BAXTER INTERNATIONAL INC
BAX DEF 14A Report ended March 25, 2025
BAXTER INTERNATIONAL INC
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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CHECK THE APPROPRIATE BOX:
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Under Rule 14a-12
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(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
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No fee required.
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Fee paid previously with preliminary materials:
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11
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Notice of 2025
Annual Meeting
of Stockholders
and Proxy Statement
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May 6, 2025
Baxter International Inc.
Headquarters
One Baxter Parkway
Deerfield, Illinois 60015
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Baxter International Inc.
One Baxter Parkway
Deerfield, Illinois 60015
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March 25, 2025
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Dear Stockholder:
It is my pleasure to invite you to attend Baxter’s Annual Meeting of Stockholders on Tuesday,
May 6, 2025, at 9 a.m. Central Time. The attached Notice of 2025 Annual Meeting of
Stockholders and Proxy Statement will serve as your guide to the business being conducted.
A New Chapter Begins:
Baxter has reached a pivotal moment in its journey to redefine and
reposition itself for a new era. On January 31, 2025, we completed the sale of our Kidney Care
business, now known as Vantive, to Carlyle for approximately $3.4 billion of net, after-tax
proceeds. This represented the final stage of a strategic transformation announced in January
2023 to enhance operational effectiveness, accelerate innovation for patients and drive value
for stockholders. Additional transformative actions announced at that time included the
implementation of a new segment-based, verticalized operating model and the divestiture of
Baxter's non-core BioPharma Solutions (BPS) business, both completed in 2023.
Baxter emerges today as a more strategically focused and operationally efficient company. We
also remain grounded in the same fundamentals that have helped fuel our success and
channel our passions for nearly a century – starting, as always, with our Mission to Save and
Sustain Lives. Our sustained emphasis on medically essential products and the diversity of our
portfolio also supports durability of demand and help us navigate challenges that may affect
sectors of our portfolio at any given time.
Growing Momentum:
Our momentum is demonstrated in our positive companywide financial
performance for continuing operations (excluding our former Kidney Care and BioPharma
Solutions businesses) for full-year 2024 across sales and earnings.
It is also evident in recent innovation that showcases our life-sustaining Mission in action. Last
year marked the U.S. launch of our leading-edge Novum IQ large-volume infusion pump with
Dose IQ safety software, highlighting our expanding impact in connected care. Among other
milestones, we announced ten injectable pharmaceutical product launches in the U.S. helping
to address critical patient needs across a range of key therapeutical areas, including critical
care, anti-infectives, pain and oncology.
We intend to continue to build upon this progress as a newly streamlined and agile enterprise.
We are united across the company in our re-envisioned efforts to redefine healthcare delivery,
advance customer-inspired innovation and accelerate profitable growth – all to benefit patients,
caregivers, stockholders and the full range of stakeholders that rely on us. To achieve and
ideally exceed our aspirations, we must now move swiftly, execute crisply and deliver
consistently on our commitments. We are excited by our opportunities in 2025 and beyond.
Leadership Updates:
Earlier this year, we announced several leadership changes coinciding
with our entry into this new phase. José (Joe) E. Almeida departed as Chair, President and
Chief Executive Officer (CEO), creating an opportunity for a new CEO to set Baxter’s course
and vision for this next chapter. On behalf of the Board of Directors (Board) and company
management, we are grateful for Joe’s nine years of leadership through a period of significant
change in our portfolio, structure and markets. Joe continues to serve in an advisory capacity
through October 31, 2025.
My own role has also shifted. After joining as a Baxter Board member in May 2022, and having
served as Lead Independent Director from April 2023 through February 2025, I am now
honored to serve as Chair and Interim CEO as the Board leads a thorough search for Baxter’s
permanent CEO.
The company has also appointed Heather Knight to the new role of Executive Vice President
and Chief Operating Officer (COO). Heather is a proven leader who has driven outstanding
performance across multiple roles since joining Baxter in 2019. Most recently, she has led the
profitable growth and enhanced innovation of our Medical Products & Therapies segment,
Baxter’s largest segment by sales. She is currently serving as the Interim Group President,
Medical Products & Therapies until her successor is appointed. As COO, she will oversee
strategies across our commercial segments and closely aligned functions, with a keen focus
on driving operational excellence and creating a more holistic experience for our customers,
caregivers and the patients they serve.
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North Cove Recovery:
A further expression of our momentum, as well as our resilience, is
how effectively we rise to our challenges; and no challenge in recent memory for Baxter has
been greater than the impact of Hurricane Helene on our North Cove, North Carolina,
manufacturing facility. Flooding from the rain and storm surge in September 2024 forced a
temporary shutdown in site operations, requiring a vast recovery effort. Our North Cove and
broader Baxter teams, in coordination with government agencies, focused immediately on
supporting employees in affected communities, bringing the facility back online, and working to
help ensure ongoing supply continuity for patients.
By early 2025, North Cove had returned to production at pre-hurricane levels. The pace of
recovery and dedication of the team have been nothing short of remarkable. I want to express
my deep gratitude to all involved in this effort, within Baxter and beyond. I also share profound
thanks with our customers for their patience as our team continues to work diligently to support
supply continuity and replenish inventory.
Commitment to Corporate Responsibility:
As we evolve our profile as a healthcare leader,
we remain committed to sound corporate citizenship. Our 2030 Corporate Responsibility
Commitment, introduced in 2021, underscores our embrace of social responsibility, sustainable
business practices and operating as an employer of choice through three pillars: Empower our
Patients; Protect our Planet; and Champion our People and Communities.
Our progress against our goals is published annually in our Corporate Responsibility Report,
which is available on www.baxter.com. Just as Baxter and its communities are ever changing,
we periodically reassess our objectives to ensure alignment with our broader trajectory and
opportunities. We expect to refresh our commitment and goals sometime in the future following
the appointment of a new permanent CEO.
Annual Meeting Details:
Baxter’s upcoming Annual Meeting will be held again in a virtual
format only. Please review the information on attendance provided in the attached Notice of
2025 Annual Meeting of Stockholders and Proxy Statement.
Details of the business to be conducted at the Annual Meeting are included in the proxy
statement, which we encourage you to read carefully.
Your vote is important to us, and I urge you to vote your shares as promptly as possible. You
may vote your shares by Internet or by phone. If you received a paper copy of the proxy card
by mail, you may sign, date and return the proxy card in the accompanying envelope.
Stockholders of record will also be able to vote at the Annual Meeting.
You will be able to submit questions in advance of and during the Annual Meeting.
In closing, I am proud to recognize our engaged, talented and highly motivated team of Baxter
colleagues worldwide, whose hard work has helped us reach this exciting new chapter in
pursuit of our life-sustaining mission.
On behalf of our Board, senior management, and the entire Baxter team, thank you for your
continued confidence and support. We look forward to your participation in the annual meeting.
Sincerely yours,
Brent Shafer
Chair and Interim CEO
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Baxter International Inc.
One Baxter Parkway
Deerfield, Illinois 60015
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March 25, 2025
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Dear Stockholder:
On behalf of the Board of Directors, I would like to thank you for your continued investment in
Baxter and for your ongoing support. It is my distinct privilege to write to you about recent
developments at Baxter in my new role as Lead Independent Director, having been appointed
earlier this year following my service on the Board since 2021. I look forward to continuing my
work alongside a skilled Board of Directors and under the guidance of Brent Shafer, our
recently announced Chair and Interim CEO.
The company made meaningful progress in completing key elements of its broad strategic
transformation announced in January 2023, which included implementing a simplified
operating model, divesting the BPS business and completing the separation of Vantive.
Further, in 2024, the Board remained committed to sound and effective corporate governance
practices and transparent disclosure, including regarding Board refreshment, leadership
succession planning, and Baxter’s robust stockholder engagement program.
I would like to highlight some recent key developments and focus areas at Baxter:
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Effective Oversight of Leadership Succession Planning:
Oversight of Baxter’s
ongoing leadership succession efforts remains a top priority for the Board. In
February 2025, Baxter announced that Joe Almeida ceased serving in his executive
roles and on the Board. I would like to thank Joe for his leadership throughout his
nine years as CEO of Baxter. In connection with Joe's departure, the Board formed
a CEO Search Working Group to help lead the search for the permanent CEO in
partnership with the Nominating, Corporate Governance and Public Policy
Committee.
The Board's effective management development and succession planning process
has also led to the election of Heather Knight as COO. The Board believes that this
new role will ultimately promote more efficient operations across the company.
•
Ongoing Commitment to Board Evolution and Engagement:
The Board is
composed of an experienced group of independent directors with a wide range of
skills, experiences and qualifications. As part of our thoughtful approach to Board
composition, in 2024, we appointed Jeffrey (Jay) Craig, retired Chief Executive
Officer and President of Meritor, Inc., to the Board. Jay complements the Board's
expertise with deep financial, broad operational and public company board
experience. Jay was also appointed as Chair of the Audit Committee, effective
December 31, 2024, in connection with the resignation of Peter Wilver from the
Board. I would like to thank Peter for his service on the Board and for his
commitment to Baxter. Our comprehensive Board refreshment practices are critical
to the Board’s success and help to ensure an appropriate balance of fresh
perspectives while maintaining critical institutional knowledge.
Additionally, we refreshed Board committee oversight in 2024 and 2025 by moving
oversight of innovation strategy and cybersecurity generally from the Quality and
Regulatory Compliance and Audit Committees, respectively, to the full Board,
consistent with the recent implementation of Baxter's new operating model. We also
updated the Company's Corporate Governance Guidelines and each standing
committee's charter in furtherance of Baxter's commitment to strong governance
and transparency.
In further continuance of our sound corporate governance practices, in 2024 and
early 2025, Baxter continued its long-standing stockholder engagement program.
These conversations with our stockholders focused on our leadership transition and
CEO search process, corporate governance, executive compensation and corporate
responsibility matters. As a result of stockholder engagement over the years, the
Board is better able to understand stockholder perspectives and incorporate them
into its decision-making process.
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Diligent Board Oversight of Company Strategy:
I remain fully confident in the
company’s strategy, our highly skilled and experienced Board and the Baxter
management team’s ability to deliver on a strong path of creating long-term
stockholder value and delivering on its Mission to Save and Sustain Lives. The
Board plays a critical role in overseeing the strategic direction of the company,
including the recently completed strategic initiatives, and helps to ensure that
Baxter’s corporate culture supports and aligns with its short- and long-term
strategies.
To further the Board’s oversight of Baxter’s strategic transformation and as part of
our leadership transition announced in February 2025, the Board formed a new
Operating Committee. The committee is designed to be short-term in nature to help
support Baxter through this transition process and it is scheduled to dissolve six
months following the Board’s appointment of a permanent CEO.
Thank you in advance for your support at the 2025 Annual Meeting of Stockholders, which will
be held on May 6, 2025. On behalf of the Board, we look forward to continuing our progress in
the year ahead and remain confident in the strength of our leadership team to lead Baxter into
our next chapter.
Best regards,
Nancy Schlichting
Lead Independent Director and
Chair of the Compensation and Human Capital Committee
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investor.baxter.com
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Table of Contents
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Table of Contents
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Non-Audit Fees
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investor.baxter.com
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Notice of 2025 Annual Meeting of Stockholders and Proxy Statement
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1
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Notice of 2025 Annual Meeting of Stockholders and
Proxy Statement
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The Annual Meeting is scheduled to be held by means of
a virtual-only format to provide a safe, convenient and
cost-efficient experience to all stockholders regardless of
location. The Annual Meeting will take place on Tuesday,
May 6, 2025 at 9:00 a.m., Central Time. Online access to
the Annual Meeting will begin at 8:45 a.m., Central Time,
on the same date. You can attend the Meeting by
accessing www.virtualshareholdermeeting.com/
BAX2025.
The Annual Meeting will be held for the following
purposes:
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How Do I Vote?
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By Internet, following the
instructions on the Notice of
Internet Availability of Proxy
Materials or the proxy card;
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By telephone, using the telephone
number printed on the proxy card;
or
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To elect the ten directors named in the proxy
statement.
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By mail (if you received your proxy
materials by mail), using the
enclosed proxy card and return
envelope.
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To approve, on an advisory basis, named executive
officer compensation for 2024.
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To ratify the appointment of
PricewaterhouseCoopers LLP as the independent
registered public accounting firm for Baxter
International Inc. (Baxter or the company) for 2025.
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Important Notice Regarding
the Availability of Proxy Materials for
the Annual Meeting of Stockholders
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To vote on the one stockholder proposal as
described in the proxy statement, if such proposal
is properly presented at the Annual Meeting.
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The proxy statement relating to the
Annual Meeting and the
Annual Report to Stockholders for the year
ended December 31, 2024 are available at
http://materials.proxyvote.com/071813
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To transact any other business that may properly
come before the Annual Meeting.
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The Board recommends that stockholders vote FOR
Items 1, 2 and 3. The Board recommends that
stockholders vote AGAINST the stockholder proposal
referred to in Item 4. Stockholders of record at the close
of business on March 13, 2025 will be entitled to vote at
the Annual Meeting.
By order of the Board,
Ellen K. Bradford
Corporate Secretary
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The Annual Meeting will again be held only
in a virtual format to provide a safe,
convenient and cost-efficient experience to
all stockholders regardless of location. As
always, you are encouraged to vote your
shares prior to the Annual Meeting whether
or not you plan to attend the Annual
Meeting. Details on how to attend the
Annual Meeting and further information can
be found at “General Information—Other
Information—Attending the Annual
Meeting.”
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| 2025 Annual Meeting of Stockholders and Proxy Statement
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2
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Notice of 2025 Annual Meeting of Stockholders and Proxy Statement
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Proxy Statement
The accompanying proxy statement is solicited on behalf of the Board for use at the Annual Meeting to be held
on Tuesday, May 6, 2025. On or about March 25, 2025, Baxter
began
mailing to stockholders of record a Notice
of Internet Availability of Proxy Materials providing instructions on how to access proxy materials via the Internet
and how to vote online (www.proxyvote.com). Stockholders who did not receive the Notice of Internet Availability
of Proxy Materials as a result of a previous election will receive a paper or electronic copy of the proxy materials,
which Baxter also began sending on or about March 25, 2025.
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investor.baxter.com
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Proxy Statement Highlights
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3
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Proxy Statement Highlights
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To assist you in reviewing the proposals to be acted upon at the Annual Meeting, this section presents summary
detail about each non-routine voting item. For more complete information, please review the company’s Annual
Report on Form 10-K for the year ended December 31, 2024 (the 2024 Form 10-K) and the complete proxy
statement.
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Election of Directors
What am I voting on?
You will be asked to vote for the election of the ten director nominees set forth
below for a term of one year.
What is the Board’s recommendation?
The Board recommends a vote
FOR
the election of each of the director
nominees.
As demonstrated in the director skills matrix included on page 7, the Board
believes that the ten directors standing for election possess a desirable mix of
skills, backgrounds, professional and industry experience and qualifications.
These directors also reflect the Board’s commitment to regular refreshment, as
demonstrated by the appointment of Mr. Jeffrey A. Craig in September 2024.
The Board believes that each director is individually qualified to make unique and
substantial contributions to the Board, and, collectively, the directors’ diverse and
complimentary skill sets, viewpoints and perspectives enable the Board to provide
the company with valuable insight and effective oversight with respect to its
business, overall performance and strategic direction. Baxter's directors’ unique
qualifications have also better enabled the Board, as a whole, to effectively consult
with management on succession planning, including in light of the ongoing CEO
transition, as well as the company’s strategic and operational plans and capital
allocation decisions, including with respect to the recent sale of its Kidney Care
business and the company's disaster recovery efforts at its North Cove facility in
response to the impacts from Hurricane Helene. See below for additional
information regarding the qualifications, experiences and backgrounds of the
directors and recent Board developments.
Where can I find more information?
Concise supporting information is presented below.
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See also “Corporate Governance at Baxter International Inc.—Proposal 1
—Election of Directors” for additional information.
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| 2025 Annual Meeting of Stockholders and Proxy Statement
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4
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Proxy Statement Highlights
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Name
1
Primary Occupation
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Age
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Director
Since
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Independent
Y/N
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Key Attributes
and Skills
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A
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CHC
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NCGPP
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QRC
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O
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William A. Ampofo II
Chair, Supply Chain
Operations Council and Vice
President, Parts & Distribution
Services and Supply Chain,
Boeing Global Services of
Boeing Company
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51
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2023
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Y
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✓
Deep operational expertise and strong
track record as a supply chain leader
✓
Significant experience driving
transformation and enabling strategic
transactions at multinational companies
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⬛
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⬛
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Jeffrey A. Craig
Chief Executive Officer and
President of Meritor, Inc.
(retired)
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64
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2024
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Y
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✓
Significant financial expertise, including as
Chief Financial Officer at Meritor, Inc.
✓
Meaningful leadership, risk management
and operational experience
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▲
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Patricia B. Morrison
Executive Vice President,
Customer Support Services &
Chief Information Officer,
Cardinal Health, Inc. (retired)
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65
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2019
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Y
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✓
Significant experience in information
technology (IT) and cybersecurity at global
healthcare companies
✓
Meaningful human capital management
experience
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⬛
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⬛
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⬛
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Stephen N. Oesterle, M.D.
Healthcare Industry
Consultant, former Senior
Vice President, Medicine and
Technology, Medtronic plc
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74
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2017
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Y
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✓
Significant experience in the medical
products and healthcare industries
(including strategic transactions)
✓
Strong scientific and medical background,
including as a former practicing cardiologist
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⬛
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▲
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Stephen H. Rusckowski.
Chair and Chief Executive
Officer and President of Quest
Diagnostics, Inc. (retired)
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67
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2023
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Y
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✓
Significant operational experience in the
healthcare industry
✓
Strong track record as a transformational
leader, including in the context of large
scale separation transactions
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⬛
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⬛
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▲
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Nancy M. Schlichting
President and Chief Executive
Officer, Henry Ford Health
System (retired)
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70
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2021
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Y
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✓
Significant experience in healthcare
administration in senior-level executive
roles with health care providers
✓
Meaningful human capital management
experience
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▲
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⬛
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Brent Shafer
Chair and Interim Chief
Executive Officer of Baxter
International Inc.
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67
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2022
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N
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✓
Significant experience leading global
organizations, including as Chair and Chief
Executive Officer of Cerner Corporation
✓
Strong digital health capabilities and
experience transforming complex
organizations
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Cathy R. Smith
Chief Financial Officer of
Starbucks Corporation
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61
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2017
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Y
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✓
Significant financial expertise and
corporate leadership experience, including
in responding to cybersecurity incidents
and overseeing large strategic transactions
✓
Meaningful human capital management
experience
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⬛
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▲
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Amy A. Wendell
Senior Vice President of
Strategy and Business
Development,
Covidien (retired)
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64
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2019
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Y
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✓
Extensive experience in business
development and strategy in the healthcare
industry, including significant mergers &
acquisitions and integration experience
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⬛
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⬛
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⬛
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David S. Wilkes, M.D.
Former Dean of University of
Virginia School of Medicine,
Chief Scientific Officer and
Co- Founder, ImmuneWorks,
Inc.
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68
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2021
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Y
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✓
Significant scientific and medical
experience, including as the co-founder
and chief scientific officer of a
biotechnology start-up
✓
Extensive experience leading large,
complex organizations, including as a
former dean of a large medical school
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⬛
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⬛
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Key
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▲
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Committee Chair
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A
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Audit Committee
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QRC
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Quality and Regulatory Compliance Committee
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⬛
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Committee Member
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CHC
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Compensation and Human Capital Committee
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O
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Operating Committee
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NCGPP
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Nominating, Corporate Governance and Public Policy Committee
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________________
1.
Directors
standing for election on May 6, 2025. Committee assignments and ages reflected in this chart speak as of March
25, 2025.
