of deferred stock units, for their Board service. During Compensation Element(1) Director Compensation Program Annual Retainer $ Annual Mandatory Deferral $ the Plan for Deferred Payment of Directors’ Compensation Committee Chair Retainer $ 30,000 for the Audit Committee(2) $ 20,000 for the Governance Committee(3) $ 20,000 for the Compensation and $ 20,000 for the Research Committee Audit Committee Member Retainer $ 10,000(2) Lead Director Retainer $ All The Audit Committee Chair retainer includes the Audit Committee Member retainer fee in the amount of $10,000. The Directors’ Deferral Plan Annual Retainer Under the Merck & Co., Inc. Plan for Deferred Payment of Directors’ Compensation (“Directors’ Deferral Plan”), each Director may elect to defer all or a portion of cash compensation from retainers. Any amount so deferred is, at the Director’s election, valued as if invested in investment measures offered under the Merck U.S. Savings Plan, including our common stock, and is payable in cash installments or as a lump sum generally no sooner than one year after service as a Director ceases. Annual Mandatory Deferral In addition to the annual retainer, upon election (or re-election) at the Annual Meeting of Shareholders, each Director Expenses and Matching Gift Program We reimburse all Directors for travel and other necessary business expenses incurred in the performance of their services for us. We also extend coverage to Directors under our travel accident and directors’ and officers’ indemnity insurance policies. Directors are also eligible to participate in the Merck Foundation Matching Gift Program. The maximum gift total for an active Director participating in the matching gift program is $30,000 in any calendar year. Director Stock Ownership Guidelines Upon joining the Board, each Director must own at least one share of Merck common stock. Directors must attain a target Merck common stock ownership level having a value equal to five times the annual cash retainer within five years of joining the Board, or as soon thereafter as practicable. Deferred stock units held in the Merck common stock account under the Directors’ Deferral Plan are counted toward the target goal. Any Director may request that the Governance Committee consider whether the target ownership level is appropriate in view of such Director’s personal circumstances. As of December 31, Merck & Co., Inc. Director Compensation 41 The table below summarizes the annual compensation for our non-employee Directors for the fiscal year ended December 31, Mr. Davis and Mr. Frazier Name(1) Fees Earned or Paid in Cash ($) Option Awards ($)(4) All Other Compensation ($)(5) Total ($) Leslie A. Brun Thomas R. Cech Mary Ellen Coe(2) Pamela J. Craig Thomas H. Glocer Rochelle B. Lazarus John H. Noseworthy(3) Paul B. Rothman Patricia F. Russo Inge G. Thulin Wendell P. Weeks Peter C. Wendell Name Fees Earned or Paid in Cash ($) All Other Compensation ($)(3) Total ($) Leslie A. Brun(1) $120,815 $200,000 $ 320,815 Thomas R. Cech, Ph.D.(1) 62,500 30,751 93,251 Mary Ellen Coe 130,000 200,000 330,000 Pamela J. Craig 150,000 225,000 375,000 Thomas H. Glocer 150,000 200,000 350,000 Risa J. Lavizzo-Mourey, M.D. 120,000 204,500 324,500 Stephen L. Mayo, Ph.D.(2) 103,441 209,140 (4) 312,581 Paul B. Rothman, M.D. 141,667 230,000 371,667 Patricia F. Russo 125,000 200,000 325,000 Christine E. Seidman, M.D. 130,000 225,000 355,000 Inge G. Thulin 120,000 200,000 320,000 Kathy J. Warden 130,000 200,000 330,000 Peter C. Wendell 120,000 230,000 350,000 Represents credits in the form of cash-settled deferred stock units (phantom shares) of Merck common stock to the Directors’ Deferral Plan. Dr. Figures also include charitable contributions made by the Merck Foundation under its matching gift program on behalf of the following Directors: Director Name Matched Charitable Contribution ($) T.R. Cech P.J. Craig T.H. Glocer R.B. Lazarus J.H. Noseworthy P.B. Rothman W.P. Weeks P.C. Wendell Director Name Matched Charitable Contribution ($) Cech* $ 30,751 Craig 25,000 Lavizzo-Mourey 4,500 Rothman 30,000 Seidman 25,000 Wendell 30,000 *$900 of Dr. Cech’s $30,751 matched charitable contribution was requested in 2020, but not paid until 2021. During Changes to Non-Employee Director Compensation Program effective The Governance Committee reviews the Company’s non-employee Director compensation program on a biennial basis. In The review included FW Cook’s analysis of both compensation levels and program design compared to Merck’s Increased annual mandatory deferral credit from The above Merck & Co., Inc. 42 Non-Binding Advisory Vote to We are pleased to provide our shareholders the opportunity to vote on a non-binding, advisory resolution to approve the compensation of our Named Executive Officers as disclosed in this proxy statement, including the Compensation Discussion and Analysis, compensation tables and the narrative discussion accompanying the tables, beginning on page In order to align executive pay with operational performance and the creation of long-term shareholder value, a significant portion of compensation paid to our NEOs is allocated to annual cash incentives and long-term equity incentives, which are both directly linked to Company and/or stock price performance. For In addition, management and the C We are asking shareholders to indicate their support for the NEO compensation as described in this proxy statement. Accordingly, the following resolution will be submitted for approval by shareholders at the “Resolved, that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and the narrative discussion described in pages The shareholder vote on this resolution will not be binding on management, the C&MD Committee or the Board and will not be construed as overruling any decision by management, the C&MD Committee or the Board. However, the Board and the C At our 2017 Annual Meeting, our shareholders voted in support of annual advisory votes on future executive compensation proposals. The Board has adopted a practice providing for annual say-on-pay advisory votes. The Board expects that the next say-on-pay vote will occur in FOR The Board of Directors recommends that shareholders vote FOR the resolution to approve, on an advisory basis, the compensation of our Named Executive Officers. Merck & Co., Inc. 43 Compensation Discussion Named Executive Officers Robert M. Davis Chief Executive Officer, President and Former Chief Financial Officer Kenneth C. Frazier Executive Chairman and Former Chief Executive Officer Caroline Litchfield Executive Vice President and Chief Financial Officer Frank Clyburn Former Executive Vice President and President, Human Health Richard R. DeLuca, Jr. Executive Vice President and President, Merck Animal Health Dean Li, M.D., Ph. D. Executive Vice President and President, Merck Research Laboratories Table of Contents Compensation Discussion and Analysis Executive Summary Our efforts and underlying business strength enabled us to deliver 17% sales growth KEYTRUDA grew 18% (ex-exchange) to over $17 billion, reflecting continued robust global demand. In the U.S., KEYTRUDA continued to demonstrate durable momentum across all key tumors, and benefited from the recent launches in triple-negative breast cancer (neoadjuvant/adjuvant), renal cell carcinoma (adjuvant and advanced settings), advanced cervical cancer, and advanced endometrial cancer. Outside the U.S., KEYTRUDA growth continued to be driven by non-small cell lung cancer indications and the ongoing launches in head and neck and RCC (adjuvant and advanced settings). In addition, we continued to fortify our position in oncology with several milestones highlighting our strategy of targeting earlier-stage cancers where there is potential for improved outcomes by reducing the risk of recurrence. GARDASIL / GARDASIL 9 grew by 39% (ex-exchange) driving strong growth in our vaccines portfolio. Outside the U.S., robust growth was driven by strong underlying demand across all key geographies, particularly China. GARDASIL / GARDASIL 9 are increasingly being recognized as vaccines that can help prevent certain We also continued to progress on our pipeline, We Lastly, 2021 marked significant changes within the Merck executive team, including the transition of Kenneth C. Frazier to Executive Chairman and Scorecard Performance Financial Performance Revenue Pre-Tax Income Non-Financial Performance Pipeline Overall Payout Financial Performance(2) Target($B) Actual($B) Weighting% Score% Revenue $52.80 $54.87 40 % 173 % Pre-Tax Income $19.72 $20.49 40 % 132 % Non-Financial Performance Pipeline 20 % 130 % Overall Payout 148 % PSU Performance 3-YearR-TSR 3-Year Cum. OCF 3-Year Cum. EPS Overall Payout 3-Year R-TSR 9.86% 5.90% 80% 50% 40% 2-Year Cum. OCF $28.80 $32.60 200% 25% 50% 2-Year Cum. EPS $9.64 $10.97 200% 25% 50% Overall Payout 100% 140% (1) Excluding the impact of (2) For purposes of the 2021 Company Scorecard, our internal Revenue and Pre-Tax Income goals assumed Organon remained part of Merck for all of 2021; as such, Revenue was adjusted to include Organon actual performance prior to spin date and operating plan numbers post spin date, and Pre-Tax income was similarly adjusted. Merck & Co., Inc. Compensation Discussion and Analysis Executive Compensation Program Objectives and Strategy 45 Executive Compensation Program Objectives and Strategy The pharmaceutical industry is science-focused and requires experimentation to foster innovation. Ultimately, The costs associated with innovation are increasing while relative return is decreasing due to ongoing pricing pressure. The number of products available to treat or prevent a particular disease or condition typically increases over time, which can limit the commercial potential of key products. It generally takes 10 to 15 years to discover, develop, and bring a new product to market. We strive to balance the need to deliver market-competitive pay within a framework that provides the appropriate mix of fixed and variable, at-risk compensation to attract, retain, and motivate talent and align with our pay-for-performance objectives. Our executive compensation program Support a shared, one-company mindset of performance and accountability to deliver on business objectives. Variable Compensation Annual Cash Incentive The Company Scorecard (described in more detail on page Long-Term Incentive The long-term incentive program, consisting of a mix of PSUs and stock options, provides our NEOs with the opportunity to own Merck stock, directly linking a substantial portion of their compensation to the returns realized by our shareholders. Merck & Co., Inc. Compensation Discussion and Analysis Compensation Policies and Practices In 2021, shareholders continued their support for our executive compensation We ask that our shareholders approve, on an advisory basis, the compensation of Compensation Policies and Practices Our executive compensation and corporate governance programs are designed to closely link pay with operational performance and increases in long-term shareholder value while minimizing incentives that could lead to excessive risk-taking. To help us accomplish these important objectives, we have adopted the following policies and practices over time: We do… Utilize a total shareholder return metric in the PSU program to align the payout with long-term stock performance and shareholder experience Provide dividend equivalents only on earned Restricted Stock Units (“RSUs”) and PSUs Monitor LTI program share utilization regularly relative to both industry standards and versus our pharmaceutical and supplemental peer groups Conduct competitive benchmarking to ensure executive officer compensation is aligned to market Offer limited perquisites that are supported by business interests Include caps on annual cash incentive and PSU program payouts Retain an independent compensation consultant that reports directly to the C&MD Committee Maintain robust stock ownership requirements and share retention policies Maintain an incentive recoupment (i.e., clawback) policy, which was expanded in 2021 to include misconduct that affects the Company’s overall goodwill or reputation Conduct assessments to identify and mitigate risk in our compensation Require double-trigger vesting of equity in the event of a change in control (i.e., there must be both a change in control and an involuntary termination) Avoid employment agreements Merck & Co., Inc. Compensation Discussion and Analysis 47 Individual executive officer compensation levels and opportunities are compared to a Primary Peer Group Companies AbbVie Amgen AstraZeneca Bristol-Myers Squibb Eli Lilly GlaxoSmithKline Johnson & Johnson Novartis Pfizer Roche Holding AG Sanofi All numbers as of 12/31/ In 2021, the C&MD Committee approved the addition of Gilead Sciences, Inc. to our primary peer group, effective January 1, 2022. Merck’s Supplemental Peer Group In addition to the pharmaceutical Supplemental Peer Group Companies(1) 3M Amgen Apple Boeing Caterpillar Chevron Cisco Coca-Cola Dow Home Depot Honeywell IBM Intel Johnson & Johnson McDonald’s Microsoft Nike Procter & Gamble salesforce.com UnitedHealth Visa Walgreens Walmart Walt Disney (1) Reflects Dow Jones Industrial Average companies (excluding the financial services companies) as of the beginning of 2021. All numbers as of 12/31/ Our overarching strategy is to position our executives’ Merck & Co., Inc. Compensation Discussion and Analysis Detailed Discussion and Analysis Detailed Discussion and Analysis Further information regarding our Compensation Decisions for • Increased base salary by • • Increased LTI target by • Age: Tenure*: (1) (2) Mr. Davis’ 2021 annual incentive target increased from 105% of salary as CFO to 150% as CEO. In 2021, Mr. Davis’ actual annual incentive award was prorated for the portion of the year (3) Mr. Davis’ 2021 LTI target increased from $4,000,000 as CFO to $10,750,000 as CEO. In 2021, Mr. Davis’ actual LTI award was $9,200,000, which reflects 3 months at the 2021 CFO rate and 9 months at the CEO rate, when Mr. Davis became President. Compensation Decisions for 2021 Kenneth C. Frazier Executive Chairman and Former Chief Executive Officer(1) • Decreased base salary by $450,000 • Decreased annual incentive target percentage by 50% points(2) • Decreased LTI target by $5,000,000(3) • Changes resulted in decreased target TDC of 34% to reflect the transition of his role in 2021 Age: 67 Tenure*: 30 Years (1) Mr. Frazier stepped down as President, effective April 1, 2021, and retired as Chief Executive Officer, effective June 30, 2021. After retiring as CEO, Mr. Frazier has continued as Executive Chairman of Merck for a transition period to be determined by the Board. (2) Mr. Frazier’s 2021 annual incentive target decreased from 150% of salary as CEO to 100% as Executive Chairman. Mr. Frazier’s actual annual incentive award was prorated for the portion of the year as Executive Chairman, effective July 2021. (3) Mr. Frazier’s 2021 LTI target decreased from $15,750,000 to $10,750,000, due to his transition from CEO to Executive Chairman. * Length of tenure is rounded. Merck & Co., Inc. 2022 Proxy Statement Compensation Discussion and Analysis Detailed Discussion and Analysis 49 Compensation Decisions for Executive Vice President • • • Age: 53 Tenure*: Compensation Decisions for Former Executive Vice President • Set base salary at $1,000,000(2) • Set annual incentive target at 100%(2) • Set LTI target at $4,300,000(2) • Issued a $3,000,000 LTI retention award, subject to vesting conditions(3) Age: Tenure*: 14 Years (1) Mr. Clyburn was promoted from Executive Vice President and Chief Commercial Officer to Executive Vice President and President, Human Health, effective April 1, 2021. He resigned from his position, effective February 1, 2022. (2) Reflects compensation as Executive Vice President and President, Human Health. (3) In connection with Mr. Davis’ transition to CEO, Mr. Clyburn received a $3,000,000 LTI retention award that would have vested on May 4, 2024, subject to his continued employment. As a result of his departure in February 2022, the full amount of the retention award was forfeited, and Mr. Clyburn was not eligible for severance benefits. * Length of tenure is rounded. Merck & Co., Inc. 2022 Proxy Statement Compensation Discussion and Analysis Detailed Discussion and Analysis Compensation Decisions for 2021 Richard R. DeLuca, Jr. Executive Vice President and President, Merck Animal Health • Set base salary at $800,000 • Set annual incentive target at 100% • Set LTI target at $2,700,000 • Issued a $2,000,000 LTI retention award, subject to vesting conditions(1) Age: 59 Tenure*: 10 Years (1) In connection with Mr. Davis’ transition to CEO, Mr. DeLuca received a $2,000,000 LTI retention award that will vest on May 4, 2024, subject to his continued employment. Dean Li, M.D., Ph.D. Executive Vice President and President, Merck Research Laboratories(1) • Set base salary at $950,000(2) • Set annual incentive target at 100%(2) • Set LTI target at $3,000,000(2) Age: Tenure*: (2) Reflects compensation as Executive Vice President and President, Merck Research Laboratories. * Merck & Co., Inc. Compensation Discussion and Analysis The Elements of 2021 Compensation 51 The Elements of How Our Compensation Program Works What We Reward • Top and bottom-line performance that meets or exceeds consensus and management expectations • Pipeline accomplishments that advance our position as an industry-leading biopharmaceutical company • Decision-making that yields long-term value creation for shareholders • Targeted growth strategy, consistently seeking opportunities that complement or supplement our portfolio in Oncology, Vaccines, Hospital and Animal Health • Inclusion of key financial and non-financial metrics in our annual cash incentive plan to ensure executives • Long-term incentive comprised of a mix of performance share units and stock options, linking a substantial amount of pay opportunity to long-term company performance and increased shareholder value • Majority of total target pay • Overall target total • Competitive positioning is targeted to median of market; actual positioning varies based on a variety of factors, including scope and complexity of role, years of experience, demonstrated performance over time, and other factors *Rounded based on full year long-term incentive and annual incentive targets. The C Additional details regarding the roles and responsibilities of the C Merck & Co., Inc. Compensation Discussion and Analysis The Elements of 2021 Compensation The C&MD Committee must balance The table shows adjustments made to Named Executive Officer Annual Base Salary Increase % Market/Promotional Adjustment % Davis(1) 3.0 % 30.7 % $ 1,500,000 Frazier(2) NA -26.5 1,250,000 Litchfield — (3) — (3) 900,000 Clyburn — (3) — (3) 1,000,000 DeLuca — (3) — (3) 800,000 Li — (3) — (3) 950,000 (1) Annual salary increase, effective March 2021; promotional adjustment effective July 2021. (2) Reduction in base salary effective July 2021. (3) Ms. Litchfield, Mr. Clyburn, Mr. DeLuca and Dr. Li were not NEOs in 2020. The NEOs participate in the Executive Award amounts under the EIP are Named Executive Officer 2020 Target Annual % of Base Salary 2021 Target Annual % of Base Salary(1) Davis 105 % 150 % Frazier 150 100 Litchfield — (2) 100 Clyburn — (2) 100 DeLuca — (2) 100 Li — (2) 100 (1) Reflects annual incentive targets as of December 31, 2021. (2) Ms. Litchfield, Mr. Clyburn, Mr. DeLuca and Dr. Li were not NEOs in 2020. Merck & Co., Inc. 2022 Proxy Statement Compensation Discussion and Analysis The Elements of 53 The C&B Committee must balance As shown in the table, adjustments Named Executive Officer Annual Base Salary Increase % Market Adjustment % Base Salary Effective April 2019 K.C. Frazier R.M. Davis S. Chattopadhyay R.M. Perlmutter J. Zachary The NEOs participate in the Award amounts under the EIP are No changes were made to EIP targets Named Executive Officer 2018 Target Annual % of Base 2019 Target Annual % of Base K.C. Frazier R.M. Davis S. Chattopadhyay R.M. Perlmutter J. Zachary Our Company Scorecard helps translate our strategic priorities into operational terms that 2021 Company Scorecard(1) 2019 Company Scorecard Measure Target Final Score* Revenue vs. Plan* Non-GAAP Pre-Tax Income vs. Plan* Value of Pipeline Approval Milestones Filing Milestones Global Development Milestones Discovery and Early Development Total *Excluding the impact of foreign exchange and certain other items, consistent with plan design; rounded Excluding the impact of variances in currency exchange rates versus budget and certain other items, consistent with plan design; rounded. Revenue: Compensation Discussion and Analysis The Elements of 2021 Compensation Pre-Tax Income: For purposes of The table below shows the Named Executive Officer Named Executive Officer Annual Base Salary (as of 12/31/19) ($) Annual Incentive (%) Annual Incentive ($) Company Scorecard Result (%) Final Award ($) K.C. Frazier R.M. Davis S. Chattopadhyay R.M. Perlmutter J. Zachary Named Executive Officer Annual Base Salary (as of 12/31/21) ($) Annual Incentive (%) Annual Incentive ($) Company Scorecard Result (%) Final Award ($) Davis(1) $1,500,000 150 % $1,915,274 148 % $2,834,606 Frazier(2) 1,250,000 100 1,894,658 148 2,804,094 Litchfield(3) 900,000 100 800,137 148 1,184,203 Clyburn(3) 1,000,000 100 975,342 148 1,443,506 DeLuca 800,000 100 800,000 148 1,184,000 Li(4) 950,000 100 946,486 148 1,400,799 Prorated using 105% target from January-June and 150%, effective July 1. Prorated using 150% target and $1,700,000 in salary from January-June and 100% and $1,250,000 in salary, effective July 1. Prorated using 100% target, effective April 1. Prorated using 100% target, effective January 4. We use two long-term incentive vehicles to ensure that our LTI program remains balanced, sustainable, and supportive of its objectives over a multi-year period. Stock Options Stock options align our executives’ interests with the interests of our shareholders because options only have financial value to the recipient if the price of our stock at the time of exercise exceeds the stock price on the date of grant. As a result, we believe stock option grants encourage executives to focus on behaviors and initiatives that support sustained long-term stock price appreciation, which benefits all shareholders. Merck & Co., Inc. 2022 Proxy Statement Compensation Discussion and Analysis The Elements of 2021 Compensation 55 Current LTI Grant Practices All grants to executive officers are approved by the C Stock options are granted at no less than fair market value on a fixed date or date of a particular event, with all required approvals obtained in advance of or on the actual grant date. Fair market value is the closing price of a share of Company stock on the grant date. In certain countries, a higher grant price may be used to satisfy provisions of local applicable law. The re-pricing of stock options is not permitted under the Incentive Stock Plan without prior shareholder approval. The Executive Officer K.C. Frazier R.M. Davis S. Chattopadhyay R.M. Perlmutter J. Zachary Named Executive Officer Davis(2) $4,000,000 $9,200,000 +$5,200,000 Frazier 15,750,000 10,750,000 -5,000,000 Litchfield — (3) 2,200,000 — Clyburn — (3) 4,300,000 — DeLuca — (3) 2,700,000 — Li — (3) 3,000,000 — Grant values shown above will be different from the values shown in theSummary Compensation Mr. Davis’ LTI target in 2021 increased from $4,000,000 as CFO to $10,750,000 as CEO. In 2021, Mr. Davis’ actual LTI award was $9,200,000 which reflects 3 months at the 2021 CFO rate and 9 months at the CEO rate, when Mr. Davis became President. Ms. Litchfield, Mr. Clyburn, Mr. DeLuca and Dr. Li were not NEOs in 2020. PSU Program At the beginning of each year, we Merck & Co., Inc. 2022 Proxy Statement Compensation Discussion and Analysis The Elements of 2021 Compensation on the R-TSR portion of the award cannot exceed 200%. If R-TSR is negative, the payout on this portion of the award cannot exceed 100%, even if our R-TSR outperforms the median of the peer group. The 2019 PSU program ended at the end of 2021 and the payout is described on the following page. Beginning in 2020, we removed the OCF metric and increased the weighting of EPS to streamline our program design, focusing on a single earnings metric. Additionally, due to the complexities associated with disentangling our Organon business from a multi-year financial plan, we adjusted the design for the 2019, 2020, and 2021 programs as further described below. Our Organon business was successfully spun off in June 2021. With having completed the spin-off in 2021 as planned, we will revert to a three-year cumulative EPS and R-TSR design in 2022, with 50% tied to EPS and 50% tied to R-TSR. Program Performance Period Original Program Design Program Design as a result of the Organon Spin-off 2019-2021 25% 3-Year EPS 25% 3-Year OCF 50% 3-Year R-TSR 25% 2-Year (2019 and 2020) EPS 25% 2-Year (2019 and 2020) OCF 50% 3-Year R-TSR 2020-20221 50% 3-Year EPS 50% 3-Year R-TSR 33% 1-Year (2020) EPS 67% 3-Year R-TSR 2021-20231 50% 3-Year EPS 50% 3-Year R-TSR 33% 1-Year (2021) EPS 67% 3-Year R-TSR Alternative design was established on grant date and part of original grant terms. Merck & Co., Inc. Compensation Discussion and Analysis The Elements of 57 Payouts Under the For grants issued in For the The The performance periods for EPS and OCF were adjusted to two years as a result of the Organon spin. Excluding the impact of R-TSR as reported by Bloomberg and calculated using the average closing price of Merck and Merck & Co., Inc. Compensation Discussion and Analysis The Elements of Named Executive Officer PSU Distribution Based on the final payout of Named Executive Officer Target Award (# of shares) Final Award (# of shares) K.C. Frazier R.M. Davis S. Chattopadhyay R.M. Perlmutter J. Zachary(1) Named Executive Officer Pre-Spin Target Award (# of shares) Adjusted Post-Spin (# of shares) Final Award(2) (# of shares) Davis Frazier Litchfield Clyburn DeLuca Li Includes accrued dividends distributed in Additional information regarding the payouts under the To accurately reflect the operating performance of our business, the C In connection with Merck’s 2021 CEO transition, the C&MD Committee approved retention LTI grants for Mr. Clyburn ($3,000,000) and Mr. DeLuca ($2,000,000). Under their leadership, the Human Health and Animal Health businesses delivered strong results in 2020, despite the impact of the COVID-19 pandemic, in what continues to be a highly competitive and challenging marketplace. These two retention grants were intended to ensure Mr. Clyburn and Mr. DeLuca remained focused on leading their respective businesses during and following the CEO transition. The LTI grants were issued on May 4, 2021 in the form of 100% RSUs, vesting in their entirety at the end of a three-year period, subject to their continued employment. As a result of Mr. Clyburn’s resignation, effective February 1, 2022, he forfeited the full value of his retention LTI grant. Named Executive Officer Clyburn DeLuca Similar to Merck’s other salaried, U.S.-based employees, the NEOs participate in a variety of retirement, health and welfare, and paid time-off benefits designed to enable us to attract and retain our workforce in a highly competitive Additionally, senior management employees, including the NEOs, are provided a limited number of other benefits, which the C These benefits, which are described in more detail below, are reflected in the “All Other Compensation” column of theSummary Compensation Financial and tax planning. Executives receive a $10,000 cash allowance each December to encourage consultation with knowledgeable financial and tax planning experts who can help them understand the compensation and benefits programs in which they participate. Merck & Co., Inc. 2022 Proxy Statement Compensation Discussion and Analysis The Elements of 2021 Compensation 59 Personal use of Company aircraft. Our global security organization regularly evaluates the travel risk for our CEO. As a result of these assessments and based on our security team’s recommendation, our Board of Directors has determined that our CEO must use Company-provided aircraft for all business and personal travel. In addition, this requirement continued for Mr. Frazier following his transition to Executive Chairman, as a result of our security team’s recommendation. Personal use of Company aircraft by other executives requires CEO approval and is only permitted under exceptional circumstances. Other than our CEO and Executive Chairman, there Personal use of Company car and driver. Our CEO Residential security systems. Reimbursement for the installation, maintenance and remote access of residential security systems is provided to select executives, when deemed necessary by our internal global security team. Executives are responsible for paying monthly security monitoring fees, which are not reimbursable. As part of our annual compensation review, the C Mr. Davis’ target TDC for 2022 increased by 7.7% based on a review of his competitive positioning relative to the primary pharmaceutical and supplemental (Dow) peer groups. Consistent with our compensation strategy that supports a pay-for-performance culture, the Board intends to increase Mr. Davis’ target TDC over time to achieve a more competitive position relative to these peer groups, assuming continued strong business performance and leadership. As part of Mr. Davis’ target TDC increase, annual base salary increased by 3%, there was no change in target annual incentive percent, and target LTI was increased by $1,000,000 to Mr. Frazier’s 2022 target TDC was reduced by 43.4%, recognizing his reduced responsibilities as Executive Chairman for 2022 and consistent with market practice for CEOs transitioning to To better align their compensation with the overall market, Ms. Litchfield’s, Mr. DeLuca’s and Dr. Li’s target TDC increased by 17.5%, The Named Executive Officer(1) Annual Base Salary Increase% Target Annual Incentive % of Base Salary Target LTI Grant Value Increase $ Davis Frazier Litchfield DeLuca Li Mr. Clyburn resigned from his position, effective February 1, 2022. As a result, he did not receive an increase to his annual base salary or a 2022 LTI grant and is not reflected in the table above. Mr. Davis’ target LTI grant was increased from a full year target of $10,750,000 to $11,750,000. In 2021, Mr. Davis’ actual LTI award was $9,200,000 which reflects 3 months at the 2021 CFO rate and 9 months at the CEO rate, when Mr. Davis became President. Includes market adjustment as described above. Merck & Co., Inc. Compensation Discussion and Analysis The Elements of Stock Ownership Requirements The C The following table sets forth the stock ownership requirements and current stock ownership status as a percentage of the requirement for the CEO, Executive Chairman, and other NEOs as of February Ms. Return of Incentive Compensation (“Clawback Policy”) Under our incentive compensation recoupment policy, the Board will seek reimbursement for the annual cash incentive and/or LTI awards paid to the executive, where the Board determines (a) the executive engaged in misconduct that resulted in a material violation relating to (i) the Hedging and Pledging As part of our insider trading policy, Merck prohibits Directors and management level employees, including officers, from engaging in short sales, publicly traded options, hedging transactions, and pledging of Company stock. Tax Deductibility of Compensation In light of the repeal of the performance-based compensation exemption under Section 162(m) of the Internal Revenue Code, the C Merck & Co., Inc. 2022 Proxy Statement Compensation Discussion and Analysis Compensation Risk Assessment 61 Our executive compensation program and policies are driven by our business environment and designed to enable us to achieve our mission and adhere to our values. The C In Compensation and The C Compensation and Patricia F. Russo (Chair) Thomas H. Glocer Inge G. Thulin Peter C. Wendell Merck & Co., Inc. The following table summarizes the total compensation that was paid or accrued for the Named Executive Officers for the fiscal years ended December 31, Name and Principal Position Year Salary ($)(1) Bonus ($) Stock Awards ($)(2) Option Awards ($)(3) Non-Equity Incentive Compensation ($)(4) Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) All Other Compensation ($)(6) Total ($) Kenneth C. Frazier Chairman, President and Chief Executive Officer Robert M. Davis Executive Vice President, Global Services and Chief Financial Officer Sanat Chattopadhyay Executive Vice President and President, Merck Manufacturing Division Roger M. Perlmutter, M.D., Ph.D. Executive Vice President and President, Merck Research Laboratories Jennifer Zachary Executive Vice President, General Counsel and Corporate Secretary Name and Principal Position Year Salary ($)(1) Bonus ($) Stock Awards ($)(2) Option Awards ($)(3) Non-Equity Incentive Plan Compensation ($)(4) Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) All Other Compensation ($)(6) Total ($) Robert M. Davis Chief Executive Officer, President and Former Chief Financial Officer 2021 $ 1,319,959 0 $6,324,576 $ 2,760,003 $2,834,606 $235,640 (7) $247,337 $ 13,722,121 2020 1,112,795 0 2,737,406 1,199,772 1,018,194 611,948 159,395 6,839,510 2019 1,075,557 0 3,046,785 1,200,201 2,090,702 193,079 120,864 7,727,188 Kenneth C. Frazier Executive Chairman and Former Chief Executive Officer 2021 1,478,681 0 7,390,092 3,225,004 2,804,094 0 (8) 299,049 15,196,920 2020 1,702,006 0 10,778,499 4,724,098 2,218,500 2,288,641 376,685 22,088,429 2019 1,659,482 0 11,425,398 4,500,763 4,609,200 5,078,147 (9) 375,485 27,648,475 Caroline Litchfield Executive Vice President and Chief Financial Officer 2021 805,060 0 1,512,420 660,001 1,184,203 0 (13) 59,770 4,221,454 2020 (10) — — — — — — — — 2019 (10) — — — — — — — — Frank Clyburn Former Executive Vice President and President, Human Health(11) 2021 960,343 0 5,956,031 (12) 1,290,003 1,443,506 187,604 83,584 9,921,071 2020 (10) — — — — — — — — 2019 (10) — — — — — — — — Richard R. DeLuca, Jr. Executive Vice President and President, Merck Animal Health 2021 790,247 0 3,856,115 (12) 809,999 1,184,000 128,732 71,907 6,841,000 2020 (10) — — — — — — — — 2019 (10) — — — — — — — — Dean Li, M.D., Ph.D. Executive Vice President and President, Merck Research Laboratories 2021 937,104 0 2,062,363 900,003 1,400,799 114,593 66,057 5,480,919 2020 (10) — — — — — — — — 2019 (10) — — — — — — — — Amounts shown reflect actual base salary earnings and are not reduced to reflect the Named Executive Officers’ elections, if any, to defer receipt of salary into the Merck Deferral Program, an unfunded nonqualified savings plan. For more information about deferred amounts, see theNonqualified Deferred Compensation table and related footnotes on page The amounts shown in this column represent the full grant date fair value of RSUs and PSUs granted to each of the Named Executive Officers during The maximum value of the PSU awards granted to the Named Executive Officers during NEO K.C. Frazier R.M. Davis S. Chattopadhyay R.M. Perlmutter J. Zachary Named Executive Officer Maximum Value of PSU Awards ($) Davis $ 12,649,152 Frazier 14,780,183 Litchfield 3,024,840 Clyburn 5,912,043 DeLuca, Jr. 3,712,269 Li 4,124,727 For more information on the awards granted during Merck & Co., Inc. Summary Compensation Table 63 The amounts shown in this column represent the full grant date fair value of stock options granted to each of the Named Executive Officers during For more information on stock options granted during Represents amounts paid under the Executive Incentive Plan. For more information, see the Amounts shown are not reduced to reflect the Named Executive Officers’ elections, if any, to defer receipt of awards into the Merck Deferral Program. For more information, see theNonqualified Deferred Compensation table and related notes and narrative on page Amounts shown are solely an estimate of the aggregate change in actuarial present value of the Named Executive Officers’ accrued benefits under the Company’s pension plans from December 31, The Merck Deferral Program, an unfunded nonqualified savings plan, does not provide for above market or preferential earnings. For more information, see theNonqualified Deferred Compensation table and related notes and narrative on page See theAll Other Compensation table on page Change in value compared to previous year is Change in pension value is negative Ms. Litchfield, Mr. The U.S. change in pension value is positive; however, the U.K. change in pension value is negative due to an increase in discount rates and change in mortality assumptions, resulting in an aggregate negative change in pension value that is reported as $0. Merck & Co., Inc. Summary Compensation Table All Other Compensation Name Financial/Tax Counseling Services ($)(1) Company Aircraft ($)(2) Company Car and Driver ($)(3) Installation, Maintenance and Remote Access of Home Security ($)(4) Relocation Expense ($) Savings Plan Company Match and Credits ($)(5) Total ($) K.C. Frazier R.M. Davis S. Chattopadhyay R.M. Perlmutter J. Zachary Name Financial/Tax Counseling & Tax Preparation Services ($)(1) Company Aircraft ($)(2) Company Car and Driver ($)(3) Installation, Maintenance and Remote Access ($)(4) Relocation Expense ($) Savings Plan Company Match and Credits ($)(5) Total ($) Davis Frazier Litchfield Clyburn DeLuca, Jr. Li The value of any personal use of Company aircraft by the Named Executive Officers is based on the aggregate incremental per-hour cost based on the flight time flown from origination to destination and a return to point of origination without passengers, when applicable. This benefit The value of any personal use of Company car and driver by the Named Executive Officers is based on the recipient’s cost if equivalent assets were used independent of the Company. This benefit The incremental cost calculation for personal use of Company car and driver by the Named Executive Officers includes driver overtime, meals, travel pay, maintenance and fuel costs. Personal use of a car and driver is also provided to a select number of other executives, primarily for commutation purposes, as further described in the Other Employee Benefits section on page Installation, maintenance, and remote access of home security are valued at actual costs billed by outside vendors. The Named Executive Officers received Company matching contributions equal to 75% of the first 6% of eligible compensation contributed (up to the IRS limit for qualified savings plans) to the Merck U.S. Savings Plan and 4.5% credit of eligible compensation in excess of the IRS limit to the Named Executive Officers’ accounts under the Merck Deferral Program. Ms. Litchfield, Mr. Merck & Co., Inc. 65 Introduction The following is a disclosure of (1) total annual compensation for our CEO, (2) the median total annual compensation for our employees globally, excluding our CEO and (3) the ratio of those two numbers. Median Total Annual Compensation We used base salary as of October 31, Exemptions Total Employees Before and After De Minimis Exemption Merck’s employee population as of October 31, 2021 included Excluded Under De Minimis Exemption Country Algeria Bahrain Belarus Bosnia and Herzegovina Bulgaria Dominican Republic Ecuador Egypt Honduras India Indonesia Jordan TOTAL The Ratio The Under the SEC rules, companies may identify the median total annual compensation using a wide variety of methods including reasonable assumptions and estimations. It is therefore difficult to compare Merck’s ratio to the Merck & Co., Inc. The following table provides information concerning each award made in Grants of Plan-Based Awards for Fiscal Year Ended December 31, All Other Stock Awards: Number of Shares of Stock or Units (#) All Other Option Awards: Number of Securities Underlying Options (#)(3) Exercise or Base Price of Option Awards ($/Sh)(3) Grant Date Fair Value of Stock Awards ($)(4) Name Grant Approval Date Award Type Thres- hold ($)(1) Target ($)(1) Maximum ($)(1) Thres- hold (#)(2) Target (#)(2) Maximum (#)(2) K.C. Frazier R.M. Davis S. Chattopadhyay R.M. Perlmutter J. Zachary Name Grant Date Approval Date Award Type Thres- hold ($)(1) Target ($)(1) Maximum ($)(1) Thres- hold (#)(2) Target (#)(2) Maximum (#)(2) All Other Stock Awards: Number of of Stock or Units (#)(3) All Other Option Awards: Number of Securities Underlying Options (#)(4) Exercise or Price of Option Awards ($/Sh)(4) Grant Date Fair Value of Stock and Option Awards ($)(5) Davis Frazier Litchfield Clyburn DeLuca, Jr. Li Amounts represent awards under the EIP, which equal a specified percentage of base salary as in effect on December 31, The payout of PSUs can range from zero for below threshold performance to a maximum of 200% of target, depending on the level of achievement of the applicable performance goals. The performance goals of PSUs reflect the adjustments that occurred as of June 2, 2021 in connection with the Organon & Co. (“Organon”) spin-off as described in the registration statement on Form 10 filed with the SEC by Organon (the “Form 10”). As reported in the Form 10, the performance goals were equitably adjusted to reflect the Organon spin-off and the number of units subject to such awards was adjusted to preserve the same intrinsic value and general terms and conditions as were in place immediately prior to the adjustments. For more information on PSUs, see the PSU Program section on page Number of shares of stock or units reflects the adjustments that occurred as of June 2, 2021 in connection with the Organon spin-off as described in the Form 10. As reported in the Form 10, all Merck time-based RSU awards outstanding as of immediately prior to the distribution date were converted on the distribution date into adjusted Merck awards for Merck employees to preserve the same intrinsic value and general terms and conditions (including vesting) as were in place immediately prior to the adjustments. For more information on RSUs, see the narrative to the Grants of Plan-Based Awards table on the following page. Stock options generally vest and become exercisable in equal installments on the first, second and third anniversaries of the grant date. This column represents the full grant date fair value of PSUs, RSUs and stock options granted to each of the Named Executive Officers, as calculated in accordance with FASB ASC Topic 718. These amounts do not represent the actual value realized by the Named Executive Officers during In connection with Mr. Clyburn’s resignation as Executive Vice President and President, Human Health, effective February 1, 2022, Mr. Clyburn’s RSU award, granted on 5/4/2021, was forfeited. Merck & Co., Inc. Grants of Plan-Based Awards Narrative Information Relating to the Grants of Plan-Based Awards Table 67 Narrative Information Relating to the Grants of Plan-Based Awards Table General Information Regarding the EIP The EIP is a shareholder-approved plan that is administered by the C Each executive officer is assigned a target award opportunity that is expressed as a multiple of salary. The Company performance component (as reflected by the Company Scorecard) is multiplied by the target award opportunity. The Company performance component can range between 50% and 200% of target. If the combined results of the three metrics do not total at least 50, no payout will be made. General Information Regarding Long-Term Incentives Stock Options Stock options enable executives to share in the financial gain derived from the potential appreciation in stock price from the date the option is granted until the date the option is exercised. The exercise price of a stock option is