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investor.baxter.com
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Proxy Statement Highlights
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5
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2024 Board and Governance Highlights
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Governance Practices
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See pages
19 and 22
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•
Strong Governance Practices
: Baxter remains committed to strong corporate governance practices and
protecting stockholder rights. As a result, the Board has adopted the following practices and provisions in
related governance documents, among others:
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Strong Lead Independent Director with robust and clearly defined responsibilities;
•
Meaningful director and officer stock ownership requirements;
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Annual director elections;
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Majority voting standard coupled with a resignation policy;
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Nine out of ten directors are independent;
•
All Board committee chairs and members are independent;
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Executive sessions of independent directors held at each regularly scheduled Board meeting;
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Mandatory retirement age;
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Regular Board refreshment, including the appointment of five new directors in the last three years;
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No supermajority voting provisions;
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Single class of voting stock;
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Proxy access rights;
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No poison pill in place;
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Stockholders have the right to call special
meetings (with a 15% threshold)
;
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Stockholders have the right to act by written consent;
•
Use of independent experts, such as auditors and compensation consultants; and
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Robust director orientation and continuing education programs.
•
Focus on Board Refreshment and Oversight Responsibilities
: Continued Board focus on refreshment led
to the appointment of a new Lead Independent Director and changes in Board and committee composition and
responsibilities in 2024 and 2025, as described below:
•
In September 2024, after the retention of an independent search firm and thorough consideration of several
potential candidates, Jeffrey A. Craig, retired Chief Executive Officer and President of Meritor, Inc., was
appointed to the Board and the Audit Committee. Mr. Craig was also appointed as chair of the Audit
Committee, effective December 31, 2024, in connection with the resignation of Peter Wilver from the Board.
•
Brent Shafer was appointed as Chair and Interim CEO, effective February 3, 2025, in connection with the
departure of Joe Almeida, while the Board searches for a permanent CEO with the assistance of a leading
search firm.
•
In February 2025, the Board formed a CEO Search Working Group consisting of independent directors to
oversee the search for a permanent CEO.
•
Nancy Schlichting was appointed to serve as Lead Independent Director in February 2025.
•
Refreshed Board committee oversight in 2024 and 2025, including moving oversight of innovation strategy
and cybersecurity generally from the QRC and Audit Committees, respectively, to the full Board, consistent
with the implementation of Baxter's new operating model.
•
In 2025, the Board's Operating Committee was formed in connection with the ongoing CEO transition. The
Operating Committee is scheduled to sunset six months after the appointment of a permanent CEO.
Stephen Rusckowski was appointed as chair of the Operating Committee.
•
Refreshed the company's Corporate Governance Guidelines and each standing committee's charter in
furtherance of Baxter's commitment to strong governance and transparency.
•
As of March 13, 2025, average director age was 59.2 years and average director tenure was 3.8 years.
•
Board's and Board Committees' Annual Self-Assessment Process:
In November 2024, the Board and
each of its committees conducted an annual self-assessment process in which each independent director
provided commentary on the performance and effectiveness of the Board and each committee on which he or
she serves. Outputs from this assessment process informed the Board's and each committee's continuing
refreshment efforts and changes to committee charters. For more information regarding this annual evaluation
process, see "Corporate Governance at Baxter International Inc.— Board of Directors— Annual Board and
Committee Evaluation".
•
Stockholder Engagement
: Baxter has a robust corporate governance outreach program in place to enable it
to better understand the perspectives of its stockholders.
•
Since the
completion of the 2024 annual meeting and through early 2025, as part of the company's annual
corporate governance outreach program, Baxter has engaged in discussions with stockholders representing
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| 2025 Annual Meeting of Stockholders and Proxy Statement
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6
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Proxy Statement Highlights
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approximately 30% of the company’s outstanding shares (calculated as of December 31, 2024). These
discussions followed an outreach to top Baxter investors representing over 60% of Baxter’s outstanding
shares (calculated as of December 31, 2024).
•
Topics discussed with stockholders included company strategy and performance (including the separation of
the Kidney Care business), the remediation efforts at the North Cove facility, management succession
planning and other corporate governance matters (including the ongoing CEO search and Board
composition), Board leadership structure, executive compensation matters (including the 2024 Say on Pay
vote and the 2024 stockholder proposal) and corporate responsibility initiatives.
•
Responsiveness to Stockholder
s
: Baxter is committed to being responsive to the views of stockholders and
has worked to reflect stockholders' perspectives in its governance policies, executive compensation program
and corporate responsibility initiatives. This engagement over the years has resulted in enhancements to
Baxter's proxy disclosure, including disclosures relating to the ongoing Board refreshment efforts (which most
recently resulted in the addition of Jeffrey Craig to the Board), management succession planning as well as
various corporate responsibility related updates. It also informed the Board's position on the stockholder
proposal to be voted on at the Annual Meeting again this year.
In addition, the company continues to evolve its
disclosure regarding the performance reviews of the CEO and the other named executive officers (NEOs) and
how they impacted related incentive payouts and included additional disclosures regarding the factors the CHC
Committee considers when reviewing executive pay.
These responsive actions are a continuation of the
Board’s
strong track record of responsiveness.
•
Overboarding:
The company's Corporate Governance Guidelines limit the number of public company boards
on which Baxter directors may serve. Specifically, the Corporate Governance Guidelines provide that no
director who is employed full time may serve on the boards of directors of more than two public companies
(including the Board) and no other director may serve on the boards of directors of more than four public
companies (including the Board). The Board considers the outside commitments of directors in connection with
the annual nominating process. Any waivers to the overboarding policy (including the one granted in
connection with the appointment of Mr. Shafer as Interim CEO) must be approved by the NCGPP Committee.
Changes in director circumstances need to be reviewed and approved by the NCGPP Committee in
accordance with the Corporate Governance Guidelines. See “Corporate Governance at Baxter International
Inc.—Board of Directors—Director Overboarding” for additional detail regarding the Baxter’s overboarding
policy.
|
investor.baxter.com
|
|
Proxy Statement Highlights
|
7
|
|
|
|
Board Qualifications, Experiences and Backgrounds
The matrix included below represents some of the key skills, experiences and backgrounds that the Board has
identified as particularly valuable to the oversight of the company and illustrates how the current director
nominees individually and collectively possess these key competencies and backgrounds. The matrix does not
encompass all of the skills, experience, qualifications and attributes of the director nominees (including additional
ones that may have been considered by the Board and the NCGPP Committee in this year's director nomination
process), and no specific weights are assigned to any of the skill sets in the matrix. Additionally, the fact that a
particular skill, experience, qualification or attribute for a nominee is not listed below does not mean that he or
she does not possess that particular skill, experience, qualification or attribute. The Board believes that its highly
qualified director nominees provide the Board with a complementary mix of skills, experience and perspectives
necessary for effective
oversight
.
|
William Ampofo
|
Jeffrey Craig
|
Patricia Morrison
|
Stephen Oesterle
|
Stephen Rusckowski
|
Nancy Schlichting
|
Brent Shafer
|
Cathy Smith
|
Amy Wendell
|
David Wilkes
|
|
|
Skills and Experience
|
||||||||||
|
Healthcare Marketing / Delivery
Relevant expertise required to effectively assess Baxter's portfolio management and innovation
strategies in light of the competitive and dynamic landscape in which Baxter operates
|
g
|
g
|
g
|
g
|
g
|
g
|
g
|
|||
|
Quality, Regulatory and Compliance
Critical skills (including the development and oversight of clinical trials) needed to help Baxter
launch new products consistent with Baxter's commitment to patient safety and quality
|
g
|
g
|
g
|
g
|
g
|
|||||
|
Financial Expertise / Risk Management
Critical skills necessary to help promote the company's financial performance and to help maintain
appropriate internal controls
|
g
|
g
|
g
|
g
|
g
|
g
|
g
|
|||
|
Manufacturing and R&D
Critical knowledge to help oversee Baxter's global manufacturing and research and development
operations, including in response to global supply chain challenges and evolving macroeconomic
dynamics
|
g
|
g
|
g
|
g
|
g
|
g
|
||||
|
Cyber / IT
Essential expertise to help Baxter pursue digital health opportunities in connection with its
continuing focus on connected care, consistent with emerging cybersecurity and artificial
intelligence practices and regulations as well as evolving market demands and privacy regulations
|
g
|
g
|
g
|
g
|
||||||
|
M&A / Transactional
Important skills to help Baxter achieve its long term strategies as the company assesses potential
future portfolio adjustments
|
g
|
g
|
g
|
g
|
g
|
g
|
g
|
g
|
||
|
International
International market knowledge and business acumen critical to Baxter's key growth strategies and
priorities. Approximately 45% of Baxter's 2024 revenues from continuing operations were from
outside the U.S.
|
g
|
g
|
g
|
g
|
g
|
g
|
g
|
|||
|
Human Capital Management
Essential skills to help oversee the company's talent and leadership development, employee
compensation and employee engagement efforts
|
g
|
g
|
g
|
g
|
g
|
g
|
g
|
|||
|
Other Sector Leadership
Enables the Board to incorporate best practices from other industries, in response to emerging
trends or otherwise
|
g
|
g
|
g
|
g
|
g
|
g
|
g
|
g
|
||
|
Demographic Information
1
|
||||||||||
|
Gender
|
M
|
M
|
F
|
M
|
M
|
F
|
M
|
F
|
F
|
M
|
|
Ethnic/Racial Diversity
|
g
|
g
|
||||||||
|
LGBTQ+
|
g
|
1.
As self-identified by each director nominee.
|
|
| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
8
|
Proxy Statement Highlights
|
|
|
|
|
|||
|
|
Advisory Vote to Approve Named Executive Officer
Compensation for 2024
What am I voting on?
You are asked to cast a non-binding advisory vote to approve Baxter’s 2024
compensation programs as described in the “Executive Compensation—
Compensation Discussion and Analysis” section of the proxy statement.
What is the Board’s recommendation?
The Board recommends a vote
FOR
this proposal.
The Board and the CHC Committee believe that Baxter’s executive compensation
programs appropriately align executives’ interests with Baxter’s strategies and
long-term objectives. See “—Performance Highlights” below for additional
information regarding 2024 financial and compensation design highlights.
Where can I find more information?
Concise supporting information is presented below.
|
||
|
|
|
See “Executive Compensation—Proposal 2—Advisory Vote to Approve
Named Executive Officer Compensation for 2024” for additional
information.
|
|
|
investor.baxter.com
|
|
Proxy Statement Highlights
|
9
|
|
|
|
Performance Highlights
|
Further
Information
|
|
|
Financial results for 2024
The company’s publicly reported financial results from continuing operations for 2024 are set
forth below. Baxter’s performance in 2024 reflects its building momentum as the company
continued to execute upon the strategic initiatives announced in January 2023. These amounts
do not include results for the company’s Kidney Care business, which was sold in January 2025
and the results of which are reflected in the company’s discontinued operations for 2024.
|
See page 39
|
|
Global Net Sales
|
GAAP Earnings per Share
|
|||||||
|
($0.64)
|
NM
1
|
|||||||
|
$10.6 billion
|
3% versus 2023
|
|||||||
|
Adjusted Earnings per Share
|
||||||||
|
$1.89
|
11% versus 2023
|
|||||||
|
1.
As used in the chart above, NM means not
meaningful
|
||||||||
|
Operating Cash Flow
|
|||||
|
$819 million
|
32% versus 2023
|
||||
|
Free Cash Flow
|
|||||
|
$373 million
|
52% versus 2023
|
||||
T
he amounts set forth above represent Baxter’s publicly disclosed results from continuing operations for 2024.
Adjusted earnings per share (EPS) and free cash flow are non-GAAP financial measures (as defined below).
Adjusted EPS excludes the impact of special items, net of the related income tax effects. Free cash flow
represents net cash provided by operating activities less capital expenditures. See Baxter’s Periodic Report on
Form 8-K dated February 20, 2025 for a reconciliation of these non-GAAP measures to the applicable measure
calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and for information about
why management believes that non-GAAP financial measures, when used in conjunction with the results
presented in accordance with GAAP and the company’s reconciliations to corresponding GAAP financial
measures, may enhance an investor’s overall understanding of the company’s past financial performance and
prospects for the future. Non-GAAP financial measures should be considered in addition to, and not as
substitutes for, information prepared in accordance with
GAAP.
For purposes of calculating performance under the company’s 2024 annual incentive plan, net sales were
calculated at budgeted exchange rates (as of January 1, 2024) and include net sales from discontinued
operations for all of 2024. This measure is referred to herein as Adjusted Net Sales Including Discontinued
Operations and was $15.2 billion for 2024.
For purposes of calculating performance under the company’s 2024 annual incentive plan, Adjusted EPS
includes adjusted EPS from discontinued operations for all of 2024
, less certain operational adjustments to the
extent that they were not included in the 2024 adjusted EPS target.
This measure is referred to herein as Further
Adjusted EPS Including Discontinued Operations and was $2.79 for 2024.
|
|
| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
10
|
Proxy Statement Highlights
|
|
|
|
For purposes of calculating performance under the company’s 2024 annual incentive plan, free cash flow
includes free cash flow from discontinued operations for all of 2024,
less certain income tax payments that were
disbursed in the third quarter of 2024 and were included in discontinued operations related to the company's
BPS business, which was sold in 2023,
and certain operational adjustments to the extent that they were not
included in the 2024 free cash flow target.
This measure is referred to herein as Adjusted Free Cash Flow
Including Discontinued Operations and was $501 million for 2024.
See “
Executive Compensation—Compensation Discussion and Analysis—Elements of Executive Compensation
—Annual Incentive Plan—Determination of 2024 Annual Incentive Plan Payouts
” for reconciliations of Adjusted
Net Sales Including Discontinued Operations, Further Adjusted EPS Including Discontinued Operations and
Adjusted Free Cash Flow Including Discontinued Operations to the applicable measures calculated in
accordance with GAAP.
Compensation Design for 2024
The
table below summarizes Baxter’s consistent compensation design for 2024 and highlights design and
payouts that are linked to Baxter’s pay-for-performance philosophy. More detail regarding
plan design
can be
found in the “Executive Compensation—Compensation Discussion and Analysis”
section of the
proxy statement
.
% of Total Target Direct 2024 Compensation
Salary
(Cash)
Long-Term
Incentive
(Stock)
Annual
Incentive
(Cash)
NA
Provides a base level
of competitive
compensation to
attract and retain
executive talent
Increases to align
to market only for
CFO and two other
NEOs
8%
15%
14%
78% of
Compensation
2024:
50% PSUs / 50%
RSUs
16%
69% of
Compensation
2024:
CFO:
50% PSUs/ 50% RSUs
Other NEOs:
100% RSUs
Payouts between
94% - 113% of
target, tied to
business and
individual
performance
PSU payout for
cycle ending in
2024 for the CEO
and CFO was 0%
of target
Used to motivate and
reward executives for
company and
individual
performance
Used to motivate and
reward an executive's
contributions to
achieving the
company's long-term
objectives and
increasing
stockholder value
50%
Adj. Net
Sales
25%
Adj. EPS
25%
Free Cash
Flow
Individual
Performance
Assessment
0%-125%
1
RSUs
PSUs
2
100% Relative Total
Shareholder Return (TSR)
CEO
Other NEOs (Average)
Results
Objective
Metric
1
Applies to members of the Executive Operating Committee (including all NEOs)
2
Applies only to the CEO and Chief Financial Officer (CFO)
|
investor.baxter.com
|
|
Proxy Statement Highlights
|
11
|
|
|
|
Pay-Per-Performance
Alignment
Baxter’s short- and long-term incentive plans consist of metrics that the company believes are among the most
critical to drive sustainable financial performance. They provide a balance among focusing on organic growth,
profitability and the financial health of day-to-day operations.
|
Metric
|
Rationale
|
Financial Results
(as measured for incentive plan purposes and
including discontinued operations)
|
|
Annual Incentive Plan Metrics:
|
||
|
•
Adjusted Net
Sales
|
•
Most important metric in the annual incentive
plan, as it is assigned twice the weight (50%)
as the other two metrics, emphasizing the
importance of growing sales as the basis of
financial stability. For Messrs. Almeida and
Grade, Adjusted Net Sales is measured on a
company-wide basis, while for Ms. Knight
and Messrs. Sonig and Toth, it is measured
on a segment basis (Medical Products &
Therapies, Pharmaceuticals and Kidney
Care, respectively).
|
•
Company-Wide Performance: grew 1%
versus 2023, resulting in funding of 122% of
target
•
Medical Products & Therapies: grew 6%
versus 2023, resulting in funding of 115% of
target
•
Pharmaceuticals: grew 8% versus 2023,
resulting in funding of 149% of target
•
Kidney Care: grew 4% versus 2023,
resulting in funding of 183% of target
|
|
•
Adjusted EPS
|
•
Assigned 25% weight in the annual incentive
plan to recognize the importance of
profitability as a key investor metric. For all
NEOs, Adjusted EPS is measured on a
company-wide basis.
|
•
Decreased 4% versus 2023, resulting in
funding of 86% of target
|
|
•
Adjusted Free
Cash Flow
|
•
Assigned 25% weight in the annual incentive
plan to recognize the importance of having
cash to fund growth and pay financial
obligations. For all NEOs, Adjusted Free
Cash Flow is measured on a company-wide
basis.
|
•
Decreased 53% versus 2023, resulting in
funding of 53% of target
|
|
Long-term Incentive Metrics: (each equally weighted, with a three-year performance period, taking into account
Baxter's long-range plan)
1
|
||
|
•
Return on
Invested Capital
(ROIC)
|
•
Recognizes the importance of efficient use of
invested capital to generate sustainable long-
term value.
|
•
ROIC during the 2022-2024 performance
period was 6.5% (below threshold, resulting
in 0% payout in respect of achievement
against the ROIC metric)
|
|
•
Net Sales
Compound
Annual Growth
Rate (CAGR)
|
•
Recognizes the importance of sales growth
over a longer period of time to reinforce
stability and future growth.
|
•
Net Sales CAGR during the 2022-2024
performance period was 2.6% (below
threshold, resulting in 0% payout in respect
of achievement against the net sales CAGR
metric)
|
|
•
Relative TSR
|
•
Recognizes the importance of creating
stockholder value.
|
•
Relative TSR from the 2022-2024
performance period was the 6.3
rd
percent
rank (below threshold, resulting in 0% payout
in respect of achievement against the
relative TSR metric)
|
|
1
For PSUs granted in 2024, which were granted solely to the CEO and CFO, relative TSR is the sole metric.
|
||
|
|
| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
12
|
Proxy Statement Highlights
|
|
|
|
|
|
Executives to Retain Significant Stock
What am I voting on?
If properly presented, you will be asked to vote on a stockholder proposal that
asks the Board to adopt a policy requiring NEOs to retain a significant percentage
of stock acquired through equity pay programs until reaching normal retirement
age (an age of at least 60) and to report to stockholders regarding the policy in the
company’s next annual proxy statement.
What is the Board’s recommendation?
The Board of Directors recommends a vote
AGAINST
the stockholder
proposal.
Where can I find more information?
Concise supporting information is presented below.
|
|
|
|
See “Stockholder Proposal—Proposal 4—Executives to Retain
Significant Stock” for additional information.
|
||
|
Items to consider when evaluating this proposal:
|
|
•
Baxter’s current stock ownership guidelines already require significant stock retention by executives
:
Baxter’s CEO is required to achieve ownership of Baxter common stock valued at a minimum of six times
annual base salary within five years of appointment. Each other executive officer is required to achieve
ownership of Baxter common stock valued at a minimum of four times annual base salary within five years of
becoming an executive officer.
|
|
•
The company’s existing stock ownership guidelines are accomplishing their intended purpose
: As of
December 31, 2024, each of the NEOs who is still serving as an executive officer with the company had met
his or her ownership requirements or, using reasonable assumptions, was on track to achieve his or her stock
ownership objective within the prescribed time frame.
|
|
•
The proposal fails to strike a reasonable balance between aligning the interests of stockholders and
management and motivating desired management behavior
: The Board believes that Baxter’s emphasis
on long-term incentive grants motivates executives to drive the long-term performance of the company and
aligns their long-term interests with those of stockholders. However, Baxter also recognizes the fact that
executives need some flexibility to manage their own financial affairs, which may, from time to time, include
the sale of Baxter stock held as a result of the vesting of these equity grants that exceed the ownership
guidelines.
|
|
•
The proposal would put Baxter at a competitive disadvantage for attracting and retaining top
executive talent and would create an unnecessary administrative burden on Baxter without
commensurate value to stockholders
:
Requiring NEOs to hold additional shares until retirement is more
stringent than current market practice and would be unnecessarily burdensome to the executives, which, as a
result, may impact Baxter’s ability to attract and retain top executive talent. Further, the NEOs often change
year-to-year and this proposal may place different stock retention requirements on certain executives every
year, which would be difficult for Baxter to administer. Instead, the company believes its current robust stock
ownership requirements, which are consistent with market practice and apply to all of Baxter’s executive and
corporate officers, provide meaningful stock ownership and retention requirements at a lower administrative
cost for the company.
|
|
•
The majority of Baxter’s stockholders voted against a similar proposal last year:
Baxter’s stockholders
considered, and rejected, a similar proposal in 2023 and 2024, with support for the proposal declining year
over year. This indicates that Baxter’s stockholders remain generally supportive of the Board’s position on this
proposal and current executive compensation structure.
|
|
investor.baxter.com
|
|
Corporate Governance at Baxter International Inc.
|
13
|
|
|
|
Corporate Governance at Baxter International Inc.
|
|
|
|||
|
|
Election of Directors
The Board has nominated ten director nominees for election for a term of one
year.
The Board of Directors recommends a vote
FOR
the election of each of
the director nominees named below under “–Nominees for Election as
Directors.”
|
||
In uncontested elections, Baxter’s Bylaws require each director to be elected by a majority of the votes cast with
respect to his or her election; that is, the number of votes cast “for” a director's election must exceed the number
of votes cast "against" his or her election. Abstentions and broker non-votes are not considered votes cast and
therefore have no effect on the election of directors. In a contested election (a situation in which the number of
nominees exceeds the number of directors to be elected), the standard for election of directors will be a plurality
of the shares represented in person or by proxy and entitled to vote on the election of
directors.
All of the nominees have indicated their willingness to serve if elected, but if any no
minee should be unable or
unwilling to stand for election, proxies may be voted for a substitute nominee designated by the Board. The
election of directors at the Annual Meeting is an uncontested election, which means each director nominee must
receive a majority of the votes cast with respect to his or her election in order to be reelected to the Board.
Unless proxy cards are marked otherwise, the individuals named as proxies intend to vote the shares
represented by proxy in favor of all of the Board’s nominees.
Under the company’s Bylaws, any incumbent director who fails to be reelected at the Annual Meeting because he
or she does not receive the required majority support must offer his or her resignation to the Board. The NCGPP
Committee will then make a recommendation to the Board on whether to accept or reject the resignation, or
whether other action should be taken. The Board will consider the NCGPP Committee’s recommendation when
deciding whether to accept or reject the tendered resignation and publicly disclose its decision and the rationale
behind it within 90 days from the date that the election results are certified. A director who offers his or her
resignation may not participate in the Board’s or the NCGPP Committee’s discussions or decision.
Set forth below under “–Nominees for Election as Directors” is information concerning each of the nominees for
election.
|
|
| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
14
|
Corporate Governance at Baxter International Inc.
|
|
|
|
Nominees for Election as Directors
William A. Ampofo II
Independent Director
Age 51
Director since 2023
Committees: Quality and Regulatory Compliance and
Operating
Biography
Mr. Ampofo has worked for Boeing Company (Boeing),
a leading global aerospace company, since 2016 and
currently serves as Chair, Supply Chain Operations
Council and Senior Vice President, Parts &
Distribution Services and Supply Chain function for
Boeing Global Services. Prior to joining Boeing, he
spent 22 years at United Technologies Corporation
(which later merged with Raytheon Company to form
Raytheon Technologies), a multinational conglomerate
which researched, developed, and manufactured
products, including aircraft engines, aerospace
systems, among other industrial products, working in
roles of increasing responsibility related to finance, IT,
corporate strategy and operations. Mr. Ampofo
currently serves as a member of the board of trustees
of The Episcopal School of Dallas.
Key Attributes, Experience and Skills
Extensive experience leading global organizations as
a result of his role as Chair, Supply Chain Operations
Council and Senior Vice President, Parts &
Distribution Services and Supply Chain function at
Boeing and his 22 years of finance, operational, IT
and corporate strategy experience at United
Technologies Corporation.
|
Jeffrey A. Craig
Independent Director
Age 64
Director since 2024
Committees: Audit
Biography
Mr. Craig is the former Chief Executive Officer and
President of Meritor, Inc. (Meritor), a global supplier of
drivetrain, mobility, braking and aftermarket solutions
for commercial vehicles, a position he held from 2015
until 2021. Prior to this, from 2014 to 2015, Mr. Craig
was President and Chief Operating Officer, with
oversight of Meritor’s business segments -
Commercial Truck & Industrial and Aftermarket &
Trailer. Prior to taking on the role of President and
Chief Operating Officer, Mr. Craig was Senior Vice
President and President of Meritor’s Commercial
Truck & Industrial segment from 2013 to 2014. He
served as Senior Vice President and Chief Financial
Officer at Meritor from 2009 to 2013 and held various
leadership positions at Meritor since 2006. Before
joining Meritor, Mr. Craig served in roles of increasing
responsibility at General Motors Acceptance
Corporation (GMAC), including as President and Chief
Executive Officer of GMAC's Commercial Finance
organization and President and Chief Executive
Officer of GMAC’s Business Credit division. He began
his career at Deloitte & Touche, where he served as
audit partner. Mr. Craig currently serves as a director
of Arcosa, Inc. and Hyliion Holdings Corp.
Key Attributes, Experience and Skills
Extensive experience leading global organizations
resulting from his various leadership roles with Meritor
and GMAC where he also gained substantial financial,
risk management, transactional, international,
operational and human capital management
experience. Further, Mr. Craig also gained significant
experience during his tenure as an audit partner at
Deloitte & Touche and through his service as Chief
Financial Officer at Meritor.
|
|
investor.baxter.com
|
|
Corporate Governance at Baxter International Inc.
|
15
|
|
|
|
Patricia B. Morrison
Independent Director
Age 65
Director since 2019
Committees: Audit, Nominating, Corporate
Governance and Public Policy and Operating
Biography
From 2009 to 2018, Ms. Morrison served as Executive
Vice President, Customer Support Services and Chief
Information Officer (CIO), of Cardinal Health Inc.
(Cardinal), a global, integrated healthcare services
and products company. At Cardinal, she led global IT
operations, which included the transformation of
multiple business segments, acquisition integration
and digital strategy. Prior to Cardinal, Ms. Morrison
was the Chief Executive Officer of Mainstay Partners,
a technology advisory firm, from 2008 to 2009. She
previously served as CIO of both Motorola, Inc. and
Office Depot, Inc. and held senior-level IT positions at
General Electric Company, PepsiCo, Inc., The Procter
& Gamble Company and The Quaker Oats Company.
She previously served as a director of Splunk Inc. and
Virtusa Corporation.
Key Attributes, Experience and Skills
Extensive experience across diverse global industries
overseeing strategic, operational and financial aspects
of IT, including cybersecurity, global IT master
planning, digital transformation and human capital
matters, including in the medical products industry, as
a result of her experience leading the IT function at
large, multinational organizations.
|
Stephen N. Oesterle, M.D.
I
ndependent Director
Age 74
Director since 2017
Committees: Nominating, Corporate Governance and
Public Policy and Quality and Regulatory Compliance
Biography
Dr. Oesterle is a consultant, advising private equity
and operating companies in the healthcare industry.
From 2002 to 2015, he was a member of the
Executive Committee of Medtronic, a global medical
technology, services and solutions company, serving
as Medtronic’s Senior Vice President, Medicine and
Technology. Previously, he served as an Associate
Professor of Medicine and Director of Invasive
Cardiology Services at each of Massachusetts
General Hospital (1998 to 2002), Stanford University
Medical Center (1992 to 1998) and Georgetown
University Medical Center (1991 to 1992). Dr. Oesterle
currently serves as a director of Paragon 28 and Peijia
Medical Ltd. He previously served as a director of
Sigilon Therapeutics, Inc., Montes Archimedes
Acquisition Corp. and REVA Medical, Inc.
Key Attributes, Experience and Skills
Extensive experience in the medical products and
healthcare industries with a strong scientific and
medical background and significant experience
advising on strategic transactions. Substantial
knowledge of the medical device industry and
extensive medical and leadership experience as a
result of his role as Senior Vice President, Medicine
and Technology at Medtronic and as a director at
various healthcare companies as well as positions
held at Harvard Medical School, Stanford University
Medical Center and other leading hospitals.
|
|
|
| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
16
|
Corporate Governance at Baxter International Inc.
|
|
|
|
Stephen H. Rusckowski
Independent Director
Age 67
Director since 2023
Committees: Compensation and Human Capital,
Quality and Regulatory Compliance and Operating
Biography
Mr. Rusckowski is the former Chief Executive Officer
and President of Quest Diagnostics, Inc. (Quest), a
leading provider of diagnostic information services, a
position he held from 2012 until 2022. He also served
as Chair of the Board of Quest from January 2017
through March 2023. Prior to joining Quest, he served
as the Chief Executive Officer of Philips Healthcare
(Philips), a health technology company focused on
improving people’s health across the health
continuum, and a member of the Board of
Management of Royal Philips Electronics. Earlier in
his career, he held roles of increasing responsibility at
Hewlett-Packard Company, a manufacturer of
software and computer services, and Procter &
Gamble Company, a leading company that produces
and sells products for the home, health and personal
care. Mr. Rusckowski currently serves on the
supervisory board of Qiagen Inc. and as a director of
Tenet Healthcare Corporation and previously served
as a director of MedQuist, Inc. and Quest.
Key Attributes, Experience and Skills
Extensive leadership experience in the healthcare
industry, including in strategic planning, international
operations and strategic transactions (including with
the build out of digital health capabilities) with
multinational corporations.
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Nancy M. Schlichting
Lead Independent Director
Age 70
Director since 2021
Committees: Compensation and Human Capital and
Quality and Regulatory Compliance
Biography
Ms. Schlichting became Baxter’s Lead Independent
Director effective February 3, 2025. She joined the
Board in 2021 following Baxter’s acquisition of Hill-Rom
Holdings, Inc. (Hillrom), where she had previously
served as a director and Chair of its Compensation and
Management Development Committee. Ms. Schlichting
is the retired President and Chief Executive Officer of
Henry Ford Health System (HFHS) in Detroit, Michigan,
a non-profit healthcare organization, serving in this role
from June 2003 to January 2017. She joined HFHS in
1998 as Senior Vice President and Chief Administrative
Officer and served as Executive Vice President and
Chief Operating Officer from 1999 to 2003 and as
President and Chief Executive Officer of Henry Ford
Hospital from 2001 to 2003. She currently serves as a
director of Encompass Health, Inc. and Walgreens
Boots Alliance, and as a trustee of the Duke University
and as the chair of the Duke University Health System
Board. She previously served as a director of Pear
Therapeutics, Inc. and as a trustee of the Kresge
Foundation.
Key Attributes, Experience and Skills
Extensive healthcare administration (including human
capital management) experience that spans more than
35 years in senior-level executive roles. This
experience includes leading HFHS through a financial
turnaround and leading various customer service,
quality and human capital management initiatives.
Extensive expertise in quality and regulatory
management, mergers and acquisitions, including
public company mergers and acquisitions such as the
global mergers of Baxter and Hillrom and Walgreens
with Alliance Boots.
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Brent Shafer
Chair and Interim Chief Executive Officer of Baxter
International, Inc.
Age 67
Director since 2022
Committees: None
Biography
Mr. Shafer became Baxter’s Chair of the Board and
Interim CEO on February 3, 2025, in connection with
Mr. Almeida's departure. He is the former Chair and
Chief Executive Officer of Cerner Corporation
(Cerner), a leading provider of various health
information technologies, ranging from medical
devices to electronic health records to hardware,
serving in this role from 2018 to 2021. Prior to Cerner,
Mr. Shafer held a number of roles at Philips, including
Chief Executive Officer of Philips North America. Mr.
Shafer was also the Chief Executive Officer of Philips
Home Healthcare Solution business. Before joining
Philips, Mr. Shafer was Vice President and General
Manager of Hillrom’s Patient Care Environment
Division and worked at GE Medical Systems where he
served in key positions in sales, marketing, and
general management. Mr. Shafer has also held senior
roles at Hewlett Packard’s Medical Products Group
and Johnson & Johnson. Mr. Shafer currently serves
as a director of Tactile Systems Technology, Inc. and
Veracyte, Inc.
Key Attributes, Experience and Skills
Substantial knowledge of the health IT industry and
extensive experience leading, operating and
transforming global corporations (including with the
build out of digital health capabilities) as a result of his
roles as Chair and Chief Executive Officer at Cerner
and key roles at Philips and in other senior
management roles at other medical device companies
(including Hillrom).
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Cathy R. Smith
Independent Director
Age 61
Director since 2017
Committees: Audit and Nominating, Corporate
Governance and Public Policy
Biography
Ms. Smith was recently appointed as Executive Vice
President and Chief Financial Officer at Starbucks
Corporation (Starbucks), a global beverage company.
Previously she served as Chief Financial Officer of
Nordstrom, Inc. (Nordstrom), a luxury department store
chain, from May 2023 to March 2025. Prior to
Nordstrom, she served as Chief Financial and
Administrative Officer of Bright Health, a diversified
consumer-focused healthcare company, from January
2020 to May 2023. Prior to Bright Health, Ms. Smith
was Executive Vice President and Chief Financial
Officer at Target Corporation (Target) from September
2015 to November 2019. Prior to joining Target in 2015,
Ms. Smith served as Executive Vice President and
Chief Financial Officer at Express Scripts Holding
Company (Express Scripts), an independent pharmacy
benefits management company, from 2014 to 2015, and
at Walmart International (Walmart), a division of
Walmart Stores Inc., from 2010 to 2014. Earlier in her
career, she served as Chief Financial Officer at
GameStop. Ms. Smith currently serves as a director of
PPG Industries, Inc.
Key Attributes, Experience and Skills
Significant financial expertise and corporate leadership
experience as a result of her senior positions held at
Starbucks, Nordstrom, Bright Health, Target, Express
Scripts and Walmart. This experience includes work
helping to oversee cybersecurity incident response and
various strategic transactions as well as human capital
management expertise as the Chief Administrative
Officer at Bright Health.
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Amy A. Wendell
Independent Director
Age 64
Director since 2019
Committees: Compensation and Human Capital,
Quality and Regulatory Compliance and Operating
Biography
Ms. Wendell served as Senior Advisor at Perella
Weinberg Partners L.P., a global financial services
firm, from January 2016 to May 2019 where she
consulted on strategy, corporate finance and investing
practices in the healthcare industry. From 2015 to
September 2018, Ms. Wendell served as a Senior
Advisor at McKinsey & Company (McKinsey), a
management consulting firm, in its strategy and
corporate finance practice and also served as a
member of McKinsey’s Transactions Advisory Board.
She previously served as Senior Vice President of
Strategy and Business Development and Licensing at
Covidien plc (Covidien) from 2006 to 2015, where she
led the company’s strategy and portfolio management
initiatives and managed business development
activities. From 1986 to 2015, Ms. Wendell held roles
of increasing responsibility at Covidien (including its
predecessors, Tyco International plc and Kendall
Healthcare Products Company), from engineering to
product management and business development. Ms.
Wendell currently serves as a director of Axogen, Inc.,
Hologic, Inc. and Solventum Corporation. Ms. Wendell
previously served as a director of Por Cristo, a non-
profit charitable medical service organization involved
in healthcare work for at-risk women and children in
Latin America.
Key Attributes, Experience and Skills
Extensive expertise in the healthcare sector in the
areas of global business development and licensing,
portfolio management, mergers and acquisitions,
resource allocation and identifying new market
opportunities, as well as significant restructuring and
integration experience, including as a result of her
roles at Covidien and its predecessors.
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David S. Wilkes, M.D.
Independent Director
Age 68
Director since 2021
Committees: Nominating, Corporate Governance and
Public Policy and Quality and Regulatory Compliance
Biography
Dr. Wilkes served as Dean of the University of Virginia
School of Medicine from 2015 to 2021 and currently
serves as Dean Emeritus. He previously served in
positions of increasing responsibility at Indiana
University School of Medicine, most recently as the
Executive Associate Director for Research Affairs and
as the August M. Watanabe Professor of Medical
Research between 2009 and 2015. Dr. Wilkes is the co-
founder of ImmuneWorks Inc. (ImmuneWorks), a
biotechnology start-up company, and has served as its
Chief Scientific Officer since 2005. Since 2006, he has
served as the National Director of the Harold Amos
Medical Faculty Development Program of the Robert
Wood Johnson Foundation. Dr. Wilkes is a military
veteran, having served three years as a major in the
U.S. Air Force Medical Corps. In 2020, he was elected
to the National Academy of Medicine. Dr. Wilkes
previously served as a director of Syneos Health.
Key Attributes, Experience and Skills
Extensive experience with, and medical and scientific
expertise and knowledge of, the healthcare industry and
its providers as a result of his positions with the
University of Virginia School of Medicine and the
Indiana University School of Medicine, as well as
related leadership experience, including in connection
with in forming and advising ImmuneWorks.
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Board of Directors
Director Independence
Baxter’s Corporate Governance Guidelines, as most recently amended in November 2024, require that the Board
be composed of a majority of directors who meet the criteria for “independence” established by the rules of the
New York Stock Exchange (NYSE). To be considered independent, the Board must affirmatively determine that
the director does not have any direct or indirect material relationship with Baxter (either directly or as a partner,
stockholder or officer of an organization that has a relationship with Baxter) and, solely with regard to CHC
Committee members, consider all relevant factors that could impair his or her ability to make independent
judgments about executive compensation.
In making its independence determinations, the Board considers transactions, relationships and arrangements
between Baxter and entities with which its directors are associated as a partner, stockholder or officer or in which
they have other material relationships. When these transactions, relationships and arrangements have existed,
they are reviewed in accordance with Baxter’s Corporate Governance Guidelines, as described in below in “—
Board Responsibilities—Certain Relationships and Related Person Transactions”.
After careful consideration, the Board has determined that each of the following directors standing for election
satisfy Baxter’s independence standards and the NYSE listing standards for independence: William A. Ampofo II;
Jeffrey A. Craig; Patricia B. Morrison; Stephen N. Oesterle, M.D.; Stephen H. Rusckowski; Nancy M. Schlichting;
Cathy R. Smith; Amy A. Wendell; and David S. Wilkes, M.D.
Director Attendance
In 2024, the Board held nine meetings. Each director attended at least 75% of the total number of Board
meetings and meetings of the committees on which he or she served as of the related meeting date. Baxter’s
Corporate Governance Guidelines set forth the company’s expectation that directors regularly attend meetings of
the Board and the committees on which he or she serves as well as the annual meeting of stockholders. In 2024,
all of the directors then in office participated in the 2024 annual meeting.
Director Tenure, Refreshment and Composition
The Board
recognizes the importance of periodic refreshment and maintaining an appropriate balance of tenure,
experience and perspectives on the Board. Through thoughtful refreshment, the Board has maintained an
appropriate mix of new and longer-tenured directors and onboarded new directors consistent with the strategic
and operational direction of the company. This mix provides the Board with the benefit of both new perspectives
and insights from directors who have familiarity with, and knowledge of, the organization and governance of the
company and the issues confronting it. The directors standing for election have an average tenure of 3.8 years
as of March 13, 2025.