set as the closing price of Merck common stock as reported on the NYSE on the grant date (unless a higher grant price is required under local law). Subject to their terms, stock options generally vest and become exercisable in equal installments on the first, second and third anniversaries of the grant date and expire on the day before the tenth anniversary of the grant date. RSUs PSUs 33% of the award will be determined by the Company’s Merck & Co., Inc. The following table provides details about each outstanding equity award held by the Named Executive Officers as of December 31, Outstanding Equity Awards for Fiscal Year Ended December 31, Name Number of Securities Underlying Unexercised Options Exercisable (#)(1) Number of Securities Underlying Unexercised Options Unexercisable (#)(1) Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Grant Date Option Exercise Price ($) Vesting Date Option 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 ($)(2)(5) Equity Incentive Plan Awards: Number of Unearned Shares, (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or That Have ($)(5) K.C. Frazier R.M. Davis S. Chattopadhyay Name Number of Securities Underlying Unexercised Options Exercisable (#)(1) Number of Securities Underlying Unexercised Options Unexercisable (#)(1) Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Grant Date Option Exercise Price ($) Vesting Date Option Expiration Date Number of or Stock Have Vested (#)(2) Market Value of Shares or Units Stock Have Not Vested ($)(2)(5) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(5) Davis Frazier Litchfield Merck & Co., Inc. Outstanding Equity Awards 69 Outstanding Equity Awards for Fiscal Year Ended December 31, Name Number of Securities Underlying Unexercised Options Exercisable (#)(1) Number of Securities Underlying Unexercised Options Unexercisable (#)(1) Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Grant Date Option Exercise Price ($) Vesting Date Option Expiration Date Number of Shares or Units of Have Not Vested (#)(2) Market Value of Shares or Units of Stock That Have Not Vested ($)(2)(5) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(5) R.M. Perlmutter J. Zachary Name Number of Securities Underlying Unexercised Options Exercisable (#)(1) Number of Securities Underlying Unexercised Options Unexercisable (#)(1) Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Grant Date Option Exercise Price ($) Vesting Date Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#)(2) Market Value of Shares or Units of Stock That Have Not Vested ($)(2)(5) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(5) Clyburn DeLuca, Jr. Li Stock options generally vest and become exercisable in equal installments on the first, second and third anniversaries of the grant date, and expire on the day before the tenth anniversary of the grant date. The date set forth in the “Vesting Date” column represents the first vesting date for such award. Merck & Co., Inc. 2022 Proxy Statement Outstanding Equity Awards Maximum (200% of target) of PSUs granted during Maximum (200% of target) of PSUs granted during The market value of the units reported in this column was computed by multiplying the number of such units by Merck & Co., Inc. 71 Option Exercises and Stock Vested The following table provides information about stock options that were exercised and stock units that vested during Option Exercises and Stock Vested for Fiscal Year Ended December 31, Name Number of Shares Acquired on Exercise (#) Value Realized ($)(1) Number of Shares Acquired on Vesting (#)(2) Value Realized ($)(3) K.C. Frazier R.M. Davis S. Chattopadhyay R.M. Perlmutter J. Zachary Name Number of Shares Acquired on Exercise (#) Value Realized on Exercise ($)(1) Number of Shares Acquired on Vesting (#)(2) Value Realized on Vesting ($)(3) Davis Frazier Litchfield Clyburn DeLuca, Jr. Li This column represents the values realized upon stock option exercises during This column represents the vesting during PSUs granted in The value realized for PSUs was determined by multiplying the number of vested units by the market price of Merck common stock on February Merck & Co., Inc. The table below sets forth information concerning the present value of benefits accumulated by the Named Executive Officers Pension Benefits for Fiscal Year Ended December 31, Name Number of Years Credited Service (#)(1) Number of Years Cash Balance Service (#)(2) Present Value of Accumulated Benefit ($)(3) Payments During Last Fiscal Year ($) K.C. Frazier R.M. Davis S. Chattopadhyay R.M. Perlmutter J. Zachary Name Number of Years Credited Service (#)(1) Number of Years Cash Balance Service (#)(2) Present Value of Accumulated Benefit ($)(3) Payments During Last Fiscal Year ($) Davis Qualified Plan — 7.67 $211,168 $0 SRP — 7.67 1,465,456 0 Frazier Qualified Plan 27.50 29.58 1,608,271 0 SRP 27.50 29.58 29,403,403 0 Litchfield(4) Qualified Plan — 31.25 75,094 0 SRP — 31.25 221,036 0 U.K. Pension Plan 26.25 — 4,663,183 0 Clyburn Qualified Plan 11.50 13.92 687,878 0 SRP 11.50 13.92 2,821,094 0 DeLuca, Jr. Qualified Plan 8.00 10.25 513,036 0 SRP 8.00 10.25 2,350,605 0 Li Qualified Plan — 4.75 126,298 0 SRP — 4.75 294,500 0 This column shows the number of years of Credited Service that is used for benefit accrual purposes and eligibility purposes under the Final Average Pay formula of the Qualified Plan and the SRP. The Final Average Pay formula is applicable only for participants who were actively employed on December 31, 2012. Participants hired (or rehired) after December 31, 2012 receive benefits under a Cash Balance formula that does not rely on Credited Service. For employees actively employed on December 31, 2012, Credited Service for the Final Average Pay formula begins with the January 1 or July 1 that coincides with or follows a participant’s hire date and ends with the last full month of employment. Credited Service is earned through the earlier of termination or December 31, 2019. After December 31, 2019, all benefits will be calculated under The number of years of Credited Service for Ms. Litchfield in the U.K. Pension Plan row shown is used for benefit accrual purposes while she participated in the plan prior to her transfer from the U.K. to the U.S. Prior to January 1, 2020, Ms. Litchfield was not a U.S. based employee and not eligible for the U.S. Pension Plan and the MSD Supplemental Retirement Plan. This column shows the number of years of Cash Balance Service that is used for benefit accrual purposes under the Cash Balance formula of the Qualified Plan and the SRP. Cash Balance Service begins on a participant’s first day of employment, includes all years and completed months of service, and ends on the participant’s date of termination of employment. The Cash Balance Service for Ms. Litchfield is based on her original hire date and is used to determine the pay credit level under the Cash Balance formula. Benefit accruals under the Cash Balance formula did not start until January 1, 2020, effective with her transfer to the U.S. Prior to January 1, 2020, Ms. Litchfield was not a U.S. based employee and not eligible for the U.S. Pension Plan and the MSD Supplemental Retirement Plan. For the Qualified Plan and the SRP, the actuarial present value is calculated using the same assumptions used for financial statement reporting purposes as set forth in the footnotes to our financial statements, except that commencement is assumed at the earliest unreduced retirement age (with no pre-retirement mortality). The earliest unreduced retirement age is the earlier of age 62 and 10 years of Discount rate equals Merck & Co., Inc. 2022 Proxy Statement Pension Benefits 73 Interest crediting rate equals 4.95% for both the Qualified Plan and the SRP; Mortality based on 100% of the sex distinct Pri-2012 White Collar Mortality Table, with projection based on modified Future lump sum conversion factors calculated by implied forward rates embedded in the 12/31/ Assumes that 80% of retirees elect a lump sum and the remaining 20% elect an annuity for the Qualified Plan and assumes 100% of retirees elect a lump sum for the SRP. The amounts in the table for the U.K. Pension Plan for Ms. Litchfield reflect benefits accrued during her participation in the plan plus legally required U.K. pension consumer price index increases. The amounts reported represent the actuarial present value of the accrued benefit payable at age 65, and converted from GBP to USD using an exchange rate ($1/£) of 1.342696 as of December 31, 2021. The NEOs participate in both U.S. defined benefit plans, as do other U.S.-based Merck Sharp & Dohme Corp. salaried employees. Benefits payable under the Qualified Plan and the SRP are based on several formulas. Beginning in 2013, a Cash Balance formula was added to replace the Final Average Pay (“FAP”) formula. Employees eligible for U.S. benefits on December 31, 2012 receive transition benefits, which provide the greater of the benefit under the Cash Balance and FAP formulas through December 31, 2019, or the date the participant terminates employment or loses retirement plan eligibility, if earlier. Only Mr. Frazier, Mr. DeLuca, Jr. and Mr. Final Average Pay Formula: For service prior to January 1, 2013, benefits are calculated and shown as a single life annuity normally payable at age 65 (normal retirement date or “NRD”). The amount equals: * Limited to 31.25 Cash Balance Formula: For service starting January 1, 2013, benefits are calculated and shown as an account balance that grows with annual pay credits according to the following schedule: Age + Cash Balance Service at 12/31 Percent of Total Pay credited to Account Balance At Least The account balance also earns interest credits every year at the annual rate of the change in the Consumer Price Index plus 3% (and not less than 3.3%). The account balance is the sum of annual pay credits and interest credits. Final Average Pay. The average of a participant’s highest five consecutive calendar years of Total Pay for the 10 years before the earlier of: Termination of employment, or December 31, 2019, if eligible for the transition provisions. Total Pay is generally base salary and EIP for both the FAP and Cash Balance formulas for the NEOs. Vesting. A participant is generally vested after three years of vesting service. All NEOs are Merck & Co., Inc. 2022 Proxy Statement Pension Benefits Early Retirement Subsidies. Under the FAP formula, a participant who is age 55 with at least 10 years of credited service is entitled to early retirement subsidies. Under this provision unreduced benefits may begin at age 62 and benefits that begin before 62 are only reduced by 3% per year. SRP Benefits. The Qualified Plan benefits are limited by the Internal Revenue Code. The SRP is an unfunded plan maintained to provide benefits according to the formulas described above without regard to those limits. The SRP also may include benefits based on compensation deferred into the Merck Deferral Program. Forms of Benefit. In the Qualified Plan and in the SRP for accruals prior to 2005, a participant generally can choose from several annuity options or a lump sum. Merck & Co., Inc. 75 Nonqualified Deferred Compensation The following table shows the executive contributions, earnings, and account balances for the Named Executive Officers in the Merck Deferral Program, an unfunded, nonqualified, unsecured deferred compensation plan. The Merck Deferral Program allows participants who are executive officers to defer all or a portion of annual bonus (but not less than $3,000), and/or up to 50% of base salary, subject to certain limitations. Nonqualified Deferred Compensation for Fiscal Year Ended December 31, Name Executive in 2019 ($) Registrant in 2019 ($)(1) Aggregate Earnings in 2019 ($)(2) Aggregate Withdrawals/ in 2019 ($) Aggregate Balance at 12/31/19 ($)(3) K.C. Frazier R.M. Davis S. Chattopadhyay R.M. Perlmutter J. Zachary Name Executive in 2021 ($) Registrant in 2021 ($)(1) Aggregate Earnings in 2021 ($)(2) Aggregate Withdrawals/ in 2021 ($) Aggregate Balance at 12/31/21 ($)(3) Davis Frazier Litchfield Clyburn DeLuca, Jr. Li The amounts disclosed in this column represent the Company’s annual 4.5% credit of eligible pay in excess of the IRS limit to the This column represents dividends earned plus changes in account value (investment earnings or losses) for the period of January 1, This column includes deferred compensation earned in earlier years which was disclosed as Merck Deferral Program Investments. Account balances may be invested in phantom investments selected by the executive from an array of investment options that mirrors the funds in the Merck U.S. Savings Plan. Distributions. When participants elect to defer amounts into the Merck Deferral Program, they also elect when the amounts ultimately will be distributed to them. Distributions may either be made in a specific year (regardless of whether employment has then ended) or at a time that begins at or after the executive’s employment has ended. Distributions can be made in a lump sum or up to 15 annual installments. Distributions from the Merck common stock fund are made in shares, with cash payable for any partial share. Merck & Co., Inc. Potential Payments Upon Termination or a Change in Control The section below describes the payments that may be made to the NEOs upon separation, either pursuant to individual agreements or in connection with a change in control (as defined below). For payments made to a participant upon a retirement other than in connection with a separation or change in control, see thePension Benefits table and related narrative beginning on page Separation The Company provides separation pay and benefits to all of its U.S.-based employees who are employees of Merck Sharp & Dohme Corp., including the NEOs, pursuant to the Merck & Co., Inc. U.S. Separation Benefits Plan (the “Separation Plan”). An amount related to the executive’s target annual incentive award is provided under certain circumstances. To be eligible for all of the benefits described below, a general release of claims is required, as well as compliance with non-disparagement, cooperation with litigation and, in some cases, non-competition and non-solicitation agreements in connection with, and at the time of, the separation. Severance Pay. The Separation Plan provides severance pay to employees whose employment is terminated due to organizational changes, including discontinuance of operations, location closings, corporate restructuring or a general reduction in work force. For eligible separations during Years of Continuous Service at Separation Date Less than 1 year 26 1-4 years 40 5 years or more 40 plus 2 additional weeks for each year of continuous service beyond 4 years (maximum 78 total) Health and Welfare Continuation. Separated employees are eligible for continued participation in the Company’s medical, dental and basic life insurance plans for 26 to 78 weeks, depending on their years of continuous service, by paying contributions at the same rate as paid by active employees. Outplacement Assistance. Certain management-level employees, including the NEOs, are eligible for up to 12 months of executive outplacement services. EIP Awards As part of our standard practice for separated employees and depending on the date of separation, we may pay an amount in lieu of a bonus payout under the EIP. If employment terminates following the end of the performance year, the executive will be considered for a bonus on the same terms and conditions as other employees with respect to the previous year’s performance. If employment terminates between January 1 and June 30 of the performance year, the employee is not eligible for payment of a bonus for the year in which separation occurred, unless the employee is retirement eligible. Retirement eligible employees may receive a special payment in lieu of any award under the EIP. The amount of the special payment is based on his or her target award and the number of months worked in the current year. If employment terminates after June 30 and before December 31 of the performance year, a special payment is made in lieu of any award under the EIP. The amount of the special payment is based on the employee’s target award and the number of months worked in the current year. Merck & Co., Inc. Potential Payments Upon Termination or a Change in Control Individual Agreements and Arrangements 77 Effects Under Other Benefit Plans Separated employees may be eligible for additional benefits under other plans as described below. In general, these benefits are only provided in exchange for a valid release of claims. Retirement Plan Bridge. This benefit is available to employees who would have been at least age 50 with at least 10 years of Cash Balance Service as of December 31 of the year in which their separation occurs. These employees receive a pro-rata portion of the enhancement provided by early retirement subsidies as described in thePension Benefits section beginning on page Retiree Healthcare Bridge. If the employee is at least age 52 with 10 years of Cash Balance Service as of December 31 of the year in which separation occurs Options, RSUs and PSUs. In Individual Agreements and Arrangements When Robert M. Davis was appointed Executive Vice President and Chief Financial Officer by the Board effective April 23, Merck & Co., Inc. Potential Payments Upon Termination or a Change in Control Change in Control Change in Control Participants in the Change in Control Plan include the NEOs as well as certain other senior executives whose participation was Cash severance paid in a lump sum within 90 days following employment termination in an amount equal to three (for the CEO) or two (for the other NEOs) times the sum of the NEO’s base salary, plus the lesser of (a) the NEO’s target bonus amount or (b) the average of the actual bonuses paid to the NEO in the three years immediately preceding termination while the NEO was serving in the same position as he or she was serving immediately prior to termination, annualized for partial or incomplete years in such position. Pro-rata annual cash incentive at target levels, paid in a lump sum within 90 days following employment termination. Continued medical, dental and life insurance benefits at active-employee rates for a period of up to three years for the CEO and for up to two years for the other NEOs. These benefits are reduced by benefits obtained from a subsequent employer. If the NEO would have attained specified age and service levels within two years following the change in control, then the NEO is entitled to (1) subsidized and/ or unreduced pension benefits upon commencement of pension benefits in accordance with plan terms after termination of employment, and (2) subsidized retiree medical benefits as a retiree under our health plans commencing immediately after the expiration of the benefit continuation period at active-employee rates as described above. An NEO who is a participant in the Company’s pension plan will become vested (if not already) in the applicable accrued benefit as of the termination date. Continued financial planning benefits and outplacement assistance benefits for up to 12 months. A “change in control” for purposes of the Change in Control Plan generally consists of any of the following: An acquisition of more than 30% of the Company’s voting securities (other than acquisitions directly from the Company); or The current Board (and their approved successors) ceasing, over any consecutive 24-month period, to constitute a majority of the board of directors of a successor to the Company; or The consummation of a merger, consolidation or reorganization, unless the shareholders of the Company prior to the transaction hold at least 50% of the voting securities of the successor; the members of the Board prior to the transaction constitute at least a majority of the board of directors of the successor; and no person owns 30% or more of the voting securities of the Company or the successor; or Shareholder approval of the liquidation or dissolution of the Company or the sale by the Company of all or substantially all of its assets. There are two types of termination of employment that entitle an NEO to receive severance benefits under the Change in Control Plan: a termination without Cause, or a resignation by the NEO for “good reason,” in each case within two years following a change in control. An NEO is not eligible for benefits under the Change in Control Plan following a termination due to death or permanent disability. A termination for “good reason” generally includes any of the following actions without the executive’s written consent following a change in control: Significantly and adversely changing the executive’s authority, duties, responsibilities or position (including title or reporting level) other than: an isolated, insubstantial and inadvertent action not taken in bad faith that the Company remedies promptly after receiving notice; a change in the person to whom (but not the position to which) the NEO reports; Merck & Co., Inc. 2022 Proxy Statement Potential Payments Upon Termination or a Change in Control Change in Control 79 ceasing to be an executive officer subject to Section 16(b) of the Exchange Act; or transfer of employment to an affiliate of the Company, if such transfer occurs prior to a change in control; Reducing annual base salary or level of bonus opportunity; Changing the executive’s office location so the executive must commute more than the greater of (a) 50 more miles or (b) 120% more miles, as compared to his or her commute immediately prior to the change; Failing to pay base salary, bonus or deferred compensation under any Company deferred compensation program within seven days of its due date; Failing to continue any material compensation plan or program in which the executive participates, including bonus plans and the Incentive Stock Plan (or successors to those plans), or failing to continue the executive’s level of participation in those plans; Failing to continue to provide the executive with pension and welfare benefits substantially similar to those in which he or she participates, or materially reducing any of those benefits or depriving the executive of any material fringe benefit; Failing to obtain a satisfactory agreement from any successor to Merck to assume and agree to perform the obligations under the Change in Control Plan; and Any purported termination of the executive’s employment by the Company or its subsidiaries that is not properly effected pursuant to the notice provisions of the Change in Control Plan. A termination by the Company for “Cause” generally includes: Willful and continued failure by the executive to substantially perform his or her duties for the Company (other than any failure that results from incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a notice of termination for good reason) for at least 30 consecutive days after a written demand for substantial performance has been delivered; Willful misconduct or gross negligence by the executive that is demonstrably and materially injurious to the Company or any of its subsidiaries; and Conviction, or entry of a plea of nolo contendere, to a felony or any crime (whether or not a felony) involving dishonesty, fraud, embezzlement or breach of trust. To receive the severance benefits under the Change in Control Plan, an NEO must execute a general release of claims against Merck (or its successor) and its affiliates, which includes certain restrictive covenants, including a commitment by the NEO not to solicit employees for two years following the change in control. The severance benefits are in lieu of (or offset by) any other severance benefits to which an NEO may be entitled under other arrangements. The severance benefits under the Change in Control Plan (other than the tax-qualified pension benefits) are generally subject to discontinuation in the event of breach by the NEO of the restrictive covenants and other obligations under the release. The NEOs are not entitled to any tax gross-up in the event they are subject to excise taxes payable under Section 4999 of the Internal Revenue Code in connection with a change in control. Options, RSUs and PSUs generally will vest upon an involuntary termination of employment within two years after a change in control. In general, vested stock options may be exercised for five years following termination of the option holder’s employment following a change in control (but not beyond the original term of the stock option). This extended exercise period would not apply in the case of a termination by reason of death or retirement or for gross misconduct. If stock options do not remain outstanding following the change in control and are not converted into successor stock options, then option holders will be entitled to receive cash for each option in an amount equal to the difference between the exercise price and the price paid to shareholders in the change in control and the applicable exercise price. Upon a change in control, In addition, our compensation and employee benefit plans, programs and arrangements generally provide that for two years following the change in control, the material terms of the plans, programs and arrangements (including terms relating to Merck & Co., Inc. 2022 Proxy Statement Potential Payments Upon Termination or a Change in Control Change in Control eligibility, benefit calculation, benefit accrual, cost to participants, subsidies and rates of employee contributions) may not be modified in a manner that is materially adverse to individuals who participated in them immediately before the change in control. The following table estimates the dollar value of the additional payments and benefits the NEOs would have been entitled to receive under applicable plans and arrangements, assuming the applicable triggering event occurred on December 31, Name Involuntary Termination Before Change in Control ($) Change in Control ($) Involuntary Termination After Change in Control ($) K.C. Frazier R.M. Davis S. Chattopadhyay R.M. Perlmutter J. Zachary Name Involuntary Termination ($) Change in Control ($) Involuntary Termination ($) Davis Frazier Litchfield Clyburn DeLuca, Jr. Merck & Co., Inc. Potential Payments Upon Termination or a Change in Control Change in Control 81 Name Involuntary Termination ($) Change in Control ($) Involuntary Termination ($) Li Amounts shown are pursuant to the arrangements for employees eligible for benefits under the SRP enhancements include the incremental value of benefits provided upon a change in control. These amounts represent the present value of the enhanced benefit that would be received under the SRP and the cost to provide retiree medical coverage at December 31, Unvested stock options vest upon an involuntary termination occurring within two years immediately following a change in control. The value shown equals the total number of unvested stock option shares as of December 31, The value equals the total number of accelerated shares as of December 31, Merck & Co., Inc. 82 Ratification of Appointment of The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm. The Audit Committee has appointed PricewaterhouseCoopers LLP (“PwC”) to serve as our independent registered public accounting firm (the independent auditors) with respect to our operations for the year ending December 31, The Audit Committee and the Board of Directors believe that the continued retention of PwC as our independent registered public accounting firm is in the best Representatives of PwC will be present at the Annual Meeting to make a statement if they desire to do so. They will also be available to answer appropriate questions from shareholders. FOR The Board of Directors recommends that the shareholders vote FOR ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2022. The Audit Committee’s Report for Merck & Co., Inc. Proposal 3 Ratification of Appointment of Independent Registered Public Accounting Firm for 83 The Audit Committee is made up entirely of independent Directors. The members of the Audit Committee meet the independence and financial literacy requirements of the NYSE and additional heightened independence criteria applicable to members of the Audit Committee under the SEC and NYSE rules. The Audit Committee has adopted, and annually reviews, a charter outlining the practices it follows. The charter complies with all current regulatory requirements. During The Audit Committee has reviewed and discussed the annual audited financial statements with management. The Audit Committee also has received from the independent auditors the written disclosures and a letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditors’ communications with the Audit Committee concerning independence, and has discussed with the independent auditors their independence. Both the independent auditors and the internal auditors had full access to the Audit Committee. The Audit Committee met with the independent auditors to discuss their fees, as well as the scope and results of their audit work, including the adequacy of internal controls and the quality of financial reporting. The Audit Committee also discussed with the independent auditors their judgments regarding the quality and acceptability of the Company’s accounting principles, the clarity of its disclosures, and whether its accounting principles and underlying estimates are Audit Committee Pamela J. Craig(Chair) Mary Ellen Coe Stephen L. Mayo, Ph.D. Paul B. Rothman, M.D. Christine E. Seidman, M.D. Kathy J. Warden Pre-Approval Policy for Services of Independent Registered Public Accounting Firm As part of its duties, the Audit Committee is required to specifically pre-approve audit and non-audit services performed by the independent auditors to see that the provision of such services does not impair the auditors’ independence. On an annual basis, the Audit Committee also will review and provide pre-approval for certain types of services that may be provided by the independent auditors without obtaining specific pre-approval from the Audit Committee. If a type of service to be provided by the independent auditors has not received pre-approval during this annual process, it will require specific pre-approval by the Audit Committee. The Audit Committee does not delegate to management its responsibilities to pre-approve services performed by the independent auditors. Merck & Co., Inc. Proposal 3 Ratification of Appointment of Independent Registered Public Accounting Firm for Fees for Services Provided by the Independent Registered Public Accounting Firm Fees for PwC, our independent auditors, for Type of Payment or Benefit 2019 ($ in millions) 2018 ($ in millions) 2021 ($ in millions) 2020 ($ in millions) Audit Fees(1) Audit-Related Fees(2) Tax Fees(3) All Other Fees(4) Total Fees Audit Fees included fees for the audit of annual financial statements, the audits of effectiveness of internal control over financial reporting, reviews of quarterly financial statements filed in the reports on Form 10-Q, and statutory audits. The 2021 and 2020 amounts also included audit fees incurred relating to the impacts to Merck’s financial statements of the spin-off of Organon & Co. (the “Organon Spin-off”). Fees for audit-related services primarily related Fees for tax services reported above included approximately None of the services provided by PwC for fiscal years Merck & Co., Inc. The text of the shareholder proposals and supporting statements appear exactly as received by the Company. All The addresses of the proponents will be provided promptly upon request. Requests Proposal 4 – Shareholder Proposal Kenneth Steiner, of Great Neck, Proposal 4 – Selection of the Chairman of the Board The Board requires the separation of the offices of the Chairman of the Board and the Chief Executive Officer. Whenever possible, the Chairman of the Board shall be an Independent Director. The Board has the discretion to The Chairman shall not be a former CEO of the company. This policy is not intended to violate any employment contract but recognizes that This proposal topic won 46% shareholder support at on the biased opinion of management on an important governance topic. At its 2020 The Plus Mr. Thomas Glocer, the new Lead Director, has 15-years long tenure. As director tenure goes up director independence goes down. Independence is With the current policy of allowing a CEO to serve as Chair this means giving up a The Please vote yes: Merck & Co., Inc. Proposal 4 Shareholder Proposal Board of Directors’ Statement in Opposition to the Proposal The Board has carefully considered the shareholder proposal and, for the reasons described below, believes Providing our Our Board believes that our shareholders and our Company are best served by allowing the As part of the Company’s Our existing governance practices and current leadership structure promote effective and independent Board oversight. Our strong corporate governance policies and practices, including the substantial percentage of independent Directors on our Board, as well as the robust duties of our independent Lead Director, empower our independent Directors to effectively oversee senior management. As further detailed in the Board Leadership Structure section of this proxy statement, the significant authority and responsibilities of the independent Lead Director are clearly defined and include, but are not limited to: Moreover, all four standing Board committees are composed solely of independent Directors and are led by independent chairs. These four independent Board committees are responsible for the oversight of many critical matters, such as evaluating the CEO’s performance, overseeing the integrity of the Company’s Summary The AGAINST The Board of Directors recommends that Merck & Co., Inc. Proposal 5 Shareholder Proposal Regarding Access to COVID-19 Products 87 Proposal 5 – Shareholder Proposal Regarding Oxfam America, Inc., Proposal 5 Supporting Statement US government funding is responsible for the discovery and development of molnupiravir.5 The government also maintains ‘march-in’ rights under the Merck has promised to make the pandemic requires worldwide, nor shed light on how public support factors into decisions that affect access. Failure to meet delivery commitments and setting inaccessible prices could jeopardize the company’s reputation, and ultimately harm investor returns. While Merck has signed bilateral licensing agreements and an agreement with the Medicines Patent Pool, those only cover an estimated half of the world’s population and exclude most upper-middle income countries most severely affected by COVID- 19, including Brazil and Mexico.8 Merck is likely to apply a tiered pricing strategy for Nor does Merck’s domestic pricing strategy reflect significant public support: producing molnupiravir costs an estimated $20 per course,11 while the company charges up to $712 per course in the US, more than 35 times the cost of production.12 Merck does not explain how it addresses the relationship between investment in a product and its pricing and licensing strategy.13 It is unclear whether Merck could modify its pricing and licensing strategy in the context of a pandemic in which public support has contributed significantly to 1Seehttps://www.merck.com/news/merck-and-ridgebacks-investigational-oral-antiviral-molnupiravir-reduced-the-risk-of-hospitalization-or-death-by-approximately-50-percent-compared-to-placebo-for-patients-with-mild-or-moderat/ 2Seehttps://www.wabe.org/emory-researchers-think-they-have-a-drug-to-fight-the-new-coronavirus/; https://www.washingtonpost.com/business/2020/06/11/coronavirus-drug-ridgeback-biotherapeutics/; https://www.keionline.org/36648 3See https://www.washingtonpost.com/business/2020/06/11/coronavirus-drug-ridgeback-biotherapeutics/ 4See https://www.businesswire.com/news/home/20200526005229/en/ 5See https://www.keionline.org/36648 6See https://www.keionline.org/36648 7Seehttps://www.merck.com/news/merck-and-ridgeback-statement-on-positive-fda-advisory-committee-vote-for-investigational-oral-antiviral-molnupiravir-for-treatment-of-mild-to-moderate-covid-19-in-high-risk-adults/ 8 Seehttps://msfaccess.org/license-between-merck-and-medicines-patent-pool-global-production-promising-new-covid-19-drug 9 Seehttps://www.merck.com/news/merck-and-ridgeback-statement-on-positive-fda-advisory-committee-vote-for-investigational-oral-antiviral-molnupiravir-for-treatment-of-mild-to-moderate-covid-19-in-high-risk-adults/ 10 Seehttps://www.researchgate.net/publication/51712884_A_win-win_solution_A_critical_analysis_of_tiered_pricing_to_improve_access_to_medicines_in_developing_countries 11 Seehttps://scholar.harvard.edu/melissabarber/publications/estimated-cost-based-generic-prices-molnupiravir-treatment-covid-19 12 See https:// Merck & Co., Inc. Proposal 5 Shareholder Proposal Regarding Board of Directors’ Statement in Opposition to the Proposal The Board has considered this shareholder proposal carefully and recommends a vote AGAINST it. The Board believes adopting the shareholder proposal is not in the best interests of the Company or our shareholders because it Merck has a long track record of making our vaccines and medicines accessible and affordable globally. Recognizing that SARS-CoV-2/COVID-19 is an unrivaled scientific and global health challenge, Merck has been committed to a strategy to increase global access to molnupiravir following regulatory authorizations or approvals. We invested at-risk – before we had any data on clinical efficacy – to support manufacturing scale-up so that molnupiravir would be available if regulatory authorizations or approvals were received. We have also entered into licensing agreements to support timely access to molnupiravir globally. For example, Merck has entered into a licensing agreement with the Medicines Patent Pool (“MPP”) to increase broad access for molnupiravir in 105 low- and middle-income countries following appropriate regulatory approvals (the “MPP Agreement”). Charles Gore, executive director of MPP, called the licensing agreement a “transparent, public health-driven agreement” and noted that it was “MPP’s first voluntary license for a COVID-19 medical technology, and we hope that [Merck]’s agreement with MPP will be a strong In addition, Merck has disclosed that our comprehensive supply and access approach for molnupiravir has also included investing at risk to governments, and (c) has shipped molnupiravir to Merck’s efforts regarding global access to molnupiravir have been recognized, including by ICCR members that submitted a similar shareholder proposal in 2021. Merck received a similar proposal last year from 16 co-proponents, including Oxfam America and other members of the Interfaith Center on Summary Providing timely access globally to molnupiravir has been a priority for Merck and Ridgeback since the inception of their molnupiravir collaboration, and Merck has been transparent regarding our comprehensive supply and access approach to doing so. This transparency has been commended by shareholders that submitted a similar proposal last year, including a public statement that the MPP Agreement was “consistent with [their] proposal request”.4 As such, we believe 1Seehttps://medicinespatentpool.org/news-publications-post/mpp-msd-new-licence-announcement-molnupiravir 2See https://seventhgenerationinterfaith.org/category/iccr/ (noting that they hope that “other pharmaceutical companies follow Merck’s lead and make these lifesaving medications available broadly through mechanisms like the MPP and to 3Seehttps://www.iccr.org/shareholders-welcome-mercks-decision-share-ip-covid-19-anti-viral-drug (noting also that “We have witnessed the AGAINST The Board of Directors recommends that the shareholders vote AGAINST this proposal. Merck & Co., Inc. Proposal 6 Shareholder Proposal Regarding Lobbying Expenditure Disclosure 89 Proposal 6 – Shareholder Proposal Regarding Lobbying Expenditure Disclosure National Legal and Policy Center, which holds at least $2,000 in market value of the Company’s common stock, has given notice that it intends to present for action at the Annual Meeting the following proposal: Proposal 6 — Lobbying Expenditure Disclosure RESOLVED: The shareholders request that Merck & Co., Inc. (“Merck”) provide a full, detailed disclosure of our company’s direct and indirect lobbying activities and expenditures to assess whether our lobbying is consistent with Merck’s expressed goals and in shareholders’ best interests. Shareholders request the Board prepare a report, updated annually disclosing: 1. Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications; 2. Payments by Merck used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient; 3. Description of the decision-making process and oversight by management and the Board for making payments described in section 2 above. For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation; (b) reflects a view on the legislation or regulation; and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which Merck is a member. Both “direct and indirect lobbying” and “grassroots lobbying communications” include lobbying at the local, state and federal levels. The report shall be presented to the Audit Committee or other relevant oversight committees of the Board and full details posted on the company’s website. Supporting Statement As shareholders we encourage transparency and accountability regarding staff time and corporate funds to influence legislation and regulation, both directly and indirectly. Merck’s lobbying expenditures may not include grassroots lobbying to directly influence legislation by mobilizing public support or opposition, nor lobbying expenditures in states that do not require disclosure. Absent a system of transparency and accountability for lobbying expenditures, Merck executives may use Company assets for objectives that are not shared by and may be inimical to the interests of the Company and its shareholders. Current disclosure is insufficient to allow the Company’s Board, its shareholders, and its current and prospective customers to fully evaluate its lobbying priorities. There is currently no single source providing shareholders the information sought by this resolution. Lobbying Expenditure Disclosure — Proposal 6 Merck & Co., Inc. 2022 Proxy Statement Proposal 6 Shareholder Proposal Regarding Lobbying Expenditure Disclosure Board of Directors’ Statement in Opposition to the Proposal The Board has considered this shareholder proposal carefully and believes that adopting the proposal is unnecessary because Merck already has a comprehensive system of disclosures for the categories specified in this proposal. In fact, Merck has been recognized by the CPA-Zicklin Index of Corporate Political Disclosure and Accountability as a “trendsetter” in political disclosure and accountability for the past 5 years.1 In light of the foregoing and as described below, the Board believes that the preparation by the Company of the report sought by the proposal would not be an effective use of the Company’s resources and recommends a vote AGAINST the proposal. Policies and Procedures Governing Lobbying Merck is committed to participating constructively and responsibly in the political process and to providing clarifying analysis and information regarding the issues that affect our business and patient care. Our participation in the political process is guided by the following principles: improving patient access to healthcare, including access to medicines and vaccines, improving access to animal health products, and encouraging innovation. The Company publicly discloses information regarding our public policy positions and advocacy expenditures on our website at www.merck.com/company-overview/responsibility /transparency-disclosures/ as well as in our Environmental, Social & Governance (ESG) progress report. This information includes the principles governing the Company’s corporate and political action committee spending. Our political contributions are made in accordance with all applicable laws and Company policies and procedures and are overseen by senior management. The Governance Committee, which is composed entirely of independent directors, monitors all such contributions and reviews the policies and practices of the corporate political contributions program. Payments Used for Lobbying The Company semiannually posts our contributions, categorized by state, candidate and amount for our corporate political and political action committee contributions in the U.S. and annually posts our contributions in Canada and Australia. These disclosures include information for the past 5 years. We also disclose a list of U.S. industry and trade groups in which we are members where our dues are greater than $25,000 and the portion of our dues that these groups use for advocacy and/or political activities. In compliance with the Lobbying Disclosure Act, Merck files a quarterly report that discloses the Company’s total federal lobbying expenditures (paid directly and through trade associations), the name of any legislation or its subject that was the topic of communication, the individuals who lobbied on behalf of the Company, and the legislative body or executive branch contacted. That report can be found on the U.S. Senate Office of Public Records website or the U.S. House of Representatives Office of the Clerk website. Similarly, any indirect contribution (e.g., payments for events honoring covered elected officials) is disclosed as part of mandatory filings available on the Senate and House of Representative’s websites. Payments that the Company makes for outside lobbying services are disclosed by the outside firms as well and are also available and searchable in the lobbying disclosure website of both the Senate and the House of Representatives. For state activity, in states where the Company has a registered lobbyist, reports are filed consistent with state law and are publicly available at the appropriate state agency or on the state’s public website. Decision-making and Oversight for Lobbying-Related Payments The Company’s decision-making and oversight process for lobbying-related payments is already available to our shareholders, including in this proxy statement as well as in past proxy statements. The Company’s public policy positions are determined by senior management with oversight by the Governance Committee. In addition, the full Board receives a report twice a year on the Company’s political contributions, as well as the Company’s payments to trade associations and other tax-exempt organizations that may be used for lobbying and political activities. Summary Merck’s practices, policies, and disclosures, reflected in our recognition by the CPA-Zicklin Index of Corporate Political Disclosure and Accountability as a “trendsetter” for 5 years in a row, demonstrate our commitment to transparency and accountability for lobbying expenditures. Merck already discloses the information sought by the shareholder proposal, including disclosures on our political contributions and lobbying activities, our policies and procedures governing lobbying, and our related decision-making and oversight, and we believe that preparing the requested report would be duplicative and not an effective use of Merck’s resources or management time, nor provide shareholders with additional meaningful disclosures. 1 The 2021 CPA-Zicklin Index, which is the most recent, is available at https://www.politicalaccountability.net/cpa-zicklin-index/. AGAINST The Board of Directors recommends that the shareholders vote AGAINST this proposal. Merck & Co., Inc. 2022 Proxy Statement Questions and Answers About the Date and Time: Location: Record Date: We hope you will fully participate as a shareholder and exercise your right to vote. It is very important that you vote to play a part in the future of our Company. You do not need to attend the Annual Meeting of Shareholders to vote your shares. Please cast your vote right away on all of the following proposals to ensure that your shares are represented: Proposal 1 Election of Directors Page FOR each Nominee No Majority of (no effect) Proposal 2 Non-binding Advisory Vote to Approve the Compensation of (Say-on-Pay) Page FOR No Majority of Proposal 3 Ratification of Appointment of Independent Registered Public Accounting Firm for Page FOR Yes Majority of Proposal Shareholder Proposals Page 85-90 AGAINST No Majority of Why did I receive this Proxy Statement? The Board of Directors is soliciting your proxy to vote at the Annual Meeting because you were a shareholder at the close of business on March This proxy statement and What is the difference between holding shares as a shareholder of record and holding shares as a beneficial owner? If your shares are registered directly in your name with Merck’s transfer agent, If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of those shares. The Proxy Materials have been forwarded to you by your broker, bank or nominee who is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your broker, bank or nominee how to vote your shares. See “Voting Merck & Co., Inc. 2022 Proxy Statement Questions and Answers About the Annual Meeting and Voting What shares are included on the proxy card? The shares on your proxy card represent shares registered in your name, as well as shares in the Merck Stock Investment Plan. However, the proxy card does not include shares held for participants in the Merck U.S. Savings Plan, MSD Employee Stock Purchase and Savings Plan, Merck Puerto Rico Employee Savings Plans and Security Plan or the Merck Frosst Canada Inc. Stock Purchase Plan. Instead, these participants will receive separate voting instruction cards covering these shares from plan trustees. What constitutes a quorum? As of the record date, by proxy constitutes a quorum for the transaction of business at the Annual Meeting. If you submit a properly executed proxy, then you will be considered part of the quorum. How do I attend the Annual Meeting? www.virtualshareholdermeeting.com/MRK2022. Access to the meeting platform will begin at 8:45 a.m. on May 24, 2022 (Eastern Time). If you are a The meeting will include a Asking questions: You will have multiple opportunities to To submit a question before the Annual Meeting, visit www.proxyvote.com with your 16-digit control number and select the “Submit a Question” option. You can also submit a question via the online platform live during the Annual Meeting. Whether or not you plan to attend the Annual Meeting, we urge you to vote and submit your proxy in advance by one of the advance voting methods described in the “How do I vote?” section below. If you encounter any technical difficulties with the meeting platform on the date of the Annual Meeting, technical support will be available virtual Annual Meeting has ended. How do I vote? If you are ashareholder of record, you may vote using any of the following methods: Proxy card. Be sure to complete, sign and date the card and return it in the prepaid envelope. Via the internet. You may vote online atproxyvote.com. You will need the 16-digit control number on the proxy card or the Notice of Internet Availability of Proxy Materials. The internet voting will close at 11:59 p.m. Eastern Time on May By telephone. You may vote by calling 1-800-690-6903 (toll free). The telephone voting facilities will close at 11:59 p.m. Eastern Time on May At the Annual Meeting. All shareholders may vote Merck & Co., Inc. 2022 Proxy Statement Questions and Answers About the Annual Meeting and Voting 93 If you are abeneficial owner of shares, you may vote by following the voting instructions provided by your broker, bank or nominee. If you own MERCK shares in your name, you are a REGISTERED shareholder through a BROKER, BANK, OR NOMINEE, you are a BENEFICIAL OWNER What can I do if I change my mind after I vote my shares? If you are ashareholder of record, you may revoke your proxy at any time before it is voted at the Annual Meeting by: sending written notice of revocation to the Secretary of the Company; submitting a revised proxy by telephone, internet or paper ballot after the date of the revoked proxy; or attending the Annual Meeting and If you are abeneficial owner of shares, you may submit new voting instructions by contacting your broker, bank or nominee. You may also vote Will my votes be confidential? Yes. Only the personal information necessary to enable proxy execution, such as control number or shareholder signature, is collected on the paper or online proxy cards. All shareholder proxies and ballots that identify individual shareholders are kept confidential and are not disclosed except as required by law. Who will count the vote? Representatives of First Coast Results will tabulate the votes and act as inspectors of election. Voting information for beneficial owners If you hold your shares through a broker, bank or nominee, you are considered the beneficial owner of those shares, but not the Your broker is not permitted to vote on your behalf on the election of directors and other matters to be considered at the Annual Meeting (except on ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for For your vote to be counted, you What if I return my proxy card but do not provide voting instructions? If you are ashareholder of record and you return your signed proxy card but do not indicate your voting preferences, the individuals named in the proxy card will vote on your behalf as follows: FOR the election as Directors of each of the FOR the approval of the compensation of our Named Executive Officers by a non-binding advisory vote; FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for AGAINST the shareholder proposals. Merck & Co., Inc. 2022 Proxy Statement Questions and Answers About the Annual Meeting and Voting What if I am a plan participant and do not provide voting instructions? If voting instructions are not received for shares held in the Merck U.S. Savings Plan, or the MSD Employee Stock Purchase and Savings Plan, those shares will not be voted. If voting instructions are not received from participants in the Merck Puerto Rico Employee Savings and Security Plan, the plan trustee will vote the shares you hold in the same proportion as the shares held in these plans for which voting instructions were timely received. If voting instructions are not received from participants in the Merck Frosst Canada Inc. Stock Purchase Plan, the plan trustee will vote the shares in accordance with the recommendations of the Board of Directors. What is “householding” and how does it affect me? Merck has adopted the process called “householding” for mailing the Proxy Materials and Notice of Internet Availability of Proxy Materials in order to reduce printing costs and postage fees. Householding means that shareholders who share the same last name and address will receive only one copy of the Proxy Materials or Notice of Internet Availability of Proxy Materials, as applicable, unless we receive contrary instructions from any shareholder at that address. Merck will continue to mail a proxy card to eachshareholder of record. Can I access the proxy materials on the internet instead of receiving paper copies? The Proxy Materials are available on Merck’s website at If you are abeneficial owner, please refer to the information provided by your broker, bank or nominee for instructions on how to elect to access future Proxy Materials electronically. Mostbeneficial owners who elect electronic access will receive an If you prefer to receive multiple copies of the Proxy Materials or Notice of Internet Availability of Proxy Materials, as applicable, at the same address for the If you are abeneficial owner, you can request additional copies of the Proxy Materials or Notice of Internet Availability of Proxy Materials, as applicable, or you can request householding by notifying your broker, bank or nominee. Where can I find the results of the Annual Meeting? We will post the final voting results the Friday following the Annual Meeting on our website Where can I find the The 2021 Annual Report on Form In addition, we will provide without charge a copy of the How much did this proxy solicitation cost? The Company retained Morrow Sodali LLC to assist in the distribution of the Proxy Materials and solicitation of votes for $20,000, plus reasonable out-of-pocket expenses. Employees, officers and Directors of the Company also may solicit proxies by telephone or in-person meetings. We will pay the solicitation costs and reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to shareholders. Merck & Co., Inc. 95 Shareholder Proposals and Director Nominations for the Deadline for Receipt of Shareholder Proposals for Inclusion in the Proxy Materials for the In order to be considered for inclusion in next year’s proxy statement in accordance with SEC Rule 14a-8, shareholder proposals must be submitted in writing to the address shown below and received by the close of business, Eastern Director Nominees for Inclusion in the Proxy Materials for the Shareholders who intend to nominate a person for election as director under the proxy access provision in our By-Laws for inclusion in our Proxy Materials must comply with the provisions of, and provide notice to us in accordance with, Section 3 of Article II of our By-Laws. That section sets forth shareholder eligibility requirements and other procedures that must be followed and the information that must be provided in order for an eligible shareholder to have included in our Proxy Materials up to two Director nominees. For the Shareholder Proposals, Director Nominations, and Other Business to be Brought Before the Any shareholder who wishes to present proposals, director nominations or other business for consideration directly at the Written notice of proposals or other business for consideration must contain the information specified in Article I, Section 6 of our By-Laws. Written notice of nomination must contain the information set forth in Article II, Section 2 of our By-Laws. Our By-Laws are available online at This written notice requirement does not apply to shareholder proposals properly submitted for inclusion in our proxy statement in accordance with the rules of the SEC and shareholder nominations of director candidates. ADDRESS TO CONTACT THE COMPANY Any notice required to be sent to the Company as described above should be emailed to office.secretary@merck.com, or mailed to the Office of the Secretary, Merck & Co., Inc., 2000 Galloping Hill Road, K1-4157, Kenilworth, NJ 07033 U.S.A. Merck & Co., Inc. This Proxy Material contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and involve risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding product development, product potential or financial performance. No forward-looking statement can be guaranteed and actual results may differ materially from those projected. Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements should be evaluated together with the many uncertainties that affect Merck’s business, particularly those mentioned in the risk factors and cautionary statements in Item 1A of Merck’s Annual Report on Form 10-K for the year ended December 31, The Board of Directors is not aware of any other matters to come before the meeting. However, if any other matters properly come before the meeting, it is the intention of the persons named in the enclosed proxy to vote said proxy in accordance with their judgment in such matters. Merck & Co., Inc. April Merck & Co., Inc. 97 AppendixA—Non-GAAP Income Non-GAAP income and non-GAAP EPS are alternative views of the Company’s performance that Merck is providing because management believes this information enhances investors’ understanding of the Company’s results as it permits investors to understand how management assesses performance. Non-GAAP income and non-GAAP EPS exclude certain items because of the nature of these items and the impact that they have on the analysis of underlying business performance and trends. The excluded items (which should not be considered non-recurring) consist of acquisition and divestiture-related costs, restructuring costs, income and losses from investments in equity securities and certain other items. These excluded items are significant components in understanding and assessing financial performance. Non-GAAP income and non-GAAP EPS are important internal measures for the Company. Senior management receives a monthly analysis of operating results that includes non-GAAP EPS. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the Company along with other metrics. In addition, senior management’s annual compensation is derived in part using non-GAAP pretax income. Since non-GAAP income and non-GAAP EPS are not measures determined in accordance with GAAP, they have no standardized meaning prescribed by GAAP and, therefore, may not be comparable to the calculation of similar measures of other companies. The information on non-GAAP income and non-GAAP EPS should be considered in addition to, but not as a substitute for or superior to, net income and EPS prepared in accordance with generally accepted accounting principles in the A reconciliation between GAAP financial measures and non-GAAP financial measures is as follows: ($ in millions except per share amounts) Income before taxes as reported under GAAP Increase (decrease) for excluded items: Acquisition and divestiture-related costs Restructuring costs Other items: Charge for the acquisition of Peloton Other Non-GAAP income before taxes Taxes on income as reported under GAAP Estimated tax benefit on excluded items(1) Net tax charge related to the enactment of the TCJA and subsequent finalization of related treasury regulations Net tax benefit from the settlement of certain federal income tax matters Tax benefit from the reversal of tax reserves related to the divestiture of MCC Non-GAAP taxes on income Non-GAAP net income Less: Net(loss) income attributable to noncontrolling interests as reported under GAAP Acquisition and divestiture-related costs attributable to noncontrolling interests Non-GAAP net income attributable to noncontrolling interests Non-GAAP net income attributable to Merck & Co., Inc. EPS assuming dilution as reported under GAAP EPS difference Non-GAAP EPS assuming dilution ($ in millions except per share amounts) Year Ended December 31, 2021 Income from continuing operations before taxes as reported under GAAP Increase (decrease) for excluded items: Acquisition and divestiture-related costs Restructuring costs Income from investments in equity securities, net Other items: Charge for the acquisition of Pandion Charges for the discontinuation of COVID-19 development programs Charge for the acquisition of VelosBio Charges for the formation of collaborations Charge for the acquisition of OncoImmune Charge for the acquisition of Peloton Other Non-GAAP income from continuing operations before taxes Taxes on income as reported under GAAP Estimated tax benefit on excluded items(1) Net tax benefit from the settlement of certain federal income tax matters Adjustment to tax benefits recorded in conjunction with the 2015 Cubist Pharmaceuticals, Inc. acquisition Tax benefit from the reversal of tax reserves related to the divestiture of Merck’s Consumer Care (“MCC”) business Net tax charge related to the finalization of treasury regulations related to the enactment of the Tax Cuts and Jobs Act (“TCJA”) Non-GAAP taxes on income from continuing operations Non-GAAP net income from continuing operations Less: Net income (loss) attributable to noncontrolling interests as reported under GAAP Acquisition and divestiture-related costs attributable to noncontrolling interests Non-GAAP net income from continuing operations attributable to noncontrolling interests Non-GAAP net income attributable to Merck & Co., Inc. EPS assuming dilution from continuing operations as reported under GAAP EPS difference Non-GAAP EPS assuming dilution from continuing operations The estimated tax impact on the excluded items is determined by applying the statutory rate of the originating territory of the non-GAAP adjustments. Merck & Co., Inc. Appendix A Non-GAAP Income and Non-GAAP EPS Acquisition and Divestiture-Related Costs Non-GAAP income and non-GAAP EPS exclude the impact of certain amounts recorded in connection with Restructuring Costs Non-GAAP income and non-GAAP EPS exclude costs related to restructuring actions (see Note Income and Losses from Investments in Equity Securities Non-GAAP income and non-GAAP EPS exclude realized and unrealized gains and losses from investments in equity securities either owned directly or through ownership interests in investment funds. Certain Other Items Non-GAAP income and non-GAAP EPS exclude certain other items. These items are adjusted for after Merck & Co., Inc. 99 Appendix B—Explanation of Incentive Program Financial Metric Weighting of Component Pipeline 20% The Company’s Research and Development goals for the incentive program No Adjustments Revenue 40% The Company’s target revenue Excludes charges or items from the measurement of performance relating to (1) the impact of significant acquisitions and/or divestitures; (2) fluctuations in currency exchange rates versus Plan rates; and (3) extraordinary items and other unusual or non-recurring charges and/or events that impact revenue Pre-Tax 40% The Company’s target non-GAAP income before taxes Excludes charges or items from the measurement of performance relating to (1) restructurings, discontinued operations, purchase accounting items, merger-related costs, the impact of significant acquisitions and/ or divestitures, extraordinary items and other unusual or non-recurring charges and/ or events; (2) an event either not directly related to Company operations or not reasonably within the control of Company management; (3) fluctuations in foreign exchange versus Plan rates; and (4) the effects of accounting changes in accordance with U.S. generally accepted accounting principles, or other significant legislative changes Operating 25% The sum of the Company’s after-tax Non-GAAP net income (attributable to the Company) less the change in working capital (working capital includes Trade Accounts Receivable and Inventory — including Trade Accounts Receivables and Inventory included in Other Assets — net of Accounts Payable) plus Non-GAAP depreciation and amortization for each of calendar year of the Award Period All of the adjustments listed for “Pre-Tax Income” above Earnings 25% The Company’s after-tax Non-GAAP net income (attributable to the Company) divided by total shares outstanding assuming dilution All of the adjustments listed for “Pre-Tax Income” above, as well as the impact of Share Repurchases above or below planned levels Relative 50% The comparison of the Company’s annualized total shareholder return (inclusive of reinvested dividends) to the median total shareholder return for the Peer Group No Adjustments The PSU program design discussed above refers to the 2019-2021 performance period. Refer to page 56 for PSU program designs relating to the 2020-2022 and 2021-2023 performance periods as a result of the Organon spin-off. Merck & Co., Inc. Due to the emerging public health impact of coronavirus disease 2019 (COVID-19), we are planning for the possibility that the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance and will set forth details on how to participate in a press release available atmerck.com
(Eastern Time) via Webcast at meetingare to:1314 Director nominees named in the proxy statement;2020;2022;concerning a shareholder right to act by written consent,regarding an independent board chairman, if properly presented at the meeting;allocation of corporate tax savings,access to COVID-19 products, if properly presented at the meeting;Vote Right Away -Advance voting methods and deadlinesWe encourage all shareholders of record to read this proxy statement with care and vote right away using any of the following methods, even if they intend to attend the Annual Meeting in person. Given the possibility that our Annual Meeting may be held solely by means of remote communication, it is even more important to vote right away.BY INTERNET* www.proxyvote.com BY INTERNET* BY PHONE* BY QR CODEBY MAIL**www.proxyvote.com
1-800-690-6903
BY QR CODE Scan this QR code to vote
mobile deviceCast your ballot, sign yourproxy card and sendin our prepaid envelopeOnly shareholders listed on the Company’s records at the close of business on March 27, 2020 are entitled to vote.Merck began distributing its Notice of Internet Availability of Proxy Materials, proxy statement, the 2019 Annual Report on Form 10-K and proxy card/voting instruction form, as applicable, to shareholders and to employee benefit and stock purchase plan participants on April 6, 2020.By order of the Board of Directors,Jennifer ZacharyExecutive Vice President, General Counsel and Corporate Secretary BY MAIL** Cast your ballot, sign your proxy card
and send in our prepaid envelope26, 2020:24, 2022:2019 2021
Annual Report on Form 10-K are available free of charge atwww.proxyvote.com.* The telephone and internet voting facilities will close at 11:59 p.m. Eastern Time on May 25, 2020. You will need the 16-digit control number included on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials.*If your shares are held in a stock brokerage account or by a bank or other nominee, your ability to vote by telephone or over the internet depends on your broker’s voting process. Please follow the directions provided to you by your broker, bank or nominee.20202022 Proxy Statement2 myour pleasure to invite you to the 20202022 Annual Meeting of Shareholders of Merck & Co., Inc. (“Merck,” known as “MSD” outside the United States and Canada).attachedforegoing Notice of Annual Meeting of Shareholders and accompanying proxy statement will serve as your guide to the business to be conducted and provide details regarding the meeting.“Our steadfast commitment to scientific discovery, combined with our focus on our growth pillars across our human and animal health businesses, enabled Merck to achieve exceptional results in 2019. We believe it is important to optimize the value patients and customers can derive from our entire portfolio of products, and this belief, combined with our financial strength, led to our decision to create a new publicly held company, Organon & Co.” For nearly 130 years,We built on our rich legacy in infectious diseases research with the peopledevelopment of Merck have dedicated themselvesmolnupiravir, an investigational oral antiviral for the treatment of COVID-19 that we believe is a key tool in the treatment options available for health care professionals and patients battling the pandemic. We invested at risk to our company’s missionramp up supply while we were still in early clinical trials, as we recognized the need for broad and timely global access of saving and improving lives. Propelled forward by this mission, we aspire to be the premier research-intensive biopharmaceutical company. Our dedication to our mission has resulted in important new medicines and vaccines that are helping to address global health crises like AIDS, Ebola virus outbreaks, antibiotic-resistant bacterial infections, and preventable maternal mortality. Today we are dealing with a new crisis—the COVID-19 pandemic that is moving around the world with unprecedented speed. We are focused on protecting the safety of our employees and their families, sustaining the supply of our medicines and vaccines, and supporting our patients in clinical trials.medicine upon authorization.We have also convened a team of top scientists to assess the value that our vast array of antiviral assets and our vaccine know-how may have in the prevention or treatment of COVID-19. As we know from our experience with ERVEBO – our recently approved vaccine for preventing Ebola virus infection – the road to a new medicine or vaccine is never fast and never easy. But we also know that the world needs new medicines and vaccines – not only for the immense challenges of this pandemic, but also for the other great health challenges of our time.Our steadfast commitment to scientific discovery, combined with our focus on our growth pillars across our human and animal health businesses, enabled Merck to achieve exceptional results in 2019. We believe it is important to optimize the value patients and customers can derive from our entire portfolio of products, and this belief, combined with our financial strength, led to our decision to create a new publicly held company, Organon & Co. (“Organon”). With its strategic intent of becoming a leader in women’s health, Organon will be a strong, independent company from the beginning, poised to reach more patients through its broad portfolio of trusted and medically important legacy products and a rapidly expanding biosimilars business. Creating Organon will help ensure that these products achieve their full potential and enable Merck to focus more fully on our key pillars and on investing in the next generation of biomedical breakthroughs.KEYTRUDA, our market-leading anti-PD-1 therapy, is an example of how our focus on breakthrough innovation leads to value creation. In the five years KEYTRUDA has been on the market, it has been approved in 23 indications across 14 tumor types and is now established as a foundational immuno-oncology treatment. These approvals were the result of a broad clinical development program that consists currently of more than 1,150 clinical trials, including more than 800 trials that combine KEYTRUDA with other cancer treatments. Beyond KEYTRUDA, our success with Lynparza, a cancer therapy20202022 Proxy Statement onWe have also worked to further integrate our Environmental, Social and Governance (ESG) initiatives into the core of Merck’s culture and business. We remain committed to operating responsibly to help ensure a safe, healthy, and sustainable environment. Our focus in this space helps advance our company’s efforts and is integral to saving and improving lives. We worked hard throughout 2021 to achieve the ESG goals that we’ve set which we collaborate with AstraZeneca,challenge Merck to drive change by: expanding health access and Lenvima,equity; continuing to cultivate a cancer therapy on which we collaborate with Eisai, as well asdiverse, inclusive and engaging environment for our early pipeline of more than 20 investigational candidates, support our belief that we will be a leader in cancer care for many years to come.Building on our rich legacy in vaccine research, we also have a broad vaccine pipeline addressing areas of significant unmet medical need. Notably, our Ebola virus vaccine, ERVEBO, gained approval in the United Statesemployees; setting ambitious yet impactful sustainability goals; and conditional approval in the European Union in 2019 – a testament to the relentless efforts of a broadfostering ethics and diverse team of people and organizations coming together to cooperatevalues across the global biopharmaceutical ecosystem. To date, investigational doses of our Ebola vaccine have been administeredorganization to more than 300,000 people in the Democratic Republic of Congo, as part of effortsdrive a culture empowered to contain the second deadliest outbreak of this virus in history.Additionally, we are seeing continued growth with GARDASILSpeak Up and GARDASIL 9, driven by increasing worldwide awareness of its role as a vaccine for the prevention of certain HPV-related cancers. We anticipate continued strong growth globally, especially as additional supply comes online, driven by higher vaccination rates and expansion into new geographies, like China, as well as gender-neutral vaccination programs.maintain compliance.Our portfolio of hospital products, including BRIDION and ZERBAXA, which was recently approved for the treatment of certain types of pneumonia, also continues to perform well. We have recently advanced, as part of a combination, islatravir, our novel investigational therapy for HIV, into phase three clinical trials.In addition, our Animal Health business continues to deliver strong results. In 2019, we completed the acquisition of Antelliq, broadening our Animal Health offerings with digital technologies for both livestock and companion animals, one of the fastest growing segments in the industry.These examples demonstrate how our research-focused strategy is the right one to continue providing value to shareholders, patients and society. While the biopharmaceutical industry faces some challenging headwinds, it is our responsibility as guardians of this company’s legacy to ensure we continue to deliver innovation that will enhance our pipeline and help patients.We will continue our efforts to streamline our operating model and make it more efficient in order to foster the investments in innovation that are necessary to produce sustainable value for patients and you, our shareholders.We hope you will participate in the Annual Meeting, either by attending and voting in person or by voting through other acceptable means as described in this proxy statement as promptly as possible.Sincerely,Chairman, President and Chief Executive OfficerChairman Chief Executive Officer and President20202022 Proxy Statement4 Independent DirectorOver its long history,For more than 130 years, Merck has been responsible for some of the most significant advancements and improvements in public health. Today, the Company focuses on breakthrough, innovative science to create long-term value for patients and shareholders, remaining committedremained dedicated to its mission of saving and improving lives. This dedication is evident in Merck’s commitment to providing timely access globally, following applicable authorizations and approvals, to molnupiravir, the Company’s investigational oral antiviral COVID-19 medicine. Merck has pursued a comprehensive supply and access approach to fulfilling this commitment, including investing at risk to produce millions of courses of therapy and granting a voluntary license to the Medicines Patent Pool to make generic molnupiravir available in more than 100 low- and middle-income countries following local regulatory authorizations or approvals – the first such license to the Medicines Patent Pool for a COVID-19 medical technology.remainare committed to thatMerck’s mission as well.well in our work overseeing the Company’s affairs and fulfilling our responsibilities. The process of planning and executing a smooth CEO transition, in particular, is one of the Board’s most important responsibilities. Our planning resulted last year in a successful CEO transition with Robert M. Davis, then-CFO, succeeding Kenneth C. Frazier as the Company’s President, effective April 1, 2021, and Chief Executive Officer, effective July 1, 2021. Mr. Davis also became a Board member effective July 1, 2021. The Board believes Mr. Davis is the right person to lead Merck into the future and continue its long history of focusing on science and innovation as the driver of long-term sustainable value creation for patients and shareholders. In September 2021, I was honored to be selected by my fellow independent Directors to assume the role of Lead Director. We also announced other important leadership transitions in 2021, electing Dean Y. Li to succeed Roger M. Perlmutter as Executive Vice President and President, Merck Research Laboratories, and Caroline Litchfield to succeed Mr. Davis as Chief Financial Officer. Most recently, with the Board’s support, the Company announced a new leadership structure for its Human Health business, consisting of (i) Human Health Global Marketing led by Arpa Garay, (ii) Human Health U.S. led by Jannie Oosthuizen, and (iii) Human Health International led by Deepak Khanna on an interim basis. This structure will enable the Company to build on its momentum, develop its internal talent and expand its high performing senior leadership team.overseesbelieves that our shareholders and our Company are best served by allowing the Board to exercise its judgment regarding the most appropriate leadership structure at a given time. As part of the Company’s CEO transition, and considering the facts and circumstances at the time, the Board determined that Merck’s shareholders were best served by a leadership structure consisting of (i) Mr. Frazier, our former CEO, serving as Executive Chairman for a transition period, (ii) Mr. Davis serving as CEO and President, and (iii) an independent director appointed by the Board’s independent members serving as Lead Director, and each role has clearly delineated responsibilities. For example, as Executive Chairman, Mr. Frazier focuses on Board operations and governance matters, as CEO, Mr. Davis manages the general supervision, direction and strategy of the business strategy and riskaffairs of the Company subject to the Board’s overall oversight, and, as independent Lead Director, I work closely with both our Executive Chairman and our CEO to set board agendas, approve board materials and ensure that Merck achieves the highest level of corporate governance.AsBoth as a full Board and through our four standing committees composed of independent directors only, we are dedicated to the effective oversight of the Company’s business and the key risks the Company faces. We believe in the business value of having diverse perspectives in the boardroom. We are deliberate in ensuring we have the right mix of perspectives, skills and expertise to address the Company’s current and anticipated needs as opportunities and challenges facing the Company.Company evolve. Our membersDirectors draw on their leadershipunique experiences and areas of expertise to provide guidance on corporate strategy and monitor its implementation in areas such as research and development, capital allocation, operating results, human capital management and global manufacturing. One important aspectThe Board also provides oversight for the Company’s ESG strategy and performance as a whole and through our committees based on their specific areas of our oversight is havingcompetency. This year, we are delighted to nominate as a productive partnership withnew Director, Douglas M. Baker, Jr., Executive Chairman of Ecolab, Inc., a provider of water and hygiene services and technologies for the food, hospitality, industrial, and energy markets. Mr. Baker brings extensive expertise in corporate governance and general and organizational management, and this was critical inwe look forward to him joining the strategic decision to spin-off Merck’s women’s health business, along with a portfolio of trusted and medically important legacy products and a rapidly expanding biosimilars business. The spin-off of Organon & Co. will enhance Merck’s ability to focus more fully on its key growth pillars and future innovation, while allowing Organon & Co. to pursue the strategic intent of being a leader in women’s health.Our Board values diverse perspectivesOur Board values shareholder perspectives and meaningful engagement. Hearing the perspectives of our shareholders helps enhance the Board’s understanding of key issues that matter to our various stakeholders. Longstanding believers in the business value of having diverse perspectives in the boardroom, we are committed to having the right mix of perspectives, skills and expertise to address the Company’s current and anticipated needs as opportunities and challenges facing the Company evolve.Board.are thrilled to have welcomed Ms. Kathy J. Warden and Dr. Christine E. Seidman to the Board in March and to nominate Dr. Risa Lavizzo-Mourey to join the Board. Each of these women brings to the Board diverse perspectives, skills and expertise. Ms. Warden, Chairman, Chief Executive Officer and President, Northrop Grumman Corporation, brings global operational experience leading a research-intensive company, along with cybersecurity expertise. Dr. Seidman, the Thomas W. Smith Professor of Medicine and Genetics at Harvard Medical School and director of the Cardiovascular Genetics Program at Brigham and Women’s Hospital, brings deep scientific expertise. Dr. Lavizzo-Mourey, PIK Professor of Health Equity and Health Policy at the University of Pennsylvania, brings extensive strategic and health policy expertise.Our Board exercises independent board leadership and is committed to strong governance practicesAs independent Lead Director, I work closely with our Chairman and CEO, Ken Frazier, to ensure a productive partnership between management and the independent Directors. I am also responsible for the annual review of our Board’s effectiveness, as well as the evaluation of Mr. Frazier’s effectiveness. The process of planning and executing a smooth CEO transition is one of the Board’s most important responsibilities. Under my leadership, the Board continues to review Mr. Frazier’s performance, evaluate potential internal and external successors and to consider the appropriate time for a transition. As a Board, we are also committed to governance practices that serve the interests of the Company and its many stakeholders. Recently, the Board amended the Compensation and Benefits Committee’s charter to formalize its oversight of the Company’s programs and policies related to its management of human capital resources.We thank you forappreciate your investment in Merck and your support for the Board. We remain committed to serving you and the patients around the world that depend on this Company’sMerck’s life-saving work. Leslie A. BrunThomas H. GlocerIndependent DirectorApril 6, 202020202022 Proxy Statement Proxy Summary 6 Corporate Governance 1211 12 13 15 15 16 17 1718191922 23 24 25 25Commitment to Corporate ResponsibilityIndependence of Directors 26 Stock Ownership Information 2830 28 29Proposal 1. Election of Directors 3032 30Director Compensation 3840 39Proposal 2. Non-Binding Advisory Vote to Approve the Compensation of Our Named Executive Officers 4142 Compensation Discussion and Analysis 4243 42 4344 44 45 46 48 56BenefitsManagement Development Committee Report 5620202022 Proxy Statement This summary highlights information contained elsewhere in this proxy statement and does not contain all of theinformation that you should consider. You should read the entire proxy statement carefully before voting. 26, 202024, 202227, 202025, 2022Bridgewater MarriottVia Webcast at 700 Commons WayBridgewater, NJ 08807Also broadcast via webcast at https://investors.merck.com/events-and-presentationswww.virtualshareholdermeeting.com/MRK2022 Page 3032 FOR each
Nominee 4142 FOR 20202022 7682 FOR Concerning a Shareholder Right to Act by Written ConsentRegarding an Independent Board Chairman 7985 AGAINST Allocation of Corporate Tax SavingsAccess to COVID-19 Products 8187AGAINST 89 AGAINST
$ 9.9B12.2B GAAP investment
R&D in 2019expenditures Shareholder Value CreationCapital Returned & Dividend Increase10.5B7.5B returnedReturned to Shareholders (dividends
and share repurchases)
1-Year 3-Year 22.3% 19.0%
5-Year13.3%
(1) Relative Total Shareholder Return, a component of our Performance Share Unit program that is described on page 52, is calculated on a different basis. 1-Year 3-Year 1.8% 4.9% 5-Year 20202022 Proxy Statement 2019 NEOs and Compensation Highlights 20192021 NEOs and Compensation Highlights(Page 46)48)20192021 Named Executive Officers, or “NEOs”, and select compensation highlights from 2019.2021. For additional information on our elements of 20192021 compensation, please refer to the Compensation Discussion and Analysis (“CD&A”), beginning on page 42.43.