To enable appropriate refreshment, the NCGPP Committee and the Board regularly evaluate the company’s
evolving needs and add new skills, qualifications and experience to the Board as necessary so that the Board
remains well positioned to help address the emerging risks, trends and opportunities facing the company.
Notably, as a result of this process, five directors have been appointed in the past three years.
The Corporate Governance Guidelines also provide that a director who has reached the age of 75 must retire
from the Board effective at the end of his or her then current term, subject to certain exceptions (such as during a
CEO succession or during a material merger, acquisition or disposition). The Board has not granted any waivers
with respect to this mandatory retirement age since its adoption.
The Board believes that having directors with a robust set of skills, backgrounds, viewpoints, perspectives and
experiences positively contributes to fulsome discussions at Board meetings and helps guide oversight of
Baxter’s long-term strategy. Although the Board does not have a formal diversity policy, diversity of background,
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global perspectives, skills and experience are relevant factors in the director selection process consistent with
the Corporate Governance Guidelines and the Board’s efforts to identify the best candidates for Board service
and to maintain a Board with a complementary set of experiences and backgrounds that is well suited to oversee
Baxter and its strategic initiatives and imperatives.
Additionally, as discussed below, the Board conducts an annual assessment of itself and its committees to help
identify potential gaps or areas that the Board may look to augment in light of the company’s strategies and
initiatives.
Director Qualifications
As discussed below in “—Nomination of Directors,” directors are selected on the basis of the criteria set forth in
Baxter’s Corporate Governance Guidelines. The Board believes that the skills, experience, expertise and
knowledge collectively represented on the Board by our director nominees allow the Board to continue to lead
Baxter in a manner that serves the best interests of its stockholders. Key attributes, experience and skills for
each of the company’s director nominees are included above in their biographies and under “Proxy Statement
Highlights—Board Qualifications, Experiences and Backgrounds.”
Director Overboarding
The Board values the experience directors bring from other boards on which they serve but recognizes that those
boards may also present demands on a director’s time and availability and may present potential conflicts of
interest.
Baxter’s Corporate Governance Guidelines limit the maximum number of public company boards of directors on
which a director may serve to two (inclusive of the Board) for directors who are employed full-time or four
(inclusive of the Board) for all other directors. Any director who is no longer in compliance with these limitations is
required to make good faith efforts to reduce the number of public company boards on which he or she serves in
order to comply prior to the time he or she is eligible to be nominated for reelection. Directors are required to
notify the Chair of the Board, the Lead Independent Director and the chair of the NCGPP Committee prior to
accepting any invitation to serve on the board, audit committee or compensation committee of any other public or
private company or to serve in a leadership role on the board or a board committee of any other public or private
company (including the chair or lead independent director of any board or chair of a board committee). This prior
notice allows the Board to consider whether such service will interfere with the director’s service on the Board,
impact the director’s independence or create an actual or apparent conflict of interest or other issues.
Further
,
the NCGPP Committee evaluates each director's time commitments in connection with the annual nomination of
directors, including service on other public company boards and committee memberships, as well as other
significant commitments involving affiliations with other for-profit businesses, non-profit entities or governmental
units. As of March 13, 2025, all of Baxter’s directors were in compliance with Baxter’s overboarding policy, with
the exception of Mr. Shafer who was recently appointed as Interim CEO. After taking into account Mr. Shafer's
time commitments, including his service on two other public company boards (which does not currently include
any board or committee leadership positions), the NCGPP Committee determined that Mr. Shafer's continued
service on those outside boards would not impair his ability to serve effectively on the Board or as Interim CEO,
and that it was advisable and appropriate to grant Mr. Shafer a waiver under the company's overboarding policy
with respect to such service.
Nomination of Directors
The NCGPP Committee considers candidates for director to the Board recommended by stockholders, members
of the Board and management in accordance with the policies outlined in Baxter’s Bylaws, Corporate
Governance Guidelines and NCGPP Committee Charter.
Additionally, in 2024, the Board retained an independent search firm to assist it in identifying and evaluating
potential director candidates, which helped lead to the appointment of Mr. Jeffrey Craig
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The NCGPP Committee evaluates all candidates for director in the same manner regardless of the source of the
recommendation. Stockholder recommendations for candidates for director must include the same information
required by Baxter’s Bylaws for director nominations by stockholders and be sent to the
Corporate Secretary
,
Baxter International Inc., One Baxter Parkway, Deerfield, Illinois 60015.
Baxter’s Corporate Governance Guidelines provide that director nominees selected by the NCGPP Committee
must:
•
possess fundamental qualities of intelligence, honesty, perceptiveness, good judgment, maturity, high
ethics and standards, integrity, fairness and responsibility;
•
have a genuine interest in the company and recognition that, as a member of the Board, each director is
accountable to all stockholders of the company, not to any particular interest group;
•
have a background that demonstrates an understanding of business and financial affairs and the
complexities of a large, multifaceted, global business, governmental or educational organization;
•
be or have been in a senior position in a complex organization such as a corporation, university or major
unit of government or a large not-for-profit institution;
•
have no conflict of interest or legal impediment that would interfere with the duty of loyalty owed to the
company and its stockholders;
•
have the ability and be willing to spend the time required to function effectively as a director;
•
be compatible and able to work well with other directors and executives in a team effort with a view to a
long-term relationship with the company as a director; and
•
have independent opinions and be willing to state them in a constructive manner.
If a vacancy occurs or is expected to occur on the Board for any reason and the Board desires to fill the position,
the Board initiates a process to identify potential candidates, such as by engaging an independent search firm.
Once a candidate has been identified, the NCGPP Committee (on behalf of the Board) and, where applicable,
the independent search firm will engage in a process that includes an examination of the candidate's business
background and education, research on the individual’s accomplishments and qualifications, interviews and
reference checking. If this process generates a positive indication, the Lead Independent Director, members of
the NCGPP Committee and the Chair of the Board will meet with the candidate and then confer with each other
regarding the candidate. After consideration of these background screens and interviews (possibly with multiple
candidates), the NCGPP Committee may then recommend the individual to the full Board for further evaluation,
and ultimately, election. Subject to formal action by the Board, the Chair of the Board is then authorized to extend
an offer to the individual candidate to join the Board on a specified date or nominate the candidate for election at
the next annual meeting of stockholders
.
In addition to making recommendations to the Board, eligible stockholders are able to nominate a candidate for
election to the Board by complying with the proxy access or advance notice procedures set forth in Baxter’s
Bylaws and by complying with Rule 14a-19 under the Securities Exchange Act of 1934, as amended (Exchange
Act). For more information about these processes, see “General Information—Other Information—Nominations of
Individuals for Election as Directors at the 2026 Annual Meeting.”
Director Orientation and Continuing Education
The NCGPP Committee has developed and oversees an orientation program designed to familiarize new
directors with Baxter’s businesses and strategic actions, key policies and practices, principal officers and
management structure and auditing and compliance processes. In addition, the NCGPP Committee regularly
monitors director continuing education participation to help the NCGPP Committee assess the overall skill set of
the Board.
Director education is vital to the ability of directors to fulfill their roles. The Board encourages directors to
participate in external continuing director education programs, and Baxter funds and reimburses directors for
related expenses. Continuing director education is also provided during Board and committee meetings and
other Board discussions. Among other topics, during 2024, the Board received training or related background
materials from outside advisers and management on numerous subjects, including on the Board’s fiduciary
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duties as they relate to Baxter’s strategic actions, cybersecurity, artificial intelligence, the company's operations
and various corporate responsibility matters.
Annual Board and Committee Evaluation
Each year, the NCGPP Committee oversees a review of the structure and composition of the Board and each
committee thereof. This review is conducted to help ensure that the Board and each Board committee continues
to function effectively in light of the company’s strategic objectives and initiatives, the Corporate Governance
Guidelines and each committee’s charter. The NCGPP Committee periodically retains one or more external
advisors to assist in the oversight of this annual review process, typically every two to three years, or as
circumstances warrant it. As part of this process (whether conducted as a self-assessment or with the assistance
of an external advisor), each independent director provides his or her views on the performance and
effectiveness of the Board and the committees on which he or she serves. Each independent director is also
asked to provide commentary on, and any suggested revisions to, the charters for the committees on which he or
she serves in response to any changes in the company’s strategic direction, emerging risks, regulatory
developments, committee composition or otherwise. The Board and each committee reviews and discusses the
collective feedback from this process. The Board also identifies any potential skill or experience gaps, if any, or
changes that the Board would like to make, such as by rotating existing directors off the Board or refreshing
committee assignments or responsibilities. The NCGPP Committee also utilizes the results of the Board
evaluation process in identifying the characteristics, skills and experience desired of candidates for election to
the Board.
This process helped result in the appointment of Jeffrey Craig to the Board in September 2024.
Communicating with the Board of Directors
Stockholders and other interested parties may contact any of Baxter’s directors, including the Lead Independent
Director or the non-management directors as a group, by writing a letter to Baxter Board of Directors, c/o
Corporate Secretary, Baxter International Inc., One Baxter Parkway, Deerfield, Illinois 60015, or by sending an e-
mail to boardofdirectors@baxter.com. Baxter’s Corporate Secretary will forward communications directly to the
Lead Independent Director,
as appropriate
, unless a different director is specified.
See “—Other Corporate Governance Information—Stockholder Engagement” below for a discussion of the
company’s stockholder outreach efforts.
Other Corporate Governance Information
Corporate Governance Guidelines
The Board has long adhered to corporate governance principles designed to promote effective corporate
governance. Since 1995, the Board has had in place a set of Corporate Governance Guidelines reflecting these
principles. The NCGPP Committee reviews, at least annually, the adequacy of Baxter’s Corporate Governance
Guidelines (including with respect to related NYSE requirements), and recommends any proposed changes to
the Board. Baxter’s current Corporate Governance Guidelines, most recently revised in November 2024, cover
topics including director qualifications, mandatory retirement age, overboarding policy, director responsibilities
(including those of the Lead Independent Director), the company’s policy regarding the anticipated future
separation of the CEO and Chair, director access to management and independent advisors, director
compensation, director orientation and continuing education, succession planning and the annual evaluations of
the Board and its committees. The November 2024 amendments to the Corporate Governance Guidelines
clarified that, at least annually, the NCGPP Committee evaluates director time commitments (including service on
other public company boards, affiliations with other for profit businesses, non-profit entities and governmental
units), and also clarified that portions of certain Board and Board committee meetings will be devoted to director
education (including on matters regarding the company's industry, business operations and important legal and
regulatory matters). Further, consistent with the company's Bylaws, the Corporate Governance Guidelines state
that the company's stockholders may recommend nominees for consideration by the NCGPP Committee by
submitting the names and required supporting information to the company's Corporate Secretary and that
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director candidates will be evaluated in the same manner regardless of the source of the recommendation.
Baxter’s Corporate Governance Guidelines are available on Baxter’s website at www.baxter.com under “Our
Story—Our Governance—Corporate Governance Matters—Corporate Governance Guidelines.”
Stockholder Engagement
The company is committed to engaging in continuing dialogue with its stockholders on corporate governance,
executive compensation, corporate responsibility and other matters of importance, including management and
Board succession planning. Management is primarily responsible for stockholder communications and
engagement, and provides regular updates to the Board on topics or concerns raised by stockholders, with
certain directors attending stockholder meetings when appropriate. The Board considers this feedback as well as
the interests of all stakeholders when overseeing company strategy, policies and practices (including with respect
to corporate responsibility matters) and designing or evaluating executive compensation programs.
After completion of the 2024 annual meeting and through early 2025, select directors (including Mr. Shafer and
Ms. Schlichting) and select members of management met with stockholders representing approximately 30% of
Baxter’s outstanding shares (calculated as of December 31, 2024) as part of the company’s annual outreach
program and in response to inbound inquires. These discussions followed an outreach to top Baxter investors
representing over 60% of Baxter’s outstanding shares (calculated as of December 31, 2024). These investors
included institutional investors, hedge funds, mutual funds and public pension funds. Topics covered in these
discussions included Baxter’s strategy and performance (including the separation of the Kidney Care business),
corporate governance matters (including Board composition, management succession planning and the 2024
stockholder proposal), the Board’s leadership structure (including the ongoing CEO search), executive
compensation matters (including the 2024 Say on Pay vote and related considerations) and corporate
responsibility initiatives. Commentary from these discussions was shared with the Board and informed the
company’s position on the stockholder proposal to be voted on at the Annual Meeting and various company
disclosures, including ones in the proxy statement regarding the Board’s oversight of the company’s strategy and
performance, management and Board succession planning, governance policies, corporate responsibility matters
and matters considered by the CHC Committee when reviewing executive pay.
Board Responsibilities
Code of Conduct
Baxter has adopted a Code of Conduct that applies to all members of the Board and all employees of the
company, including the CEO, CFO, Controller and other senior financial officers. Any amendment to, or waiver
from, a provision of the Code of Conduct that applies to the CEO, CFO, Controller or persons performing similar
functions will be disclosed on Baxter’s website, at www.baxter.com under “Our Story—Our Governance—
Corporate Governance Matters.” The Code of Conduct is available on Baxter’s website at www.baxter.com under
“Our Story—Our Governance—Corporate Governance Matters—Code of Conduct.” The full Board is responsible
for overseeing compliance with the Code of Conduct and regular training on the Code of Conduct is provided to
the Board and made available to employees, including senior management.
The Board’s Oversight of Risk
The Board maintains broad oversight over risk management, including with respect to the company’s strategic
objectives and the risks identified by the company’s Enterprise Risk Management (ERM) program. Baxter's ERM
program is designed to identify, assess and prioritize strategic, financial, operational, regulatory and compliance,
technological and reputational risks with the potential to have sustained impact on the company. While
management has day-to-day responsibility for assessing and managing the company’s risk exposure, the Board
and its committees provide active oversight in connection with those efforts. Management regularly reports to the
Board on global dynamics, challenges and opportunities facing the company and, at least annually, management
reports to the Board on the company’s ERM process and identified risks. The full Board also regularly oversees
other areas of potential risk, such as significant acquisitions and divestitures and management succession
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planning, as further described below. The Board consults with internal and external advisors, as needed, to
enable the Board to exercise its oversight responsibility for the company’s risk management processes. Further,
the Board and its committees receive updates and training from internal and external experts on topics that
pertain to relevant areas of risk management. The Board’s oversight of risk management is designed to support
the achievement of the company’s strategic and organizational objectives, improve long-term organizational
performance and enhance stockholder value.
The Board monitors key risks through review and discussion of related materials with company management and
by delegating certain risk oversight responsibilities to its committees. The Board delegates risk oversight
responsibility to its committees where it believes the committee’s purpose and subject matter responsibilities, as
set forth in each committee's charter, as well as the composition of the committee will support efficient and
effective oversight. More specifically, and in addition to cybersecurity incident oversight as described below, the
Audit Committee is charged with oversight of the process by which management assesses and manages
financial risk as well as the steps taken to monitor and control these exposures. The QRC Committee is charged
with oversight of Baxter’s quality and regulatory compliance programs (inclusive of the quality and regulatory
aspects of the company’s research and development programs). The NCGPP Committee is responsible for
overseeing and reviewing corporate governance matters (including director independence and Board
composition) and corporate actions related to corporate citizenship and public policy, including current and
emerging political issues. The CHC Committee oversees compensation policies and practices with respect to
both executive compensation and compensation generally as well as certain human capital management
matters. The full Board is kept abreast of risk oversight and other activities of its committees through reports of
the committee chairs to the full Board during Board meetings.
Cybersecurity
Oversight
In February 2024, the Board amended the charters of the Audit Committee and QRC Committee to realign
oversight over the company’s innovation strategy and cybersecurity to the full Board, as these responsibilities
now sit within the vertically integrated segments and are part of each segment's business strategies. The Board
oversees IT functions generally, including product related cybersecurity matters (which had previously been
subject to the oversight of the QRC Committee) as well as the company's use of artificial intelligence (whether
internally or in its products and services). The Audit Committee is responsible for the oversight of certain
significant cybersecurity incidents, including ones related to Baxter products and services, and, in the event of a
significant cybersecurity incident, receives related updates from management on those incidents. Consistent with
this oversight responsibility, the Audit Committee is responsible for reviewing proposed disclosures in connection
with any material cybersecurity incident consistent with the company's disclosure obligations under Item 1.05 of
Form 8-K. The full Board receives periodic updates on IT and cybersecurity matters from company management
and external advisors from time to time and the Audit Committee receives periodic updates (including as part of
continuing director education) on the evolving cybersecurity landscape and regulatory reporting requirements
.
Human Capital Management Oversight
The Board and the CHC Committee oversee and regularly engage with the CEO, the Chief Human Resources
Officer and other members of senior leadership on a broad range of human capital management issues,
including workforce composition, compensation and pay equity, talent attraction, recruitment and turnover,
leadership training, learning and development, employee engagement, health and well-being, and management
succession planning (as further discussed below). These discussions, which include the review of the company’s
Best Place to Work survey results, take place as part of annual corporate responsibility updates to the full Board
and during
select CHC Committee meetings
.
The CHC Committee is responsible for overseeing certain human
capital management matters, including leadership development and workplace culture matters.
Management Succession Planning
The Board believes that its management succession planning process is rigorous and effective. The CHC
Committee, in consultation with the CEO, oversees succession planning for key members of management
(excluding the CEO), and the full Board, in consultation with the Lead Independent Director and the NCGPP
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Committee, oversees succession planning for the CEO. Succession planning includes both emergency
succession plans and succession in the ordinary course. At least annually, the CEO reviews key management
succession planning with the CHC Committee. Additionally, at each regularly scheduled CHC Committee
meeting, the CHC Committee conducts deeper reviews of the performance of and succession planning for key
members of management (excluding the CEO) and discusses any open senior management positions. In
connection with CEO succession planning, the entire Board is invited to participate in meetings of the NCGPP
Committee at which the topics of CEO succession and CEO goal setting and performance evaluations are
discussed. Further, all independent directors are invited to meetings of the CHC Committee at which CEO
compensation recommendations are made (for approval by the independent directors of the Board). Board
members have exposure to internal succession candidates through their periodic participation in Board meetings
as well as other engagements outside of Board meetings. The Board and CHC Committee's succession planning
process resulted in the successful internal promotion of Heather Knight to Chief Operating Officer (COO) in
February 2025.
On February 3, 2025, the company announced that the Board appointed Mr. Shafer as Chair and Interim CEO in
connection with Mr. Almeida’s departure, and that the Board initiated a comprehensive search for a permanent
CEO with the assistance of a leading search firm. This search represents an extension of the Board’s ongoing
CEO succession planning activities. Additionally, the Board formed a CEO Search Working Group consisting of
Cathy Smith, Stephen Oesterle, Stephen Rusckowski and David Wilkes to lead the search for the permanent
CEO. The CEO Search Working Group, working closely with the external search firm and the NCGPP
Committee, is leading a comprehensive process to identify and consider potential internal and external
candidates for the permanent CEO position. The CEO Search Working Group regularly reports to the full Board
on the status of the search for the permanent CEO, and the full Board will ultimately elect the permanent CEO.
Certain Relationships and Related Person Transactions
The Board recognizes that related person transactions present a heightened risk of conflicts of interest.
Accordingly, pursuant to Baxter’s Corporate Governance Guidelines, the NCGPP Committee has been charged
with reviewing related person transactions at least annually. For purposes of this policy, a “related person
transaction” is any transaction in which the company was or is to be a participant and in which any related person
has a direct or indirect material interest other than transactions that involve less than $120,000 when aggregated
with all similar transactions. This amount was increased from $50,000 in 2024, consistent with peer company
practices. Any such related person transaction must be approved or ratified by the NCGPP Committee. The
NCGPP Committee reviews related person transactions as they arise. The NCGPP Committee also annually
reviews materials prepared by the Corporate Secretary to help determine whether any related person
transactions have occurred that have not been previously reported to the NCGPP Committee and require
approval or ratification.