Incentive$ $1,500,000 150% $10,750,000(2) +131% 1,250,000 100 10,750,000 -34 900,000 100 2,200,000 —(3) 1,000,000 100 4,300,000 —(3) 800,000 100 2,700,000 —(3) 950,000 100 3,000,000 —(3) (1) (2) Annual BaseIn 2021, Mr. Davis’ actual LTI award was $9,200,000, which reflects 3 months at the 2021 CFO rate and 9 months at the CEO rate, when Mr. Davis became President.SalaryIncrease%(3) TargetMs. Litchfield, Mr. Clyburn, Mr. DeLuca and Dr. Li were not NEOs in 2020.AnnualIncentive%(4) TargetLong-TermIncentive$Total TargetDirect Compensation Increase%*��2019 NEOsKenneth C. FrazierChairman, President andChief Executive Officer+3.1%no change+$2,000,000 +12.5%Robert M. DavisExecutive Vice President, Global Services and Chief Financial Officer+3.0 no change +200,000 +4.4 Sanat ChattopadhyayExecutive Vice Presidentand President, Merck Manufacturing Division+3.6 no change +500,000+17.5 Roger M. Perlmutter, M.D., Ph.D.Merck Research LaboratoriesHuman Health, effective February 1, 2022.+3.0 no change +1,000,000+17.0 Jennifer ZacharyExecutive Vice President, General Counsel and Corporate Secretary+9.4 no change +350,000+13.9 * Total target direct compensation is the aggregate total of annual base salary, target annual cash incentive and target long-term incentive.a Critical Component ofto Achieve Our Pay-For-Performance Objectives(Page 43)45)shareholders.shareholders, among other objectives. For this reason, a significant portion of our NEOs’ pay is variable and at-risk, subject to Company performance as measured against financial, operating and strategic objectives, as well as relativeRelative Total Shareholder Return (“R-TSR”)or R-TSR (as defined in Appendix B). The Company’s variable incentives demonstrate a strong linkage between pay and performance.50)53) focuses on our most critical business drivers — the Company’s target revenue (“Revenue”), non-GAAP pre-tax income (“Pre-Tax Income”) and pipelinethe Company’s research and development goals for the incentive program (“Pipeline”) — and is used to determine the payout of our annual incentive for all eligible employees, including our NEOs under the Executive Incentive Plan. Our Scorecard performance during 20192021 resulted in above-target achievement of 184%148%.Long-Term Incentive (“LTI”)For grants issued in 2017, 70% of each Named Executive Officer’s annual target LTI was converted to Performance Share Units (“PSUs”) based on the closing price of Merck stock on the date of grant. The number of units ultimately earned is based on our performance against the pre-established Operating Cash Flow (“OCF”) and Earnings Per Share (“EPS”) targets and R-TSR performance. For the 2017-2019 performance period, three-year cumulative OCF and EPS were each weighted at 25%, and R-TSR versus our pharmaceutical peer group was weighted at 50%. The results of the combined performance resulted in an actual payout of 137% as illustrated in more detail on page 53.20202022 Proxy Statement8 Say-On-Pay Advisory Vote 44)46)In 2019, shareholders continued their support for our executive compensation programs with 93% the votes cast in favor of approving the say-on-pay proposal. Consistent with the Company’s strong interest in shareholder engagement and our pay-for-performance approach, the Compensation and Benefits Committee has continued to examine our executive compensation program to ensure alignment between the respective interests of our executives and shareholders. No significant changes were made to our executive compensation program in 2019 as a result of the most recent say-on-pay vote.We ask that our shareholders approve, on an advisory basis, the compensation of our NEOs as further described in Proposal 2 on page 41.For additional information, please refer to the Compensation Discussion and Analysis in this proxy statement.23)24)andwho is also Chair of our Governance Committee, Leslie Brun, participates in substantive engagements with some of the Company’s largest shareholders. In 2019,2021, discussions with shareholders covered a wide range of topics of interest to shareholders, including the Company’s response to the COVID-19 pandemic and related matters, the Board’s composition and leadership, management and director succession, Environmental, Social and Governance (“ESG”) reporting, executive compensation programs, ESG reporting, human capital management and other governance matters. These discussions provided valuable insights into shareholder views, and we heard from many shareholders that they greatly appreciated the opportunity to engage with our Company.corporate responsibilityESG and corporate governance practices.On an annual basis,At least annually, the Governance Committee considers the size, structure and needs of the Board,Board. The Governance Committee reviews possible candidates for the Board and recommends Director nominees to the Board for approval.represented.then-represented on the Board. The Board also considers the Company’s current and future global business strategies, opportunities and challenges. Such considerations have resulted in the election of fourfive new Board members over the last three years and the nomination of a new director in this proxy statement. For more information, see “Criteria for Board Membership and Director Nomination Process” beginning on page 16.21. in 2020 the Board elected two new independent Directors, Dr. Christine E. Seidman, Thomas W. Smith Professor of Medicine and Genetics at Harvard University, and Ms. Kathy J. Warden, Chairman, Chief Executive Officer and President of Northrop Grumman Corporation. In addition, the Board is nominating an additional independent Director to stand for election by shareholders at the 20202022 Annual Meeting of Shareholders, Dr. Risa Lavizzo-Mourey, Penn Integrates Knowledge ProfessorMr. Douglas M. Baker, Jr., Executive Chairman of Health EquityEcolab Inc., a provider of water and Health Policy athygiene services and technologies for the University of Pennsylvania. Ms. Rochelle B. Lazarus will retire from the Board effective as of the 2020 Annual Meeting of Shareholders. Also, due to other commitments, Mr. Wendell Weeks will not be standing for re-election to the Board.food, hospitality, industrial, and energy markets.20202022 Proxy Statement Governance Highlights Governance HighlightsWe believe good corporate governance is essential to achieving long-term shareholder value. We are committed to governance policies and practices that serve the interests of our Company and its many stakeholders. For this reason, we devote considerable time and resources to making sure that:our policies reflect our values and business goals;we have an effective corporate governance structure; andwe operate in an open, honest and transparent way.We highlight some significant aspects of our corporate governance practices below.Independence• Twelve of our thirteen Director nominees are independent.• We have a strong independent lead director.• Our independent directors convene regular executive sessions.• All four of our standing Board committees (Audit, Compensation and Benefits, Governance and Research) are comprised solely of independent directors.Accountability• Every director stands for re-election every year.• Directors are elected by majority vote.Best practices• Our Board of Directors as a whole, and each individual Board committee, conducts a self-evaluation every year.• The Board actively engages in CEO succession planning.• The Board is diverse in terms of gender, ethnicity, experience and skills.• Our Board policies include an express Diversity Policy.Transparency• We have strong control over our political spending and disclose corporate political activity.• We disclose aspects of our public policy engagement.Board oversight• The full Board and each individual Board committee is responsible for overseeing risk.• The full Board oversees corporate strategy.Alignment with shareholder interests• Our officers and directors are prohibited from engaging in hedging, pledging or short sale transactions involving Company stock.• Executives and directors must hold prescribed meaningful amounts of Company stock.• We have a robust shareholder engagement program.• We have a proxy access provision in our By-Laws under which shareholders who own 3% of our stock for at least three years may nominate up to 20% of the members of our Board.• Holders of 15% of our shares may call a special meeting.• We do not have a shareholder rights plan (also known as a poison pill).• We do not have any supermajority voting provisions.Compensation practices• We have conducted an annual say-on-pay advisory vote since 2011.• All incentive compensation paid to executives is subject to a clawback policy.• Our incentive compensation awards are designed to align pay with performance.• Our Compensation and Benefits Committee uses an independent compensation consultant.Citizenship• We have a longstanding commitment to corporate responsibility.• All of our employees must adhere to a robust Code of Conduct.Merck & Co., Inc. 2020 Proxy Statement10 Proxy Summary Nominees for Director 30)33)skill setskillsets and areas of expertise can be found beginning on page 30.33. Current Committee Memberships Audit Compensation
and Benefits Governance Research Director Nominee Age Director
Since Title 67 2008 Chairman and Chief Executive Officer, Sarr Group, LLC Thomas R. Cech, Ph.D. 72 2009 Distinguished Professor,
University of Colorado Mary Ellen Coe 53 2019 President, Google Customer Solutions, Google Inc. Pamela J. Craig 63 2015 Former Chief Financial Officer, Accenture plc 65 2011 Chairman, President and Chief Executive Officer,
Merck & Co., Inc. Thomas H. Glocer 60 2007 Former Chief Executive Officer, Thomson Reuters Corporation Risa J. Lavizzo-Mourey, M.D.* 65 — Paul B. Rothman, M.D. 62 2015 Dean of Medical Faculty and Vice President for Medicine, The Johns Hopkins University, and CEO, Johns Hopkins Medicine Patricia F. Russo 67 1995 Chairman, Hewlett Packard Enterprise Company; Former Chief Executive Officer and Director, Alcatel-Lucent Christine E. Seidman, M.D. 67 2020 Inge G. Thulin 66 2018 Former Chairman of the Board, President and Chief Executive Officer, 3M Company Kathy J. Warden 48 2020 Peter C. Wendell 69 2003 Managing Director, Sierra Ventures 9 7 4 4 Current Committee Memberships Audit C&MD Governance Research Director Nominee Age Director
SinceTitle Douglas M. Baker, Jr.* 63 — Executive Chairman and Former Chief Executive Officer, Ecolab Inc. Mary Ellen Coe 55 2019 President, Google Customer Solutions, Google Inc. Pamela J. Craig 65 2015 Former Chief Financial Officer, Accenture plc 55 2021 Chief Executive Officer and President, Merck & Co., Inc. 67 2011 Executive Chairman,
Merck & Co., Inc. 62 2007 Former Chief Executive Officer, Thomson Reuters Corporation Risa J. Lavizzo-Mourey, M.D. 67 2020 Stephen L. Mayo, Ph.D. 60 2021 64 2015 Patricia F. Russo 69 1995 Christine E. Seidman, M.D. 69 2020 Inge G. Thulin 68 2018 Kathy J. Warden 50 2020 Peter C. Wendell 71 2003 Managing Director, Sierra Ventures Dr. Lavizzo-MoureyMr. Douglas M. Baker, Jr. is a first-time Director nominee for election by shareholders at the 2022 Annual Meeting of Shareholders. If elected, Dr. Lavizzo-MoureyMr. Baker would serve as a member of the Compensation and BenefitsManagement Development Committee and the Governance Committee. Effective May 5, 2022, Mr. Baker will retire as Executive Chairman of Ecolab, Inc. Committee Chair
20202022 Proxy Statement10 Our 2020 Director Nominees Snapshot 1120202022 Director Nominees Snapshotchart,charts, our slate of Director nominees are made upconsists of individuals with expertise in fields that align with the Company’s business and long-term strategy, and reflectincludes a mixture of tenure that allows for both new perspectives and continuity.continuity and reflects the Board’s commitment to diverse perspectives.DiversitySkills and IndependenceQualifications (of 14 Director Nominees)Gender IndependenceTenureNo. of
Nominees9 7 44 9 3 7 5 3 9 3 20202022 Proxy Statement12 For example,2019,March 2022, the Board revisedamended: (1) the Policies of the Board and the Charter of the Governance Committee to include a formal diversity policy to guidemore expressly reflect (a) the Director succession process. The Board also revised the Compensation and Benefits Committee’s charter to formalize itsBoard’s oversight of ESG matters and (b) the Governance Committee’s assistance in this regard; and (2) the Charter of the Audit Committee to clarify the Audit Committee’s responsibility for reviewing the Company’s programs, policies and practices related to itscybersecurity risk management of human capital resources.program.merck.com/about/leadershipwww.merck.com/company-overview/leadership/board-of-
directors:principlesguidelinesShareholder Communications with the Board• Merck Code of Conduct — Our Values and Standards Merck Code of Conduct — Our Values and Standards12
Board committee, conducts a self-evaluation every year.
experience and skills.14
independent auditors and evaluate the independent auditors’ qualifications, performance and independence;
complaints received by the Company regarding accounting, internal accounting controls, or auditing matters;16
Company’s operations for the research and development of pharmaceutical products and
vaccines. As part of this oversight, the Research Committee focuses on a variety of areas,
including drug and vaccine discovery, licensing and development strategies, decision-making
procedures and outcomes, as well as processes and procedures for identifying, evaluating and
capitalizing on cutting edge scientific developments and advancements and enabling technologies.
discovery, development and licensing efforts and evaluate the effectiveness of our strategies and operations in those areas;
recommendations to the President of Merck Research Laboratories and to the Board on
modifications of strategies and operations; and
standards of scientific integrity in the conduct of Merck research and development.20202022 Proxy Statement18 Independence of DirectorsRisk Oversight 13Oversight Area for Cybersecurity and Privacy Matters 20 Oversight Area for ESG Issues Planning CycleApproach to ESGMerck & Co., Inc. 2022 Proxy Statement22 of 14
Nominees9 7 4 4 9 3 7 5 3 9 3 24 Step 1
Step 2
Step 3
First, each Director completed a
written questionnaire developed
by the Governance Committee to
provide feedback on the
effectiveness of the Board, the
Board’s leadership structure,
the committees and the level
and quality of the Directors’
individual contributions, as well
as any areas that the Director
believes warrant heightened
focus in the year ahead.Second, the independent Lead
Director, Thomas H. Glocer,
conducted an interview with
each Board member to gather
additional suggestions for
improving Board effectiveness
and to solicit additional feedback
on Board operations, composition
and priority agenda topics.Finally, the collective feedback
of the Board members was
compiled and presented to the
full Board. During discussion led
by independent Lead Director,
Thomas H. Glocer, Directors
considered areas of strength
and opportunities to enhance
the operations of the Board. What We Heard
What We Did
26 Compensation and BenefitsC&MD Committee. The Governance Committee reviews the Board’s approach to determining director independence periodically and recommends changes, as appropriate, for consideration and approval by the full Board.Merck & Co., Inc. 2020 Proxy Statement14 Corporate Governance Independence of Directors Director and Director nominee.Director. As a result of that review, the Board has determined that, with the exception of Robert M. Davis, our CEO and President, and Kenneth C. Frazier, our Executive Chairman, and CEO, each Director and Director nominee has only immaterial relationships with the Company, and accordingly, each is independent under these standards. The Board also has determined that each member of the Audit Committee, the Compensation and BenefitsC&MD Committee28 each Director (or Director nominee) serves,Directors serve, as well as the fact that in the ordinary course of business, transactions may occur between such organizations and the Company or one of our subsidiaries. The Board also evaluated whether there were any other facts or circumstances that might impair a Director’s or a Director nominee’s independence.As previously disclosed, the Company and Corning Incorporated (“Corning”), for which Mr. Weeks serves as Chairman, Chief Executive Officer and President, are parties to a Joint Research and Development Agreement (“R&D Agreement”) aimed at developing new glass materials. In 2011, the R&D Agreement was first reviewed and approved by the Governance Committee and reviewed by the Board (other than Mr. Weeks) to confirm Mr. Weeks’ continued independence. In 2014, Merck and Corning entered into two follow-on agreements: a multi-year component supply agreement (“Supply Agreement”) with minimum volume commitments and a royalty agreement (“Royalty Agreement” and, together with the R&D Agreement and the Supply Agreement, the “Corning Agreements”). The Royalty Agreement also amended the R&D Agreement. Both agreements were reviewed and approved by the Governance Committee and the entire Board (again, with Mr. Weeks recusing himself). The Governance Committee has conducted regular oversight of the Corning Agreements.In 2019, Merck and Corning amended the Corning Agreements to eliminate the previously agreed minimum volume commitments, provide for additional development work under the R&D Agreement and revise a payment date in the Supply Agreement. In connection with these amendments, Merck agreed to pay Corning an aggregate amount of up to $5 million per year until December 31, 2023. For the additional development work, Merck agreed to pay Corning an aggregate amount of up to $6.25 million per year until January 31, 2023. Finally, under the revised payment date in the Supply Agreement, Merck will pay to Corning by the end of 2023 the $15 million that had been agreed previously. The parties also agreed to negotiate and enter into a new supply agreement by the end of 2023 and, if they do not, Merck will pay to Corning an additional amount of $20 million. The amendments to the Corning Agreements were reviewed and recommended for approval by the Governance Committee. Mr. Brun, a member of the board of directors of Corning, did not participate in the review or recommendation by the Governance Committee. The amendments were then approved by the entire Board (with both Mr. Weeks and Mr. Brun recusing themselves).Prior to 2019, Merck reimbursed Corning for an aggregate of $25.2 million for development costs incurred under the R&D Agreement and intellectual property filing costs. In 2019, Merck paid Corning an additional $1 million for development costs incurred under the R&D Agreement upon the achievement of agreed milestones. An additional $6 million of reimbursable costs remain to be paid upon the achievement of a milestone agreed to under the R&D Agreement. In 2019, Merck reimbursed Corning an additional approximately $600,000 for intellectual property filing costs incurred in 2018.Merck expects to reimburse Corning for additional intellectual property filing costs in the future. In addition, in 2019, the Company made purchases from Corning in the ordinary course of business unrelated to the Supply Agreement. Commencing in 2020, the Company expects to begin receiving royalties under the Royalty Agreement.Cech, Lavizzo-Mourey, Rothman and Seidman are employed at medical or academic institutions with which the Company engages in purchase and/or sale transactions in the ordinary course of business. Ms. Coe is employed by Google Inc., and, in 2020, the Company engaged in a purchase transaction with Google Inc. in the ordinary course of business. In addition, Mr. Thulin was employed by 3M Company until June 1, 2019, and the Company engages in routine business transactions with 3M Company. The Board reviewed transactions with each of these entities and determined that the applicable individual Director or Director nominee had no role with respect to the Company’s decision to make any of the purchases or sales, and the aggregate amounts in each case were less than 2% of the consolidated gross revenues of the other organization and the Company.Merck & Co., Inc. 2020 Proxy StatementCorporate Governance Board Leadership Structure 15The Board of Directors is currently led by Kenneth C. Frazier, who serves as the Chairman of the Board, and by Leslie A. Brun, an independent Director, who serves as the Board’s Lead Director. The Board, made up of independent Directors (other than Mr. Frazier), is highly empowered and engaged. The independent Directors evaluate our Board leadership structure at least annually.The Board meets in executive session without the Chairman and CEO at each in-person Board meeting. During these executive sessions, which are led by the independent Lead Director, the Directors discuss topics such as succession planning for the CEO, key management positions and points of follow-up with management on strategic issues.Merck’s independent Lead Director is appointed by the independent members of the Board of Directors to a three-year term. The position of Lead Director has a clear mandate and significant authority and responsibilities — all set out in the Policies of the Board. These include:Board Meetings and ExecutiveSessions• The authority to call meetings of the independent members of the Board.• Presiding at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent members of the Board.Communicating withManagement• Serving as the principal liaison on Board-wide issues between the independent members of the Board and the Chairman/CEO.Agendas• Approving meeting agendas and the information sent to the Board, including supporting material for meetings.Meeting Schedules• Approving meeting schedules to ensure there is sufficient time for discussion of all agenda items.Communicating withShareholders and Stakeholders• Being available for consultation and direct communication with major shareholders, as appropriate.• Serving as a liaison between the Board and shareholders on investor matters.Board Performance Evaluation• Leading the annual performance evaluation of the Board.Chairman and CEOPerformance Evaluations• Leading the annual performance evaluation of the Chairman/CEO.CEO Succession• Leading the CEO succession planning process.In addition to a Board Chairman and an independent Lead Director, the Board of Directors has four standing committees, each of which is composed solely of independent Directors and is led by an independent chair. These standing committees are described beginning on page 19. The Board believes the Company and its shareholders are well-served by this leadership structure. Having an independent Lead Director vested with key duties and responsibilities and four independent Board committees chaired by independent Directors promotes strong independent oversight of the Chairman and CEO and the rest of our management team.The Board believes that having Mr. Frazier serve as Chairman and CEO adds substantial strategic and operational perspective to the Chairman role. Mr. Frazier’s years of senior management and executive leadership experience at Merck provide valuable business and cultural insight into the Company to the benefit of the Board and position Mr. Frazier to provide effective Board-level leadership.Merck & Co., Inc. 2020 Proxy Statement16 Corporate Governance Criteria for Board Membership and Director Nomination Process Criteria for Board Membership and Director Nomination ProcessThe Governance Committee is responsible for screening and nominating director candidates considered for election by the Board. In this capacity, the Committee considers the composition of the Board, including the depth of experience, balance of professional skills, expertise represented and diversity of perspectives. The Committee also evaluates prospective nominees identified on its own initiative as well as candidates recommended by other Board members, management, shareholders or search consultants. In 2019, the Governance Committee retained a search firm to identify possible candidates who meet our qualifications, to interview and screen such candidates (including conducting reference checks) and to assist in scheduling candidate interviews with Board members.To be considered for membership on the Board, a candidate must meet the following minimum criteria:be of proven integrity with a record of substantial achievement in an area of relevance to the Company;have demonstrated ability and sound judgment that usually will be based on broad experience;be able and willing to devote the required amount of time to the Company’s affairs, including attendance at Board meetings, Board committee meetings and annual shareholder meetings;possess a judicious and critical temperament that will enable objective appraisal of management’s plans and programs; andbe committed to building sound, long-term Company growth.Individual Experience, Qualifications, Attributes and SkillsIn its regular discussions regarding Board composition — and especially in conjunction with the annual Board and committee evaluations — the Governance Committee works with the Board to determine the appropriate mix of professional experience, expertise, educational background and other qualifications that are particularly desirable in light of our current and future business strategies. The Governance Committee uses this input in its planning and Director search process. In addition to the five broad criteria listed above, the following chart highlights the background, experience and skills the Board takes into account for future candidates. These attributes are amply represented by our current Director nominees.DiversityDiversity is an important factor considered when identifying prospective nominees for our Board and, in 2019, the Board added a formal diversity policy to the Policies of the Board. The policy reflects the Board’s longstanding commitment to ensure that Directors represent diverse perspectives and areas of expertise important to fostering the Company’s business success. The policy provides that the Board does not discriminate against potential Directors on the basis of gender, race, age, sexual orientation or ethnic and national background and that having a board composed of diverse individuals is an important contributor to the Board’s overall effectiveness.Merck & Co., Inc. 2020 Proxy StatementCorporate Governance Succession Planning 17Shareholder Recommendations of Director CandidatesThe Governance Committee will consider recommendations for Director candidates made by shareholders and will evaluate those individuals using the same criteria applied to other candidates. Shareholder recommendations must be sent to the Office of the Secretary, Merck & Co., Inc., 2000 Galloping Hill Road, K1-4157, Kenilworth, New Jersey 07033 U.S.A., and must include detailed background information regarding the recommended candidate that demonstrates how that candidate meets the Board membership criteria.Candidates are evaluated initially based on materials submitted by them or on their behalf. If a proposed or recommended candidate continues to be of interest to the Governance Committee, we obtain additional information through inquiries to various sources and, if warranted, interviews.The Board regularly reviews short- and long-term succession plans for the CEO and other executive officers. In assessing possible CEO candidates, the independent Directors identify the skills, experience and attributes they believe are required for an effective CEO in light of the Company’s global business strategies, opportunities and challenges. The Board also ensures that Directors have substantial opportunities to engage with possible succession candidates and have access to external consultants, as needed.In 2018, the Board eliminated the existing policy regarding mandatory retirement of the CEO at age 65. Eliminating this policy allows the Board appropriate flexibility in determining the optimal timing of the succession process.The Board also considers its own composition and succession plans. Discussion of these topics is an important part of the annual Board evaluation process. In Director succession planning, the Governance Committee and the Board consider, among other things, the needs of the Board and the Company in light of the overall composition of the Board, with a view toward achieving a balance of the skills, experience and attributes that are essential to the Board’s oversight role. In addition, the Policies of the Board provide that Directors may not be nominated for re-election to our Board after they reach the age of 72. The Governance Committee considers this policy and the schedule of upcoming Director retirements in determining the right approach to maintaining a strong composition of Director skills and experience. Although the Board believes this policy promotes regular refreshment of the Board, in 2019, the Board waived this policy with respect to the Chair of the Research Committee, Dr. Cech, for a period of one year as the Board onboards additional members to the Research Committee.The Board conducts an evaluation of its performance and effectiveness, as well as that of the four standing committees, on an annual basis. The purpose of the evaluation is to track progress in certain areas targeted for improvement and to identify ways to enhance the overall effectiveness of the Board and its committees. The evaluation process is led by the independent Lead Director. The Governance Committee also periodically engages an independent third party to manage the process to ensure it remains as thorough and transparent as possible. In 2019, the evaluation was conducted in 3 phases.The Board evaluation process resulted in a number of recommendations, including recommendations regarding priority agendatopics for the Board to address in 2020. The feedback highlighted that Directors were pleased to have had additional timeallotted to full-Board discussion of Director succession priorities in 2019. A key recommendation is to continue this practice.Merck & Co., Inc. 2020 Proxy Statement18 Corporate Governance Risk Oversight The Board of Directors has two primary methods of overseeing risk. The first method is through its Enterprise Risk Management (“ERM”) process, which allows for full Board oversight of the most significant risks facing the Company. The second is through the functioning of the Board committees.Management has established an ERM process to ensure a complete Company-wide approach to evaluating risk over six distinct but overlapping risk areas:Responsibility and ReputationRisks that may impact the well-being of the Company, its employees, customers, patients, communities or reputationStrategyMacro risks that may impact our ability to achieve long-term business objectivesOperationsRisks in operations and cybersecurity that may impact our ability to achieve business objectivesComplianceRisks related to compliance with laws, regulations and Company values, ethics and policiesReportingRisks to maintaining accurate financial statements and timely, complete financial disclosuresSafetyRisks to employee, patient or community health and safetyThe goal of the ERM process is to provide an ongoing review, implemented across the Company and aligned to Company values and ethics, to identify and assess risk and to monitor risk and agreed-upon mitigating action. Furthermore, if a risk transforms into an incident, the ERM process ensures that effective response and business continuity plans are in place. If the ERM process identifies a material risk, it will be elevated through the CEO and the Executive Committee to the full Board of Directors for consideration. The Audit Committee periodically reviews the ERM process to ensure it is robust and functioning effectively.Through the ERM process, each Board committee oversees specific areas of risk relevant to the committee through direct interactions with the CEO, members of the Company’s Executive Committee and the heads of business divisions and corporate functions. A committee may address risks directly with management or, where appropriate, may elevate a risk for consideration by the full Board or another Board committee. The following are examples of Board committees’ responsibilities in risk oversight:the Audit Committee has primary responsibility for overseeing the Company’s risk-management program relating to cybersecurity, although, the full Board participates in periodic reviews and discussion dedicated to the Company’s cyber risks, threats and protections. The Audit Committee also oversees risk relating to finance, business integrity and Sarbanes-Oxley reporting through its interactions with the Chief Financial Officer, Chief Compliance Officer, Controller and the Head of Internal Audit;the Compensation and Benefits Committee (the “C&B Committee”) and senior management continually evaluate the relationship between risk and reward as it relates to our executive compensation program. When setting incentive plan targets each year, the C&B Committee is aware of the risk associated with drug pricing, among other things, and ensures our plans do not incentivize risky behavior in order to meet targets;the Governance Committee oversees the Company’s corporate governance, including the practices, policies and procedures of the Board and its committees, considers the size, structure and needs of the Board, reviews possible candidates for the Board and recommends Director nominees to the Board for approval; andthe Research Committee oversees the overall strategy, direction and effectiveness of the Company’s research and development operations.The separate ERM process and Board committee approach to risk management leverages the Board’s leadership structure to ensure the Board oversees risk on both a Company-wide approach and through specific areas of competency.Merck & Co., Inc. 2020 Proxy StatementCorporate Governance Related Person Transactions 19 of Directors has adopted a written Related Person Transaction Policy (the “Policy”) that is incorporated into the Policies of the Board and administered by the Governance Committee. The Policy governs the review and approval of any transactions involving amounts exceeding $120,000 to which the Company or a subsidiary is a party and in which a “related person” has a direct or indirect material interest. A “related person” is any Director, Director nominee, executive officer or holder of more than 5% of any outstanding class of the Company’s voting securities, as well as immediate family members or certain affiliated entities of any of the foregoing persons.merck.com/about/leadershipwww.merck.com/company-overview/leadership/board-of-directors/.in the Policies of the Board.Director nominee and executive officer of Merck annually, and each Director nominee before such nominee’s nomination, completes and submits to the Company a Director & Officer (“D&O”) Questionnaire. The D&O Questionnaire requests, among other things, information regarding whether any Director, Director nominee, executive officer or their immediate family members had an interest in any transaction or proposed transaction with Merck or its subsidiaries or has a relationship with a company that has entered or proposes to enter into such a transaction.2019,2021, the Governance Committee has determined that no transactions require disclosure under Item 404(a) of SEC Regulation S-K.In 2019, the Board of Directors met six times. Under the Policies of the Board, Directors are expected to attend regular Board meetings, applicable Board committee meetings and annual shareholder meetings.The independent Directors of the Board met in 12 executive sessions in 2019. Mr. Brun, Lead Director of the Board, presided over the executive sessions. Eleven of the then twelve Directors attended the 2019 Annual Meeting of Shareholders.All Directors attended at least 75% of the meetings of the Board and of the committees on which they served in 2019.The Board of Directors has four standing committees, each of which is made up solely of independent Directors: Audit Committee; Compensation and Benefits Committee; Governance Committee; and Research Committee. In addition, the Board from time to time establishes special purpose committees. All of our standing committees are governed by Board-approved charters, which are available on our website atmerck.com/about/leadership/board-of-directors. The committees evaluate their performance and review their charters annually. Additional information about the committees is provided below. As a non-independent director, Mr. Frazier is not a member of any Board committee.2020 Proxy Statement20 Corporate Governance Board Meetings and Committees Audit Committee Pamela J. CraigChairOverviewThe Audit Committee oversees our accounting and financial reporting processes, internal controlsand audits and consults with management, the internal auditors and the independent auditors on,among other items, matters related to the annual audit, the published financial statements andthe accounting principles applied. The Audit Committee has established policies and proceduresfor the pre-approval of all services provided by the independent auditors (as described on page 77of this proxy statement) and for the approval of the annual internal audit plan as executed by theInternal Audit organization.The Audit Committee’s Report is included on page 77 of this proxy statement.The Primary Functions of this Committee are to:• Appoint, evaluate and retain our independent auditors;• Maintain direct responsibility for the compensation, termination and oversight of ourindependent auditors and evaluate the independent auditors’ qualifications, performance andindependence;• Monitor compliance with the Foreign Corrupt Practices Act and the Company’s policies onethical business practices and report on these items to the Board;• Establish procedures for the receipt, retention and treatment, on a confidential basis, ofcomplaints received by the Company (as described under “Shareholder Communications withthe Board” on page 24 of this proxy statement); and• Oversee the ERM process.Other MembersLeslie A. BrunThomas R. Cech, Ph.D.Mary Ellen CoePaul B. Rothman, M.D.Christine E. Seidman, M.D.(1)Kathy J. Warden(1)Number of Meetings in 2019:9Financial Experts on Audit CommitteeThe Board has determined that each of Mr. Brun, Ms. Craig and Ms. Warden is an “audit committee financial expert” as defined by the SEC and has accounting or related financial management expertise as required by NYSE Corporate Governance Listing Standards.(1)Joined the Board of Directors on March 16, 2020.Compensation and Benefits Committee Thomas H. GlocerChairOverviewThe C&B Committee annually reviews and approves corporate goals and objectives relevant to thetotal direct compensation opportunity for the Chairman and CEO and certain other officers;evaluates their performance against these goals and objectives; and, based on this evaluation,sets their total target direct compensation and determines payouts under our variablecompensation plans. The details of the processes and procedures involved are described in theCompensation Discussion and Analysis beginning on page 42. The independent members of thefull Board ultimately make the final decisions regarding the Chairman and CEO’s total directcompensation.The C&B Committee Report is included on page 56 of this proxy statement.The Primary Functions of this Committee are to:• Establish and maintain a competitive portfolio of executive compensation and benefitsprograms designed to attract, motivate and retain the talent necessary to execute theCompany’s long-term strategic plan;• Discharge the Board’s responsibilities for compensating our officers;• Oversee/monitor– The competence and qualifications of our executive officers,– Officer succession,– The soundness of the organizational structure,– The Company’s programs, policies and practices related to its management of humancapital resources, and– Other related matters necessary to ensure the effective management of the business; and• Review the Compensation Discussion and Analysis for inclusion in our proxy statement.Other MembersRochelle B. Lazarus(1)Patricia F. RussoInge G. ThulinPeter C. WendellNumber of Meetings in 2019:7Compensation and Benefits Committee Interlocks and Insider ParticipationThere were no C&B Committeeinterlocks or insider (employee)participation during 2019.(1)Retiring from the Board effective as of the 2020 Annual Meeting.Merck & Co., Inc. 20202022 Proxy Statement Board Meetings and Committees 21Governance Committee Leslie A. BrunChair | Lead DirectorOverview �� The Governance Committee oversees the Company’s corporate governance, including thepractices, policies and procedures of the Board and its committees. Further, the GovernanceCommittee annually reviews the size, structure and needs of the Board and Board committees,reviews possible candidates for the Board and recommends Director nominees to the Board forapproval. The details of the review process and assessment of candidates are described under“Criteria for Board Membership and Director Nomination Process” beginning on page 16 of thisproxy statement.The Primary Functions of this Committee are to:• Coordinate an annual evaluation of Board performance, and review Board compensation,related person transactions and D&O indemnity and fiduciary liability insurance coverage forthe Company’s officers and non-employee Directors;• Oversee the Board’s Incumbent Director Resignation Policy;• Review the Company’s: Good Manufacturing Practice compliance, including internal andexternal audits; Environmental, Health and Safety practices; supply chain manufacturingstrategy and governance, as well as its third-party sourcing program; business continuityplans; and privacy policies and practices;• Review social, political and economic trends that affect our business; review the positions andstrategies we pursue to influence public policy;• Monitor and evaluate our corporate citizenship programs and activities, including the supportof charitable, political and educational organizations and political candidates and causes; and• Review legislative, regulatory, privacy and other matters that could impact our shareholders,customers, employees and the communities in which we operate.Other MembersPamela J. CraigThomas H. GlocerRochelle B. Lazarus(1)Patricia F. RussoInge G. ThulinNumber of Meetings in 2019:4(1)Retiring from the Board effective as of the 2020 Annual Meeting.Research Committee Thomas R. Cech, Ph.DChairOverviewThe Research Committee oversees the overall strategy, direction and effectiveness of theCompany’s operations for the research and development of pharmaceutical products andvaccines. As part of this oversight, the Research Committee focuses on a variety of areas,including drug and vaccine discovery, licensing and development strategies, decision-makingprocedures and outcomes, as well as processes and procedures for identifying, evaluating andcapitalizing on cutting edge scientific developments and advancements and enabling technologies.The Primary Functions of this Committee are to:• Identify areas and activities that are critical to the success of our product and vaccinediscovery, development and licensing efforts and evaluate the effectiveness of our strategiesand operations in those areas;• Keep the Board apprised of this evaluation process and findings and make appropriaterecommendations to the President of Merck Research Laboratories and to the Board onmodifications of strategies and operations; and• Assist the Board in its oversight responsibilities to ensure compliance with the higheststandards of scientific integrity in the conduct of Merck research and development.Other MembersMary Ellen CoePaul B. Rothman, M.D.Christine E. Seidman, M.D.(1)Kathy J. Warden(1)Wendell P. Weeks(2)Peter C. WendellNumber of Meetings in 2019:4(1)Joined the Board of Directors on March 16, 2020.(2)Not standing for re-election as a Merck Director in 2020.Merck & Co., Inc. 2020 Proxy Statement22 Corporate Governance &B&MD Committee retains the services of a compensation consultant to serve as an objective third-party advisor on the reasonableness of compensation levels and on the appropriateness of the compensation program structure in supporting our business strategy and human resource objectives. Since 2008, the C&B&MD Committee has retained FW Cook as its compensation consultant. In addition, FW Cook is periodically retained by the Governance Committee periodically retains FW Cook to assist with a review of the Directors’ compensation program.IndependenceBoard of Compensation ConsultantDirectorsThe C&B Committee annually reviewsMerck & Co., Inc.services provided by FW Cook and has concluded that FW Cook is independent in providing executive compensation consulting services. The C&B Committee conducted a specific reviewvolume of its relationship with FW Cook in 2019, and, consistent with the guidance provided under the Dodd-Frank Act andcorrespondence received, communications will be reviewed by the SEC andOffice of the NYSE, determined that FW Cook’s workSecretary for the C&B Committee didpurpose of determining whether the contents are appropriate for submission to the entire Board, the Chairman, the independent Lead Director or the Chair of a particular committee. The Office of the Secretary will not raise any conflicts of interest. In making this determination, the C&B Committee reviewed information provided by FW Cook on the following factors:transmit:provision of other services to Merck by FW Cook;Company engage in illegal activity;the fees received from Merck by FW Cook as a percentage of the total revenue of FW Cook;the policies and procedures of FW Cookare designed to prevent conflicts of interest;any business or personal relationship between any member of FW Cook’s consulting team advising the C&B Committee or any other employee of FW Cook and a member of the C&B Committee;any business or personal relationship between any member of FW Cook’s consulting team advising the C&B Committee or any other employee at FW Cook and an executive officer of Merck; andany stock of Merck owned by any member of FW Cook’s consulting team advising the C&B Committee or any other employee at FW Cook or their immediate family members.In particular, the C&B Committee noted that (i) FW Cook providedhave no other services to Merck, other than occasional assistancerelevance to the Human Resources staff arising from FW Cook’s C&B Committee-related duties; and (ii) FW Cook’s work is performed directly on behalfrole of the Board working in cooperation with management,or to assist boththe business of the Company;&B&MD Committee.Governance Committee with executing their respective responsibilities.Services Performed During 2019During 2019, FW Cook supported the C&B Committee and/confidential, anonymous submissions by employees of concerns regarding questionable accounting or the Governance Committee by:reviewing our competitive market data with respect to the CEO’s and other senior executives’ compensation;conducting a competitive assessment of the Company’s non-employee Director compensation program;providing guidance and analysis on executive compensation plan design, market trends, regulatory developments and best practices;assisting with design and setting of performance goalsauditing matters. These procedures are described in the variable incentive plans;assisting in determining the CEO’s total target direct compensationMerck Code of Conduct — Our Values and payouts under the Executive Incentive Plan;assisting with the preparationThe Merck Code of public filings related to executive compensation, including the Compensation Discussion and Analysis, CEO pay ratio and the accompanying tables and footnotes; andassisting with spin-off preparation including executive compensation analysis for Organon & Co. executive committee.Since 2010, management has retained Pay Governance LLC to provide consulting servicesConduct is available on an as-needed basis. Although Pay Governance did not provide any services during 2019, they will perform their biennial risk assessment of our compensation programs in November 2020.website atwww.merck.com/company-overview/culture-and-values/code-of-conduct/values-and-standards/ .20202022 Proxy Statement Shareholder EngagementPolitical Contributions and FeedbackLobbying Expenditure Oversight and Disclosure 23Shareholder EngagementPolitical Contributions and FeedbackLobbying Expenditure Oversight and Disclosurecommunicates with shareholders to better understand their perspectivesupdates information regarding its public policy positions and has establishedadvocacy expenditures on our website at www.merck.com/company-overview/responsibility/transparency-disclosures/. This information includes the Company’s contributions, categorized by state, candidate and amount, for our corporate political and political action committee contributions in the U.S., Canada and Australia. These disclosures include information for the past 5 years. In addition, this information includes a shareholder engagement program that is proactivelist of U.S. industry and cross-functional. Throughouttrade groups in which we are members where our dues are greater than $25,000 and the year, membersportion of our Investor Relations department,dues that these groups use for advocacy and/or political activities.OfficeCompany’s pricing practices, the Company annually posts on its website its Pricing Transparency Report for the United States. The report provides the Company’s average annual list price, net price increases and average discounts across the Company’s U.S. portfolio dating back to 2010. In 2021, the Company’s gross U.S. sales were reduced by 43.5% as a result of rebates, discounts and returns. Our process around pricing our products includes regular presentations to the Board on drug pricing strategies. In addition, on balance, over the last few years, our revenue growth has been primarily attributable to increased volume arising from increased demand for our products rather than price increases.Secretary,Board require that a substantial majority of our Directors be independent. In making independence determinations, the Human Resources departmentBoard observes all relevant criteria established by the U.S. Securities and Exchange Commission (the “SEC”) and the Office of Corporate Responsibility,New York Stock Exchange (the “NYSE”), as well as other subject-matter experts withincategorical independence standards set forth in the Company, engage with our shareholders to remain well-informed regarding their perspectives on current issues and to address any questions or concerns. These teams serve as liaisons between shareholders, members of senior management and the Board.In addition, we conduct an extensive shareholder outreach program twice a year focused on governance and executive compensation. We believe it is most productive to discuss governance and compensation issues well in advancePolicies of the Annual Meeting so managementBoard. The Board considers all relevant facts and circumstances in making an independence determination.can gather information about investor perspectivesmust affirmatively determine that the director has no direct or indirect material relationship with the Company.make educatedthe C&MD Committee. The Governance Committee reviews the Board’s approach to determining director independence periodically and deliberate decisions that are balanced andrecommends changes, as appropriate, for Merck’s diverse shareholder baseconsideration and approval by the full Board.best interestPolicies of the Company. GivenBoard, the Board reviewed relationships between the Company and each Director. As a result of that review, the Board has determined that, with the exception of Robert M. Davis, our large shareholder base, we concentrateCEO and President, and Kenneth C. Frazier, our outreach efforts on our largest 30 shareholders, which represented approximately 42% of our ownership as of December 31, 2019.During 2019, we held discussionsExecutive Chairman, each Director has only immaterial relationships with a number of our shareholders in the spring before the Annual MeetingCompany, and once again in late fall. Our Lead Director and Chairaccordingly, each is independent under these standards. The Board also has determined that each member of the GovernanceAudit Committee, Leslie Brun, participated in substantive engagements with some of the Company’s shareholders. We also regularly seek to take advantage of other engagement opportunities and events. We discussed a number of topics with shareholders in 2019.Topics Discussed with Shareholders during 2019• Company strategy• Board leadership, composition and refreshment• Management succession• Board and management diversity• Director overboarding• Director tenure• Board evaluation process• Risk oversight• Cybersecurity• Executive compensation programs• Policy and pricing environment• Global access to Merck products• Merck Animal Health• ESG reporting• Merck culture• Reputation• Human Capital Management• Director onboardingSome key themes emerged as part of our various engagements as set forth below. What We Heard