Board Structure and Processes
Board Leadership Structure; Lead Independent Director
Mr. Shafer, former Lead Independent Director, was appointed as Chair and Interim CEO on February 3, 2025, in
connection with Mr. Almeida's departure. In conjunction with his appointment, Mr. Shafer stepped down from his
role as Lead Independent Director and the independent directors elected Ms. Schlichting to serve as Lead
Independent Director for one year, effective February 3, 2025. Mr. Shafer has served as a director since 2022
and served as Lead Independent Director from April 2023 until his appointment as Chair and Interim CEO. Ms.
Schlichting joined the Board following Baxter’s acquisition of Hillrom in 2021.
The Board regularly reviews the leadership structure of the company, including whether the position of Chair of
the Board should be held by an independent director. In connection with Mr. Shafer’s interim appointment, the
Board determined that it was in Baxter stockholders’ best interests to keep the Chair and CEO roles combined
while the Board searches for a permanent CEO in order to provide strong, collaborative and consistent
leadership during the transition period. The Board appointed Mr. Shafer as Chair and Interim CEO because of his
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significant industry and leadership experience at global corporations, including as Chair and CEO of Cerner, and
in light of his experience as Baxter's Lead Independent Director. The Board believes that this combined role
enables Mr. Shafer to effectively connect the Board and Baxter management, particularly during a time of
transition. Notwithstanding the foregoing, in 2020, in response to a stockholder proposal, the company adopted a
policy that provides that, effective upon the next permanent CEO transition, the Chair will be an independent
director unless the Board determines that it would be in the best interests of the company and its stockholders to
have a non-independent director serve as Chair.
As Chair of the Board, and pursuant to Baxter’s Bylaws and Corporate Governance Guidelines, Mr. Shafer
presides at all Board and stockholder meetings, serves as the primary spokesperson for Baxter and acts as a
liaison between the Board and the stockholders. As Interim CEO and pursuant to Baxter’s Bylaws, Mr. Shafer
supervises the business of the company, subject to the direction of the Board.
As part of its commitment to independent leadership and oversight, the Board has adopted a policy requiring the
appointment of a Lead Independent Director at any time when the Chair is not independent and has created a
robust Lead Independent Director position with clearly defined responsibilities. Ms. Schlichting now serves in that
capacity. Pursuant to Baxter’s Corporate Governance Guidelines, the Lead Independent Director has the
following responsibilities and authority:
•
presiding at all Board executive sessions and all meetings of the Board when the Chair is not present;
•
facilitating discussion among the independent directors on key issues and concerns in executive
sessions excluding any management directors and outside of meetings of the Board;
•
acting as principal liaison between the independent directors and the Chair and CEO;
•
reporting the results of and feedback from executive sessions to the Chair;
•
reviewing and approving meeting agendas for the Board and working with the Chair to facilitate timely
and appropriate information flow to the Board;
•
reviewing and approving meeting schedules to
ensure
that there is sufficient time for discussion of all
agenda items;
•
having the authority to call meetings of the independent directors;
•
in consultation with the chair of the NCGPP Committee, leading the annual performance evaluation of
the Chair and CEO (as applicable);
•
in consultation with the chair of the NCGPP Committee, leading the CEO succession process;
•
engaging with Baxter’s stockholders on selected topics including corporate governance, executive
compensation and other corporate responsibility
matters
; and
•
performing such other duties as may be requested by the other independent directors.
Additionally, the Lead Independent Director serves as the contact person for interested parties to communicate
directly with the independent members of the Board and has engaged with Baxter’s stockholders on select
topics, including many of those discussed under “—Other Corporate Governance Information—Stockholder
Engagement” above. Further, as Lead Independent Director, Ms. Schlichting leads executive sessions of the
Board, as further discussed under “—Executive Sessions” below. The Lead Independent Director, together with
the chairs of the CHC and NCGPP Committees, also leads the non-employee directors in the annual review and
approval of compensation for the CEO.
The Board believes that its robust Lead Independent Director position, combined with the regular use of
executive sessions of the independent directors and fully-independent Board committees, enables the Board to
effectively oversee management.
In sum, the Board has determined that the combined Chair and CEO structure currently serves the best interests
of the company and its stockholders while the Board searches for a permanent CEO, taking into account the
strong role played by the Lead Independent Director and the independent directors generally.
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Executive Sessions
In 2024, directors met in executive session without management at every regularly scheduled meeting in
accordance with Baxter’s Corporate Governance Guidelines. Mr. Shafer, as the Lead Independent Director in
2024, led these executive sessions. The Lead Independent Director or Chair of the Board may invite the
company’s officers, employees and independent advisors to attend portions of these executive sessions.
Directors covered critical issues facing the company during executive sessions in 2024, including the company’s
response to challenging global macroeconomic conditions, operational challenges (including those related to the
company's response to Hurricane Helene), optimization of the company’s portfolio (including with respect to the
recent sale of the company’s Kidney Care business), capital allocation decisions and Board and management
succession planning. Additionally, the Audit Committee holds executive sessions, a portion of which include each
of the internal auditor, the independent registered public accounting firm and select members of management
(including the CFO and the Controller). The CHC Committee regularly holds executive sessions, a portion of
which include the independent compensation consultant. The NCGPP, QRC and Operating Committees also
generally meet in executive session at each regularly scheduled committee meeting.
Committees of the Board
The standing committees of the Board consist of the Audit Committee, the CHC Committee, the NCGPP
Committee and the QRC Committee. In addition, the Board formed a new Operating Committee to assist
management and the Board throughout the CEO transition.
Each committee consists solely of independent directors and is governed by a written charter. All standing
committee charters are available on Baxter’s website at www.baxter.com under “Our Story—Our Governance—
Board Committees & Charters.”
Audit Committee
The Audit Committee is composed of Jeffrey A. Craig (Chair), Patricia B. Morrison and Cathy R. Smith, each of
whom is independent under the rules of the NYSE and Rule 10A-3 of the Exchange Act. Mr. Peter Wilver served
as the chair of the Audit Committee until his resignation, effective December 31, 2024, and upon his resignation,
Mr. Craig was appointed as chair of the Audit Committee. The Board has determined that Mr. Craig and Ms.
Smith each qualify as an “audit committee financial expert” as defined by the rules of the SEC. The Audit
Committee is primarily concerned with the integrity of Baxter’s financial statements, system of internal accounting
controls, the internal and external audit process and the process for monitoring compliance with laws and
regulations as it relates to financial matters.
As set forth in its amended charter, the Audit Committee’s duties
include
:
(1)
reviewing the adequacy and effectiveness of Baxter’s internal controls over financial reporting with
management, internal audit and the independent registered public accounting firm;
(2)
reviewing with management Baxter’s disclosure controls and procedures;
(3)
retaining and evaluating the qualifications, independence and performance of the independent
registered public accounting firm;
(4)
approving audit and permissible non-audit engagements to be undertaken by the independent
registered public accounting firm;
(5)
reviewing the scope of the annual external and internal audit plans;
(6)
reviewing and discussing with management and the independent registered public accounting firm
Baxter’s financial statements (audited and unaudited), as well as earnings press releases and related
information, prior to their filing or release;
(7)
overseeing legal and regulatory compliance as it relates to financial matters;
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(8)
overseeing the company’s response to cybersecurity incidents involving the company’s IT systems or
products and services;
(9)
holding separate executive sessions with the independent registered public accounting firm, the internal
auditor and management;
(10)
reviewing guidelines and policies governing the process by which Baxter assesses and manages risk;
(11)
reviewing updates on the company's directors' and officers' and property liability insurance policies and
related matters; and
(12)
approving certain financing matters, proposed corporate transactions and capital expenditures.
The Audit Committee met nine times in 2024. The Audit Committee Report appears on
page 85.
Compensation and Human Capital Committee
The CHC Committee is composed of Nancy M. Schlichting (Chair), Stephen H. Rusckowski and Amy A. Wendell,
each of whom is independent under the rules of the NYSE and is a non-employee director under the rules
promulgated by the U.S. Securities and Exchange Commission (SEC) under Section 16 of the Exchange Act.
The CHC Committee exercises the authority of the Board relating to employee benefit, compensation and equity-
based plans of the company's executives and overseeing the development, implementation and effectiveness of
the company’s policies and strategies relating to human capital management.
As set forth in its amended charter, the CHC Committee’s duties include:
(1)
making recommendations for consideration by the Board, in executive session and in coordination with
the NCGPP Committee, concerning the compensation of the CEO and his or her performance for the
relevant period;
(2)
determining the compensation of the company’s key executives (other than the CEO) and advising the
Board of the related determination;
(3)
making recommendations to the Board with respect to incentive compensation plans and equity-based
plans and exercising the authority of the Board concerning benefit plans;
(4)
serving as the administration committee of the company’s equity-based plans and exercising the
authority of the Board to issue Baxter stock as compensation or incentive to non-employee directors,
officers, employees, consultants or advisors;
(5)
making recommendations to the Board concerning non-employee director compensation;
(6)
reviewing the adequacy of the company’s stock ownership guidelines for key executives and directors
and periodically assessing compliance with these guidelines;
(7)
overseeing the company’s compensation philosophy and strategy and periodically assessing the risk
related to its compensation policies and practices;
(8)
overseeing certain human capital management matters, including key management succession
planning and leadership development matters; and
(9)
approving the Compensation Discussion and Analysis (CD&A) for inclusion in the company’s annual
proxy statement.
The NCGPP and CHC Committees work together to establish a link between the CEO’s performance
assessment and decisions regarding his or her compensation. All compensation actions relating to the CEO are
subject to the approval of the independent directors of the Board. The CHC Committee met five times in 2024.
The CHC Committee Report begins on
page 38
.
The CHC Committee has the sole and direct responsibility for the appointment, compensation and oversight of
the work of any advisor retained by the CHC Committee. Aon Consulting, Inc. (Aon), as the CHC Committee's
independent compensation consultant, reports directly and exclusively to the CHC Committee and, except as
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noted below, has not historically provided any additional services to Baxter except advising on executive and
Board compensation matters (inclusive of a review of related company disclosures).
The CHC Committee
consultant provides analyses and recommendations that help inform the CHC Committee’s decisions but does
not decide or approve any compensation actions. During 2024, the CHC Committee consultant advised the chair
of the CHC Committee on agenda items for CHC Committee meetings, reviewed management proposals
presented to the CHC Committee, assisted in the CHC Committee’s assessment of Baxter’s compensation
policies and practices and conducted a review of the compensation of non-employee directors at Baxter’s peer
companies.
See “Executive Compensation—Compensation Discussion and Analysis—Structure of Executive
Compensation Program—Peer Group and Use of Peer Group Data” for additional information on Baxter’s
compensation peer group.
For services rendered in 2024, Baxter paid approximately $315,000 to Aon in fees
related to recommending the amount or form of executive and director compensation and approximately $1.5
million in fees primarily related to commercial risk advisory services and tools to benchmark benefits. The
company also paid Aon approximately $506,000 (paid from assets contained in the Hillrom Pension Plan) for
serving as the plan’s outsourced chief investment officer and investment manager in 2024, which services Aon
started providing prior to Baxter's acquisition of Hillrom in December 2021
. The determination to engage Aon for
the additional services rendered was recommended by management and approved by Baxter’s Investment
Committee, which is comprised of members of management annually appointed by the Audit Committee.
In
accordance with the rules of the SEC and the NYSE regarding the independence of compensation consultants,
the CHC Committee consultant provided the CHC Committee information regarding any personal, financial or
business relationships between it and Baxter, the consultant’s management or the members of the CHC
Committee that could impair the consultant's independence or present a conflict of interest. Based on its review
of this information, the CHC Committee determined that there were no relationships that impair Aon's
independence or create a conflict of interest between Baxter and Aon and the partners, consultants and
employees who provide(d) services to the CHC Committee. In addition, the CHC Committee annually reviews the
substantive performance of the independent CHC Committee consultant as part of its engagement process.
CHC Committee Interlocks and Insider Participation
During 2024, Mses. Schlichting and Wendell and Messrs. Rusckowski and Wilver served as a member of the
CHC Committee.
No current or former director that served on the CHC Committee in 2024 is or has been one of
the company’s officers or employees, and none have any relationships with Baxter of the type that is required to
be disclosed under Item 404 of Regulation S-K. None of the company’s executive officers serves or has served
as a member of the board, the compensation committee or other board committee performing equivalent
functions of any entity that has one or more executive officers serving as one of Baxter’s directors, including on
the CHC Committee.
Nominating, Corporate Governance and Public Policy Committee
The NCGPP Committee is composed of Cathy R. Smith (Chair), Patricia B. Morrison, Stephen N. Oesterle, M.D.,
and David S. Wilkes, M.D., each of whom is independent under the rules of the NYSE. The NCGPP Committee
assists and advises the Board on director nominations, corporate governance, general Board organization and
planning matters and on current and emerging political, corporate citizenship and public policy issues that may
affect Baxter's business operations, performance or public image.
As provided in its amended charter, the NCGPP Committee’s duties include:
(1)
developing general criteria for use in evaluating and selecting candidates for election or re-election to
the Board;
(2)
assisting the Board in identifying and attracting qualified director candidates;
(3)
having the sole authority to retain and terminate any search firm to be used to identify director
candidates;
(4)
recommending to the Board annually a slate of nominees to be proposed by the Board to stockholders
as nominees for election as directors and, from time to time, recommend persons to fill any vacancy on the
Board;
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(5)
reviewing and making recommendations to the Board regarding director nominees' independence for
the general Board and CHC Committee and Audit Committee service, and the financial literacy and expertise
of Audit Committee members and nominees who may be asked to serve on the Audit Committee;
(6)
reviewing the suitability for continued service of each director when his or her term expires, including
each director's time commitments, and when he or she has a change in circumstances under Baxter’s
Corporate Governance Guidelines;
(7)
reviewing periodically the size and composition of the Board and each committee, including whether the
Board possesses an appropriate mix of skills, tenure, experiences and backgrounds;
(8)
recommending to the Board any changes in number, authority, procedures and duties of Board
committees and the chairs and members who should serve thereon;
(9)
advising the Board and the Chair and CEO on major organizational matters, including the proposed
election of any new officers in response to any organizational changes;
(10)
recommending for election by the full Board an acting or successor CEO in the event of death,
incapacity, resignation or other absence (temporary or permanent) of the CEO;
(11)
overseeing the annual process for evaluating the performance of the CEO (and Chair if applicable) and
the Lead Independent Director in connection with his or her appointment or re-election;
(12)
overseeing the annual process for evaluating Board and committee performance and effectiveness in
light of Baxter’s strategic objectives, Baxter’s Corporate Governance Guidelines and each committee
charter;
(13)
to the extent not delegated to other committees, reviewing matters impacting Baxter’s image and
reputation and its standing as a responsible corporate citizen;
(14)
overseeing the orientation of new Board members to Baxter and its business as well as the continuing
education of the directors;
(15)
ensuring compliance with the Board’s overboarding policy for directors;
(16)
reviewing and reassessing at least annually the adequacy of Baxter’s Corporate Governance
Guidelines; and
(17)
reviewing and approving or ratifying related person transactions in accordance with Baxter’s Corporate
Governance Guidelines.
The NCGPP Committee met
six
times in 2024.
Quality and Regulatory Compliance Committee
The QRC Committee is composed of Stephen N. Oesterle, M.D. (Chair), William A. Ampofo, II, Stephen H.
Rusckowski, Nancy M. Schlichting, Amy A. Wendell and David S. Wilkes, M.D. The QRC Committee has
oversight responsibility with respect to quality and medical affairs and certain other compliance matters, including
with respect to quality and regulatory aspects of the company’s research and development programs.
As provided in its amended charter, the QRC Committee’s duties include:
(1)
overseeing risk management in the area of product quality and safety (including with respect to quality
and regulatory aspects of the company’s research and development programs);
(2)
reviewing periodic reports on significant compliance matters from senior executives in charge of the
company’s quality and compliance functions;
(3)
coordinating with the Audit Committee with respect to the QRC Committee’s oversight of quality and
regulatory compliance issues; and
(4)
reviewing strategic issues and corporate
actions
relating to current and emerging environmental, health
and safety and sustainability matters that may affect Baxter business operation, performance or public
image.
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The QRC Committee met five times in 2024.
Operating Committee
The Operating Committee was formed in February 2025 and is composed of Stephen H. Rusckowski (Chair),
William A. Ampofo, II, Patricia B. Morrison and Amy A. Wendell. The Operating Committee assists management
and the Board in reviewing and identifying opportunities for improvement in the company’s plans and strategies
related to product development, manufacturing, distribution, growth and operating efficiency. Unless the Board
should otherwise determine to extend its term, the Operating Committee will dissolve automatically on the date
that is six months following the Board’s appointment of a permanent CEO.
Director Compensation
Non-employee directors are compensated for their service under Baxter’s non-employee director compensation
plan with cash compensation and equity awards of fully vested Baxter shares. Baxter’s director compensation
program utilizes equity awards in order to further align the interests of directors with those of Baxter stockholders.
No changes were made to the director compensation program for 2024.
However, effective beginning in 2025,
certain committee chair cash retainers have been increased and committee meeting fees have been eliminated,
as further described below. These changes were made by the Board consistent with the recommendation of the
CHC Committee and upon the independent compensation consultant's recommendation. They are intended to
better align the company's director compensation program with market practice
. Non-employee director
compensation is reviewed annually utilizing market data and analyses provided by the CHC Committee’s
independent compensation consultant.
Cash Compensation
In 2024, non-employee directors were entitled to receive a $100,000 annual cash retainer and a $2,000 fee for
each committee meeting attended. Directors that joined during the year were paid their retainer on a pro rata
basis for the period of service. Directors did not receive additional compensation for each Board meeting
attended or for attending meetings for committees on which he or she did not sit.
Beginning in 2025, the annual cash retainer for the Board has been raised to $120,000, and committee meeting
fees have been eliminated. Additional market competitive adjustments were made to the retainers of the chairs
of the QRC and NCGPP Committees, which increased from $15,000 to $20,000 each. The cash retainer for the
Lead Independent Director, the Audit Committee chair and the CHC Committee chair remained unchanged from
2024 at $50,000, $25,000 and $20,000, respectively. I
n addition,
in February 2025, both the Operating
Committee and CEO Search Working Group were established in connection with the ongoing CEO transition.
The chairs of each group will be paid a stipend upon the completion of certain events, as discussed in the
footnotes to the table below. See “—Committees of the
Board—Operating Committee” and "—Board
Responsibilities—Management Succession Planning" for additional information on the Operating Committee and
CEO Search Working Group, respectively.
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Cash Compensation:
|
2024
|
2025
|
|
Annual Cash Retainer
|
$
100,000
|
$
120,000
|
|
Committee Meeting Fee (Per Meeting)
|
$
2,000
|
$
—
|
|
Lead Independent Director Cash Retainer
|
$
50,000
|
$
50,000
|
|
Committee Chair Cash Retainers:
|
||
|
Audit Committee Chair
|
$
25,000
|
$
25,000
|
|
CHC Committee Chair
|
$
20,000
|
$
20,000
|
|
QRC Committee Chair
|
$
15,000
|
$
20,000
|
|
NCGPP Committee Chair
|
$
15,000
|
$
20,000
|
|
Operating Committee Chair
1
|
NA
|
$
20,000
|
|
CEO Search Working Group Chair
2
|
NA
|
$
10,000
|
1.
The chair of the Operating Committee will receive a stipend upon the earlier of (i) the dissolution of the Operating Committee
(or the date that is six months following the Board’s appointment of a permanent CEO), and (ii) any decision by the Board to
extend the term of the Operating Committee.