What We Did
Shareholders are interested to know more about how our Board oversees human capital management.The Board amended the C&BC&MD Committee charter to formally codify the Board’s oversight of the Company’s programs, policies and practices related to its management of human capital resources, including talent and diversity.Board composition and refreshment are important to shareholders, particularly as it pertains to diversity of individuals and perspectives.The Board has nominated three women in 2020, each of whom brings to the Board diverse perspectives, skills and expertise as further described on pages 30-37.Shareholders are interested in knowing more about the Board’s oversight of risk, including with respect to public concern over drug pricing.We have included additional disclosures on pages 18 and 25.Merck also hosted an investor day in 2019. Members of the Company’s leadership team outlined the Company’s strategic priorities to generate sustainable value for patients and shareholders.28 24 Corporate Governance Shareholder Communications with the Board Proxy AccessCompensation ConsultantsAfter engagingRole of Compensation Consultantsnumber of our largest shareholders, our Board of Directors proactively amended our By-Laws in 2015 to give shareholders a right to proxy access for Director nominations. Our By-Laws allow a shareholder (or a group of no more than twenty shareholders) who has maintained continuous qualifying ownership of at least 3%review of the Company’s outstanding common stock for at least three years to include Director nominees constituting up to 20% of the Board in the Company’s proxy materials for an annual meeting of shareholders. Our By-Laws, which prescribe additional requirements for proxy access, are available on our website atmerck.com/about/leadership.Directors’ compensation program.Shareholder Communications with the BoardThe Board of Directors welcomes input from shareholders and other interested parties and has established a process to receive these communications. Shareholders and interested parties may communicate directly with the Board, the independent Lead Director, the non-management or independent Directors as a group or other members of the Board by writing to the following address:&B&MD Committee.and general information on communications to the Board areis available on our website atmerck.com/about/leadershipwww.merck.com/company-overview/culture-and-values/code-of-conduct/values-and-standards/ .20202022 Proxy Statement 25policymakingpolitical process and to providing clarifying analysis and information and analysis onregarding the issues that affect our business and patient care. As described on our website, ourThe Company advocates for public policies that foster research into innovative medicines and improve access to medicines, vaccines and health care. Our participation in the public policy debatepolitical process is focused on two key objectives: encouraging innovation andguided by the following principles: improving patient access to quality healthcare.healthcare, including access to medicines and vaccines, improving access to animal health products, and encouraging innovation. The Company’s public policy positions are determined by senior management with oversight by the Governance Committee. Our political contributions are made in accordance with all applicable laws and Company policies and procedures and are overseen by senior management. The Governance Committee monitors all such contributions, and the full Board receives a bi-annual report.merck.com/ about/views-and-positions andmsdresponsibility.com/our-approach/public-policywww.merck.com/company-overview/responsibility/transparency-disclosures/. This information includes the Company’s contributions, categorized by state, candidate and amount, for our corporate political and political action committee contributions in the U.S., Canada and Australia. These disclosures include information for the past 5 years. In addition, this information includes a list of U.S. industry and trade groups in which we are members where our dues are greater than $25,000 and the portion of our dues that these groups use for advocacy and/or political activities.2019,2021, the Company’s gross U.S. sales were reduced by approximately 44%43.5% as a result of rebates, discounts and returns. Our process around pricing our products includes regular presentations to the Board on drug pricing strategies. In addition, on balance, over the last few years, our revenue growth has been primarily attributable to increased volume arising from increased demand for our products rather than price increases.20202022 Proxy Statement26 28 Commitment to Corporate Responsibility “The amount of good we can do in the world is directly correlated to the strength of our business. Merck’s long-term focus is anchored on a foundation of corporate responsibility. We believe this approach fuels our pursuit of medical breakthroughs that benefit patients, our shareholders, and society.”— Kenneth C. Frazier, Chairman, President and Chief Executive OfficerRelated Person Transactions CommitmentRelated Person TransactionsCorporate ResponsibilityOperating responsibly aswhich the Company or a business is at the very heart of our ability to deliver sustainable impact – driving long-term value for our company and society.Our approach to corporate responsibility is about the health, economic, social and environmental impact we have on individuals and communities around the world.We hold ourselves accountable to our many stakeholders, including patients, employees, customers and shareholders, whose perspectives help to define our corporate responsibility priorities.Reflecting our commitment to managing environmental, social and governance (ESG) issues, we continue to focus our approach to corporate responsibility in four primary areas that are of greatest relevance to our business and society: Access to Health, Employees, Environmental Sustainability and Ethics & Values.ReportingOur annual corporate responsibility reportsubsidiary is a web-based, ESG reporting platformparty and in which a “related person” has a direct or indirect material interest. A “related person” is any Director, Director nominee, executive officer or holder of more than 5% of any outstanding class of the Company’s voting securities, as well as immediate family members or certain affiliated entities of any of the foregoing persons.represents our commitmentthe transaction remains fair and reasonable to widely recognized reporting frameworks that reflect environmental, social and governance issues.In 2019, we continued to advance our reporting strategy with the publication of our inaugural Environmental, Social and Governance Progress Report. We prepared this report usingCompany. For additional information, the Global Reporting Initiative (GRI) Standards: Core Option and the Sustainability Standards Board Standards (SASB). A copy of this reportfull Policy is available on our website.To learn more about our corporate responsibility approach, progress and commitments, please visit:the Company’s website at MSDresponsibility.comwww.merck.com/company-overview/leadership/board-of-directors/External RecognitionOur commitment to responsibility continues to earn us external recognition. Below is a selectionin the Policies of the awardsBoard.recognitionexecutive officer of Merck received overannually, and each Director nominee before such nominee’s nomination, completes and submits to the past year.Company a Director & Officer (“D&O”) Questionnaire. The D&O Questionnaire requests, among other things, information regarding whether any Director, Director nominee, executive officer or their immediate family members had an interest in any transaction or proposed transaction with Merck or its subsidiaries or has a relationship with a company that has entered or proposes to enter into such a transaction.ENERGY STARAfter review of the D&O Questionnaires by the Office of the Secretary, the responses are collected, summarized and distributed to responsible areas within the Company to identify any potential transactions. All relevant relationships and any transactions, along with payables and receivables, are compiled for each person and affiliation. Management submits a report of the affiliations, relationships, transactions and appropriate supplemental information to the Governance Committee for its review. Based on this information for 2021, the Governance Committee has determined that no transactions require disclosure under Item 404(a) of SEC Regulation S-K.Partner of the YearSustained Excellence AwardForbes’ and JUST Capital’sThe Just 100 list of America’s best corporate citizensNewsweeklist of America’s Most Responsible CompaniesNational Association of Female Executive’“Top Companies for Executive Women”People Magazine’s“50 Companies that Care” listFTSE4Good IndexConstituent MemberFast Company’s“50 Best Workplaces for Innovators” listAmerican Heart AssociationWorkplace Health Achievement IndexGold recognition20202022 Proxy Statement Commitment to Corporate ResponsibilityCompensation Consultants 27Our Corporate Responsibility Focus AreasCompensation ConsultantsWe continueRole of Compensation Consultantsfocusserve as an objective third-party advisor on the reasonableness of compensation levels and on the appropriateness of the compensation program structure in supporting our approachbusiness strategy and human resource objectives. Since 2008, the C&MD Committee has retained FW Cook as its compensation consultant. In addition, the Governance Committee periodically retains FW Cook to corporate responsibilityassist with a review of the Directors’ compensation program.four primary areasproviding executive compensation consulting services. The C&MD Committee conducted a specific review of its relationship with FW Cook in 2021, and, consistent with the guidance provided under the Dodd-Frank Act and by the SEC and the NYSE, determined that FW Cook’s work for the C&MD Committee did not raise any conflicts of interest. In making this determination, the C&MD Committee reviewed information provided by FW Cook on the following factors:greatest relevanceinterest;our businessMerck; and society: Access(ii) FW Cook’s work is performed directly on behalf of the Board working in cooperation with management, to Health, Employees, Environmental Sustainabilityassist both the C&MD Committee and Ethics & Values.the Governance Committee with executing their respective responsibilities. Access To Health357 Mpeople reached through ourmajor programsand partnerships in 2018We believe it is our responsibility to address the health needs of patients and society through transformational science: inventing vaccines, medicines and animal health products to help millions around the world. Expanding access to health is a business imperative for optimizing and sustaining our business over the long term. We also recognize that barriers to quality care and medical treatment — such as a lack of trained health care professionals, weak infrastructure, political uncertainty, civil strife and a shortage of safe water in many parts of the world — make even basic health care delivery difficult at best. These challenges go well beyond what we can address alone. Through a range of policies, programs and partnerships, we are focused on transforming the future of human and animal health. Employeesof our managementroles in 2018 were heldby womenof new U.S. hires in roles in 2018 were members of underrepresented ethnic groupsA positive, inclusive and high-performing work environment is essential in order for our employees to feel welcome, valued and able to fully contribute to the business objectives of their teams.Harnessing the knowledge and insights of a globally diverse workforce requires leadership, a corporate culture of respect and full engagement and a thoughtful and strategic approach to workplace inclusion and employee development and well-being — physical, emotional, social and financial. EnvironmentalSustainabilityreduction of water use since 2015The world’s resources are limited, and over the next few decades the demand for energy, clean water and other natural resources will increase substantially due to population growth and economic development. Climate change is projected to significantly impact human health and could present long-term risks to our business. As a global company, we believe we have a responsibility to use resources wisely and drive innovations that will enable global development while protecting and preserving the planet and the communities in which we live and work. Ethics & Valuesscore on the Human Rights Campaign’s Corporate Equality IndexOur Company’s reputation, and the trust that our stakeholders place in us, depends on how we conduct ourselves as a business. Operating with ethics, integrity and respect for human rights is critical to our success. We disclose information through a variety of mechanisms, including our financial disclosures, our annual corporate responsibility report, and participation in voluntary efforts such as CDP, formerly the Carbon Disclosure Project, as well as through the media and direct stakeholder engagement.20202022 Proxy Statement28 30 Table;table; and (c) all Directors and executive officers as a group. As of February 29, 2020, 2,532,395,79428, 2022, 2,527,811,512 shares of Merck common stock were issued and outstanding. Unless otherwise noted, the information is stated as of February 29, 2020,28, 2022, and the beneficial owners exercise sole voting and/or investment power over their shares. In addition, unless otherwise indicated, the address for each person named below is c/o Merck & Co., Inc., 2000 Galloping Hill Road, Kenilworth, New Jersey 07033. Company Common Stock Company Common Stock (1)
Options/Stock Units
Ownership Under
Options/Stock Units 787,729 3,267,516 * — 710,665 3,668,920 * — 1,948 5,000 * 42,808 100 — * 37,469 247,593 430,029 * — 10 — * 3,615 10 — * 12,949 1,715 — * 13,777 1,715 — * 20,624 5,100 — * 67,769 5,100 — * 80,578 6,351 (7) — * 87,206 1,000 — * 5,486 100 — * 2,911 100 — * 13,777 100 — * 20,625 13,148 — * 35,766 13,148 — * 44,787 100 — * 7,164 100 — * 7,788 100 — * 14,043 100 5,000 * 92,096 500 — * 5,610 1,000 — * 93,177 1,000 — * 111,095 77,632 267,442 * 14,014 98,875 263,812 * 2,241 171,055 406,043 * 135,063 370,888 * — 214,428 874,813 * 15,462 49,723 * — 3,689 24,397 * 26,556 147,787 * —
(25 individuals) 1,535,449 5,655,978 * 511,393 1,591,687 5,769,706 * 342,916 * (1) Dr. Seidman and Ms. Warden were elected to the Board effective March 16, 2020 and are not included in this table.(2)4,1104,382 shares, Mr. Clyburn — 1,780 shares, Mr. DeLuca — 1,166 shares, and all Directors and executive officers as a group — 8,2868,803 shares.(3)(2)29, 2020,28, 2022, through the exercise of outstanding stock options.(4)(3)(5)(4)Ms. Lazarus is retiringMr. Clyburn was promoted from the BoardExecutive Vice President and Chief Commercial Officer to Executive Vice President and President, Human Health, effective as of the 2020 Annual Meeting of Shareholders.April 1, 2021. He resigned from his position, effective February 1, 2022.(6)Mr. Weeks is not standing for re-election as a Merck Director in 2020.(7)Includes shares of common stock in which the beneficial owners share voting and/or investment power as follows: 1,757 shares held by Ms. Lazarus’ spouse.20202022 Proxy Statement 292019.2021. As of December 31, 2019, 2,539,026,3912021, 2,527,604,629 shares of Merck common stock were issued and outstanding. Amount and Nature of
Beneficial Ownership Percent of Class 210,542,333211,202,531(1) 8.26%8.36% 190,783,225198,224,264(2) 7.50%7.80% (1) 47 to Schedule 13G (the “Vanguard filing”) filed with the SEC on February 6, 2020.9, 2022. According to the Vanguard filing, of the 210,542,333211,202,531 shares of Merck common stock beneficially owned by The Vanguard Group (“Vanguard”), as of December 31, 2019,2021, Vanguard has the sole power to vote or direct the vote with respect to 3,937,834 shares, shared power to vote or direct the vote with respect to 747,5864,007,839 shares, sole power to dispose or to direct the disposition of 206,086,318200,790,380 shares, and shared power to dispose or to direct the disposition of 4,456,01510,412,151 shares.(2) 1012 to Schedule 13G (the “BlackRock filing”) filed with the SEC on February 5, 2020.1, 2022. According to the BlackRock filing, of the 190,783,225198,224,264 shares of Merck common stock beneficially owned by BlackRock, Inc. (“BlackRock”), as of December 31, 2019,2021, BlackRock has the sole power to vote or direct the vote with respect to 165,094,002171,958,371 shares and sole power to dispose or to direct the disposition of 190,783,225198,224,264 shares.20202022 Proxy Statement30 1314 nominees for election as Directors at thisthe 2022 Annual Meeting:Meeting of Shareholders: Mr. Leslie A. Brun, Dr. Thomas R. Cech,Douglas M. Baker, Jr., Ms. Mary Ellen Coe, Ms. Pamela J. Craig, Mr. Robert M. Davis, Mr. Kenneth C. Frazier, Mr. Thomas H. Glocer, Dr. Risa J. Lavizzo-Mourey, Dr. Stephen L. Mayo, Dr. Paul B. Rothman, Ms. Patricia F. Russo, Dr. Christine E. Seidman, Mr. Inge G. Thulin, Ms. Kathy J. Warden and Mr. Peter C. Wendell. All nominees, other than Mr. Frazier,Davis, our Chief Executive Officer, and Mr. Frazier, our Executive Chairman, satisfy the NYSE independence requirements.Each of Dr. Seidman and Ms. Warden was elected toIn connection with the Board’s CEO succession planning, in February 2021, the Board elected Mr. Davis, effective March 16, 2020July 1, 2021, to serve untilsucceed Mr. Frazier as CEO and become a member of the 2020 Annual MeetingBoard and to stand for election by shareholders at the meeting. Dr. Lavizzo-Mourey2022 Annual Meeting of Shareholders. Mr. Baker is being nominated to stand for election by shareholders at the meeting. All other nominees currently serve on the Board and were elected by the shareholders at the 20192021 Annual Meeting. Dr. Seidman was first identified as a possible Director candidate by the Chair of the Research Committee, and each of Ms. Warden and Dr. Lavizzo-MoureyMr. Baker was first identified as a possible Director candidate by a third-party search firm. Each of Dr. Seidman, Ms. Warden and Dr. Lavizzo-MoureyMr. Baker was recommended to the Board by the Governance Committee and met with various members of the Board leading up to her election or nomination, as applicable.Mr. Wendell Weeks has served on the Board since 2004 with a distinguished history of insightful contributions. The Board has benefited from his extensive management, commercial, operational and financial expertise. Due to other commitments, Mr. Weeks will not be standing for re-election as a Merck Director in 2020. Ms. Rochelle Lazarus will retire from the Board effective as of the Annual Meeting in accordance with the Board’s retirement policy. Ms. Lazarus has brought extensive expertise in management, marketing and communications and made valuable contributions since joining the Board in 2004. In 2019, the Board waived its retirement policy with respect to Dr. Cech, Chair of the Research Committee, for a period of one year as the Board onboards additional members to the Research Committee.nomination. the Director nominees named in this proxy statement meet the Board’s criteria for membership and were recommended by the Governance Committee, and approved by the Board, for election by shareholders at thisthe 2022 Annual Meeting. All of the nomineesthem hold, or have held, senior leadership positions in large, complex organizations, including multi-national corporations, medical or academic institutions, or charitable organizations. In these positions, our Director nominees have demonstrated their leadership, intellect and analytical skills and gained deep experience in core disciplines significant to their oversight responsibilities at Merck. Their varied roles in these organizations also enable themand experiences reflect a diversity of perspectives, skills and expertise to offer quality advice and counsel toaddress the Company’s management.current and anticipated needs as the Company’s opportunities and challenges evolve. If elected, each nominee will serve until the 20212023 Annual Meeting of Shareholders or until a successor has been duly elected and qualified.qualified, subject to their earlier resignation, death or removal. which must act on the recommendation no later than 90 days following certification of the shareholder vote.vote and publicly disclose its decision and rationale.of Directors, unless the Board of Directors reduces the size of the Board.its size.below, including the key experience, and some of the qualifications and skills eachsuch Director bringsnominee contributes to the Board that are important in light of our current needs and business priorities.20202022 Proxy Statement 31 Leslie A. BrunDouglas M. Baker, Jr. Lead Director 6763 Since:Nominee 2008 Audit Governance(Chair) BrunBaker has extensivewide-ranging expertise in corporate governance and general and organizational management, investment banking, commercial bankingincluding a deep understanding of global marketing, sales and financial advisory experience inoperations of public companies. Currently, Mr. Baker is Executive Chairman of Ecolab Inc., a highly-regulated industry,provider of water and hygiene services and technologies for the food, hospitality, industrial and energy markets. He previously served as Chairman of the Board & Chief Executive Officer of Ecolab. Mr. Baker is also a member of the Board of Target Corporation and served as their Lead Independent Director from 2015 to 2021. This directorship as well as demonstrated success throughout his tenure as the Chairman and CEO of Sarr Group, LLC and Chairman, CEO and founder of Hamilton Lane. Mr. Brun’s depth of financial expertise also derives from his experience as a Managing Director and co-founder of the investment banking group of Fidelity Bank. In addition, his directorshipsprevious directorship at other public companies, including service as the Non-executive Chairman of CDK Global, Inc. and Lead Director of Broadridge Financial Solutions, Inc.U.S. Bancorp provide him with extensivedeep experience on corporate governance issues.issues facing large public companies.Sarr Group, LLC, an investment holding companyEcolab Inc.(2006-present)G100 Companies, executive and educational convening organization(2006-2020) Senior Advisor (2016-present)CCMP Capital Advisors, LLC, global private equity firm• Managing Director and Head of Investor Relations (2011-2013)Hamilton Lane, private equity firm• Chairman and Chief Executive Officer (1991-2005)(2004-2006) Broadridge Financial Solutions,Ecolab Inc.(since 2007), Non-executive Chairman (2011-2019) (Since 2006)(2)CDK Global, Inc. (since 2014),Non-executive Chairman (2014)• Corning Incorporated (since 2018)Target Corporation (Since 2013)Hewlett Packard Enterprise Company (2015-2018)U.S. Bancorp (2008-2018)(1) Thomas R. Cech, Ph.D.IndependentAge: 72Director Since: 2009Committees:AuditResearch(Chair)ExperienceDr. Cech has extensive scientific expertise relevant to the pharmaceutical industry, including being a Nobel Prize-winning chemist and a Professor at the University of Colorado. In addition, his role as the former President of the Howard Hughes Medical Institute provides Dr. Cech with extensive managerial experience with direct relevance to scientific research.Awards• National Medal of Science (1995)• Nobel Prize in Chemistry (1989)Career HighlightsUniversity of Colorado• Distinguished Professor, Chemistry and Biochemistry (1990-present)• Director, BioFrontiers Institute(2009-present)Howard Hughes Medical Institute,non-profit medical research organization• President (2000-2009)• Investigator (1988-present)Other Public DirectorshipsCurrent• NoneFormer• NoneMerck & Co., Inc. 2020 Proxy Statement32 (2) Proposal 1 ElectionMr. Baker will retire as Executive Chairman of DirectorsEcolab Inc., effective May 5, 2022. 5355 consumer marketing and sales expertise from her leadership position at McKinsey and other global marketing consulting firms. 34 6365 FinanceScience/Technology/Sustainability Committees of 3M Company, as a member of the Audit and Corporate Responsibility and Sustainability Committees of Corning Incorporated, and as chair of the Technology Committee and a member of the Compensation Committee of Progressive Insurance, provide her with valuable experience on governance issues facing public companies. Progressive InsuranceCorning Incorporated (since 2018)2021)Merck & Co., Inc. 2020 Proxy StatementProposal 1 Election of Directors 33 Kenneth C. FrazierRobert M. Davis 6555 20112021 and(2011-present)(2011-present)(2011-2021(2010-present)(2010-2021) 6062 Benefits(Chair)Management Development 20202022 Proxy Statement34 36 6567 NomineeSince: 2020 (1) BenefitsManagement Development Governance the PIKRobert Wood Johnson Foundation Professor Emerita of Health Equity and Health Policy and formerly as President and Chief Executive Officer of Robert Wood Johnson Foundation, the nation’s largest healthcare-focused philanthropic organization. Her role at Robert Wood Johnson Foundation provided her with deep management, strategic, human capital and talent development expertise. In addition, her directorships at other public companies, including her service as Chair of the Governance Committee at GE and theher previous service as Chair of the Compensation and Management Development Committee at Hess Corporation, provide her with extensive experience on corporate governance matters. Dr. Lavizzo-Mourey was elected to the National Academy of Medicine, American Academy of Arts and Sciences and The American Philosophical Society. (2018-present)
(2018-2021) Hess Corporation (since 2004)• Intel Corporation (since 2018)NoneHess Corporation (2004-2020)(1)IfLavizzo-Mourey will serve on these committees.Mayo also serves as a member of the board of directors of Sarepta Therapeutics, Inc. 6264 Research Merck & Co., Inc. 2020 Proxy StatementProposal 1 Election of Directors 35 6769 BenefitsManagement Development (Chair) (1) 38 6769 Merck & Co., Inc. 2020 Proxy Statement36 Proposal 1 Election of Directors 6668 BenefitsManagement Development 4850 Research Veridian Corporation.General Electric. In addition, Ms. Warden is the Chair of the Board of Directors of the Federal Reserve Bank of Richmond and a member of the Board of Visitors of James Madison University.University and a former chair of the board of the Richmond Federal Reserve Bank.
(since 2018)Merck & Co., Inc. 2020 Proxy StatementProposal 1 Election of Directors 37 6971 BenefitsManagement Development positionsposition as a Managing Director of Sierra Ventures, his service as a board member and Senior Advisor at WestBridge Capital, his status as a Lecturer in strategic management at the Stanford University Graduate School of Business for over 20 years, and his former Chairmanship of the Princeton University endowment. 20202022 Proxy Statement38 40 2019, 2021, non-employee Directors were compensated for their Board service as shown in the chart below.20192021 Schedule of Director Fees 115,000, which may be deferred, at the Director’s election120,000 185,000200,000 credit to Director’s Merck common stock account under BenefitsManagement Development Committee 30,00040,000(3)(1) annual retainerscompensation is annual. Retainers are paid in quarterly installments.installments and may be voluntarily deferred at the Director’s election.(2) (3) independent Lead Director is the ChairpersonChair of the Governance Committee as prescribed by the committeeGovernance Committee charter. As a result of the combined responsibility, the Lead Director retainer totals $50,000$60,000 in the aggregate.will receivereceives a credit, which for 2021, was valued at $185,000$200,000 in the form of phantom shares denominated in Merck common stock to the Director’s account under the Directors’ Deferral Plan. Directors who join the Board after that datethe Annual Meeting of Shareholders are credited with a pro-rata portion. All distributions from the Directors’ deferred account are payable in cash installments or as a lump sum and are generally made no sooner than one year after service as a Director ceases.2019,2021, all Directors serving at least fivethree years have either met or exceeded these stock ownership requirements. Mr. Thulin joined the Board effective March 1, 2018, Ms. Coe joined the Board effective March 18, 2019 and Dr. Seidman and Ms. Warden joined the Board effective March 16, 2020.2020, Dr. Lavizzo-Mourey joined the Board effective May 26, 2020 and Dr. Mayo joined the Board effective March 15, 2021. Each of these Directors is making progress toward meeting the stock ownership guidelines.20202022 Proxy Statement 20192021 Director Compensation 3920192021 Director Compensation2019.2021.isare the only DirectorDirectors who is an officerare officers and employeeemployees of the Company, and he doesthey do not receive any additional compensation for histheir Board service. Director Compensation for Fiscal Year Ended December 31, 2019 $ 175,000 — $ 185,000 $ 360,000 145,000 — 215,000 360,000 98,454 — 191,398 (6) 289,852 145,000 — 203,500 348,500 135,000 — 210,000 345,000 115,000 — 215,000 330,000 47,917 — 20,000 67,917 125,000 — 215,000 340,000 115,000 — 185,000 300,000 115,000 — 185,000 300,000 115,000 — 215,000 330,000 115,000 — 215,000 330,000 Director Compensation for Fiscal Year Ended December 31, 2021 (1) Dr. Seidman and Ms. Warden were elected toMr. Brun retired from the Board effective March 16, 2020 and are not included in this table.August 19, 2021. Dr. Cech retired from the Board effective as of the 2021 Annual Meeting of Shareholders.(2) Ms. CoeDr. Mayo was elected to the Board effective March 18, 2019.15, 2021.(3) Dr. Noseworthy retired from the Board effective May 28, 2019.(4)No grants have been made under the 2010 Non-Employee Directors Stock Option Plan since 2011 and no further grants are permitted. Stock options previously issued to Directors under the 2010 Non-Employee Directors Stock Option Plan and any predecessor plans became exercisable in substantially equal installments on the first, second and third anniversaries of the grant date. All stock options previously issued to Directors are fully vested and exercisable. All options expire on the day before the tenth anniversary of their grant. The exercise price of the options is the closing price of our common stock on the grant date as quoted on the NYSE.On December 31, 2019, the number of option awards outstanding for each Director who served during 2019 were:Director NameOutstanding OptionAwards at 12/31/19L.A. Brun5,000W.P. Weeks5,000Merck & Co., Inc. 2020 Proxy Statement40 Director Compensation 2019 Director Compensation(5)NoseworthyCech did not receive a credit to the Directors’ Deferral Plan because he retired from the Board at the 20192021 Annual Meeting of Shareholders, which occurred prior to the award date.Shareholders. $ 30,000 18,500 25,000 30,000 20,000 30,000 30,000 30,000 (6)(4)2019, Ms. Coe2021, Dr. Mayo received a prorated portion of the 20182020 credit under the Directors’ Deferral Plan when shehe joined the Board on March 18, 2019,15, 2021, as well as the full 20192021 portion.202020222019,2021, the Governance Committee conducted such a review in consultation with FW Cook, the Compensation and BenefitsC&MD Committee’s independent compensation consultant. two peer groups that are used for executive compensation competitive benchmarking—a U.S. pharmaceutical peer group and a supplemental peer group comprised of the Dow Jones Industrial Average companies, excluding financial services companies (as described on page 45)47). The findings fromBased on this review indicated thatand the competitive positioning with respect torecommendation of FW Cook, the design of Merck’s overall program continued to align with market peer best practice corporate governance policies, but the compensation level was below the median of both peer groups.The Governance Committee submitted its findings to the full Board in November 20192021 and recommended that the full Board approve changes to the non-employee Director compensation program to more closely align withaddress anticipated market trends and increased rates prior to the market median.Governance Committee’s biennial Director compensation program review in 2023. Based on the results of FW Cook’s analysis and the Governance Committee’s recommendation, the Board approved the following changes to the non-employee Director compensation program effective January 1, 2020:2022:∎Increased annual cash retainer from $115,000 to $120,000;∎Increased lead director retainer from $30,000 to $40,000; and∎ $185,000$200,000 to $200,000.$220,000.increases combined representincrease represents a 6.7%6% increase (excluding the lead director retainer increase) in total non-employee Director compensation and align this compensation more closely with the market median. No changes were made to the Committee-related retainers.compensation. The Governance Committee will continue to conduct, on a biennial basis, a competitive assessment of our non-employee Director compensation program with the goal of maintaining it at or near the median of our external peer groups.20202022 Proxy Statement 41
Approve the Compensation of
Our Named Executive Officers 42.43. As described in the Compensation Discussion and Analysis,CD&A, our executive compensation programs are principally designed to reward executives based on the achievement of Company and individual performance objectives which, as a whole, are intended to drive sustainable long-term value creation for shareholders and reflect and maintain our position as an industry leader in the development of innovative medicines. The compensation of our NEOs is also designed to enable us to attract, engage and retain talented, high-performing and experienced executives in a competitive market.2019,2021, approximately 91%90% and 81%83%, respectively, of the CEO’s and other NEOs’ annual target total target direct compensation was variable based on our operating performance and/or our stock price.&B&MD Committee continually review the compensation programs for the NEOs to ensure they achieve the desired goals of reinforcing alignment of officer incentives with the interests of shareholders and linking compensation to performance as measured by operational results. As a result, we have adopted the policies and practices described on page 4446 to further align pay with operational performance and increases in long-term shareholder value while minimizing incentives that could lead to excessive risk-taking.20202022 Annual Meeting:42 - 7543-81 of this proxy statement, is hereby APPROVED on an advisory basis.”&B&MD Committee value the opinions of our shareholders as expressed through their votes and other communications. In 2019,2021, shareholders continued their support of our executive compensation programs with 93%approximately 91% of the votes cast for approval of a similar proposal. We will continue to give careful consideration to the outcome of the advisory vote on executive compensation and to the opinions of our shareholders when making compensation decisions.2021.2023.20202022 Proxy Statement42
and Analysis The following Compensation Discussion and Analysis or “CD&A”This CD&A describes the material elements of compensation for our 20192021 Named Executive Officers.44 45 45 45 45 46 46 47 47 47 48 51 51 52 52 53 54 54 58 58 59 60 61 61 44 20192021 was a year of significant yearachievement and meaningful progress for Merck as we executed against our strategic initiatives and drove growth and innovation in the key pillarsface of oncology, vaccines, hospitalwhat has continued to be a challenging environment for individuals, healthcare systems, and animal health.Ineconomies around the contextworld. We remained committed to protecting the health and safety of our Scorecard results for 2019, we exceededemployees, sustaining the supply of our targets, delivering 10% revenuemedicines and 12% pre-tax incomevaccines, employing our scientific capabilities in the global fight against COVID-19 and progressing our pipeline. We achieved strong operational performance, accelerated our broad pipeline, completed the spin-off of Organon, and completed key strategic business development transactions. Despite challenges from the ongoing pandemic, our teams performed with agility and executed with excellence.over our Scorecard results for 2018,(16% excluding the impact of foreign exchangecurrency exchange). As a result, we exceeded our Revenue and Pre-Tax Income targets for our 2021 Scorecard. Commercially, we executed extremely well across all our key performance drivers, including KEYTRUDA, GARDASIL / GARDASIL 9, and Animal Health.other items, consistentHPV-related cancers in both females and males. Our Animal Health business crossed the $5.5 billion revenue threshold with plan design. Our strong16% growth (ex-exchange) and is well-positioned for continued success.performance continuedreceiving more than 30 approvals and filing more than 20 new drug applications and supplemental biologics license applications in the U.S., European Union, Japan, and China. In particular, we made meaningful advancements across our broader pipeline with major market approvals for KEYTRUDA,new molecular entities, including VAXNEUVANCE, Verquvo and WELIREG. For molnupiravir, our investigational oral antiviral COVID-19 medicine, we have received authorizations in the U.S. in Adjuvant Therapy for Melanoma, first line Head and Neck Cancer and first line Renal Cell Carcinoma and in China, for first line Non-Small Cell Lung Cancer. We also received approvals in the U.S. for ZERBAXA for the treatment of certain types of bacterial hospital acquired pneumonia and RECARBRIO for the treatment of certain bacterial infections. Additionally, ERVEBO, our Ebola virus vaccine, received approval10 countries, including an emergency use authorization (“EUA”) in the U.S. and conditionala special approval for emergency use in Japan. We believe molnupiravir will be an important treatment option to combat the EU marking a critical advanceongoing COVID-19 pandemic with clinical trial data showing significantly reduced hospitalization or death in preparednessadult patients at high risk of progressing to severe disease. Following the FDA’s EUA in December 2021, our dedicated teams worked diligently to deliver 1.4 million courses of therapy to the fight against the deadly virusU.S., Japan, United Kingdom, and evidencing the passion, dedication and commitment of our employees to save and improve lives.other countries.continue to reshape our portfolio throughalso acted on key strategic business development transactions and strategic collaborationsopportunities to augment our pipeline, including the acquisitions of ArQule, Immune Design, PelotonPandion Therapeutics, Inc., a clinical-stage biotechnology company developing novel therapeutics designed to address the unmet needs of patients living with autoimmune diseases, and Tilos Therapeutics – to expand our oncology and non-oncology pipeline and bolster our capabilities in the development of vaccines. Our Animal Health business acquired Antelliq,Acceleron Pharma Inc., a biopharmaceutical company focused on using digital technology to monitor and promoteharnessing the health and well-being of livestock and companion animals.In February, we announced our plan to spin-off our women’s health, trusted legacy brands and biosimilars businesses into a new company, to be called Organon & Co. The spin-off of Organon will enhance our ability to focus on growth and innovation in our key pillars while allowing Organon to pursue its strategic intent to become a leader in women’s health. The separationpower of the two companies is expectedtransforming growth factor (TGF)-beta superfamily of proteins, with a lead candidate, sotatercept, having the potential to provide additional value for patientsa novel approach to treating pulmonary arterial hypertension.shareholders.As a science-based biopharmaceutical company, our mission isRobert M. Davis to improve the quality of human and animal life. We enter 2020 with a strengthened resolve to continue our legacy of tackling urgent global health challenges. In connection with the COVID-19 pandemic, we have convened a team of our top scientists to assess the value that our vast array of assets and our vaccine know-how may haveChief Executive Officer, both effective July 1, 2021. The Board’s succession planning resulted in the prevention or treatmentelection of COVID-19.Dean Y. Li, M.D., Ph.D. to succeed Roger M. Perlmutter, M.D., Ph.D. as Executive Vice President and President, Merck Research Laboratories, effective January 1, 2021, and Caroline Litchfield to succeed Mr. Davis as Chief Financial Officer, effective April 1, 2021.20192021(1) Target($B) Actual($B) Weighting% Score% $ 44.23 $ 46.98 40 % 80 % $ 15.04 $ 16.27 40 % 71 % 20 % 33 % 184 % (2017–2019)(2019–2021)(1) Peer Median Merck Result Weighting Payout 15.7% 17.3% 108% 50% 54% Target($B) Actual($B) Result Weighting Payout $37.8 $40.8 177% 25% 44% $12.15 $12.93 155% 25% 39% 100% 137% Peer Median Merck Result Weighting Payout Target($B) Actual($B) Result Weighting Payout foreignvariances in currency exchange rates versus budget and certain other items, consistent with plan design; roundeddesign, as discussed below; rounded.20202022 Proxy Statement 43theour work we do has an enormous impact on global health and well-being. Because of the inherent complexity and dynamic science of human and animal health, even with flawless execution, we risk failure. In addition:Our Compensation Program Must Address the Industry Environment We Operate Within, Be Market-CompetitiveMarket Competitive Pay and Pay For PerformancePay-for-Performancemust…is designed to… Support our efforts to attract and retain the brightest and most innovative minds in business, research, and academia. Align the interests of our executives with the interests of our shareholders to ensure prudent actions that will benefit long-term value. Reward our executives based on the achievement of sustained financial and operatingoperational performance and demonstrated leadership. Is ais Critical Component ofto Achieve Our Pay-For-Performance Objectives50)53) focuses on our most critical business drivers — revenue, pre-tax incomeRevenue, Pre-Tax Income, and pipelinePipeline accomplishments — and is used to determine the payout for our annual incentive for all employees, including our NEOs under the Executive Incentive Plan. Our Scorecard performance for 20192021 resulted in above-target achievement of 184%148%.For the 2017-2019 performance periodThe 2019 PSU program (described in more detail on page 53), PSUs57) paid out at 137%140% based on achievement of cumulative three-yeartwo-year OCF, cumulative three-yeartwo-year EPS and three-year R-TSR metrics during the performance period, weighted at 25%, 25% and 50%, respectively. As previously disclosed, cumulative two-year OCF and EPS metrics were used due to the complexities associated with disentangling our Organon business from a multi-year financial plan. Organon was successfully spun off in June 2021.20202022 Proxy Statement44 46
programs with approximately 91% of the votes cast in favor of the say-on-pay
proposal. Consistent with the Company’s strong interest in shareholder
engagement and our pay-for-performance approach, the C&MD Committee
continues to evaluate our executive compensation program to ensure alignment
between the respective interests of our executives and shareholders. The C&MD
Committee did not make significant changes to our executive compensation
program in 2021 as a direct result of the most recent say-on-payIn 2019, shareholders continued their support for our executive compensation programs with 93% of the votes cast in favor of the say-on-pay proposal. Consistent with the Company’s strong interest in shareholder engagement and our pay-for-performance approach, the C&B Committee has continued to examine our executive compensation program to ensure alignment between the respective interests of our executives and shareholders. No significant changes were made to our executive compensation program in 2019 as a result of the most recent say-on-pay vote.
our NEOs as further described in Proposal 2 on page 41.42. We do not… Allow Directors and management employees, including officers, to engage in transactions involving short sales, publicly traded options, hedging or pledging of Company stock
Grant time-vested RSUs to NEOs as part of the annual LTI program
Grant stock options with an exercise price less than fair market value
Re-price underwater stock options without shareholder approval
Pay tax gross-ups on any payments made in connection with a change in control event
programs control (i.e., there must be both a change in control and an involuntary termination) Allow Directors and management employees including officers to engage in transactions involving short sales, publicly traded options, hedging or pledging of Company stock
Grant time-vested RSUs to NEOs as part of the annual LTI program
Grant stock options with an exercise price less than fair market value
Re-price underwater stock options without shareholder approval
Pay tax gross-ups on any payments made in connection with a change in control event
Utilize a total shareholder return metric in the PSU program to align the payout with long-term stock performance and shareholder experienceProvide dividend equivalents only on earned Restricted Stock Units ("RSUs") or PSUsMonitor LTI program share utilization regularly relative to both industry standards and versus our pharmaceutical and supplemental peer groupsConduct competitive benchmarking to ensure executive officer compensation is aligned to marketOffer limited perquisites that are supported by business interestsInclude caps on annual cash incentive and PSU program payoutsRetain an independent compensation consultant that reports directly to the C&B CommitteeMaintain robust stock ownership requirements and share retention policiesMaintain an incentive recoupment (i.e. clawback) policyConduct assessments to identify and mitigate risk in our compensationprograms 20202022 Proxy Statement Compensation Policies and PracticesPeer Groups 45Peer Grouppeer group of large multinational pharmaceutical companies approved by the C&MD Committee that participate in a pharmaceutical industry compensation survey. The survey is conducted by Willis Towers Watson, an independent consulting firm. In setting compensation levels for 2019,2021, the C&B&MD Committee reviewed the survey results which consisted offor the following Peerpeer companies with whichthat Merck competes with to attract talented, high-performing executives:executives. The C&MD Committee occasionally reviews information related to the companies in the primary peer group that are headquartered in the U.S. because practices outside the U.S. can differ geographically.20192021
Peer Grouppeer group described above, we also use a Supplemental Peer Groupsupplemental peer group consisting of the companies that comprise the Dow Jones Industrial Average (excluding the financial services companies) as a secondary reference for CEO compensation and for other compensation-related practices (for example, share usage and dilution, change in control policy design, and stock ownership and retention guidelines). Merck is a member of the Dow Jones Industrial Average, and we believe this group provides insight into practices among companies of similar scale and complexity that operate across a variety of industries, providing us with a broader view of market pay, policies, and practices.
Disney ChemicalExxon Mobil PfizerUnited TechnologiesGroup Verizon20192021total target direct compensation (base salary, target annual cash incentive and target long-term equity incentive)TDC at the median, on average, with variability by individual executive based on scope and complexity of role, market availability of proven talent, experience, leadership, sustained performance over time, potential for advancement as part of succession planning, and other unique factors that may exist from time to time. This median target compensation philosophy ensures that actual realized compensation varies above or below market levels based on attainment of longer-term goals and changes in shareholder value, and that overall costs and share dilution are reasonable and sustainable relative to market practices.20202022 Proxy Statement46 48 20192021 Named Executive Officers and the material elements of their compensation is described below. 20192021 Kenneth C. FrazierRobert M. DavisChairman,Chief Executive Officer, President and Former Chief ExecutiveFinancial Officer(1) 3.1%$385,392MaintainedIncreased annual incentive target percentage by 45% points(2)$2,000,000$6,750,000(3)Increased totalChanges resulted in increased target direct compensation by 12.5%TDC of 131% to reflect promotions that occurred in 2021 6555 288 Years Change in value is mainly attributedMr. Davis was promoted from Executive Vice President, Global Services and Chief Financial Officer (“CFO”) to lower discount rates, an increase in five-year average payPresident, effective April 1, 2021, and an additionalbecame Chief Executive Officer and a member of the Board, effective July 1, 2021.of service.as CEO, effective July 2021. 20192021 Robert M. DavisCaroline Litchfield Global Services and Chief Financial Officer(1) IncreasedSet base salary by 3%at $900,000(2)MaintainedSet annual incentive target percentageat 100%(2)IncreasedSet LTI target by $200,000• Increased total target direct compensation by 4.4%at $2,200,000(2) 631 Years * RoundedMerck & Co., Inc. 2020 Proxy StatementCompensation Discussion(1) Ms. Litchfield was promoted from Senior Vice President, Treasurer to Executive Vice President and Analysis Chief Financial Officer, effective April 1, 2021.Detailed Discussion(2) Reflects compensation as Executive Vice President and Analysis 47Chief Financial Officer. 20192021 Sanat ChattopadhyayFrank Clyburn
and President, Merck Manufacturing DivisionHuman Health (1) • Increased base salary by 3.6%• Maintained annual incentive target percentage• Increased LTI target by $500,000• Increased total target direct compensation by 17.5% 605750 Compensation Decisions for 2019Roger M. Perlmutter, M.D., Ph.D.Executive Vice Presidentand President, Merck Research Laboratories • Increased base salary by 3%• Maintained annual incentive target percentage• Increased LTI target by $1,000,000• Increased total target direct compensation by 17% Compensation Decisions for 2021 6759 115 YearsCompensation Decisions for 2019Jennifer ZacharyExecutive Vice President,General Counsel and Corporate Secretary• Increased base salary by 9.4%• Maintained annual incentive target percentage• Increased LTI target by $350,000• Increased total target direct compensation by 13.9%Age: 42 Tenure*: 2 Years(1) Dr. Li was promoted from Senior Vice President, Discovery Sciences and Translational Medicine to Executive Vice President and President, Merck Research Laboratories, effective January 1, 2021.RoundedLength of tenure is rounded.20202022 Proxy Statement48 Compensation Discussion and Analysis The Elements of 2019 Compensation 20192021 Compensation How We Link Pay To Performance How We Pay
are rewarded for top and bottom-line performance and pipeline advancement which leads to longer-term revenue opportunities
opportunity is at-risk and tied to company performance and/orlong-term stock value target pay opportunity, as well as each pay element, is assessed for competitiveness
relative to primary andand/or supplemental peer groups, which include the
largest pharmaceutical peers and Dow Jones Industrial Average companies, excluding financial services &B&MD Committee recommends, and in the caseindependent members of Mr. Frazier, the Board of Directors (not including Mr. Frazier), determinesapprove, the compensation for theour CEO and Executive Chairman. The C&MD Committee reviews and approves compensation for all other NEOs each year based on a variety of factors, including scope and complexity of role, experience, sustained leadership, and performance and competitive positioning as compared to our pharmaceutical and supplemental peer groups as described in more detail on page 45.47.&B&MD Committee are provided beginning on page 20.15.20202022 Proxy Statement52
the need to deliver a competitive level
of base salary with ensuring the
appropriate mix of fixed to variable
compensation for each NEO.
base salaries in 2021 for Mr. Davis and
Mr. Frazier who were NEOs in 2020.
Adjustments were based on Merck’s
U.S. salary increase budget for all
employees. New Base
Salary
Incentive Plan (“EIP”).
determined based upon achievement
of Company performance measures as
reflected by the Company Scorecard.
The overall EIP award fund cannot
exceed 200% of the aggregate total
target incentive amount for all
participants. The maximum award
amount for each NEO for 2021,
excluding the impact of the Scorecard,
is listed in the Grants of Plan-Based
Awards table on page 66.
Incentive
Incentive 20192021 Compensation 49Base Salary
the need to deliver a competitive level
of base salary while also ensuring the
appropriate mix of fixed to variable
compensation for each NEO.
were made to base salaries in 2019.
All adjustments were based on
Merck’s U.S. salary increase budget
for all employees, including the NEOs. 3.1 % No Change $ 1,670,000 3.0 No Change 1,082,144 3.6 No Change 724,850 3.0 No Change 1,158,837 3.8 5.6 % 875,000 Annual Cash Incentive
shareholder-approved Executive
Incentive Plan (“EIP”).
determined based upon achievement
of Company performance measures
as reflected by the Company
Scorecard. The overall EIP award fund
cannot exceed 200% of the aggregate
total target incentive amount for all
participants. The maximum award
amount for each NEO for 2019,
excluding the impact of the Scorecard,
is listed in theGrants of Plan-Based
Awards table on page 61.
for the 2019 performance period as
shown in the table.
Incentive
Salary
Incentive
Salary 150 % 150 % 105 105 90 90 105 105 95 95 Merck & Co., Inc. 2020 Proxy Statement50 Compensation Discussion and Analysis The Elements of 2019 Compensation 20192021 Merck Company Scorecardtrackenable tracking and measuremeasurement of our progress and performance against annual operating goals and critically important long-term strategic drivers of sustainable value creation tied to our research and development pipeline — each of which is measured in the context of compliance, health, safety, and environmental outcomes. The Company Scorecard may be adjusted based on an evaluation of these outcomes, recognizing the importance they play in driving Merck’s values and a culture of integrity. For 2021, no adjustment was applied. Revenue and Pre-Tax Income are equally weighted at 40% each based on the C&B&MD Committee’s belief that they are the key financial measures of our success during the year. The Pipeline milestonesgoals are collectively weighted at 20% and are designed to ensure that we are focused on internal and external early discovery opportunities, late-stage clinical development progression, and regulatory filings and approvals.As indicated above, theThe target, threshold and stretch revenueRevenue and pre-tax incomePre-Tax Income goals are set in relation to the Board-approved annual operating plan and the expectations of management. Each year, the pipelinePipeline goals are recommended by the head of Merck Research Labs,Laboratories, reviewed by the Research Committee, and approved by the C&B&MD Committee. Failure to achieve threshold performance on any of the metrics would result in forfeiture of the entire opportunity for that metric. If the combined results of the three metrics do not total at least 50, the entire opportunity would be forfeited (i.e., there would be no payout).payout. The overall results of the Scorecard are calibrated so individuals may receive between 50% and 200% of their target award opportunity established for the annual performance period. Adjustments are applied to Revenue and Pre-Tax Income results using a consistent framework of adjustments to our reported financial results for incentive program purposes approved by the C&MD Committee to accurately reflect the operating performance of our business. For further explanation of these adjustments, please refer to Appendix B on page 99. The Scorecard structure and results are summarized below. Weight
($) billions Reported
($) billions Adjusted
($) billions 40 $44.23 $46.84 $46.98 40 $15.04 $16.12 $16.27 20 6 12 4 5 3 5 7 11 100 (1) ReportedMerck’s revenue for 2021 was $48.70B, reflecting continuing operations. For purposes of $46.84Bthe 2021 Company Scorecard, our internal Revenue goals assumed Organon remained part of Merck for all of 2021. As such, for purposes of determining Revenue for the 2021 Company Scorecard, this figure was adjusted to $46.98Binclude Organon actual performance prior to removespin date and operating plan numbers post spin date. This result of $54.88B was adjusted to $54.87B to exclude the negative impact of foreigncurrency exchange rates (vs. foreign(versus currency exchange rates budgeted in the annual operating plan) and the impact of business development transactions (consistent with plan design and past practice), exceeding. We exceeded our internal revenueRevenue target of $44.23B.$52.80B due to strong performance in key pillars including oncology, vaccines, and animal health, as well as the significant contribution of molnupiravir.Pre-Tax Income:Reported pre-tax incomeMerck & Co., Inc. 2022 Proxy Statement54 $16.12Bthe 2021 Company Scorecard, our internal Pre-Tax Income goals assumed Organon remained part of Merck for all of 2021. As such, Pre-Tax Income from continuing operations was adjusted to $16.27Binclude the impact of Organon, similar to the adjustment described above for Revenue. This result of $20.48B was adjusted to $20.49B to exclude the impact of foreigncurrency exchange rates (vs. foreign(versus currency exchange rates budgeted in the annual operating plan) and the impact of gains/losses from equity securities and the effect of certain business development transactions (consistent with plan design and past practice), exceeding. We exceeded our internal pre-taxPre-Tax income target of $15.04B.$19.72B due to the sales strength that was achieved coupled with our continued discipline in expense management.Merck & Co., Inc. 2020 Proxy StatementCompensation Discussion and Analysis The Elements of 2019 Compensation 5120192021 Annual Incentive Payouts20192021 annual cash incentives paid to the NEOs. The total annual incentive amount paid to“Final Award” for each NEO is reflected in the “Non-Equity“Non-Equity Incentive Plan Compensation” column of theSummary Compensation Table.table.20192021 Annual Incentive Payments Target $1,670,000 150% $ 2,505,000 184% $ 4,609,200 1,082,144 105 1,136,251 184 2,090,702 724,850 90 652,365 184 1,200,352 1,158,837 105 1,216,779 184 2,238,873 875,000 95 831,250 184 1,529,500 Target (1) (2) (3) (4) 20192021 Equity Award Mix Performance Share Units PSUs link realized compensation value to the achievement of critical financial and operational objectives and align executives’ interests with those of our shareholders. The earned award varies based on results versus pre-determined performance goals, as well as long-term returns to shareholders as measured by relative stock price performance and dividend yield. &B&MD Committee and, in the case of Mr. Frazier,our CEO and Executive Chairman, recommended by the C&MD Committee and approved by the independent members of the Board of Directors (not including Mr. Frazier).Directors. Annual PSU grants (with a 3-year performance period) are generally made on the last business day in March and annual stock option grants are made on the third business day following announcement of our first quarter earnings. We may also selectively grant stock options and RSUs to executive officers on the third business day following the announcement of quarterly earnings generally as part of a new hire sign-on or for retention purposes. These dates were chosen to ensure that grants are made shortly after we have released information about our financial performance to the public. However, the C&B&MD Committee reserves the right to change the date when grants are made, in view of its responsibility to consider all facts and circumstances to ensure that grants are consistent with our compensation philosophy and objectives.Merck & Co., Inc. 2020 Proxy Statement52 Compensation Discussion and Analysis The Elements of 2019 Compensation 20192021 LTI Grant Values20192021 annual LTI grant values for the CEO and other NEOsExecutive Chairman as compared to the prior year are shown in the following table. The number of shares associated with each award is set forth in theGrants of Plan-Based Awards table on page 61.66. The LTI grant valuesvalue for Mr. Davis was increased by the Board in consideration of his new role as President and Chief Executive Officer. The LTI value for Mr. Frazier Mr. Davis and Dr. Perlmutter were increasedwas decreased by the C&B Committee (or the Board in consideration of his transition to Executive Chairman. The other NEOs were not including Mr. Frazier,named executive officers in the case of Mr. Frazier) to recognize sustained performance and leadership. LTI values for Mr. Chattopadhyay and Ms. Zachary were increased by the C&B Committee to strengthen their competitive market positioning versus our pharmaceutical peer group and to recognize their impact.2020. Target Grant Value(1) 2018 2019 Increase
in Target
Grant Value $13,000,000 $15,000,000 +$2,000,000 3,800,000 4,000,000 +200,000 1,800,000 2,300,000 +500,000 4,000,000 5,000,000 +1,000,000 2,000,000 2,350,000 +350,000 Target Grant Value(1) Increase in
Target Grant Value 2020 2021 (1) Table andGrants of Plan-Based Awardstables based on the fair value on grant date in accordance with FASB ASC Topic 718 and SEC disclosure rules which consider factors other than share price.(2) (3) establishreview the design of our PSU program to ensure that our metrics are focused on the long-term measures that are most applicable to driving value for the Company and its shareholders over a three-year performance targets for the metrics under the PSU program. Awards granted in 2017 and in subsequent years are measured against cumulative EPS (25%), OCF (25%) and R-TSR (50%).period. Payouts under the PSU program are formulaic;formulaic and, as such, the C&B&MD Committee does not consider individual performance or use discretion when determining final awards.EPS and OCFFinancial targets applicable to the PSUs are established based on our three-year financial plan, which considers a variety of factors including management, Board, and external expectations and aspirations of our long-term performance. R-TSR performance versus our peer group is measured at the end of the three-year period and compares Merck’s average annual TSR to the median TSR of our pharmaceutical peer group. Each percentage point of outperformance or underperformance versus the median modifies the earned award by +/+/-5 percentage points. In the event of underperformance by more than 10 percentage points, there will not be a payout on the R-TSR portion of the award. In the event of outperformance, the payout56 (1) 20202022 Proxy Statement 20192021 Compensation 532017–20192019–2021 PSU Award CycleProgram Performance Period2017,2019, 70% of each NEO’s annual target LTI was converted to PSUs based on the closing price of Merck stock on the date of grant. The number of PSUs ultimately earned is based on our performance against the pre-established EPS and OCF targets and R-TSR performance. As a result of the spin-off of Organon, the original number of PSUs granted were adjusted to preserve the same intrinsic value as was in place immediately prior to the adjustments.2017-20192019-2021 performance period, three-yearas a result of the Organon spin-off, two-year (2019-2020) cumulative EPS and OCF metrics were each weighted at 25%, and three-year R-TSR versus our pharmaceutical peer group was weighted at 50%. If the Organon spin-off did not occur, three-year cumulative EPS and OFC metrics would have been used. The resultsoutcome of the combined performance resulted in an actual payout of 137%140% as illustrated in the tables below.137%140% payout was based on our strong EPS and OCF performance (155% and 177%, respectively) primarily(both at 200%) during the performance period due to the momentum in key growth areas of the business that delivered above-plan after-tax non-GAAP net income. We outperformedWhile exceeding our operational metrics, we underperformed the median TSR of our Peer Grouppharmaceutical peer group by 1.6%,4 percentage points, which increaseddecreased the payout by +5%5% for each percentage point of outperformance,underperformance, resulting in an R-TSR payout of 108%80%.(1) foreignvariances in currency exchange rates versus budget and certain other items, consistent with plan design; rounded.(2) Peerpharmaceutical peer group company common stock for December 20162018 and December 2019,2021, assuming reinvestment of dividends.dividends, including the special dividend of Organon shares; rounded.(3) Rounding may be applied.Rounded to the nearest whole percentage.20202022 Proxy Statement54 58 20192021 Compensation 137%140%, the NEOs received the following number of shares of Merck common stock, including dividends accrued during the performance period and paid in shares: 137,709 203,791 41,863 61,951 16,525 24,454 44,067 65,214 N/A N/A
Target Award(1) 33,666 34,699 53,457 126,247 130,120 200,456 2,886 2,975 4,584 15,150 15,615 24,056 16,833 17,349 26,728 2,886 2,975 4,584 (1) Ms. ZacharyAs a result of the spin-off of Organon, the original number of PSUs granted in 2019 were adjusted to preserve the same intrinsic value as was hired in April 2018 and was not a participantplace immediately prior to the adjustments.(2) the 2017-2019 PSU performance period.shares following final award determination.2017-20192019-2021 PSU performance period is provided in theOption Exercises and Stock Vested table on page 65.71.&B&MD Committee has approved a consistent framework of adjustments to our reported financial results for incentive program purposes. For further explanation of these adjustments and our GAAP versus Non-GAAP results, please refer to Appendices A and B on pages 9097 and 92,99, respectively. Retention LTI Grant RSU Retention Grant Value Grant Date Vest Date $ 3,000,000 May 4, 2021 Forfeited 2,000,000 May 4, 2021 May 4, 2024 marketplace.market. Pension and savings plans help employees save and prepare financially for retirement. Health and welfare and paid time-off benefits help ensure that we have a healthy, productive, and focused workforce.&B&MD Committee believes are reasonable, appropriate, and consistent with our executive compensation philosophy.Table.table.iswas no reported usage for any other NEO.isand Executive Chairman are provided with a car and driver to ensure histheir individual safety and security. Personal use of a car and driver is also provided to a select number of other executives, primarily for commutation purposes, allowing them to devote additional time to critical Company business.&B&MD Committee reviewed and approved target TDC opportunities for our executive officers, including our NEOs. The Board of Directors (excluding Mr. Davis and Mr. Frazier) reviewed and approved Mr. Davis’ and Mr. Frazier’s target TDC.our 2020 PSU program$11,750,000.removeExecutive Chairmen. No change was made to Mr. Frazier’s annual base salary or target annual incentive percent. Mr. Frazier’s target LTI grant was reduced by $5,750,000 to $5,000,000. In addition, while there is no definitive timing for Mr. Frazier’s retirement as Executive Chairman, the OCF metricBoard determined that his continued service as Executive Chairman would be for a transition period and, increaseas such, intends to provide Mr. Frazier’s LTI grant in the weightingform of RSU awards that vest one year from the date of the EPS metricgrant. Similar to 50%Mr. Frazier’s 2019-2021 grants, the 2022 RSU awards will be subject to continued compliance with non-compete and non-solicit requirements.maintaining a linkage between our long-term profitability9.3% and executive incentives. 23.5%, respectively. This included market adjustments to their annual base salaries and increases in their annual LTI grants. Given Mr. Clyburn’s departure, he did not receive an increase to his annual base salary or an LTI grant.remaining 50% of the award will continuefollowing table summarizes adjustments made to be based on 3-year R-TSR during the performance period.CEO, Executive Chairman, and other NEO compensation for 2022. Target Total Direct
Compensation Increase % +7.7 % +3.0 % No change +$1,000,000 (2) -43.4 No change No change -5,750,000 +17.5 +8.3 (3) No change +550,000 +9.3 +6.3 (3) No change +300,000 +23.5 +13.2 (3) No change +900,000 (1) (2) (3) 20202022 Proxy Statement60 20192021 Compensation 55In addition, the C&B Committee reviewed and approved total target direct compensation opportunities for our executive officers, including our NEOs, and the Board of Directors (not including Mr. Frazier) reviewed and approved Mr. Frazier’s total target direct compensation.Mr. Frazier’s 2020 LTI grant value was increased to recognize his sustained high performance and achieve competitive positioning relative to the primary pharmaceutical and supplemental (Dow) peer group. Similar to 2019, his 2020 grants will include specific terms and conditions providing for full vesting if he remains employed through December 31, 2020, subject to his continued compliance with non-compete and non-solicit requirements. Mr. Chattopadhyay and Ms. Zachary received market adjustments and increases in their annual LTI grant values to better align their overall compensation to the market.The following table summarizes adjustments made to CEO and other NEO compensation for 2020.Named Executive OfficerAnnual Base SalaryIncrease %Target Annual IncentiveIncrease %Target Long-Term IncentiveIncrease $K.C. Frazier+1.8% No change+$750,000R.M. Davis+3.0No changeNo changeS. Chattopadhyay+13.8(1)No change+500,000R.M. Perlmutter+3.0No changeNo changeJ. Zachary+5.0(1)No change+150,000(1)Includes market adjustment as described above.&B&MD Committee recognizes the critical role that executive stock ownership has in aligning the interests of management with those of shareholders. As such, we maintain a formal stock ownership policy, under which the CEO and other senior executives are required to acquire and hold Merck common stock in an amount representing a multiple of their base salary.salary for so long as they remain in office. Until the designated multiple of base salary is reached, executives are required to retain in stock a percentage of the after-tax net proceeds associated with stock option exercises and/or PSU and RSU distributionssettlements (100% for the CEO and Executive Chairman and 75% for the other NEOs). In calculating the attainment of our stock ownership requirements, we exclude (1) unexercised stock options and (2) unvested PSUs and RSUs.29, 2020.28, 2022. Stock Ownership Requirements(1)Percent Attainment of Goal(1) Zachary was hiredLitchfield and Dr. Li became Executive Officers in April 2018.2021. Mr. Clyburn resigned from his position, effective February 1, 2022; therefore, he is no longer subject to the stock ownership requirements.Merck & Co., Inc. 2020 Proxy Statement56 Compensation Discussion and Analysis Compensation Risk Assessment caseresearch, development, manufacturing, sales or marketing of the Company’s products or (ii) the overall goodwill or reputation of the Company (the latter of which was added and approved by the C&MD Committee in November 2021), or (b) a significant restatement of financial results caused by executive fraud or willful misconduct,has occurred. In the Boardevent of Directors will seek reimbursement fora financial restatement, the portion of the annual cash incentive and/or PSUs paid to the executive, in excess of the amount that would have been paid if the financial results were reported accurately. Additionally, for incentive compensation awarded in and after 2014, an incentive recoupment policy applies to senior executives in instances of material violations of Company policy that cause significant harm to Merck and instances of a failure to manage or monitor conduct or risks appropriately.accurately, will be recouped.&B&MD Committee may authorize compensation that is not deductible if it is determined to be appropriate and in the best interests of the Company and our shareholders.&B&MD Committee and senior management continually evaluate the relationship between risk and reward as it relates to our executive compensation program and have adopted policies and practices that mitigate undue risk while preserving the incentive/variable nature of the compensation. These policies and practices are described in more detail in the Compensation Policies and Practices chart on page 44.46.2018,2020, Merck engaged Pay Governance, an independenta compensation consultant to management, to perform a formal assessment of our executive compensation program, policies, and practices based on generally accepted compensation practices. The results of the assessment were reviewed by FW Cook, the C&MD Committee’s independent compensation consultant, and then discussed with the C&B&MD Committee in November 2018.2020. The assessment reaffirmed our belief that our compensation programs and policies are structured and operated in a manner that does not create risks that are reasonably likely to have a material adverse effect on our business. In addition to ongoing monitoring of our programs and policies, we are committed to performing formal assessments on a periodic basis. The next formal assessment is scheduled for review and discussion with the C&B&MD Committee in November 2020.2022.BenefitsManagement Development Committee Report&B&MD Committee, comprised of independent Directors, reviewed and discussed the above CD&A with management. Based on the review and discussions, the C&B&MD Committee recommended to our Board of Directors that the CD&A be included in these proxy materials.BenefitsManagement Development Committee(Chair)Rochelle B. LazarusPatricia F. RussoRisa J. Lavizzo-Mourey, M.D.20202022 Proxy Statement62 572019, 20182021, 2020, and 2017.2019. The Named Executive Officers are the Company’s Chief Executive Officer, Executive Chairman, Chief Financial Officer and the three next most highly compensated executive officers as of December 31, 2019.2021.