2.
The chair of the CEO Search Working Group will be paid a stipend upon the appointment of the permanent CEO.
Non-employee directors are eligible to participate in a deferred compensation plan that allows for the deferral of
all or any portion of cash payments until their Board service ends. The plan provides participants with a select
subset of investment elections available to all eligible employees under Baxter’s U.S. tax-qualified Section 401(k)
plan (401(k) Plan).
Equity Grant
For 2024, the aggregate value of each non-employee director’s annual equity grant was $215,000. One hundred
percent (100%) of this grant was made in fully vested Baxter shares on the date of the 2024 annual meeting to
non-employee directors then in office. All equity awards are subject to a six-month forfeiture period in the event
the director stops serving on the Board during that period (other than as a result of death, disability or qualifying
retirement). Each non-employee director can elect to defer receipt of all of his or her fully vested stock awards
under the deferred compensation plan each year until the director stops serving on the Board.
Other Director Compensation
Directors are eligible to participate in the Baxter International Foundation matching gift program, under which
Baxter’s foundation matches gifts made by employees and directors to eligible non-profit organizations. The
maximum gift total for a director participant in the program is $20,000 in any calendar year.
Baxter’s Stock Ownership Guidelines for Directors; Prohibitions on Trading
Baxter’s Corporate Governance Guidelines provide that after five years of Board service, each director is
expected to hold common stock equal to five times the annual cash Board retainer provided to directors. As of
December 31, 2024,
all directors who have served on the Board for at least five years were in compliance with
these guidelines
.
Pursuant to Baxter’s Securities Trading Policy, Baxter directors are prohibited from engaging in short-term trading
activities (including hedging) and option transactions in Baxter stock. As a result, directors cannot enter into any
“put” or “call” options or otherwise buy or sell derivatives on any Baxter stock. Additionally, it is Baxter’s policy not
to permit directors to pledge Baxter securities as collateral for loans or otherwise as a security interest.
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Director Compensation Table
The following table provides information on 2024 compensation for non-employee directors who served during
any portion of 2024.
|
Name
|
Fees Earned or
Paid in Cash
($)
1
|
Stock Awards
($)
2
|
All Other
Compensation
($)
3
|
Total
($)
|
|
William A. Ampofo II
|
110,000
|
214,986
|
—
|
324,986
|
|
Jeffrey A. Craig
4
|
37,333
|
136,207
|
—
|
173,540
|
|
Patricia B. Morrison
|
130,000
|
214,986
|
4,496
|
349,482
|
|
Stephen N. Oesterle, M.D.
|
137,000
|
214,986
|
20,000
|
371,986
|
|
Stephen H. Rusckowski
|
120,000
|
214,986
|
20,000
|
354,986
|
|
Nancy M. Schlichting
|
140,000
|
214,986
|
14,535
|
369,521
|
|
Brent Shafer
|
172,000
|
214,986
|
—
|
386,986
|
|
Cathy R. Smith
|
145,000
|
214,986
|
—
|
359,986
|
|
Amy A. Wendell
|
120,000
|
214,986
|
20,000
|
354,986
|
|
David S. Wilkes, M.D.
|
122,000
|
214,986
|
34,535
|
371,521
|
|
Peter M. Wilver
5
|
153,000
|
214,986
|
20,000
|
387,986
|
1.
Consists of the amounts described above under “—Cash Compensation” above.
2.
The amounts shown in this column are valued based on the grant date fair value of the underlying fully vested Baxter share
awards computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic
718, Stock Compensation (FASB ASC Topic 718). For more information on how these amounts are calculated, please see
Note 9 to the Consolidated Financial Statements included in the 2024 Form 10-K. The following non-employee directors
were granted 5,952 fully vested shares in May 2024: Mr. Ampofo, Ms. Morrison, Dr. Oesterle, Mr. Rusckowski, Ms.
Schlichting, Mr. Shafer, Ms. Smith, Ms. Wendell, Dr. Wilkes and Mr. Wilver. In connection with Mr. Craig’s appointment to the
Board in September, 2024, he received 3,472 fully vested shares for his prorated service between his appointment and the
Annual Meeting. As of December 31, 2024, each current and former non-employee director, as set forth above, had the
following number of stock options outstanding, all of which were fully vested as of such date: Mr. Ampofo 0; Mr. Craig 0; Ms.
Morrison 0; Dr. Oesterle 1,060; Mr. Rusckowski 0; Ms. Schlichting 0;
Mr. Shafer 0
; Ms. Smith 17,868; Ms. Wendell 17,116;
Dr. Wilkes 0; and Mr. Wilver 0.
3.
The amounts in this column include matching gift contributions made by Baxter’s charitable foundation as of March 1, 2025
on qualifying charitable donations made by the following directors in 2024: Dr. Oesterle ($20,000); Mr. Rusckowski
($20,000); Ms. Wendell ($20,000); Mr. Wilkes ($20,000); and Mr. Wilver ($20,000). All other amounts in this column include
the dividend equivalent unit payments made in 2024 on previously deferred restricted stock units (
RSUs)
pursuant to the
deferred compensation plan: Ms. Morrison ($4,496); Ms. Schlichting ($14,535); and Dr. Wilkes ($14,535).
4.
Mr. Craig was appointed effective September 9, 2024.
5.
Mr. Wilver resigned effective December 31, 2024.
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Corporate Responsibility
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Corporate Responsibility
|
What Corporate Responsibility Means to Baxter
Driven by Baxter’s Mission to Save and Sustain lives, Baxter strives to create lasting value and meaningful
impact by Empowering our Patients, Protecting our Planet and Championing our People and Communities.
Baxter’s corporate responsibility strategy focuses on addressing the corporate responsibility
matters
that affect
its patients, customers, employees, communities and other critical stakeholders worldwide.
Advancing Baxter’s corporate responsibility goals contributes to business, social and economic value, including
the attraction, retention and engagement of employees, enhanced operational efficiency and implementation of
enterprise risk management strategies, among others. The company remains focused on its 2030 Corporate
Responsibility Commitment, which features strategic goals for focused action (as discussed in “—2030 Corporate
Responsibility Commitment and Goals” below). The 2030 Corporate Responsibility Commitment and Goals
highlight Baxter's corporate responsibility focus and help to further advance Baxter's corporate responsibility
performance. This commitment, which was established to help drive innovation and create value for the
company's full range of stakeholders, supports and complements Baxter's business strategy. Baxter expects to
announce a refreshed corporate responsibility commitment and goal set after the issuance of the 2024 Corporate
Responsibility Report (currently projected to be issued in June 2025), either in a separate announcement or as
part of the 2025 Corporate Responsibility Report. This timing should allow for the permanent CEO to have the
opportunity to review and contribute to Baxter's commitment and goals and for the commitment and goals to
reflect recent operational and other developments (including the recent Kidney Care sale).
Management and Board Oversight
Corporate responsibility matters receive strategic guidance and oversight at the highest levels of the company,
including Baxter’s Interim CEO, the COO, many of the direct reports of the Interim CEO and COO and other
functional leaders, the Board and the CHC, NCGPP and QRC Committees. An executive cross-functional
steering committee (the Corporate Responsibility Steering Committee) provides direction and oversight regarding
the company’s corporate responsibility initiatives and advances Baxter’s corporate responsibility strategy and
culture. The Corporate Responsibility Steering Committee meets or receives updates quarterly to monitor
policies, action plans and strategies and other matters of significance to Baxter’s reputation as a socially
responsible organization. The Corporate Responsibility Steering Committee also provides guidance to the
Corporate Responsibility Council (the Council). The Council, composed of cross-functional leaders, meets
throughout the year to (i) track progress toward Baxter’s 2030 Corporate Responsibility Commitment and Goals
and deliver regular updates to the Corporate Responsibility Steering Committee, (ii) solicit and review
stakeholder input on Baxter’s corporate responsibility programs, priorities, goals and disclosures, as well as
broader industry trends, and (iii) periodically lead Baxter’s materiality assessments to help validate the direction
and focus of the company’s corporate responsibility programs. Day-to-day corporate responsibility matters are
managed by a combination of corporate responsibility goal owners and working group members, which include
environmental, health, safety and sustainability, operations, human resources, finance, investor relations, legal,
communications and other personnel depending on the nature of the matter.
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Board of Directors
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Quality and Regulatory Compliance Committee Nominating Corporate Governance and Public Policy Committee
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Compensation and Human Capital Committee
|
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Corporate Responsibility Steering Committee*
|
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Chair and Interim CEO EVP, COO and Interim Group President, Medical Products & Therapies
|
|
EVP and CFO EVP and General Counsel EVP, Chief Supply Chain Officer
|
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EVP and Chief Human Resources Officer EVP and Group President, Pharmaceuticals
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EVP and Group President, Healthcare Systems & Technologies
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SVP, Chief Accounting Officer and Controller SVP, Chief Quality Officer SVP, Chief Investor Relations Officer
|
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SVP, Chief Information Officer SVP, Chief Communications Officer & Corporate Marketing SVP and Corporate Secretary
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SVP, Chief Medical and Scientific Officer SVP and President, Growth and Emerging Markets
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VP, Finance, Financial Planning and Analysis VP, Audit
|
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Co-Chairs of Corporate Responsibility Council
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VP, Environment, Health, Safety and Sustainability VP, Corporate Responsibility and Global Philanthropy
|
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Corporate Responsibility Council Members and 2030 Goal Leaders
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Corporate Responsibility Working Groups
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*As of March 13, 2025
To drive further accountability, the individual performance assessment of the Executive
Operating Committee
,
which includes all of the Interim CEO’s direct reports and certain of the COO's direct reports, are based as an
initial matter on the company’s performance against pre-established measures for certain strategic priorities,
including those related to corporate responsibility. The strategic 2024 priorities that impact the related individual
assessment are included in three categories: Patient Safety and Quality; Best Place to Work; and Growth
Through Innovation. See “Executive Compensation—Compensation Discussion and Analysis—Elements of
Executive Compensation—Annual Incentive Plan—Determination of 2024 Annual Incentive Plan Payouts—
Individual Performance” for additional information. One or more executive leaders are also assigned to each of
Baxter’s 2030 Corporate Responsibility Goals to help ensure the accountability of cross-functional teams
responsible for achieving the goals.
In addition, the Board plays a critical role in corporate responsibility oversight. The full Board receives updates at
least annually on corporate responsibility matters (including a discussion of related goals and industry trends).
The QRC Committee and the NCGPP Committee share oversight for corporate responsibility-related matters and
the CHC Committee oversees certain human capital management matters. The QRC Committee provides
oversight for issues related to environmental, health and employee safety, sustainability and compliance matters,
while the NCGPP Committee provides oversight for other areas related to Baxter’s corporate responsibility,
including charitable contributions, public policy, and other social and governance issues. The CHC Committee
provides oversight for succession planning for key members of management (other than the Chair and CEO),
leadership development and inclusion initiatives. See “Corporate Governance at Baxter International Inc.—
Committees of the Board” for additional information regarding the responsibilities of each committee of the
Board.
Pursuant to Baxter’s robust stockholder engagement program, Baxter's management and certain directors
regularly engage in corporate responsibility discussions with many of the company’s investors. Outputs from
these discussions are shared with the entire Board during Board-wide corporate responsibility updates and with
the NCGPP Committee as part of its oversight of corporate governance matters generally. See “Corporate
Governance at Baxter International Inc.—Other Corporate Governance Information—Stockholder Engagement”
for additional Information.
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Corporate Responsibility
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2030 Corporate Responsibility Commitment and
Goals
Baxter has a long-standing commitment to responsible operations and corporate responsibility reporting. Baxter
is ever conscious of its global impact, including with respect to its employees, the communities in which it
operates and the people who use its products. Setting goals across a broad range of corporate responsibility
focus areas demonstrates Baxter’s commitment to this important topic, reinforces accountability and helps to
drive ongoing improvement across the organization.
Baxter's 2030 Corporate Responsibility Commitment and Goals demonstrate the connection between its
corporate responsibility initiatives and business priorities. Anchored by three pillars—Empower Our Patients,
Protect Our Planet and Champion Our People and Communities—this commitment
features
strategic goals for
focused action. T
he company’s corporate responsibility goals align with certain of the United Nations Sustainable
Development Goals (UN SDGs) and the 2030 Agenda for Sustainable Development, particularly UN SDGs 3
(good health and well-being), 6 (clean water and sanitation) and 12 (responsible consumption and production).
Baxter has been consistently recognized by external rankings and ratings organizations as a corporate
responsibility and sustainability leader. Representative of this recognition, in 2024, Baxter was named one of
America’s Most JUST Companies by JUST Capital for 2024, one of the 100 Best Corporate Citizens of 2024 by
3BL Media, a constituent company in the FTSE4Good Index Series, and was listed within the Wall Street
Journal’s Management Top 250. CDP also scored Baxter for its environmental management with B scores in both
Climate Change and Water Security for taking coordinated action within these areas. These awards are among
other regional and country-specific recognitions received by the company across the globe.
Annual Reporting and Disclosures
Transparent reporting is a longstanding focus for Baxter, as it has more than a 30-year history of publishing
environmental performance reports. The company’s corporate responsibility disclosures have evolved and
broadened in scope, generally in line with stakeholders’ significant interests combined with the increasing
sophistication of Baxter’s corporate responsibility strategy and evolving regulatory requirements. Every year,
Baxter measures and evaluates its performance, communicates progress and challenges and identifies
opportunities to drive even greater impact across its business and society. In 2024, Baxter completed a double
materiality assessment to inform its corporate responsibility strategy and 2030 Corporate Responsibility
Commitment and Goals and to help address related regulatory reporting requirements.
Baxter is committed to sharing information about its corporate responsibility initiatives, priorities, goals and
performance. The annual Corporate Responsibility Report illustrates the company’s commitment to sound
governance and balanced, transparent disclosure. It also serves as a platform for stakeholder engagement and
provides an important means for soliciting feedback on the company’s related activities. Since 2019, Baxter has
published its Sustainability Accounting Standards Board Index in alignment with the Medical Equipment and
Supplies Sustainability Accounting Standard, and in 2023, Baxter issued its inaugural report against the
framework established by the Task Force on Climate-related Financial Disclosures. The company elected to
make these voluntary public disclosures in the interest of providing enhanced corporate responsibility information
to investors and in response to feedback received during the company’s annual corporate governance outreach
discussions (as described in “Corporate Governance at Baxter International Inc.—Other Corporate Governance
Information—Stockholder Engagement”). In addition, the company has published a redacted version of its 2024
U.S. Employer Equal Opportunity EEO-1 consolidated report on its website.
Neither the Corporate Responsibility Report nor any other report or website listed herein are incorporated by
reference into this proxy statement or any other document filed with the SEC. More information about Baxter’s
corporate responsibility efforts and initiatives, including the 2023 Corporate Responsibility Report, is available on
Baxter’s website under “Our Story—Corporate Responsibility.”
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Executive Compensation
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37
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Executive Compensation
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Advisory Vote to Approve Named Executive Officer
Compensation for 2024
At the 2023 annual meeting, stockholders recommended that the Board continue
to hold annual advisory votes approving the compensation of Baxter’s NEOs
(commonly referred to as “say-on-pay”). The Board determined to follow the
stockholders’ recommendation and continues to hold annual say-on-pay votes.
Accordingly, the Board is requesting that stockholders approve, pursuant to a
non-binding vote, the compensation of the company’s NEOs for 2024 as
disclosed in this proxy statement.
The Board of Directors recommends a vote
FOR
approval of the
compensation of the company’s NEOs for 2024.
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In accordance with Section 14A of the Exchange Act, stockholders are being asked to vote on a resolution to
approve, on a non-binding, advisory basis, the compensation of Baxter’s NEOs for 2024. The Board encourages
stockholders to carefully review the “—Compensation Discussion and Analysis” section of the proxy statement in
connection with this advisory vote. The Compensation Discussion and Analysis section describes Baxter’s
executive compensation program and the decisions made by the CHC Committee and the Board with respect to
the compensation of the company’s NEOs for 2024.
The company has designed its executive compensation program to attract, motivate, reward and retain the
executive talent required to help achieve its corporate and strategic objectives and increase stockholder value.
As discussed below in the Compensation Discussion and Analysis section, pay-for-performance is the most
significant structural element of Baxter’s executive compensation program, where the majority of executive pay is
at risk and is only delivered if specific annual or long-term performance requirements are met.
In addition, Baxter has adopted policies, like its stock ownership guidelines and its clawback policies, to promote
the long-term focus of, and appropriate levels of risk-taking by, its executive officers.
The Board believes that Baxter’s executive compensation program is designed to meet the objectives discussed
in the Compensation Discussion and Analysis section. Accordingly, the Board recommends that stockholders
vote in favor of the following resolution:
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RESOLVED
, that the stockholders of Baxter International Inc. approve the compensation paid to the
company’s NEOs for 2024 as described in this proxy statement under “Executive Compensation,”
including the Compensation Discussion and Analysis, the executive compensation tables and other
narrative disclosure contained therein.
|
||
This say-on-pay advisory vote is non-binding on the Board. Although the vote is non-binding, the Board and the
CHC Committee will review and thoughtfully consider the voting results when making future decisions concerning
the compensation of the company’s future NEOs. The company will hold the next say-on-pay advisory vote at the
2026 annual meeting.
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Executive Compensation
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Compensation and Human Capital Committee Report
The CHC Committee is responsible for the oversight of Baxter’s compensation programs on behalf of the Board.
In fulfilling its oversight responsibilities, the CHC Committee has reviewed and discussed with management the
Compensation Discussion and Analysis set forth in the proxy statement.
Based on the review and discussions referred to above, the CHC Committee recommended to the Board that the
following Compensation Discussion and Analysis be included in the 2024 Form 10-K and the proxy statement,
each of which has been or will be filed with the SEC.
Compensation and Human Capital Committee
Nancy M. Schlichting (Chair)
Stephen H. Rusckowski
Amy A. Wendell
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (CD&A) discusses the 2024 compensation paid to Baxter’s
executive officers who are identified as NEOs below. The purpose of this discussion is to provide stockholders
with an understanding of the company’s executive compensation policies and practices and the decisions
regarding the NEOs’ compensation.
For 2024, Baxter’s
NEOs are:
|
Named Executive Officer
|
Title
|
||
|
José Almeida
1
|
Former Chair of the Board, President and CEO
|
||
|
Joel Grade
2
|
Executive Vice President and CFO
|
||
|
Heather Knight
3
|
Executive Vice President, COO and Interim Group President,
Medical Products & Therapies
|
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Alok Sonig
|
Executive Vice President and Group President, Pharmaceuticals
|
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Christopher Toth
4
|
Former Executive Vice President and Group President, Kidney
Care
|
1.
Mr. Almeida ceased serving as Chair of the Board, President and CEO, effective on February 3, 2025 and transitioned into a
non-executive officer role (Special Advisor). Mr. Almeida's employment with Baxter will terminate effective as of October 31,
2025.
2.
Mr. Grade ceased serving as the company's Interim Chief Accounting Officer as of February 21, 2025, and continues to
serve as the company's Executive Vice President and CFO.
3.
Prior to February 3, 2025, Ms. Knight served as the company’s Executive Vice President and Group President, Medical
Products & Therapies.
4.
Mr. Toth cease
d serving as Executive Vice President and Group President, Kidney Care on January 31, 2025 in connection
with the closing of the sale of that business to certain affiliates of Carlyle on the same date.
The Executive Summary section of this CD&A highlights the following:
•
2024 Company Results
•
2022 – 2024 CEO Realizable Pay
•
2024 Say-on-Pay Vote
•
2024 Executive Compensation Program Actions
and Changes
•
2025 Executive Compensation Program Changes
•
Compensation Philosophy and Governance Practices
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Executive Compensation
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39
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|
The remainder of this CD&A discusses the following:
•
Structure of Executive Compensation Program
•
Elements of Executive Compensation
•
Additional Compensation Governance
Executive Summary
2024 Company Results
Baxter’s 2024 financial results, as calculated for purposes of the 2024 annual incentive plan, reflect the
company’s improving performance:
•
Adjusted Net Sales Including Discontinued Operations of $15,181 million, which was 101% of the
annual incentive target of $15,017 million;
•
Further Adjusted EPS Including Discontinued Operations of $2.79, which was 95%
of the annual
incentive target of $2.95; and
•
Adjusted Free Cash Flow Including Discontinued Operations of $501 million, which was 72% of the
annual incentive target of $700 million.
See “—2024 Executive Compensation Program Actions and Changes—2024 Annual Incentive Design and
Performance” below for an overview of Baxter’s 2024 annual incentive plan and “
—Elements of Executive
Compensation—Annual Incentive Plan—Determination of 2024 Annual Incentive Plan Payouts
” for a description
of Adjusted Net Sales Including Discontinued Operations, Further Adjusted EPS Including Discontinued
Operations and Adjusted Free Cash Flow Including Discontinued Operations (including a description of
adjustments from the closest GAAP measures to derive these amounts).
A comparison of the performance of Baxter’s common stock against certain of its peers over the past three and
five years provides other perspectives on Baxter’s overall performance.
The graphs below compare the cumulative TSR (including reinvested dividends) on Baxter common stock, the
Standard & Poor’s 500 Composite Index and the Standard & Poor’s 500 Health Care Index for the three- and
five-year periods ended December 31, 2024.
As set forth below, the TSR for Baxter for the three-year period
totaled approximately (63%), as compared to 29% for the S&P 500 Composite Index and 3% for the S&P 500
Health Care Index over the same period.
These numbers reflect softness in Baxter stock, which likely reflects the
company’s reduction in guidance due to certain macroeconomic headwinds and related supply constraints which
impacted the company’s 2022 earnings results. In addition, the company’s Healthcare Systems & Technologies
business has underperformed expectations in recent years due to the impact from select operational factors and
supply constraints. In January 2023, the company began executing on a series of strategic actions to enhance
future performance, the latest of which was completed on January 31, 2025. These actions included the
divestiture of two businesses which lowered the company’s overall earnings. These strategic actions have now
been completed and the company should be well positioned to drive enhanced performance and create
incremental value for all stakeholders going forward.
F
or the five-year period, the TSR for Baxter totaled
approximately (61%), as compared to 97%
for the S&P 500 Composite Index and 47% for the S&P 500 Health
Care Index over the same period. These results may be attributable to similar cau
ses.
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Executive Compensation
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1.
TSR calculations (as provided by FactSet) include reinvested dividends.
1.
TSR calculations (as provided by FactSet) include reinvested dividends.
2022 – 2024 CEO Realizable Pay
Paying for performance is the foundation of the company’s compensation program, and much of the company’s
executives’ pay is “at-risk.” Over the past several years, the company has granted a mix of time-based restricted
stock units (RSUs) and performance share units (PSUs), as well as stock options, to help retain and motivate
executives to deliver long-term performance. Given that a significant portion of the compensation packages vary
depending on company performance, oftentimes the grant date value of compensation (as reported annually in
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Executive Compensation
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41
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the Summary Compensation Table) is not always reflective of the actual realizable pay value that is ultimately
received by the CEO.
To illustrate the differences, the company compared Target Compensation (as defined below) and the Summary
Compensation Table values to Realizable Pay on a year-by-year basis; for this purpose:
•
“Target Compensation” refers to the sum of target salary, target annual bonus and target long-term
equity incentive (LTI) grant values,
•
“Summary Compensation Table” refers to the actual disclosure in the Summary Compensation Table,
and
•
“Realizable Pay” refers to the sum of actual salary, actual annual bonus and the potential payout value
of equity grants, including performance criteria and stock price.
As shown in the table further below, as of December 31, 2024, Mr. Almeida’s aggregate Realizable Pay was 42%
of the intended aggregate Target Compensation for years 2022-2024, and 42% of the aggregate Summary
Compensation Table disclosure for these years, taking into account only such amounts reported under the
“Salary”, “Bonus”, “Stock Awards”, “Option Awards” and “Non-Equity Incentive Plan Compensation” columns of
the Summary Compensation Table. This level of Realizable Pay is consistent with the company’s performance
during those years and the company’s pay-for-performance philosophy, which resulted in a significant amount of
Mr. Almeida’s compensation being placed “at-risk”.
The
graph below is not a substitute for the information required by the 2024 Summary Compensation Table for
years 2022-2024, which appears on
page 62
. All values in the graph below are in U.S. Dollars and shown in
thousands.
Realizable Pay reinforces a pay-for-performance linkage as the target economic value of short- and
long-term incentive opportunities only provide value when meaningful
performance
is achieved.
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Executive Compensation
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2024 Say-on-Pay Vote
At the 2024 annual meeting, approximately
80
% of the stockholders voting at the meeting approved, in an
advisory vote, the compensation for Baxter’s NEOs for 2023. As discussed in “Corporate Governance at Baxter
International Inc.—Other Corporate Governance Information—Stockholder Engagement,” the company engaged
with select institutional investors to solicit feedback and understand executive compensation concerns after
completion of the 2024 annual meeting and through early 2025.
In direct response to stockholder feedback, the
company enhanced disclosures in the proxy statement regarding certain elements of its programs,
including
enhancements regarding factors the CHC Committee considers when reviewing executive pay
.
The Board and
the CHC Committee value and take into consideration comments received during stockholder outreach
discussions.
The CHC Committee and management are committed to continuing to strengthen pay-for-performance
alignment, as well as the overall design of Baxter’s executive compensation program, informed by stockholder
feedback obtained from corporate governance outreach discussions.
2024 Executive Compensation Program Actions and Changes
Baxter continues to review its executive compensation program based on the company’s operational strategy
and stockholder feedback. The following outlines: (i) 2024 annual incentive design and performance; (ii) 2024
annual PSU grant design; and (iii) other 2024 executive compensation actions.
2024 Annual Incentive Design and Performance
The 2024 annual incentive payout was calculated using the following formula:
The three applicable financial performance metrics remained unchanged from 2023 to 2024 and included
NEO's Target
Annual Incentive
The Aggregate
Performance Across the
Three Applicable
Financial Performance
Metrics with a Payout
Range Between
0%-200%
The NEO's
Individual
Performance
Assessment
that Ranges
Between
0%-125%
Annual Incentive
Payout
X
X
=
Adjusted Net Sales (
50%
weighting), Further Adjusted EPS (
25%
weighting) and Free Cash Flow (
25%
weighting).
Both the Adjusted Net Sales and Free Cash Flow metrics are also included in the annual incentive
plans for the eligible broader population at Baxter. For 2024, t
hese measures are referred to as Adjusted Net
Sales Including Discontinued Operations, Further Adjusted EPS Including Discontinued Operations and Adjusted
Free Cash Flow Including Discontinued Operations in this proxy statement (to reflect the impacts of the
discontinued operations treatment of the recent sale of the Kidney Care business).
For 2024, to mitigate the potential challenges around financial target setting due to the proposed separation of
the Kidney Care business, the performance curves for
Adjusted EPS and Free Cash Flow
were widened by 10%
at threshold and 10% at maximum, as shown in the table below.
The CHC Committee reviews these curves
each year, taking into account unique circumstances when making these determinations.
|
|
Threshold
|
Maximum
|
|||||
|
Metric
|
2023
|
2024
|
2023
|
2024
|
|||
|
Adjusted EPS
|
90%
|
80%
|
110%
|
120%
|
|||
|
Free Cash Flow
|
80%
|
70%
|
120%
|
130%
|
|||
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Executive Compensation
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43
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No adjustments were made for 2024 to the performance curve for Adjusted Net Sales metric. For all metrics,
100% achievement will result in target payout.
For 2024, each NEO’s individual performance assessment, as well as that of the broader Executive Operating
Committee, was initially determined in connection with an assessment of Baxter’s performance against pre-
established measures for key strategic 2024 priorities, which include various corporate responsibility metrics.
See “
—Elements of Executive Compensation—Annual Incentive Plan—Determination of 2024 Annual Incentive
Plan Payouts
” below for details on the 2024 financial and individual performance metric results for each NEO.
2024 Annual Equity Design
In order to support the stability and focus required of senior leadership in connection with the proposed
separation of the Kidney Care business, the company made its 2024 annual LTI grant to all equity-eligible
employees in the form of 100% RSUs, with the exception of Messrs. Almeida and Grade. Messrs. Almeida and
Grade each received 50% of their 2024 annual equity grants in the form of RSUs and 50% of their annual equity
grants in the form of PSUs, as the company recognizes the importance of the CEO and CFO to have a significant
portion of their equity awards consist of performance-based equity.
As the proposed Kidney Care separation was known during the planning phase for
the 2024 annual grant
, setting
three-year PSU targets to accurately reflect performance before and after the separation was complex.
To
mitigate potential complications of setting these multi-year targets based on internal metrics for
Messrs. Almeida
and Grade in the year in which the Kidney Care separation could have been completed, PSUs granted in 2024
are wholly based on Baxter’s relative TSR versus the S&P 500 Healthcare Equipment & Services Index. This
index is used to measure relative TSR for the company's PSU grants made in 2022 and 2023. The 2024 PSU
design is set forth in the table below:
|
2024 Plan Design
|
|
|
Metric:
|
Relative TSR
|
|
Weighting:
|
100%
|
|
Measurement:
|
Three-year performance period
|
See “—Elements of Executive Compensation—Long-Term Incentive Plan—2024 Annual LTI Grants” for
additional detail on Baxter’s 2024 PSU grants.
2024 Executive Compensation Actions
The following summarizes 2024 compensation actions for NEOs:
•
Base Salary: Mr. Almeida did not receive a salary increase in 2024. As specified in Mr. Toth's offer letter
dated April 22, 2023, his salary was to remain the same through the business separation of Kidney Care
and he did not receive a salary increase in 2024. Mr. Grade, Ms. Knight and Mr. Sonig each received
salary increases during the 2024 annual compensation cycle.
•
Annual Incentives: Each NEO received a cash bonus pursuant to the 2024 annual incentive plan,
funded as explained in "
—Elements of Executive Compensation—Annual Incentive Plan—
Determination of 2024 Annual Incentive Plan Payouts
".
•
Long-term Incentives: Each NEO received an equity grant during the company's annual cycle in March
2024. As explained above, Messrs. Almeida and Grade received their awards with 50% delivered in
PSUs and 50% in RSUs. Ms. Knight's and Messrs. Sonig's and Toth's awards were delivered wholly in
the form of RSUs. No off-cycle LTI grants were made to NEOs in 2024.
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Executive Compensation
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2022—2024 PSU Performance
The following highlights the performance results for the PSUs granted in March 2022, with a performance period
of January 1, 2022 to December 31, 2024, which were calculated as follows:
|
Performance Metric
|
Weighting
|
Threshold
(50%
Payout)
|
Target
(100%
Payout)
|
Maximum
(200%
Payout)
|
Result
1
|
Payout as
a % of
Target
|
|
Relative TSR against the TSR
performance of the companies in the
S&P 500 Healthcare Equipment &
Services Index
|
33-1/3%
|
35th Percent
Rank
|
50th Percent
Rank
|
80th Percent
Rank
|
6.3
rd
Percent
Rank
|
0%
|
|
Adjusted ROIC
|
33-1/3%
|
7.7%
|
9.6%
|
11.5%
|
6.5%
|
0%
|
|
Adjusted Net Sales CAGR
|
33-1/3%
|
2.6%
|
4.4%
|
6.2%
|
2.6%
|
0%
|
|
Weighted Payout as a % of Target
|
0%
|
|||||
1.
Actual r
esults for Adjusted Net Sales CAGR were slightly below 2.6%, but appear at 2.6% due to rounding conventions.
See “—Elements of Executive Compensation—Long-Term Incentive Plan—2022–2024 PSU Performance” for
additional detail on PSU performance, including targets and performance ranges.
2025 Executive Compensation Program Changes
Annual Incentive Plan Design Changes
In November 2024, the CHC Committee approved returning to the prior Free Cash Flow performance curve (80%
at threshold and 120% at maximum). Given the recent separation of the Kidney Care business, less variability
should exist in forecasting Free Cash Flow for 2025.
The Adjusted EPS and Adjusted Net Sales performance
curves are aligned with that of Baxter's peers and were unchanged for 2025.
For 2025, the CHC Committee has selected (i) Patient Safety and Quality and (ii) Growth as the two categories
for the individual modifier for
the Executive Operating Committee
, each with an equal 50% weight. The CHC
Committee believes that these categories are most important to supplement senior management's annual
financial goals to promote disciplined focus on a number of key measures (including profitable growth and new
product development) and drive further accountability.
For more information on the three categories for the
individual modifier used for 2024, see "—Elements of Executive Compensation—Annual Incentive Plan—
Determination of 2024 Annual Incentive Plan Payouts— Individual Performance".
Long-Term Incentive Design Changes
Now that the Kidney Care separation has been completed, the CHC Committee approved the prior annual equity
LTI mix, last used in 2023, which is meant to balance performance-based equity while also providing a stable
retentive value.
This mix reflects typical market practice and reinforces the link of pay-for-performance as stock
options only provide value to the holder if the stock price appreciates
. The table below illustrates the 2023, 2024
and 2025 annual equity grant mixes for the Executive Operating Committee (including the NEOs that are still in
role).
|
Equity Type
|
2023
|
2024
|
2025
|
|
PSUs:
|
50%
|
50% (CEO and CFO only)
|
50%
|
|
Stock Options:
|
25%
|
—
|
25%
|
|
RSUs:
|
25%
|
50% (CEO and CFO only) and 100% all other NEOs
|
25%
|
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Executive Compensation
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45
|
|
|
|
Compensation Philosophy and Governance Practices
Baxter's compensation program is built on the following
principles:
Principles:
Compare competitively
to
companies where Baxter
competes for executive
talent.
Equitably reflect the value
of each executive's position
in the market and within the
company.
Encourage innovation
and
appropriate levels of risk-
taking.
Enhance
the company's
long-term financial and
stockholder
value
performance.
Attract, retain and
motivate
high-performing
executives.
Recognize
company and
individual performance.
The objectives of the program are to:
Objectives:
Compensate Baxter's
executives in a manner that is
consistent with the above
principles.
Align
the interests of
management
with those of
stockholders
to reflect
best
practices.
Drive sustained and
superior performance
relative to the company's
peers.
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Executive Compensation
|
|
|
|
|
What Baxter Does
|
What Baxter Does Not Do
|
|
|
✓
Emphasize company performance.
92% of the
CEO’s 2024 total target direct compensation and an
average of 85% of the other NEOs’ 2024 total target
direct compensation is variable based on Baxter’s
performance.
✓
Align with stockholders.
78% of the CEO’s 2024 total
target direct compensation and an average of 69%
of the other NEOs’ 2024 total target direct
compensation is based on long-term incentives
aligned with stockholders’ interests.
✓
Incorporate corporate responsibility metrics into the
annual incentive plan.
NEOs have shared corporate
responsibility goals embedded into their 2024 annual
incentive individual performance assessment
measured under three categories: (i) Patient Safety
and Quality (40%); (ii) Best Place to Work (30%) and
(iii) Growth Through Innovation (30%).
✓
Require significant stock ownership.
Executive
officers are subject to certain stock ownership
requirements and neither unvested PSUs nor
unexercised stock options (or any portions thereof)
count towards the requirements.
✓
Maintain anti-hedging and anti-pledging stock
policies for executives and directors.
These policies
reflect good governance and mitigate compensation-
related risk.
✓
Allow for clawbacks and forfeitures under the annual
incentive and long-term incentives based on the
Mandatory Clawback Policy and Compensation
Recoupment Policy (including without limitation all
time-based incentive awards).
The company's
Mandatory Clawback Policy is consistent with Dodd-
Frank requirements and corresponding NYSE listing
standards and the company's Compensation
Recoupment Policy extends beyond the applicable
Dodd-Frank requirements. Various actions can be
taken under the two policies (or are required to be
taken, as applicable) with regard to annual and long-
term incentive payouts to executives and other
incentive-based compensation upon a financial
restatement or for an employee’s violation of
restrictive covenants.
✓
Pay severance and vest outstanding equity grants
only upon a “double trigger” in the event of a change
in control.
The “double trigger” requires both a
change in control and termination of employment by
the company without cause or by the executive for
good reason.
|
X
Provide tax gross-ups in the event of a change in
control
. Taxes are each NEO’s sole responsibility.
X
Re-price or exchange of underwater stock
options.
The company does not re-price
outstanding stock options, whether vested or
unvested, without prior stockholder approval.
X
Pay dividend equivalent units (DEUs) on unvested
RSUs or PSUs.
DEUs on RSUs and PSUs in the
form of additional shares are paid only upon the
vesting of the underlying RSUs and PSUs with the
number of DEUs for PSUs based on actual
company performance.
X
Offer excessive perquisites.
Executives are
eligible for a very limited number of perquisites
that generally meet criteria for efficiency, personal
health and safety.
|
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Executive Compensation
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47
|
|
|
|
Structure of Executive Compensation Program
Pay-for-Performance and Total Target Direct Compensation Mix
Pay-for-performance is the most significant structural element of Baxter’s compensation program, where the
majority of executive pay is variable and subject to specific annual or long-term performance requirements. As
shown below for 2024, 92% of Mr. Almeida’s total target direct compensation and 85% of the average total target
direct compensation for the other NEOs was variable and subject to various performance metrics and company
stock price performance.
Named Executive Officer Total Target Direct
Compensation
1
|
Fixed
|
Variable
|
Fixed
|
Variable
|
|||
|
8%
|
92%
|
15%
|
85%
|
1.
Percentages are calculated using annual base salary, target annual incentive and target LTI grant values as of December 31,
2024.
Peer Group and Use of Peer Group Data
The CHC Committee uses competitive compensation data from the annual total compensation study of peer
companies to inform its decisions about overall compensation opportunities and specific compensation elements.
Additionally, the CHC Committee uses multiple reference points when establishing targeted compensation levels.
The CHC Committee does not benchmark specific compensation elements or total compensation to any specific
percentile relative to the peer companies or the broader market. Instead, the CHC Committee applies judgment
and discretion in establishing targeted pay levels, taking into account not only competitive market data, but also
factors such as company, business and individual performance, scope of responsibility, critical needs and skill
sets, leadership potential and succession planning. The CHC Committee also evaluates the compensation
programs of other companies which, while not in the peer set, have similar characteristics of Baxter’s business
model, complexity and sophistication.
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| 2025 Annual Meeting of Stockholders and Proxy Statement
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48
|
Executive Compensation
|
|
|
|
The CHC Committee, with input from its independent compensation consultant, annually reviews the
Compensation Peer Group to determine the appropriate companies to include. In its review, the CHC Committee
considers companies with all of the following factors for objectivity:
•
Publicly-traded, US-based companies, with a focus on healthcare equipment, services and supplies and
life sciences tools and services indices.
•
Revenues and market capitalization within a reasonable range of Baxter’s revenue and market
capitalization.
•
List Baxter as a peer, are in Baxter’s peer group as selected by a proxy advisory firm or are prevalent
peers of Baxter’s peer group selected by a proxy advisory firm.
Based on this review, the annual evaluation resulted in the addition of GE HealthCare Technologies and the
removal of Thermo Fisher Scientific Inc. for 2024.