Plan 2019 $ 1,659,482 $ 0 $ 11,425,398 $ 4,500,763 $ 4,609,200 5,078,147 (7) $ 375,485 $ 27,648,475 2018 1,610,577 0 9,456,006 3,901,093 3,061,800 0 (8) 2,905,028 (9) 20,934,504 2017 1,572,212 0 8,814,767 3,750,000 2,686,575 504,658 314,875 17,643,087 2019 1,075,557 0 3,046,785 1,200,201 2,090,702 193,079 120,864 7,727,188 2018 1,043,726 0 2,764,058 1,140,317 1,389,977 171,067 111,695 6,620,840 2017 1,018,269 0 2,679,655 1,140,001 1,216,163 151,849 104,962 6,310,899 2019 719,467 0 1,751,906 690,121 1,200,352 963,252 93,495 5,418,593 2018 (10) — — — — — — — — 2017 (10) — — — — — — — — 2019 1,151,783 0 3,808,436 1,500,254 2,238,873 361,579 162,429 9,223,354 2018 1,116,262 0 2,909,523 1,200,341 1,488,486 236,334 147,696 7,098,642 2017 1,083,750 0 2,820,733 1,200,000 1,296,032 294,435 138,917 6,833,867 2019 856,818 0 1,790,006 705,120 1,529,500 83,704 80,572 5,045,720 2018 553,846 750,000 (11) 2,454,748 600,166 638,400 30,462 165,997 5,193,619 2017 (12) — — — — — — — — (1) 69.75.(2) 2019, 20182021, 2020, and 2017,2019, respectively, as calculated in accordance with FASB ASC Topic 718. These amounts do not represent the actual value realized by the Named Executive Officers during the respective year. Please refer to pages 52 - 5355-57 for more information on the PSU award disclosures. For discussion of the assumptions used in these valuations, seeNote 13to the Company’s Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2019.2021. 20192021 assuming achievement of the highest level of performance (200%) was: Maximum Value
of PSU Awards
($) $ 22,850,795 6,093,570 3,503,812 7,616,871 3,580,013 2019,2021, see theGrants of Plan-Based Awards table and related narrative and footnotes beginning on page 61.66.20202022 Proxy Statement58 Summary Compensation Table(3) 2019, 20182021, 2020 and 2017,2019, respectively, as calculated in accordance with FASB ASC Topic 718. The stock option values were calculated using the Black-Scholes option pricing model and may not represent the actual value realized by the Named Executive Officers during the respective year. For discussion of the assumptions used in these valuations, seeNote 13 to the Company’s Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2019.2021. 2019,2021, see theGrants of Plan-Based Awards table and related narrative and footnotes beginning on page 61.66.(4) GrantsGrants of Plan-Based Awards table and related narrative and footnotes beginning on page 61.For 2018, based on her employment start date of April 16, 2018, Ms. Zachary’s award reflects pro-rated eligibility for 8 of 12 months during the performance period.66. 69.75.(5) 20182020 to December 31, 2019.2021. These plans areinclude the Merck U.S. Pension Plan, (the “Qualified Plan”) and the MSD Supplemental Retirement Plan.Plan, and U.K. Pension Plan (Ms. Litchfield only). For more information about thosethe U.S. plans, see thePension Benefits table and accompanying narrative beginning on page 66.72. 69.75.(6) 5964 for additional details on amounts. See footnotes 1 and 4 to theAll Other Compensation table for an explanation of how financial and tax planning benefits, as well as installation, maintenance, and remote access of home security, are valued. For all other personal benefits provided to the Named Executive Officers, in accordance with SEC disclosure rules, we calculated the cost of those benefits as the incremental cost of providing them. Each benefit plan serves a business purpose, as described further in the Other Employee Benefits section on page 54.58.(7) mainly attributedsmaller primarily due to lower discount rates, ansignificant decrease in pension eligible earnings compared to 2020 and increase in five-year average pay and an additional year of service.discount rates.(8) generallyprimarily due to anage and increase in discount rates. In accordance with SEC rules, a $0 value is reported rather than a negative amount.(9) Includes $2.5 millionChange in deferred compensationvalue for 2019 is mainly attributed to offset the losslower discount rates, an increase in five-year average pay and an additional year of pension benefits due to the elimination of the Mandatory CEO Retirement Policy. For additional details, see thePension Benefits table on page 66.service.(10) Chattopadhyay wasClyburn, Mr. DeLuca, and Dr. Li were not a Named Executive OfficerOfficers in 2018 or 2017.2019 and 2020.(11) Ms. Zachary received a sign-on bonus to compensate for lost bonus opportunityMr. Clyburn resigned as Executive Vice President and to provide a hiring incentive.President, Human Health, effective February 1, 2022.(12) Ms. Zachary was hired on April 16, 2018.Includes value of RSU retention grant.(13) 20202022 Proxy Statement64 All Other Compensation 59 Year
& Tax
Preparation 2019 $ 10,000 $ 90,661 $ 50,121 $ 12,378 $ 0 $ 212,325 $ 375,485 2018 10,000 79,830 48,907 72,919 0 2,693,372 (6) 2,905,028 2017 10,000 20,663 47,961 52,172 0 184,079 314,875 2019 10,000 0 0 0 0 110,864 120,864 2018 10,000 0 0 0 0 101,695 111,695 2017 10,000 0 0 0 0 94,962 104,962 2019 10,000 0 15,457 0 0 68,038 93,495 2018 (7) — — — — — — — 2017 (7) — — — — — — — 2019 10,000 0 33,708 0 0 118,721 162,429 2018 10,000 0 29,143 0 0 108,553 147,696 2017 10,000 (8) 0 21,521 0 0 107,396 138,917 2019 10,000 0 0 0 3,378 67,194 80,572 2018 8,477 0 0 0 139,607 17,913 165,997 2017 (9) — — — — — — — Year
of Home Security 2021 $10,000 $94,552 $11,353 $26,258 $0 $105,174 $247,337 2020 10,000 0 3,620 0 0 145,775 159,395 2019 10,000 0 0 0 0 110,864 120,864 2021 10,000 93,769 25,262 3,966 0 166,052 299,049 2020 10,000 21,983 50,572 7,637 0 286,493 376,685 2019 10,000 90,661 50,121 12,378 0 212,325 375,485 2021 10,000 0 0 0 0 49,770 59,770 2020 (6) — — — — — — — 2019 (6) — — — — — — — 2021 10,000 0 1,358 0 0 72,226 83,584 2020 (6) — — — — — — — 2019 (6) — — — — — — — 2021 10,000 0 0 0 0 61,907 71,907 2020 (6) — — — — — — — 2019 (6) — — — — — — — 2021 10,000 0 0 0 0 56,057 66,057 2020 (6) — — — — — — — 2019 (6) — — — — — — — (1) As of January 2019, the executivesThe Named Executive Officers receive a cash allowance each December for financial planning and tax planning benefits. Prior to 2019, these benefits were valued using the actual costs billed by outside vendors up to a $10,000 maximum benefit value.(2) generally is taxable to the Named Executive Officers. As further described in the Other Employee Benefits section on page 54,58, personal use of Company aircraft is required for the CEO and Executive Chairman for security purposes.(3) generally is taxable to the Named Executive Officers. 54.58.(4) (5) (6) For additional details, see Footnote 9 in theSummary Compensation Table on page 57.(7)Chattopadhyay wasClyburn, Mr. DeLuca, and Dr. Li were not a Named Executive OfficerOfficers in 2018 or 2017.(8)Reported as $0 in the 2018 proxy statement due to a clerical error.(9)Ms. Zachary was hired on April 16, 2018.2019 and 2020.20202022 Proxy Statement60 2019,2021, to identify the employee with the median total annual compensation.compensation (not including our CEO). For this purpose, we annualized base salary for all full and part-time employees (other than our CEO) hired after January 1, 20192021 and employed as of October 31, 2019.2021. We converted foreign currency to U.S. dollars using a twelve-month average exchange rate between November 1, 20182020 through October 31, 2019.2021.25,846 (35%26,810 (37%) employees in the United States and 48,066 (65%45,197 (63%) employees outside the United States. After excluding 3,7033,600 employees in 19 countries, as detailed in the table below and up to the 5% limit allowable under the SEC disclosure rules, we identified our median employee from a group of approximately 70,20968,407 employees globally. Number of Employees Country Number of Employees Number of Employees Country Number of Employees 71 Malaysia 401 60 Jordan 35 8 Nigeria 1 2 Malaysia 464 3 North Macedonia 1 6 Nigeria 1 51 Oman 12 59 Oman 6 15 Philippines 301 11 Peru 147 55 Philippines 230 305 Qatar 24 196 Turkey 526 13 Turkey 555 6 Uruguay 90 1,325 Ukraine 73 1,224 Vietnam 282 412 Uruguay 85 200 47 3,703 3,600 median total annual compensation of our median employee as calculated under theSummary Compensation Tabletable requirements for calculating total annual compensation was $95,621$102,803 comprised of base salary, annual incentive, savings plan company match and change in pension value, all of which were annualized to reflect a full year of service.value. The total annual compensation for our CEO was $27,648,475.$13,722,121. A reasonable estimation of the ratio of our CEO’s compensation to our median employee’s compensation including the change in pension value is 289 to 1; excluding change in pension value the ratio is 246133 to 1.ratioratios of other companies.20202022 Proxy Statement66 6120192021 to the Named Executive Officers under any incentive plan.20192021 Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards Estimated Future Payouts
Under Equity Incentive
Plan Awards
and Option
Date 03/29/19 02/25/19 PSUs 0 126,247 252,494 $ 11,425,398 (2) 05/03/19 02/25/19 Options 423,402 $ 80.00 4,500,763 (3) EIP $ 0 $ 2,505,000 $ 5,010,000 03/29/19 02/25/19 PSUs 0 33,666 67,332 3,046,785 (2) 05/03/19 02/25/19 Options 112,907 80.00 1,200,201 (3) EIP 0 1,136,251 2,272,502 03/29/19 02/25/19 PSUs 0 19,358 38,716 1,751,906 (2) 05/03/19 02/25/19 Options 64,922 80.00 690,121 (3) EIP 0 652,365 1,304,730 03/29/19 02/25/19 PSUs 0 42,082 84,164 3,808,436 (2) 05/03/19 02/25/19 Options 141,134 80.00 1,500,254 (3) EIP 0 1,216,779 2,433,558 03/29/19 02/25/19 PSUs 0 19,779 39,558 1,790,006 (2) 05/03/19 02/25/19 Options 66,333 80.00 705,120 (3) EIP 0 831,250 1,662,500 Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards Estimated Future Payouts
Under Equity Incentive
Plan Awards
Shares
Base 3/31/2021 2/26/2021 PSU 0 86,102 172,204 $6,324,576 5/4/2021 2/26/2021 Options 290,272 73.73 2,760,003 EIP $0 $ 1,915,274 $ 3,830,548 3/31/2021 2/26/2021 PSU 0 100,607 201,214 7,390,092 5/4/2021 2/26/2021 Options 339,177 73.73 3,225,004 EIP 0 1,894,658 3,789,316 3/31/2021 2/26/2021 PSU 0 20,590 41,180 1,512,420 5/4/2021 2/26/2021 Options 69,413 73.73 660,001 EIP 0 800,137 1,600,274 3/31/2021 2/26/2021 PSU 0 40,243 80,486 2,956,021 5/4/2021 3/22/2021 RSU (6) 40,690 3,000,009 5/4/2021 2/26/2021 Options 135,671 73.73 1,290,003 EIP 0 975,342 1,950,684 3/31/2021 2/26/2021 PSU 0 25,269 50,538 1,856,135 5/4/2021 3/22/2021 RSU 27,126 1,999,981 5/4/2021 2/26/2021 Options 85,188 73.73 809,999 EIP 0 800,000 1,600,000 3/31/2021 2/26/2021 PSU 0 28,077 56,154 2,062,363 5/4/2021 2/26/2021 Options 94,654 73.73 900,003 EIP 0 946,486 1,892,972 (1) 2019.2021. The actual amounts earned by each Named Executive Officer are set forth in the “Non-Equity“Non-Equity Incentive Plan Compensation” column of theSummary Compensation Table.table.(2) 5255 and the narrative to theGrants of Plan BasedPlan-Based Awards table on the following page.(3) (4) The exercise Exercise price and holdings reflect the adjustments that occurred as of June 2, 2021 in connection with the Organon spin-off as described in the Form 10. As reported in the Form 10, all Merck stock options granted in 2019 isoption awards outstanding as of immediately prior to the closing price of Merck common stock, as tradeddistribution date were converted on the NYSE on May 3, 2019.distribution date into adjusted Merck awards for Merck employees to preserve the same intrinsic value and general terms and conditions (including vesting) as were in place immediately prior to the adjustments. For more information on stock options granted to the NEOs in 2019,2021, please see Current LTI Grant Practices on page 51.55.(4)(5)2019.2021.(6) 20202022 Proxy Statement62 &B&MD Committee. It is designed to provide cash awards to employees who are subject to Section 16 of the Securities Exchange Act of 1934, as amended, as follows:Restricted Stock Units (“RSUs”),RSUs, subject to their terms, generally vest and become payable in equal installments in shares of Merck common stock on the first, second and third anniversaries of the grant date. Dividend equivalents are accrued and paid out in cash if, and when, the RSUs vest. NoneMr. Clyburn and Mr. DeLuca, Jr. each received special one-time RSU retention grants on May 4, 2021 that would vest in their entirety on the third anniversary of the NEOs received RSUs in 2019.grant date, subject to their continued employment. In connection with Mr. Clyburn’s resignation as Executive Vice President and President, Human Health, effective February 1, 2022, Mr. Clyburn’s RSU retention grant was forfeited. Please refer to the Retention Actions section on page 58 for more information.Performance Share Units (“PSUs”),PSUs, subject to their terms, generally vest and become payable in shares of Merck common stock at the end of a three-year performance period provided that minimum performance goals are met. Failure to attain the minimum performance goal results in forfeiture of the shares applicable to the respective award opportunity. PSU awards for continuing executives and performance goals are approved by the C&B&MD Committee within the first 90 days of the applicable performance cycle.ForSimilar to PSUs granted on or after January 1, 2017, final awards will be determined overin 2020, the program design for PSUs granted in 2021 was adjusted as a three-year cumulative performance period based onresult of the following:successful spin-off of our Organon business as follows:25%Operating Cash Flow vs. target for the three-year performance period.2021 EPS versus target.25% of the award will be determined by the Company’s Cumulative Earnings Per Share vs. target for the three-year performance period.50%67% of the award will be determined by the Company’s average annual TSRtotal shareholder return (inclusive of reinvested dividends) relative to the median TSR oftotal shareholder return for our Peer Grouppeer group for the three-year performance period.period (2021-2023).20202022 Proxy Statement68 632019.2021.20192021 Option Awards Stock Awards
Units or
Other Rights
That Have
Not Vested
Other Rights
Not Vested 644,122 05/06/13 $ 44.98 05/06/14 05/05/23 550,206 05/09/14 58.22 05/09/15 05/08/24 743,034 05/01/15 59.86 05/01/16 04/30/25 814,941 05/10/16 54.68 05/10/17 05/09/26 356,632 178,318 05/05/17 63.97 05/05/18 05/04/27 158,581 317,162 05/04/18 57.75 05/04/19 05/03/28 423,402 05/03/19 80.00 05/03/20 05/02/29 334,128 (3) $ 30,388,942 252,494 (4) 22,964,329 251,273 05/10/16 $ 54.68 05/10/17 05/09/26 108,416 54,209 05/05/17 63.97 05/05/18 05/04/27 46,354 92,709 05/04/18 57.75 05/04/19 05/03/28 112,907 05/03/19 80.00 05/03/20 05/02/29 97,668 (3) $8,882,905 67,332 (4) 6,123,845 38,647 05/06/13 $ 44.98 05/06/14 05/05/23 33,012 05/02/14 58.22 05/02/15 05/01/24 49,536 05/01/15 59.86 05/01/16 04/30/25 81,494 05/10/16 54.68 05/10/17 05/09/26 42,796 21,398 05/05/17 63.97 05/05/18 05/04/27 21,957 43,915 05/04/18 57.75 05/04/19 05/03/28 64,922 05/03/19 80.00 05/03/20 05/02/29 46,264 (3) $4,207,711 38,716 (4) 3,521,220 Option Awards Stock Awards
Shares
Units of
That
Not
of
That 167,613 5/5/17 $62.07 5/5/18 5/4/27 143,329 5/4/18 56.04 5/4/19 5/3/28 77,578 38,792 5/3/19 77.62 5/3/20 5/2/29 41,509 83,020 5/1/20 75.36 5/1/21 4/30/30 290,272 5/4/21 73.73 5/4/22 5/3/31 75,016 (3) $5,749,226 172,204 (4) 13,197,715 567,084 5/9/14 $56.49 5/9/15 5/8/24 765,828 5/1/15 58.08 5/1/16 4/30/25 839,941 5/10/16 53.06 5/10/17 5/9/26 551,360 5/5/17 62.07 5/5/18 5/4/27 490,337 5/4/18 56.04 5/4/19 5/3/28 290,926 145,464 5/3/19 77.62 5/3/20 5/2/29 163,444 326,890 5/1/20 75.36 5/1/21 4/30/30 339,177 5/4/21 73.73 5/4/22 5/3/31 295,378 (3) $22,637,770 201,214 (4) 15,421,041 38,291 5/1/15 $58.08 5/1/16 4/30/25 41,997 5/10/16 53.06 5/10/17 5/9/26 26,465 5/5/17 62.07 5/5/18 5/4/27 22,630 5/4/18 56.04 5/4/19 5/3/28 11,634 5,821 5/3/19 77.62 5/3/20 5/2/29 6,770 13,543 5/1/20 75.36 5/1/21 4/30/30 69,413 5/4/21 73.73 5/4/22 5/3/31 773 $59,243 1,732 132,740 6,992 (3) $535,867 41,180 (4) 3,156,035 20202022 Proxy Statement64 Outstanding Equity Awards20192021 Option Awards Stock Awards
Stock That 192,572 05/09/14 $ 58.22 05/09/15 05/08/24 247,678 05/01/15 59.86 05/01/16 04/30/25 271,647 05/10/16 54.68 05/10/17 05/09/26 114,122 57,062 05/05/17 63.97 05/05/18 05/04/27 48,794 97,589 05/04/18 57.75 05/04/19 05/03/28 141,134 05/03/19 80.00 05/03/20 05/02/29 102,808 (3) $ 9,350,388 84,164 (4) 7,654,716 24,397 48,794 05/04/18 $ 57.75 05/04/19 05/03/28 66,333 05/03/19 80.00 05/03/20 05/02/29 11,544 $ 1,049,927 48,484 (3) $ 4,409,620 39,558 (4) 3,597,800 Option Awards Stock Awards 19,848 5/2/14 $56.49 5/2/15 5/1/24 5,668 2/9/15 56.60 2/9/16 2/8/25 44,673 5/1/15 58.08 5/1/16 4/30/25 55,995 5/10/16 53.06 5/10/17 5/9/26 35,287 5/5/17 62.07 5/5/18 5/4/27 41,489 5/4/18 56.04 5/4/19 5/3/28 34,910 17,456 5/3/19 80.00 5/3/20 5/2/29 25,942 51,888 5/1/20 77.67 5/1/21 4/30/30 135,671 5/4/21 73.73 5/4/22 5/3/31 40,690 $3,118,482 46,886 (3) $3,593,343 80,486 (4) 6,168,447 59,564 5/1/15 58.08 5/1/16 4/30/25 104,993 5/10/16 53.06 5/10/17 5/9/26 66,163 5/5/17 62.07 5/5/18 5/4/27 75,436 5/4/18 56.04 5/4/19 5/3/28 38,790 19,395 5/3/19 80.00 5/3/20 5/2/29 25,942 51,888 5/1/20 77.67 5/1/21 4/30/30 85,188 5/4/21 73.73 5/4/22 5/3/31 27,126 $2,078,937 46,886 (3) $3,593,343 50,538 (4) 3,873,232 14,702 5/5/17 62.07 5/5/18 5/4/27 15,087 5/4/18 56.04 5/4/19 5/3/28 11,634 5,821 5/3/19 80.00 5/3/20 5/2/29 7,004 14,010 5/1/20 77.67 5/1/21 4/30/30 1,296 2,595 5/1/20 77.67 5/1/21 4/30/30 94,654 5/4/21 73.73 5/4/22 5/3/31 773 $59,243 1,791 137,262 332 25,444 8,574 (3) $657,111 56,154 (4) 4,303,643 (1) StockUpon retirement, if a retiree has unvested stock options also vest upon attainment of eligibility to retire, in which case they become exercisable in equal installments on the first, second and third anniversaries of the grant date. Since 2013, unvested options for retirees that otherwise would have vestedbecome exercisable within 12 months following retirement had the retiree remained employed, such unvested options vest and become exercisable in accordance with their original schedule.on the applicable scheduled date and the remainder expire as of the retirement date.70 (2) Beginning in 2018, RSUs vest and are payable in shares of Merck common stock and generally vest in equal installments on the first, second and third anniversaries of the grant date, provided the individual remains continuously employed through the vesting date. Mr. Clyburn and Mr. DeLuca, Jr. each received special one-time RSU retention grants on May 4, 2021, vesting in their entirety at the end of a three-year period, subject to continued employment. Upon retirement, if a retiree has unvested RSUs, a pro rata portion will be distributed to the retiree on the dates on which the RSUs would have vested had employment continued. The pro rata portion is determined based on the number of completed months of employment during the 3-year vesting period relative to the total length of the period, i.e. 36 months. The remaining portion of unvested RSUs is forfeited as of the retirement date.(3) 20182020 that may be earned based on Merck’s performance, as determined by the C&B&MD Committee, following the completion of the three-year performance period ending December 31, 2020.2022.(4) 20192021 that may be earned based on Merck’s performance, as determined by the C&B&MD Committee, following the completion of the three-year performance period ending December 31, 2021.2023.(5) $90.95,$76.64, the closing price of Merck common stock on December 31, 2019.2021.20202022 Proxy Statement 652019.2021.20192021 Option Awards Stock Awards
on Exercise
on Vesting 694,698 $ 28,284,571 203,791 (a) $ 15,602,239 409,290 10,175,890 61,951 (a) 4,742,969 73,727 2,978,031 24,454 (a) 1,872,198 — — 65,214 (a) 4,992,784 — — 5,772 (b) 461,760 Option Awards Stock Awards — $— 53,457 (a) $3,929,624 663,881 25,632,956 200,456 (a) 14,735,521 22,683 782,813 4,584 (a) 336,970 59,086 2,173,380 24,056 (a) 1,768,357 165,187 6,107,450 26,728 (a) 1,964,775 — — 4,584 (a) 336,970 (1) 2019,2021, which were calculated based on the difference between the market price of Merck common stock at the time of exercise and the exercise price of the option.(2) 20192021 of the following: (a) 20172019 that were paid on February 28, 2020,24, 2022, including dividends accrued and paid in shares. The total net after-tax number of shares of Merck common stock received from the vesting of PSUs was 119,29129,896 for Mr. Davis, 119,488 for Mr. Frazier, 33,3962,429 for Ms. Litchfield, 14,541 for Mr. Davis, 15,785Clyburn, 15,966 for Mr. ChattopadhyayDeLuca, Jr., and 35,0493,023 for Dr.��Perlmutter. Ms. Zachary was hired on April 16, 2018.(b)Partial vesting of RSUs granted to Ms. Zachary on May 4, 2018. RSUs vest in equal installments on the first, second and third anniversaries of the grant date. Li.(3) 28, 2020. The value realized for RSUs was determined by multiplying the number of vested units by the market price of Merck common stock on May 3, 2019.24, 2022.20202022 Proxy Statement66 72 from two defined benefit pension plans:from: the Merck U.S. Pension Plan (the “Qualified Plan”) and, the MSD Supplemental Retirement Plan (the “SRP”) and U.K. Pension Plan (see footnote 4 below). The terms of the U.S. plans are described below.20192021 Plan Name Qualified Plan 27.50 27.58 $ 1,597,193 $ 0 SRP 27.50 27.58 29,000,060 0 Qualified Plan — 5.67 114,910 0 SRP — 5.67 714,126 0 Qualified Plan 10.00 10.08 572,845 0 SRP 10.00 10.08 2,381,913 0 Qualified Plan 3.50 10.58 305,814 0 SRP 3.50 10.58 1,745,566 0 Qualified Plan — 1.67 31,308 0 SRP — 1.67 82,857 0 Plan Name (1) athe Cash Balance formula. A maximum of 35 years of Credited Service may be earned. For rehires after December 31, 2012 (Dr. Perlmutter), Credited Service for benefit accrual purposes ends at the original date of termination. Mr. Davis, Ms. Litchfield, and Ms. ZacharyDr. Li do not have Credited Service because they entered the U.S. Plans after December 31, 2012.2012 and only have a benefit under the Cash Balance formula.(2) (3) creditedCredited Service (including service under the Cash Balance formula) or age 65 with no service requirement. Mr. Frazier and Dr. Perlmutter qualifyqualifies for unreduced benefits, and valuation occurred as of December 31, 2019.2021. The Cash Balance account as of December 31, 2021 is projected to the earliest unreduced retirement age based on the assumed interest crediting rate. Mr. Davis, Ms. Litchfield, and Ms. ZacharyDr. Li have only a Cash Balance benefit, which is valued as of December 31, 2019.2021. Some key assumptions include:3.4%3.0% for the Qualified Plan and 3.3%2.8% for the SRP;MP-2019MP-2021 Projection Scale using a 0.75% ultimate rate at most ages;20192021 Willis Towers Watson RATE:Link 60th to 90th percentile yield curve and mortality defined in Internal Revenue Code Section 417(e)(3)(D); andMerck & Co., Inc. 2020 Proxy Statement(4) Benefits 67ChattopadhyayClyburn are eligible for transition benefits. Less Than — 40 4.5% 40 50 5.5% 50 60 6.5% 60 70 8.0% 70 — 10.0% vested except for Ms. Zachary who will become vested on April 16, 2021.vested. A participant who is vested and terminates employment can commence receiving a reduced pension benefit after attaining age 55. FAP benefits are reduced on an actuarial basis. Participants who only have vested benefits under the Cash Balance formula can commence payment of their Qualified Plan benefit immediately upon termination.74 Merck & Co., Inc. 2020 Proxy Statement68 Pension BenefitsIn addition, employees who were exempt from the Age Discrimination in Employment Act and subject to the Company’s mandatory age 65 retirement policy prior to January 1, 1995 were eligible for an additional benefit payable upon retirement from active service at age 64. The additional benefit is an amount calculated under the FAP formula using one additional month of credited service for each month of credited service accrued prior to January 1, 1995 (up to the 35-year cap) minus: (i) the regular benefit payable under the Company Retirement Plans; and (ii) any retirement benefit payable from a plan not sponsored by the Company.The SRP was amended as of January 1, 1995 to prospectively eliminate this additional benefit. Then, in 2009, the Company restricted its mandatory retirement policy to cover only the CEO, which would have required Mr. Frazier to retire no later than December 2019 at which time he would have received an additional 2.5 years of Credited Service, bringing his total to 30 years.However, in 2018 the Company eliminated its Mandatory CEO Retirement Policy entirely. Therefore, Mr. Frazier was no longer required to retire, making him ineligible for the additional benefit. To compensate him for losing the value of the benefit, estimated at approximately $2.5 million, the Company made a $2.5 million credit to Mr. Frazier’s Deferral Program as of December 31, 2018 as shown in theSummary Compensation Table. The credit would have been forfeited if his employment had ended before January 2020 (unless due to his earlier death or disability).Post-2004, SRP accruals post-2004 are payable in a lump sum or installments of 5 to 10 years. All forms of benefit are actuarially equivalent to the single life annuity.20202022 Proxy Statement 6920192021
Contributions
Contributions
Distributions $ 0 $ 199,725 $ 3,110,447 $ 0 $ 20,316,575 0 98,264 95,687 0 554,525 0 55,438 645,660 0 5,582,666 0 106,121 106,370 0 749,234 0 54,594 6,745 0 66,713
Contributions
Contributions
Distributions $0 $92,124 $139,997 $0 $1,077,132 0 153,002 2,454,256 0 25,865,809 0 36,720 9,911 0 93,968 38,758 59,176 221,064 0 1,748,791 166,933 48,857 669,716 0 4,135,862 0 43,007 44,987 0 227,197 (1) NEOsNEOs’ accounts under the Merck Deferral Program. These amounts are included within the amount disclosed in the “All Other Compensation” column of theSummary Compensation Tabletable for each applicable executiveNEO for 2019.2021.(2) 20192021 to December 31, 2019.2021.(3) either “Salary” or “Non-Equity“Salary,” “Non-Equity Incentive Plan Awards”Compensation” or “All Other Compensation” in theSummary Compensation Tabletable of prior proxy statements as follows: Davis, $132,950 for 2020 and $98,264 for 2019; Frazier, $0$273,668 for 20182020 and $550,274$199,725 for 2017.2019. Ms. Litchfield, Mr. Clyburn, Mr. DeLuca and Dr. Li were not NEOs prior to 2021.20202022 Proxy Statement70 76 66.72.2019,2021, certain management-level employees, including the NEOs, were eligible to receive the following severance pay, payable in a lump sum. Weeks of Severance Pay 20202022 Proxy Statement 7166.72. The pro-rata portion equals the percentage of the employee’s Credited Service on the separation date divided by the Credited Service the employee would have had if employment had continued until the employee was first eligible to be treated as an early retiree.he/she isthey are eligible for subsidized retiree medical benefits in accordance with the plan provisions applicable to similarly situated retired employees, as they may be amended from time to time.2019,2021, all separated bridged employees who are entitled to the Retirement Plan Bridge, as described above, are also eligible to be treated in accordance with planthe equity plan’s provisions applicable to retired employees with respect to stock options granted to them before 2013. For stock option, RSU and PSU grants occurring during or after 2013, generally, separated bridged“bridged” employees are eligible to be treated in accordance with the planequity plan’s provisions applicable to retired employees only if they are also eligible for subsidized retiree medical benefits. If they are not also eligible for subsidized retiree medical benefits, separated bridged employees will be treated in accordance with the planequity plan’s provisions applicable to involuntarily terminated employees.On March 27, 2018, the Board appointed Jennifer Zachary as Executive Vice President and General Counsel, effective April 16, 2018. The Company’s offer letter, dated March 16, 2018 (the “Offer Letter”), provides for Ms. Zachary to receive the following:Annual Base Salary of $800,000, subject to annual review by the C&B Committee;Eligibility to participate in the Company’s Executive Incentive Plan with a target bonus for the 2018 performance year of 95% of her Annual Base Salary;Eligibility to receive an annual equity-based grant beginning in 2018 pursuant to the Company’s Long-Term Incentive Program with a target value of $2,000,000;Sign-On Bonus of $750,000 payable in a single installment in the first pay period following her start date. Ms. Zachary’s right to retain the payment is conditioned on her continued employment for 24 months after her start date, but if her employment is terminated for good reason, or by the Company other than for cause, within 24 months of appointment of a successor CEO to Kenneth Frazier, any repayment obligation will be forgiven;A grant of RSUs valued at approximately $1,000,000 to be made on the first quarterly grant date immediately following her start date. The RSUs will vest and are payable as shares of Merck common stock in equal installments on the first, second and third anniversaries of the grant date;Eligibility to receive enhanced severance in the event of termination for reason other than cause or if terminated for good reason within 24 months of the appointment of a successor CEO to Kenneth Frazier equal to one times base salary plus target annual cash incentive;Reimbursement of certain expenses associated with Ms. Zachary’s move of her residence in accordance with the Company’s Relocation Program; andParticipation in other benefits plans in accordance with the Company’s practices for other executives of a similar level, including participation in the Company’s Change in Control Plan.2014. To2014, to compensate Mr. Davis for pension benefits he forfeited upon leaving his prior employer, his offer letter provides for a cash payment of $2,000,000 within 90 days of his termination of employment (other than for cause) provided that he was employed for at least 10 years with no breaks in service. The terms of this offer letter continue in full force and effect following his promotions that occurred in 2021.20202022 Proxy Statement72 78 grandfathered in 2012allowed to continue when the C&B&MD Committee otherwise reduced the size of the participant population.population in 2012. With respect to the NEOs, the severance benefits described below would be provided upon qualifying terminations of employment within two years following a change in control. - - - - - - - Merck & Co., Inc. 2020 Proxy StatementPotential Payments Upon Termination or a Change in Control Change in Control 73aan award continues until the end of the award period, but the portion of PSUs generallythat will become vested, as determined by reference to the holder’s period of employment during the performance cycle:including upon a subsequent involuntary termination, will be based on target performance.-based on actual performance as to fiscal years that have been completed for at least 90 days as of the date of the change in control; or-otherwise, based on target performance.80 Merck & Co., Inc. 2020 Proxy Statement74 Potential Payments Upon Termination or a Change in Control Change in Control2019.2021. These amounts are in addition to what would otherwise be payable in the event the NEO retired. As of December 31, 2019,2021, Mr. Frazier, Dr. PerlmutterMr. Clyburn, and Mr. ChattopadhyayDeLuca, Jr. are retirement eligible (i.e., at least age 55 and hashaving completed at least 10 years of Credited Service). Type of Payment or Benefit Severance Pay(1) $ 2,505,000 — $ 12,525,000 Supplemental Pension and Retiree Medical(2) — — — Welfare Benefits Continuation 39,879 — 79,759 Stock Option Accelerated Vesting(3) — — 8,355,724 PSU Accelerated Vesting(4) — — 5,932,452 RSU Accelerated Vesting — — — Outplacement, Financial Planning 5,000 — 15,000 TOTAL $ 2,549,879 — $ 26,907,935 Severance Pay(1) $ 874,039 — $ 4,436,790 Supplemental Pension and Retiree Medical(2) — — — Welfare Benefits Continuation 17,741 — 47,311 Stock Option Accelerated Vesting(3) — — 5,776,829 PSU Accelerated Vesting(4) 5,359,352 — 7,503,375 RSU Accelerated Vesting — — — Outplacement, Financial Planning 5,000 — 15,000 TOTAL $ 6,256,132 — $ 17,779,305 Severance Pay(1) $ 724,850 — $ 2,754,430 Supplemental Pension and Retiree Medical(2) — — — Welfare Benefits Continuation 14,941 — 29,883 Stock Option Accelerated Vesting(3) — — 1,202,920 PSU Accelerated Vesting(4) — — 909,649 RSU Accelerated Vesting — — — Outplacement, Financial Planning 5,000 — 15,000 TOTAL $ 744,791 — $ 4,911,882 Severance Pay(1) $ 980,554 — $ 4,751,232 Supplemental Pension and Retiree Medical(2) — — — Welfare Benefits Continuation 14,099 — 37,597 Stock Option Accelerated Vesting(3) — — 2,650,256 PSU Accelerated Vesting(4) — — 1,977,468 RSU Accelerated Vesting — — — Outplacement, Financial Planning 5,000 — 15,000 TOTAL $ 999,653 — $ 9,431,553 Severance Pay(1) $ 673,077 — $ 3,195,267 Supplemental Pension and Retiree Medical(2) — — 114,165 Welfare Benefits Continuation 4,160 — 16,641 Stock Option Accelerated Vesting(3) — — 2,346,307 PSU Accelerated Vesting(4) 2,660,471 — 4,003,710 RSU Accelerated Vesting(4) 599,103 — 1,049,927 Outplacement, Financial Planning 5,000 — 15,000 TOTAL $ 3,941,811 — $ 10,741,017 Type of Payment or Benefit
Before Change in Control
After Change in Control Severance Pay(1) $1,326,923 — $11,250,000 Supplemental Pension and Retiree Medical(2) — — — Welfare Benefits Continuation 22,308 — 89,234 Stock Option Accelerated Vesting(3) — — 950,957 PSU Accelerated Vesting(4) 1,526,739 — 9,473,470 RSU Accelerated Vesting — — — Outplacement, Financial Planning 4,650 — 14,650 TOTAL $2,880,620 — $21,778,311 Severance Pay(1) $1,875,000 — $5,000,000 Supplemental Pension and Retiree Medical(2) — — — Welfare Benefits Continuation 50,683 — 67,577 Stock Option Accelerated Vesting(3) — — 867,213 PSU Accelerated Vesting(4) — — 10,507,617 RSU Accelerated Vesting — — — Outplacement, Financial Planning 4,650 — 14,650 TOTAL $1,930,333 — $16,457,057 Severance Pay(1) $1,350,000 — $3,600,000 Supplemental Pension and Retiree Medical(2) — — 159,154 Welfare Benefits Continuation 30,584 — 40,779 Stock Option Accelerated Vesting(3) 75,998 — 219,327 PSU Accelerated Vesting(4) 656,035 — 1,845,951 RSU Accelerated Vesting 144,876 — 191,983 Outplacement, Financial Planning 4,650 — 14,650 TOTAL $2,262,143 — $6,071,844 Severance Pay(1) $1,115,385 — $4,000,000 Supplemental Pension and Retiree Medical(2) — — — Welfare Benefits Continuation 16,495 — 32,989 Stock Option Accelerated Vesting(3) — — 296,410 PSU Accelerated Vesting(4) — — 2,922,577 RSU Accelerated Vesting 685,725 — 3,118,482 Outplacement, Financial Planning 4,650 — 14,650 TOTAL $1,822,255 — $10,385,108 Severance Pay(1) $800,000 — $3,200,000 Supplemental Pension and Retiree Medical(2) — — — Welfare Benefits Continuation 18,170 — 36,339 Stock Option Accelerated Vesting(3) — — 198,473 PSU Accelerated Vesting(4) — — 2,148,579 RSU Accelerated Vesting(4) 457,138 — 2,078,937 Outplacement, Financial Planning 4,650 — 14,650 TOTAL $1,279,958 — $7,676,978 20202022 Proxy Statement 75 Type of Payment or Benefit
Before Change in Control
After Change in Control Severance Pay(1) $730,769 — $3,800,000 Supplemental Pension and Retiree Medical(2) — — — Welfare Benefits Continuation 13,453 — 53,813 Stock Option Accelerated Vesting(3) — — 296,698 PSU Accelerated Vesting(4) 174,500 — 2,480,377 RSU Accelerated Vesting(4) 165,709 — 221,949 Outplacement, Financial Planning 4,650 — 14,650 TOTAL $1,089,081 — $6,867,487 (1) Merck & Co., Inc. U.S. Separation Benefits Plan as described on page 70.76.(2) 2019.2021.(3) 2019,2021, multiplied by the difference between the closing price of Merck common stock on December 31, 2019, of $90.952021, which was $76.64, and the exercise price of the option.(4) 2019,2021, multiplied by the closing price of Merck common stock on December 31, 2019,2021, which was $90.95.$76.64.20202022 Proxy Statement76
Independent Registered Public
Accounting Firm for 20202022 2020,2022, subject to ratification by the holders of common stock of the Company. In taking this action, the Audit Committee considered carefully PwC’s performance in that capacity for the Company since the merger between Merck & Co., Inc. and Schering-Plough Corporation (the “Merger”), and prior to the Merger since its retention in 2002, its independence with respect to the services to be performed and its general reputation for adherence to professional auditing standards. The Audit Committee is responsible for the audit fee negotiations associated with the retention of PwC. The Audit Committee annually evaluates the performance of PwC, including the senior audit engagement team, and determines whether to reengage the independent registered public accounting firm.interestinterests of the Company and our shareholders. Because the members of the Audit Committee value shareholders’ views on our independent auditors, even though ratification is not legally required, there will be presented at the Annual Meeting a proposal for the ratification of the appointment of PwC.PwC will be presented at the Annual Meeting even though ratification is not legally required. If the appointment of PwC is not ratified, the matter of the appointment of independent auditors will be considered by the Audit Committee.20192021 follows.20202022 Proxy Statement 20202022 772019,2021, at each of its regularly scheduled meetings (which include in-person meetings scheduled in conjunction with the regular Board meetings, as well as teleconferencesmeetings to review the quarterly and annual financial statements filed with the SEC), the Audit Committee met as a group with senior members of the Company’s financial management, the independent auditors and internal auditors. In addition, at each in-person meeting in connection with regular Board meetings, the Audit Committee held separate private sessions with senior management, the independent auditors, and internal audit, and the Senior Vice President, Chief Ethics and Compliance Officer to seeconfirm that all were carrying out their respective responsibilities.aggressive or conservative,appropriate, as well as other matters that are required to be discussed by applicable regulatory standards. The Audit Committee reviewed and discussed the audited financial statements with management. Based on the review and discussion referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K filing with the SEC. Additional information about the Audit Committee and its responsibilities may be found on page 2014 of this proxy statement. The Audit Committee Charter is available on our website at merck.com/about/www.merck.com/company-overview/leadership/board-of-directorsboard-of-directors/.Leslie A. BrunThomas R. Cech, Ph.D.(1)(1)(1)Joined the Board of Directors on March 16, 2020.20202022 Proxy Statement78 84 20202022 20192021 and 20182020 are as follows: $ 30.9 $ 29.3 $35.2 $37.4 16.5 6.1 7.5 17.3 5.7 6.6 3.3 4.0 1.6 1.2 0.0 0.1 $ 54.7 $ 43.2 $46.0 $58.8 (1) (2) to:to special purpose audits of the financial statements of Organon associated with the spin-off of the new Merck entity, Organon & Co., with products from Merck’s women’s health, trusted legacy brands and biosimilars businesses;Spin-off, employee benefit plan audits;audits, other audit-related reviews;reviews, agreed-upon procedures;procedures and systems pre-implementation review procedures.(3) $0.8$0.3 and $0.3$0.5 million, in 20192021 and 2018,2020, respectively, for tax compliance services.(4) ConsistsConsisted of fees not included in the Audit, Audit-Related or Tax categories, including fees for reviews performed to maintain compliance with various government regulations relating to the healthcare industry.20192021 or 20182020 were approved by the Audit Committee pursuant to the waiver of pre-approval provisions set forth in the applicable SEC rules.20202022 Proxy Statement 7985
statements contained in the proposals and supporting statements are the sole responsibility of the proponent(s) and may
contain assertions about the Company or other matters that the Company believes are incorrect, but the Company has
not
attempted to refute all such assertions. The Board recommends a vote against the shareholder proposals based on
the
reasons set forth in the Company’s statements in opposition following each of the shareholder proposals.mayshould be sent in writing to the Office
of
the Secretary, Merck & Co., Inc., 2000 Galloping Hill Road, K1-4157, Kenilworth, NJ 07033 U.S.A. Concerning Shareholder Right to Act by Written ConsentRegarding an Independent Board ChairmanNew York,NY, owner of at least $2,000 in market value of the Company’s common stock, of the Company as of November 27, 2019, has given notice that he intends to present for action at the Annual Meeting the following proposal:Adopt a New Shareholder Right – Written ConsentIndependent Board ChairmanShareholdersThe shareholders request that our boardthe Board of directors takeDirectors adopt an enduring policy, and amend the stepsgoverning documents as necessary in order that 2 separate people hold the office of the Chairman and the office of the CEO as follows:permit written consent by shareholders entitledselect a Temporary Chairman of the Board who is not an Independent Director to castserve while the minimum numberBoard is seeking an Independent Chairman of votesthe Board.would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. This written consent is to give shareholders the fullestBoard has broad power to act by written consent consistent with applicable law. This includes shareholder ability to initiate any appropriate topic for written consent.renegotiate an employment contract.Hundreds of major companies enable shareholder action by written consent. This proposal topic won majority52% support at Boeing and 54% support at Baxter International in 2020. Boeing then adopted this proposal topic in 2020. The roles of Chairman and CEO are fundamentally different and should be held by 2 directors, a CEO and a Chairman who is completely independent of the CEO and our company.13 large companiesMerck in a single year.2017. This included67%-support at both Allstate and Sprint. This proposal topic also won 63%46%-support at Cigna Corp. (CI) in 2019. This proposal topic wouldlikely represented 51 %-support from the shares that have received higher votes than 63% to 67% at these companies if more shareholders had access to independent proxy voting advice.This proposal would be a stronger contender to obtain a Merck management should support the majority vote atfrom the shares that have access to independent proxy voting advice and are not forced to rely Merck annual meeting if Merck publishedLowe’s (LOW) directors said that having a separate Chairman and Chief Executive Officer affords allows the favorable comments from the independent proxy advisors.Chairman to devote his time and attention to Board oversight.right for shareholdersMerck board needs attention. In 2021 Mr. Leslie Brun received 190 million negative votes and Ms. Patricia Russo received 228 million negative votes. These 2 negative votes were up to act28-times the negative votes received by written consentother Merck directors. These 2 directors were also the leaders in negative votes at Merck in 2020.gaining acceptancethe most important attribute in a Lead Director.more important right than the right to call a special meeting. This also seems to be the conclusionsubstantial check and balance safeguard that can only occur with an independent Board Chairman. A lead director can delegate most of the Intel Corporation (INTC) shareholder vote atlead director duties to the 2019 Intel annual meeting.CEO office and then · simply rubber-stamp it. There is no way shareholders can be sure of what goes on.directors at Intel apparently thought they could divert shareholder attention away from written consent by makingit less difficultlack of an enduring policy for shareholdersan independent Board Chairman policy is an unfortunate way to call a special meeting. However Intel shareholders responded with greater support for written consent in 2019 compareddiscourage promising new outside ideas and an unfortunate way to 2018. Plus a proxy advisor has set certain minimum requirements for a company adopting written consent in case management is temptedencourage the CEO to adopt a “fig leaf” version of written consent.The Bank of New York Mellon Corporation (BK) said it adopted written consent in 2019 following a 45%-vote for a written consent shareholder proposal.An example of the duplicitypursue pet projects that the management of companies can have on this topic is that the 2019 Bank of America (BAC) proxy said that shareholders who wantwould not stand up to act between annual meetings (and who lack the deep pockets of BAC) should be forced to depend upon input from all shareholders by being restricted to calling for a special meeting. Meanwhile BAC (with its unlimited deep pockets) hyped in the very same proxy that BAC concentrates on input from 250 BAC investors.Written consent won 44%-support at Capital One Financial Corporation (COF) in 2018 and this increased to 56% support in 2019. Written consent won 47%-support at United Rentals, Inc. (URI) in 2018 and this increased to 51%-support in 2019. Written consent won 43%-support at Flowserve Corporation (FLS) in 2018 and this increased to 51 %-support in 2019.effective oversight.Adopt a New Shareholder Right – Written ConsentIndependent Board Chairman – Proposal 4 20202022 Proxy Statement80 86 Concerning Shareholder Right to Act by Written ConsentRegarding an Independent Board Chairman that action by written consentadopting it is not necessaryin the best interests of Merck’s shareholders. The Board’s current leadership model provides strong, consistent and experienced leadership, as well as robust, effective and independent Board oversight, and allows the Board appropriate flexibility to determine the best leadership structure based on facts and circumstances at a given time.current governance structures. Specifically, as more fully described below,independent and skilled Board the flexibility to determine our leadership structure at a given time and based on relevant circumstances best serves our shareholders and our Company.Company’s current governanceBoard to exercise its judgment regarding the most appropriate leadership structure under which holders of the Company and the Board at a relatively small percentagegiven time. The independent members of the Board regularly review this structure and will do so in 2022. The most effective leadership structure at a given time will depend on a variety of factors, including the leadership, skills and experience of each of the CEO, the independent Lead Director and the other members of the Board, as well as the needs of the business and other factors. The Board is best positioned to identify, based on those factors, the individual who has the skills and commitment to perform the role of Chair most effectively at the time.shares may callCEO transition in 2021, the Board, considering the facts and circumstances at the time, determined that Merck’s shareholders were best served by a special meetingleadership structure consisting of Mr. Frazier, our former CEO, serving as Executive Chairman for a transition period, Mr. Davis serving as CEO and President, and an independent director appointed by the independent members of the Board, currently Mr. Tom Glocer, serving as Lead Director. Each role has clearly delineated responsibilities: Mr. Frazier presides over meetings of the Board and shareholders and focuses on Board operations and governance matters; Mr. Davis is preferablein charge of the general supervision, direction and strategy of the business and affairs of the Company subject to the proposed written consent structure that could disenfranchise certain shareholders. Accordingly,Board’s overall oversight; and Mr. Glocer has a clear mandate and significant authority as set forth in the Polices of the Board recommends voting againstand highlighted below. The Board believes that this structure works particularly well because it allows the proposal.Company to benefit, during this transition period, from Mr. Frazier’s years of experience in leadership roles at Merck, Mr. Davis’ leadership as the Company’s principal executive officer and Mr. Glocer’s leadership in providing independent oversight.Shareholders holdinglittlethe principal liaison on board-wide issues between the independent Directors, the Chair and the CEO;15%appropriate;shares havefinancial statements, monitoring our risk-management program, designing our executive compensation program, developing the right to call a special meeting; New Jersey corporate law offers an additional right to holdersstrategies and operations for the Company’s research and development of 10% or morepharmaceutical products and vaccines, reviewing policies and practices of the Company’s stock.corporate political contributions program, and nominating new directors. As non-independent Directors, Mr. Frazier and Mr. Davis are not members of any Board committee.Board has soughtBoard’s current leadership model strikes an appropriate balance between strong and consistent executive leadership and independent and effective oversight of Merck’s business. The proposal seeks to afford shareholders with a greater ability to call and express their views at special shareholders meetings. In that connection, after substantial Company outreach to shareholders and consideration of feedback received from them, the Board amendedreplace the Company’s By-Laws in 2014balanced governance structure with an inflexible approach that restricts the Board’s ability, regardless of circumstances, to allow holdersexercise judgment about which arrangements would best serve the interests of as little as 15% of the Company’s stock to call for a special shareholder meeting. In addition, under New Jersey corporate law, holders of 10% or more of the Company’s stock may submit to the New Jersey Superior Court a request for a special shareholder meeting, which the court may order upon a showing of good cause.Adopting written consent could disenfranchise some shareholders.The Company’s Restated Certificate of Incorporation requires that all shareholder action be taken at an annual or special meeting to which all shareholders receive notice and have the ability to express themselves, rather than by written consent. This requirement ensures that all shareholders have a voice in critical matters affecting theour Company as well as a meaningful and structured opportunity to exchange views with the Board before acting. If a subset of the Company’s shareholders could act by written consent without a meeting, amendments to the Company’s By-Laws and other corporate actions could be taken without all shareholders having an opportunity to provide input on the decision. Actions taken by written consent could deprive shareholders of the critical opportunities to receive notice, assess, discussand vote on the merits of proposed actions. Moreover, allowing shareholders to act by written consent can potentially expose the Company to numerous consent solicitations which would force the Company to incur significant expense and could cause disruption to its operations. In addition, we have received this shareholder proposal in seven of the past nine years, and our shareholders have not approved it.Our Board has demonstrated consistently its commitment to sound corporate governance principles.In addition to the special meeting rights described above, the following areat a few examples of our Board’s commitment to sound corporate governance principles:particular time.•our By-Laws provide a “proxy access” rightallows a group of as many as 20the shareholders who have held at least 3% of the outstanding shares for at least 3 years to nominate individuals representing up to 20% of the Board;vote AGAINST this proposal. •we have a robust shareholder engagement program through which the Board has received and responded to shareholder feedback;•we do not have a shareholder rights plan (also known as a poison pill);•we do not have any supermajority voting provisions;•12 of our 13 Director nominees are independent;•every director stands for re-election every year;•our directors are elected by majority vote, other than in contested elections;•we have a strong Lead Independent Director; and•the Board is diverse in terms of gender, ethnicity, experience and skills.20202022 Proxy Statement 81Allocation of Corporate Tax SavingsAccess to COVID-19 Productsof Washington, DC, and other co-filers, each owningwhich holds at least $2,000 in market value of the Company’s common stock, of the Company as of December 20, 2019, havehas given notice that they intendit intends to present for action at the Annual Meeting the following proposal:—Allocation of Corporate Tax Savings— Access to COVID-19 ProductsRESOLVED, thatRESOLVED: shareholders request the board of directors of Merck & Co.,Co, Inc. (“Merck” or) ask the “Company”)Board of Directors to issue a report preparedto shareholders, at a reasonable costexpense and omitting confidential and proprietary information, describingon whether and how the Company plansdirect and indirect receipt of public financial support for development and manufacture of a therapeutic for COVID-19 is being, or will be, taken into account when making decisions that affect access to allocate tax savings that result from the Tax Cuts and Jobs Act (“TCJA”).such products, such as sharing intellectual property through voluntary licenses or setting prices.The TCJA reduced the corporate income tax rate from 35Merck is seeking emergency use authorization for molnupiravir, an antiviral medicine, to 21%, and transformed the provisions requiring companies pay taxes on money earned abroad. These changes helped reduce federal corporate income tax collections by nearly $100 billion, representing more than a 30% decline.treat COVID-19.1 OneMolnupiravir was developed at Emory University using up to $35 million in US government funding from 2013 through 2020.2 Emory was responsible for non-clinical testing, which enabled Ridgeback, during its short period of managing the overarching goalsdrug, to receive FDA approval for human testing.3 After the drug was licensed to Ridgeback in March 2020, Ridgeback entered into a collaboration with Merck, which has taken over clinical development and manufacturing.4legislation wasBayh-Dole Act to boost companies’ long-term investment ingrant patent licenses to other producers.6American economy. While still early, theremedicine widely available. Specifically, Merck states that ‘global access has been no discernible boost in capital formation attributable toa priority’ for the tax reform.company.27 Without more detailed information, investors cannot tell whether a company’s strategy on how to allocate its tax savings aligns with long-term value creation.We believe this information is important for investors. BlackRock CEO Larry Fink recently stated: “CompaniesHowever, Merck’s commitments have not been explicit enough about their long-term strategies. Inmatched by the United States,demand that the COVID-19example, companies shouldcountries not included in the voluntary license.9 Tiered pricing for small molecule medicines usually results in unaffordable prices, especially for middle-income countries.10investorsthe development and commercialization of products. This Proposal seeks to fill this gap by asking Merck to explain whether and how the significant changescontribution to tax law fit into their long-term strategy. Whatits products by public entities affects, or will you do with increased after-tax cash flow, and how will you use itto create long-term value? This is a particularly critical moment for companies to explain their long-term plans to investors.”Merck received an estimated $1.2 billion in tax savings in 2018 from two provisions ofaffect, decisions that could affect access, such as setting prices or setting the TCJA. Through 2025, the Company will receive an estimated $6.9 billion tax cut on previously un-taxed offshore profits.3Merck has an opportunity to strengthen its longer-term value creation by investing in workers, benefits, jobs, communities, capital investments, and R&D. Yet, in contrast to dozens of companies which have shared how they will spend the tax savings to create long-term value,4 Merck has not done so adequately. Without any specificity or discussion of these investments, investors cannot understand how the tax law affects the Company’s long-term strategy to create value.When polled, 52% of Americans thought the tax savings should go towards worker pay, new jobs, and giving back to communities. Passing savings onto shareholders ranked as the lowest priority.5Merck more than doubled its share repurchases from $4 billion in 2017 to $9 billion last year. The Company increased its property plant and equipment by just 3%, and its R&D dropped by $456 million in 2018.6 All told, Merck was reported to have allocated 81%scope of its tax cuts to shareholders.7 These practices suggest the Company is not prioritizing long-term value creation.We urge shareholders to vote for this Proposal.voluntary licenses.Allocation of Corporate Tax SavingsAccess to COVID-19 Products — Proposal 5www.cbo.gov/publication/54647www.nytimes.com/2021/10/27/health/covid-pill-access-molnupiravir.html213 See https://www.aei.org/economics/dont-give-up-on-the-tax-cuts-and-jobs-act-just-yet/3See https://www.oxfamamerica.org/explore/research-publications/hazardous-your-health/4See https://www.businessinsider.com/fedex-boeing-jpmorgan-chase-tax-savings-just-capital-2018-35See https://justcapital.com/reports/the-just-capital-rankings-on-corporate-tax-reform/6 Oxfam analysis of Company’s end-of-year 10-K financial statements filed at the Securities and Exchange Commission7See https://justcapital.com/reports/the-just-capital-rankings-on-corporate-tax-reform/www.merck.com/wp-content/uploads/sites/5/2021/08/Merck-Access-to-Health-Principles_Update-2021.pdf20202022 Proxy Statement82 88 Allocation of Corporate Tax Savings Access to COVID-19 Products foris unnecessary and duplicative considering the following reasons:Company’s existing practices and transparency regarding access to molnupiravir, the investigational oral antiviral COVID-19 medicine being developed in collaboration with Ridgeback Biotherapeutics. Merck has been transparent about our commitment to providing timely access to molnupiravir globally through our comprehensive supply and access approach and invested in manufacturing at-risk so that supply would be available if molnupiravir received regulatory authorizations or approvals. As further discussed below, this approach and our transparency has been commended publicly by shareholders that submitted a similar shareholder proposal in connection with our 2021 annual meeting. Indeed, other than Oxfam America, the lone proponent of this year’s proposal, each of the other 15 co-proponents of last year’s proposal did not submit a similar proposal this year.At Merck is committed to increasing access globally to molnupiravir following regulatory authorizations or approvals and has been transparent regarding our approach.heritageencouragement to others.”1 Additionally, Merck has entered into non-exclusive voluntary license agreements for molnupiravir with established generic manufacturers to accelerate availability of inventingmolnupiravir in more than 100 low- and middle-income countries following approvals or emergency authorization by local regulatory agencies.saveproduce millions of courses of therapy, tiered pricing based on World Bank country income criteria to reflect countries’ relative ability to finance their health response to the pandemic, allocating up to 3 million courses of therapy for distribution through UNICEF and improve lives,the ACT Accelerator Therapeutics Partnership to supplement the supply from licensed generic manufacturers, and we are committedentering into supply agreements with governments. To-date, Merck (a) has entered into an advance purchase agreement with the U.S. government for the supply of molnupiravir, (b) has entered into advance purchase and supply agreements for molnupiravir with governments for over 30 markets worldwide, including Australia, Canada, Korea, Japan, Thailand, Ukraine and United Kingdom, pending regulatory authorizations, and is currently in discussions with additionalfocusingover 25 markets, including approximately 3.1 million patient courses supplied to the U.S. government under its advance purchase agreement. In countries where molnupiravir is approved or authorized, patients have begun to receive the medicine.breakthrough scienceCorporate Responsibility (“ICCR”), requesting a nearly identical report. Other than Oxfam America, none of the other co-proponents of last year’s proposal submitted a repeat proposal this year. Indeed, following Merck’s announcement of the MPP Agreement, a representative of the Province of Saint Joseph of the Capuchin Order of Milwaukee, WI, the lead proponent of last year’s proposal, contacted Merck personnel to create long-term value for patientsinform Merck that they would not be re-submitting the shareholder proposal again this year. Seventh Generation Interfaith, an ICCR member involved with last year’s proposal, issued a statement following the announcement of the MPP Agreement noting that they “do believe that Merck’s decision to make the agreement with MPP is consistent with our proposal request” and shareholders. Delivering innovative products is atthat “Merck’s agreement with the coreMPP goes a long way toward advancing access globally”.2 ICCR itself issued a release stating that members of who we areICCR and Merck shareholders were “gratified by [the] news” that Merck had entered into the MPP Agreement and that the ICCR members “welcomed the agreement as a Company,precedent-setting event that will hopefully pressure other pharmaceutical companies with COVID-19 entries . . . to follow suit and enter into negotiations with the MPP”.3our research-focused strategy isthat preparing the right one to continue to provide value to patients and society.The subject matter underlying the proposal’s request for a report related to the Tax Cuts and Jobs Act is our capital allocation decisions. Such decisions are fundamental to our ordinary course operations, and the proposedrequested report would be unduly burdensome whileduplicative and not providingan effective use of Merck’s resources, nor provide shareholders with additional meaningful additional informationdisclosures.shareholders. We take a balanced approach to capital allocation, investingdo so in terms that are transparent”).business and creating value for shareholders, and publicly disclose our capital allocation priorities. Our decisions around capital allocation are made carefully and purposefully by the Company’s management and our Board and require deep knowledgepower of the Company’s businessMPP model in advancing access to life-saving medicines . . . Merck has become a first-mover with molnupiravir for COVID-19 and operations.The Company invests billions of dollars each year in research and development. With a continued focus on science, the Company’s research in oncology is providing hope to a growing number of patients with development programs across more than 30 tumor types. For example, our current clinical development program for KEYTRUDA, our anti-PD-1 therapy approved for the treatment ofmany cancers, consists of more than 1,150 clinical trials. In addition, over the 5-year period covering 2019 through 2023, we plan to invest about $19 billion in capital investments to stay on the cutting edge of science and meet growing demand for our human and animal health medicines and vaccines. These planned capital investments will include expanding our manufacturing capacity for oncology, vaccines and animal health. $10 billion of these investments will be in the United States.Our Board believes that preparing and releasing a report of the type requested in the proposal would require substantial time and expense without significant benefit to our stakeholders as a whole. Each year we issue a corporate responsibility report that speaks to the health, economic, social and environmental impact we have on individuals and communities around the world and on our efforts to build a responsible and sustainable business. We hold ourselves accountable to our many stakeholders, including patients, employees, customers and shareholders, whose perspectives help to define our corporate responsibility priorities. Aligning our reporting with widely-accepted standards and frameworks enables us to report more robustly and comprehensively in a way that is responsive to allletting its peers know of our stakeholders, rather than a subset alone.expectation that they will soon be following in Merck’s footsteps.”)Accordingly, the Board recommends a vote AGAINST this proposal.4See https://seventhgenerationinterfaith.org/category/iccr/20202022 Proxy Statement90 8391
Annual Meeting and Voting Merck & Co., Inc. 20202022 Annual Meeting of Shareholders Details Tuesday, May 26, 2020,24, 2022, at 9:00 a.m., local timeEastern Time Bridgewater Marriott, 700 Commons Way, Bridgewater, New Jersey 08807 *Via Webcast at www.virtualshareholdermeeting.com/MRK2022 March 27, 2020Webcast:https://investors.merck.com/events-and-presentations25, 2022 More
information Board’s
recommendation Broker
discretionary
voting allowed? Votes required
for approval Abstentions
and Broker
Non-Votes 3032
votes cast Do not
count for
all fivesix
proposals
our Named Executive Officers 4142
votes cast 20202022 7682
votes cast44,5 and 56 Page79-82AGAINSTNoMajority ofvotes cast*Due to the emerging public health impact of coronavirus disease 2019 (COVID-19), we are planning for the possibility that the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance and will set forth details on how to participate in a press release available at merck.com.Merck & Co., Inc. 2020 Proxy Statement84 Questions and Answers About the Annual Meeting
votes cast27, 2020,25, 2022, the record date, and are entitled to vote at the Annual Meeting.20192021 Annual Report onForm 10-K (the “Proxy Materials”), along with either a proxy card, a voting instruction form, or Notice of Internet Availability of Proxy Materials, as applicable, are being distributed to shareholders beginning on April 6, 2020. The4, 2022. This proxy statement summarizes the information you need to know to vote at the Annual Meeting. You do not need to attend the Annual Meeting to vote your shares.Equinity Trust Company,Equiniti Shareowner Services, you are considered with respect to those shares, the shareholder of record.record for those shares. The Proxy Materials and proxy card have been sent directly to you by Merck.Informationinformation for Beneficial Owners”beneficial owners” on page 85.93.92 2,525,086,7112,528,353,085 shares of Merck common stock were issued and outstanding. Each share of common stock is entitled to one vote per share. A majority of the outstanding shares present in personat the Annual Meeting or representedDue to the emerging public health impact of coronavirus disease 2019 (COVID-19), we are planning for the possibility that theThe Annual Meeting maywill be held solely by means of remote communications. If we take this step, we will announce the decision to do so in advance and will set forth details on how to participate in a press release available atmerck.com.However, if we hold the Annual Meeting in person as planned,solely virtual format, and all shareholders as of the record date, March 27, 2020, may25, 2022, as well as guests are invited to attend. To attend the Annual Meeting, but must have an admission ticket andvisit the online meeting platform at:valid, government-issued photo identification. Ticketsshareholder as of the record date, March 25, 2022, you will be availableable to registeredparticipate in the meeting by voting your shares and beneficial owners and to one guest accompanying each registered or beneficial owner. You must request an admission ticket on or before May 15, 2020, if you wish to attendasking questions through the Annual Meeting in person.You can get your ticket(s) by accessing Shareholder Meeting Registration at www.proxyvote.com and followingonline meeting platform. To do so, enter the instructions provided. You will need the 16-digit control number included on your proxy card, votervoting instruction form or Notice of Internet Availability of Proxy Materials. Each person attendingMaterials when you visit the online meeting platform listed above. Guests may also access the Annual Meeting must bringbut may do so solely in listen-only mode. No control number is required for guests.printed ticketquestion and answer session, and we will endeavor to answer as many questions submitted by shareholders as time permits. We reserve the right to edit profanity or other inappropriate language and to exclude questions regarding topics that are not pertinent to meeting matters or Company business. If we receive substantially similar questions, we may group them together and provide a valid photo ID, such as a driver’s license or passport. Failuresingle response to follow these admission procedures may delay your entry into, or prevent you from being admittedavoid repetition.oursubmit questions for the Annual Meeting.Directions• on your ticket or by visitingmerck.com/finance/proxy/overview.html.If you are unable to print your ticket(s), please contact Shareholder Meeting Registration Support at 1-844-318-0137 (toll free) or 1-925-331-6070 (international toll call) for assistance.Is there a webcast?Yes, you will be able to viewduring this time and listen to the meeting online. We will broadcast the Annual Meeting as a live webcast through our website. The webcast will remain available for replay for one month followinguntil the meeting. Visit our Investor Relations website athttps://investors.merck.com/events-and-presentations.Merck & Co., Inc. 2020 Proxy StatementQuestions and Answers About the Annual Meeting 85• 25, 2020.23, 2022.25, 2020.23, 2022.In person atBy QR code. You may vote by scanning the QR code on page 1 with your mobile device (may require free app). in person at the Annual Meeting. Please see “How do I attend the Annual Meeting?” on page 84. You may also execute a proxy to designate another person to represent you.above.If you wish toYou may also vote in person at the Annual Meeting, you must obtain a legal proxy from your broker, bank or nominee and present it to the inspectors of election with your ballot.Meeting. How to vote in person at the Annual Meeting Attend andYou may vote in person, or send a representative with a properly executed proxy designating such person as your representative, and submit your vote by proxy ballot provided at the virtual meeting by visiting www.virtualshareholdermeeting.com/MRK2022 and entering the 16-digit control number included on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials. Attend andYou may vote in person if you obtain a legal proxy from the record owner in advance of the meeting and bring it with you to hand in along with the proxy ballot provided at the virtual meeting by visiting www.virtualshareholdermeeting.com/MRK2022 and entering the 16-digit control number included on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials, but you should confirm this process with your broker, bank, or nominee.voting in person.voting.in person atduring the Annual Meeting if you obtain a legal proxy as described in the answer to the previous question.Meeting.record holder.shareholder of record. As a beneficial owner, you will receive voting instructions from that record holderyour broker, bank or nominee and you must communicate your voting decisions to that particular institution rather than directly to(not the CompanyCompany) by using the voting instruction form that the institution provides to you. You may also vote your shares via telephone or the internet by following the specific instructions the institution provides to you for that purpose.2020)2022). If you do not provide voting instructions, your shares will not be voted on any proposal other than the ratification of the auditors. This is called a “broker non-vote.”Merck & Co., Inc. 2020 Proxy Statement86 Questions and Answers About the Annual Meetingwill need tomust communicate your voting decisions to your broker, bank or nominee before the date of the Annual Meeting.thirteenfourteen nominees;2020;2022; and94 merck.com/finance/proxy/overview.htmlwww.merck.com/investor-relations/financial-information/. If you are ashareholder of record, you may choose to stop receiving paper copies of Proxy Materials in the mail by following the instructions given while you vote by telephone or through the internet. If you choose to access future Proxy Materials on the internet, you will receive an e-mailemail message next year that will provide a link to those documents. Your choice will remain in effect until you advise us otherwise.e-mailemail message next year containing the URL for access to the Proxy Materials.20202022 Annual Meeting or for future annual meetings, additional copies will be provided promptly upon written or oral request. If you are ashareholder of record, you may contact us by writing to EQ Shareowner Services, P.O. Box 64874, St. Paul, MN 55164-0874 or calling 1-800-522-9114. The request should include your account number. Eligible shareholders of record receiving multiple copies of the Proxy Materials or Notice of Internet Availability of Proxy Materials, as applicable, can request householding by contacting Merck in the same manner.merck.comwww.merck.com under “Investors.” We also intend to disclose the final voting results on Form 8-K within four business days of the Annual Meeting. Additionally, shareholders may call 1-800-CALL-MRK (1-800-225-5675) beginning on Friday, May 29, 2020.Merck & Co., Inc. 2020 Proxy StatementQuestions and Answers About the Annual Meeting 8720192021 Annual Report on Form 10-K?10-K?10-KThe 2019 Annual Report on Form 10-K is available on Merck’s website atmerck.com/finance/proxy/overview.htmlwww.merck.com/investor-relations/financial-information/.20192021 Annual Report on Form 10-K, including financial statements and schedules, upon the written request of any shareholder to the Office of the Secretary, Merck & Co., Inc., 2000 Galloping Hill Road, K1-4157, Kenilworth, NJ 07033 U.S.A. Shareholders may also email the Office of the Secretary at office.secretary@merck.com to make such request.20202022 Proxy Statement88 20212023 Annual Meeting of Shareholders20212023 Annual Meeting of ShareholdersStandard Time, on December 7, 2020.5, 2022.20212023 Annual Meeting of Shareholders (Proxy Access)20212023 Annual Meeting of Shareholders, we must receive the required notice between November 7, 2020,5, 2022, and December 7, 2020,5, 2022, at the address shown below. Such notice must include the information required by our By-Laws, which are available on our website atmerck.com/about/ leadershipwww.merck.com/company-overview/leadership/board-of-directors/.20212023 Annual Meeting of Shareholders2021202 Annual Meeting of Shareholders but does not intend to have such proposals or nominations included in Merck’s Proxy Materials must submit the proposal or nomination in writing to the address shown below so that it is received between December 27, 2020,25, 2022, and January 26, 2021.24, 2023. However, in the event that the date of the 20212023 Annual Meeting of Shareholders is more than 30 days earlier or later than the anniversary date of this year’s annual meeting, such notice must be so received not later than the close of business on the later of the 120th day prior to the 20212023 Annual Meeting of Shareholders or the 10th day following the day on which a public announcement of the date of the 20212023 Annual Meeting of Shareholders is first made.merck.com/about/leadershipwww.merck.com/company-overview/leadership/board-of-directors/ or upon request to the Office of the Secretary.20202022 Proxy Statement96 892019,2021, and in its periodic reports on Form 10-Q and current reports on Form 8-K, if any, which we incorporate by reference.6, 20204, 202220202022 Proxy Statement90
and Non-GAAP EPS United StatesU.S. (“GAAP”). Year Ended
December 31, 2019 $ 11,464 2,681 927 993 55 16,120 1,687 695 (117 ) 364 86 2,715 13,405 (66 ) (89 ) 23 $ 13,382 $ 3.81 1.38 $ 5.19 $13,879 2,484 868 (1,884) 1,704 225 (43) — — — (4) 17,229 1,521 206 207 — — — 1,934 15,295 13 — 13 15,282 4.86 1.16 6.02 (1) 20202022 Proxy Statement98 91 business acquisitions and divestitures. These amounts include the amortization of intangible assets and amortization of purchase accounting adjustments to inventories, as well as intangible asset impairment charges, and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration. Also excluded are integration, transaction, and certain other costs associated with business acquisitions and divestitures.Restructuring CostsNon-GAAPNon-GAAP income and non-GAAP EPS also exclude amortization of intangible assets related to collaborations and licensing arrangements.56 to the Company’s Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2019)2021). These amounts include employee separation costs and accelerated depreciation associated with facilities to be closed or divested. Accelerated depreciation costs represent the difference between the depreciation expense to be recognized over the revised useful life of the asset, based upon the anticipated date the site will be closed or divested or the equipment disposed of, and depreciation expense as determined utilizing the useful life prior to the restructuring actions. Restructuring costs also include asset abandonment, facility shut-down and other related costs, as well as employee-related costs such as curtailment, settlement and termination charges associated with pension and other postretirement benefit plans and share-based compensation costs.they are evaluatedevaluating them on an individual basis, considering their quantitative and qualitative aspects. Typically, these consist of items that are unusual in nature, significant to the results of a particular period or not indicative of future operating results. Excluded from non-GAAP income and non-GAAP EPS in 2019 is a chargeare charges for the acquisitionacquisitions of Pandion, VelosBio, OncoImmune and Peloton, as well as charges related to collaborations, including transactions with Seagen (see Note 34 to the Company’s Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2019), tax2021). Also excluded from non-GAAP income and non-GAAP EPS are charges related to the finalizationdiscontinuation of U.S. treasury regulations relatedCOVID-19 development programs (see Note 4 to the Tax CutsCompany’s Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2021). Additionally, excluded from non-GAAP income and Jobs Act of 2017, anon-GAAP EPS are certain tax items, including net tax benefitbenefits related to the settlement of certain federal income tax matters, andan adjustment to tax benefits recorded in conjunction with the 2015 acquisition of Cubist Pharmaceuticals, Inc., a tax benefit related to the reversal of tax reserves established in connection with the 2014 divestiture of Merck Consumer CareMCC, and a net tax charge related to the finalization of U.S. treasury regulations related to the TCJA (see Note 1516 to the Company’s Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2019)2021).20202022 Proxy Statement92
Adjustments toNon-GAAP Results
For Incentive Plans Definition Adjustments Annual Incentive Pipeline 20%
Income ExcludePSU EarningsPer Share 25%
Cash Flow
(or OCF) The Company’s after-tax Non-GAAP net income (attributable to the Company) divided by total shares outstanding assuming dilution All of the above and the impact of Share Repurchases above or below planned levelsOperatingCash Flow25% RelativeTSRPer Share
(or EPS) 50%
TSR (or
R-TSR) 20202022 Proxy Statement-Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) DateSCAN TO VIEW MATERIALS & VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY D09979-P34871-Z76477 MERCK & CO., INC. 2000 GALLOPING HILL ROAD KENILWORTH, NJ 07033 Please indicate if you wish to view future meeting materials electronically via the Internet rather than receiving a hard copy. MERCK & CO., INC. 1g. RisaLavizzo-Mourey 1b. Thomas R. Cech 1e. Kenneth C. Frazier 1f. Thomas H. Glocer The Board of Directors recommends you vote AGAINST proposals 4 and 5: 1k. Inge G. Thulin 1j. Christine E. Seidman 1l. Kathy J. Warden 1m. Peter C. Wendell 3. Ratification of the appointment of the Company’s independent registered public accounting firm for 2020. 2.Non-binding advisory vote to approve the compensation of our named executive officers. 1. Election of Directors The Board of Directors recommends you vote FOR each of the following Nominees: 4. Shareholder proposal concerning shareholder right to act by written consent. 1a. Leslie A. Brun 1c. Mary Ellen Coe 1d. Pamela J. Craig 1h. Paul B. Rothman 1i. Patricia F. Russo Nominees: The Board of Directors recommends you vote FOR proposals 2 and 3: Yes No 5. Shareholder proposal regarding allocation of corporate tax savings. For Against Abstain For Against Abstain For Against Abstain SCAN TO VIEW MATERIALS & VOTE w ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS KENILWORTH, NJ 07033 If consent you would to receiving like to reduce all future the proxy costs statements, incurred by our proxy company cards and in mailing annual proxy reports materials, electronically you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail using the or the Internet Internet. and, To when sign prompted, up for electronic indicate delivery, that you please agree follow to receive the instructions below to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy below materials to vote electronically in future years. Before VOTE BY INTERNET—The INTERNET Meeting - Go to www.proxyvote.com or scan the QR Barcode above 11:59 Use the p. Internet m. Eastern to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on May 25, 2020.your 23, voting 2022. instructions Have your and proxy for card electronic in hand delivery when of you information access the website up until and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting—Go to www.virtualshareholdermeeting.com/MRK2022 You is printed may attend in the box the meeting marked by via the the arrow Internet available and vote and during follow the the meeting. instructions. Have the information that VOTE BYPHONE— PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on May 25, 2020.23, 2022. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Merck & Co.,Co, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. SHAREHOLDER MEETING REGISTRATION ToTO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D72520-P68464-Z81984 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY MERCK & CO., INC. The Board of Directors recommends you vote and/or attendFOR each of the meeting, gofollowing Nominees: 1. Election of Directors Nominees: For Against Abstain 1a. Douglas M. Baker, Jr. For Against Abstain 1b. Mary Ellen Coe 1l. Inge G. Thulin 1c. Pamela J. Craig 1m. Kathy J. Warden 1d. Robert M. Davis 1n. Peter C. Wendell 1e. Kenneth C. Frazier The Board of Directors recommends you vote FOR proposals For Against Abstain 2 and 3: 1f. Thomas H. Glocer 2. Non-binding advisory vote to approve the “Registercompensation of our named executive officers. 1g. Risa J. Lavizzo-Mourey, M.D. 3. Ratification of the appointment of the Company’s independent registered public accounting firm for Meeting” link at www.proxyvote.com.2022. 1h. Stephen L. Mayo, Ph.D. The Board of Directors recommends you vote AGAINST proposals For Against Abstain 4, 5 and 6: 1i. Paul B. Rothman, M.D. 4. Shareholder proposal regarding an independent board chairman. 1j. Patricia F. Russo 5. Shareholder proposal regarding access to COVID-19 products. 1k. Christine E. Seidman, M.D. 6. Shareholder proposal regarding lobbying expenditure disclosure. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) DateD09980-P34871-Z76477Merck & Co., Inc. Annual Meeting of Shareholders Tuesday, May 24, 2022, at 9:00 a.m. (Eastern Time) via Webcast at www.virtualshareholdermeeting.com/MRK2022* Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on May 26, 2020:24, 2022: The Notice and Proxy Statement and Annual Report on Form10-K are available at www.proxyvote.com. Parking is limited. Follow Route 287 South to exit 17 (Route 202/206 South). Bear right immediately and make*We have adopted a right atvirtual format for the sign reading Commons Way. At first light, make a left onto Commons Way. Make a left at the fourth light. Merck & Co., Inc.2022 Annual Meeting of Shareholders Tuesday, May 26, 2020, at 9:00 a.m. Bridgewater Marriott 700 Commons Way, Bridgewater, New Jersey 08807*to provide a safe, consistent and convenient experience to all shareholders regardless of location. D72521-P68464-Z81984 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints KENNETH C. FRAZIER, JENNIFER ZACHARY and KELLY GREZ as Proxies, each with the power to appoint his/her substitute, and hereby authorizes them to represent and to vote ALL of the stock of MERCK & CO., INC. standing in the name of the undersigned at the ANNUAL MEETING OF SHAREHOLDERS to be held at 9:00 a.m. (Eastern Time) on May 26, 2020,24, 2022, and at all adjournments or postponements thereof, upon the matters set forth on the reverse side, as designated, and upon such other matters as may properly come before the meeting. This card also provides voting instructions for shares held for the account of the undersigned in the Merck Stock Investment Plan. Any prior proxy or voting instructions are hereby revoked. The shares represented by this proxy will be voted as directed by the shareholder and in accordance with the judgment of the Proxies upon any other matter that may properly come before the meeting and any adjournment or postponement thereof. If no specification is made, the shares will be voted FOR each nominee in Item 1, FOR Items 2 and 3 and AGAINST Items 4, 5 and 5.6. IF YOU VOTE BY TELEPHONE OR BY INTERNET, DO NOT MAIL THIS PROXY CARD. THE TELEPHONE AND INTERNET VOTING FACILITIES WILL CLOSE AT 11:59 P.M. ON MAY 25, 2020.23, 2022. Please complete, sign, date and return the Proxy Card promptly using the enclosed envelope. (Continued, and to be signed and dated on the reverse side.) *Due to the emerging public health impact of coronavirus disease 2019(COVID-19), Merck & Co., Inc. is planning for the possibility that the Annual Meeting may be held solely by means of remote communication. A decision to take this step will be announced in a press release, available at www.merck.com, that will include details on how to participate.