For 2024, the Compensation Peer Group is as follows:
|
Abbott Laboratories
|
DENTSPLY Sirona Inc.
|
Medtronic Public Limited Company
|
|
Agilent Technologies, Inc.
|
Edwards Lifesciences
|
Quest Diagnostics Incorporated
|
|
Becton, Dickinson and Company
|
GE HealthCare Technologies
|
Stryker Corporation
|
|
Boston Scientific Corporation
|
Hologic, Inc.
|
Zimmer Biomet Holdings, Inc.
|
|
Danaher Corporation
|
Intuitive Surgical, Inc.
|
|
|
DaVita Inc.
|
Laboratory Corporation of America
Holdings
|
The median revenue and market capitalization for the Compensation Peer Group was approximately $12.7 billion
and $41.0 billion, respectively, for the year ended December 31, 2024. Baxter’s revenue of $15.1 billion for the
year ended December 31, 2024 (net sales including discontinued operations as reported under GAAP for 2024)
placed Baxter at the 58
th
percentile of this peer group. Baxter’s market capitalization of approximately $19.6
billion as of December 31, 2024 placed Baxter at the 28
th
percentile of this peer group.
Individual Performance
The CHC Committee assesses the individual performance and future potential of each company executive officer
or other key executive (other than the CEO) in making compensation decisions related to base salary, annual
incentive and annual LTI grant. The independent members of the Board make this determination with respect to
the CEO. Baxter believes it is important to consider an individual’s performance in assessing compensation and
not just the company’s financial performance relative to the financial targets in the interest of recognizing how he
or she performed with respect to his or her individual goals.
The CHC Committee’s assessment of individual performance and future potential relies on informed judgment
and requires significant input from the CEO, who reviews the evaluations of each of the other executive officers
and key executives and shares his or her insights and recommendations with the CHC Committee. Based on that
input, the CHC Committee assesses how well an executive officer or other key executive fulfilled his or her
obligations in the past year and such executive officer’s or other key executive’s potential for future contributions
to Baxter. The assessment of the prior year’s performance focuses on how well the operations or function for
which an executive officer or key executive is responsible performed during the year. The CHC Committee also
considers how well an executive officer or key executive performed against his or her performance goals.
The independent members of the Board are responsible for assessing the CEO’s performance each year and
making adjustments, if any, to his or her base salary, annual incentive award and annual LTI grant. As part of this
assessment, they review the extent to which the CEO satisfied his or her goals for the year. This review is
conducted with the support of the Lead Independent Director and the NCGPP and CHC Committees, which
oversee the establishment of the CEO’s goals and the annual performance and compensation review process.
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Executive Compensation
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49
|
|
|
|
Elements of Executive Compensation
See "Proxy Statement Highlights—Performance Highlights—Compensation Design for 2024" for a summary of
base salary, annual incentive, and LTI grants components of the company's 2024 executive compensation
program. Additional general details of the program are provided below. To help ensure an overall competitive
total compensation program, executives are also eligible for benefits that are generally available to all
employees.
Base Salary
Overview
As discussed above, the CHC Committee (in the case of the NEOs other than the CEO) or the independent
members of the Board (in the case of the CEO) determine base salaries using competitive compensation data
from the annual total compensation study of the Compensation Peer Group to inform related decision making.
The CHC Committee uses multiple reference points when establishing base salaries, and applies judgment and
discretion, taking into account not only competitive market data, but also factors such as company, business and
individual performance, scope of responsibility, critical needs and skill sets, leadership potential and succession
planning.
2024 Actions
For 2024, Mr. Almeida’s annual base salary remained at $1,300,000 and Mr. Toth’s annual base salary remained
at $1,000,000.
In March 2024, in connection with the annual compensation cycle, Ms. Knight and Messrs. Grade and Sonig
each received salary increases. In recognition of their
continued
expanded leadership responsibilities and to
drive stability during the ongoing transformation of the company, Ms. Knight and Mr. Sonig were provided more
meaningful salary increases.
The following table provides each NEO’s 2023 and 2024 annual base salary as of December 31, 2023 and
December 31, 2024
,
incorporating the increases described above (if any):
|
2023 Base
Salary
|
2024 Base
Salary
|
%
Increase
|
|||
|
Mr. Almeida
|
$
1,300,000
|
$
1,300,000
|
—
%
|
||
|
Mr. Grade
|
$
800,000
|
$
812,000
|
1.5
%
|
||
|
Ms. Knight
|
$
800,000
|
$
900,000
|
12.5
%
|
||
|
Mr. Sonig
|
$
725,000
|
$
800,000
|
10.3
%
|
||
|
Mr. Toth
|
$
1,000,000
|
$
1,000,000
|
—
%
|
Annual Incentive Plan
Overview
Similar to base salary, the CHC Committee (or the independent members of the Board, in the case of the CEO)
determines annual incentive targets using competitive compensation data from the annual total compensation
study of the Compensation Peer Group to inform related decision making. The CHC Committee applies judgment
and discretion, taking into account not only competitive market data, but also factors such as company, business
and individual performance, scope of responsibility, critical needs and skill sets, leadership potential and
succession planning.
The same factors that influence the setting of base salary also influence the establishment
of annual incentive target awards.
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50
|
Executive Compensation
|
|
|
|
Annual incentive payouts are calculated using the following
formula
:
For the 2024 annual incentive plan,
consistent with the 2023 plan
, the CHC Committee selected Adjusted Net
NEO's Target
Annual
Incentive
The Aggregate
Performance Across the
Three
Applicable
Financial Performance
Metrics with a Payout
Range Between
0%-200%
The NEO's
Individual
Performance
Assessment
that Ranges
Between
0%-125%
Annual Incentive
Payout
X
X
=
Sales, Adjusted EPS and Free Cash Flow as the financial performance metrics for funding the annual incentive
plan. Baxter placed greater emphasis on Adjusted Net Sales (which is weighted at 50%) as compared to the
other metrics to recognize the criticality of continuing organic sales growth. The weightings for Adjusted EPS and
Free Cash Flow continued to be equally weighted for 2024 (at 25% each), as the two metrics remain important
measures of Baxter’s operational strategy used by stockholders to assess Baxter’s financial performance.
All
three measures for 2024 are referred to in this proxy statement as Adjusted Net Sales Including Discontinued
Operations, Further Adjusted EPS Including Discontinued Operations and Adjusted Free Cash Flow Including
Discontinued Operations
(to reflect the impacts of the discontinued operations treatment of the recent sale of the
Kidney Care business)
.
See “—Executive Summary—2024 Executive Compensation Program Actions and Changes—2024 Annual
Incentive Design and Performance” for additional information on changes made to the annual incentive plan and
individual performance assessment discussion for 2024.
Annual Incentive Target Awards
NEOs’ annual incentive target awards are set within a competitive range for the Compensation Peer Group.
The 2024 annual incentive target as of December 31, 2024 for each NEO is outlined below.
The target annual incentive did not change from the prior year for Messrs. Almeida, Grade or Toth.
The annual
incentive target change for Mr. Sonig was to better align to market for his role.
In connection with her promotion
to EVP and COO, Ms. Knight received an increase in her annual incentive target for 2025.
|
NEO
|
2024 Target Annual
Incentive
as a % of
Base Salary
|
||
|
Mr. Almeida
|
165%
|
||
|
Mr. Grade
|
100%
|
||
|
Ms. Knight
|
105%
|
||
|
Mr. Sonig
|
100%
|
||
|
Mr. Toth
|
125%
|
Determination of 2024 Annual Incentive Plan Payouts
Financial Performance.
The tables below provide Adjusted Net Sales Including Discontinued Operations, Further
Adjusted EPS Including Discontinued Operations and Adjusted Free Cash Flow Including Discontinued
Operations targets for 2024, as well as actual results for each NEO. The payout for performance in between the
payout ranges is based on linear interpolation. Given related segment oversight responsibilities, the performance
for each of Ms. Knight and Messrs. Sonig and Toth was measured on the Adjusted Net Sales Including
Discontinued Operations for his or her respective segment (which reflect budgeted exchange rates). The
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|
51
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|
|
|
Adjusted Net Sales Including Discontinued Operations metric for each of Messrs. Almeida and Grade are based
on overall Baxter results to recognize his enterprise-wide responsibilities. Performance for all NEOs continues to
be measured on overall Baxter results for Further Adjusted EPS Including Discontinued Operations and Adjusted
Free Cash Flow Including Discontinued Operations metrics.
See "—Individual Performance" beginning on
page
53
for final payout percentages and amounts.
Messrs. Almeida and Grade
|
2024
|
||||||
|
Threshold
(50%
Payout)
|
Target
(100%
Payout)
|
Maximum
(200%
Payout)
|
Actual
|
Achievement
as a % of
Target
4
|
Formulaic
Payout
as a %
of Target
|
|
|
Company—Adjusted Net
Sales Including Discontinued
Operations (in millions)
1
|
$
14,266
|
$
15,017
|
$
15,768
|
$
15,181
|
101.1
%
|
122
%
|
|
Further Adjusted EPS
Including Discontinued
Operations
2
|
$
2.36
|
$
2.95
|
$
3.54
|
$
2.79
|
94.5
%
|
86
%
|
|
Adjusted Free Cash Flow
Including Discontinued
Operations (in millions)
3
|
$
490
|
$
700
|
$
910
|
$
501
|
71.6
%
|
53
%
|
|
Weighted Financial Formulaic Payout as a % of Target:
|
96
%
|
|||||
Ms. Knight
|
2024
|
||||||
|
Threshold
(50%
Payout)
|
Target
(100%
Payout)
|
Maximum
(200%
Payout)
|
Actual
|
Achievement
as a % of
Target
4
|
Formulaic
Payout
as a %
of Target
|
|
|
Medical Products &
Therapies—Adjusted Net
Sales Including Discontinued
Operations (in millions)
1
|
$
4,920
|
$
5,179
|
$
5,438
|
$
5,217
|
100.7
%
|
115
%
|
|
Further Adjusted EPS
Including Discontinued
Operations
2
|
$
2.36
|
$
2.95
|
$
3.54
|
$
2.79
|
94.5
%
|
86
%
|
|
Adjusted Free Cash Flow
Including Discontinued
Operations (in millions)
3
|
$
490
|
$
700
|
$
910
|
$
501
|
71.6
%
|
53
%
|
|
Weighted
Financial
Formulaic
Payout as a
% of
Target:
|
92
%
|
|||||
|
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|
|
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|
Executive Compensation
|
|
|
|
Mr. Sonig
|
2024
|
||||||
|
Threshold
(50%
Payout)
|
Target
(100%
Payout)
|
Maximum
(200%
Payout)
|
Actual
|
Achievement
as a % of
Target
4
|
Formulaic
Payout
as a %
of Target
|
|
|
Pharmaceuticals—Adjusted
Net Sales Including
Discontinued Operations (in
millions)
1
|
$
2,232
|
$
2,349
|
$
2,467
|
$
2,407
|
102.5
%
|
149
%
|
|
Further Adjusted EPS
Including Discontinued
Operations
2
|
$
2.36
|
$
2.95
|
$
3.54
|
$
2.79
|
94.5
%
|
86
%
|
|
Adjusted Free Cash Flow
Including Discontinued
Operations (in millions)
3
|
$
490
|
$
700
|
$
910
|
$
501
|
71.6
%
|
53
%
|
|
Weighted
Financial
Formulaic
Payout as a
% of
Target:
|
109
%
|
|||||
Mr. Toth
|
2024
|
||||||
|
Threshold
(50%
Payout)
|
Target
(100%
Payout)
|
Maximum
(200%
Payout)
|
Actual
|
Achievement
as a % of
Target
4
|
Formulaic
Payout
as a %
of Target
|
|
|
Kidney Care—Adjusted Net
Sales Including Discontinued
Operations (in millions)
1
|
$
4,140
|
$
4,358
|
$
4,576
|
$
4,539
|
104.1
%
|
183
%
|
|
Further Adjusted EPS
Including Discontinued
Operations
2
|
$
2.36
|
$
2.95
|
$
3.54
|
$
2.79
|
94.5
%
|
86
%
|
|
Adjusted Free Cash Flow
Including Discontinued
Operations (in millions)
3
|
$
490
|
$
700
|
$
910
|
$
501
|
71.6
%
|
53
%
|
|
Weighted Financial Formulaic Payout as a % of Target:
|
126
%
|
|||||
1.
Adjusted Net Sales Including Discontinued Operations is calculated as the company’s reported net sales (determined in
accordance with GAAP) using budgeted exchange rates as of January 1, 2024 and including net sales from discontinued
operations. Company Adjusted Net Sales Including Discontinued Operations, Medical Products & Therapies Adjusted Net
sales Including Discontinued Operations, Pharmaceuticals Adjusted Net Sales Including Discontinued Operations and
Kidney Care Adjusted Net Sales Including Discontinued Operations totaled $15.2 billion, $5.2 billion, $2.4 billion and $4.5
billion, respectively, for 2024. Company net sales from continuing operations, Medical Products & Therapies net sales from
continuing operations and Pharmaceuticals net sales from continuing operations as reported under GAAP for 2024 totaled
$10.6 billion, $5.2 billion, and $2.4 billion, respectively.
Kidney Care net sales included in Discontinued Operations as
reported under GAAP for 2024 totaled $4.5 billion. Totals may not foot due to rounding. The company uses net sales at
budgeted exchange rates as a target under the 2024 an
nual incentive plan for the same reason that Baxter provides sales
guidance excluding the impact of foreign currency fluctuations and certain other items—that is, the company believes it
provides a better perspective on underlying sales growth. The use of budgeted exchange rates also allows Baxter to
evaluate final performance on the same foreign currency basis that was used for setting the target and establishing the
budget.
2.
Further Adjusted EPS including Discontinued Operations is calculated as the company's diluted earnings per share
(determined in accordance with GAAP) as adjusted for special items and including adjusted earnings per share from
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Executive Compensation
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discontinued operations less certain operational adjustments to the extent that they were not included in the 2024 adjusted
earnings per share target. Special items for 2024 totaled $2.3 billion (or $2.1 billion on an after-tax basis), or $4.17 per
diluted share. These adjustments primarily related to goodwill and long-lived asset impairments, intangible asset
amortization, business optimization items, separation-related costs, costs associated with European regulations (medical
devices reporting regulations), Hurricane Helene costs, acquisition and integration costs related to its acquisition and
integration of Hillrom, legal matters, product related reserves and tax matters. Further Adjusted EPS for the 2024 annual
incentive plan was further adjusted to remove the impact of certain operational adjustments of $55 million, or $0.11 per
diluted share. Total GAAP diluted EPS in 2024 was ($1.27). Further adjusted EPS may not foot due to rounding.
3.
Adjusted Free Cash Flow including Discontinued Operations is calculated as the company’s operating cash flow calculated
in accordance with GAAP less capital expenditures. It includes free cash flow from discontinued operations and reflects the
exclusion of certain income tax payments that were disbursed in the third quarter of 2024 and were included in discontinued
operations related to the company's former BPS business which was sold in 2023 and certain operational adjustments to the
extent that they were not included in the 2024 free cash flow target. The company uses free cash flow (rather than operating
cash flow) as it gives effect to the company’s capital expenditures and better reflects the cash generated by the company
that may be available for future investment. In 2024,
the company’s operating cash flow from continuing operations was
$819 million and the company incurred $446 million in capital expenditures from continuing operations. The company’s 2024
operating cash flow from discontinued operations was $200 million and the company incurred $216 million in capital
expenditures from discontinued operations over that period. Free cash flow for the purposes of the 2024 annual incentive
plan was further adjusted by excluding $158 million of tax payments related to the company's former BPS business, included
in discontinued operations in the third quarter of 2024 less $14 million of certain operational adjustments.
4.
Level of achievement used to determine funding of the annual incentive may not foot due to rounding.
Individual Performance.
For 2024, each NEO’s individual performance assessment, as well as that of the
broader Executive Operating Committee, was initially determined in connection with an assessment of Baxter’s
performance against pre-established measures for key strategic 2024 priorities. This approach is intended to
further motivate and incentivize the NEOs and broader Executive Operating Committee to meet key 2024
priorities focused on various strategic areas, including corporate responsibility matters, while continuing to help
enable the delivery of strong financial results through the financial metrics used to calculate aggregate financial
performance.
The strategic 2024 priorities are included in the three categories highlighted below along with the applicable
weightings used to calculate the overall weighted payout. The payout for each category ranged from a 90%
payout for threshold performance up to a 110% payout for maximum performance. The initial weighted payout is
subject to further adjustment for each NEO’s overall individual performance assessment based on individual
achievements down to a minimum of 0% and up to a maximum of 125%.
Based on the strategic priority qualitative assessment described below, input from the independent members of
the Board (in the case of the CEO’s individual performance assessment) and the CHC Committee (for all other
NEOs), the 2024 individual performance assessment for each NEO (based on the sum of the weightings of the
related categories and resulting payouts)
was reduced as an initial matter from 102.7% to 100%, consistent with
the negative discretion of the Board.
In its review of 2024 performance, the CHC Committee felt that a reduction
to 100% most accurately represented achievement with respect to these goals. See below for discussion of
additional adjustments made to the individual performance assessment made for each NEO.
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|
|
|
|
|
Category
|
Weighting
|
Initial Payout
1
|
Notable Items
2
|
|
Patient Safety and Quality (including product
safety and quality systems)
|
40%
|
103%
|
•
The company met its internal benchmarks
in key areas such as CAPA (Corrective and
Preventative Actions) effectiveness and
product quality, notwithstanding the
incurrence of certain regulatory actions
|
|
Best Place to Work (including effective talent
management)
|
30%
|
100%
|
•
The company met internal benchmarks in
manager effectiveness, while it fell slightly
below the internal benchmark for voluntary
turnover
|
|
Growth Through Innovation (including the
company’s focus on new product development)
|
30%
|
105%
|
•
The company met or exceeded internal
benchmarks including new product sales
and the vitality index score, notwithstanding
that the Kidney Care separation was not
completed until 2025
|
|
Final Weighted Payout as a % of Target for
NEOs
|
100%
|
|
1.
The initial payout for each category ranged from a 90% payout for threshold performance up to a 110% payout for maximum
performance. The weighted payout is subject to further adjustment for each NEO’s overall individual performance
assessment based on individual achievements down to a minimum of 0% and up to a maximum of 125%.
2.
Reflects certain notable items in each category, which is not comprehensive of all related goals in each category.
Taking into account both financial and individual performance, the table below outlines the 2024 annual incentive
payout for each NEO.
It reflects the
limited discretion utilized by the CHC Committee for the 2024 annual
incentive payouts for each NEO to further align their payouts to that of the employees in their respective business
segments (consistent with the performance of such segments), and for Baxter overall for the CEO and CFO.
|
NEO
|
Base
Salary
|
Target
Annual
Incentive
as a % of
Base
Salary
|
Target
Annual
Incentive
Amount
|
Formulaic
Weighted
Financial
Payout
|
Adjusted
Weighted
Financial
Payout
1
|
Additional
Individual
Performance
Assessment
|
Total
Annual
Incentive
Payout
|
Total
Annual
Incentive
Payout as
a % of
Target
|
|
Mr. Almeida
|
$1,300,000
|
165%
|
$2,145,000
|
96%
|
94%
|
100%
|
$2,016,300
|
94%
|
|
Mr. Grade
|
$812,000
|
100%
|
$812,000
|
96%
|
94%
|
110%
|
$839,608
|
103%
|
|
Ms. Knight
|
$900,000
|
105%
|
$945,000
|
92%
|
100%
|
110%
|
$1,039,500
|
110%
|
|
Mr. Sonig
|
$800,000
|
100%
|
$800,000
|
109%
|
113%
|
100%
|
$904,000
|
113%
|
|
Mr. Toth
|
$1,000,000
|
125%
|
$1,250,000
|
126%
|
111%
|
100%
|
$1,387,500
|
111%
|
1.
Formulaic weighted payout percentages were adjusted to align payouts to that of the employees in each NEO's respective
business segment (consistent with the performance of each segment), and for Baxter overall for the CEO and CFO.
Reflects
the initial individual performance assessment of 100% (based on strategic qualitative assessment described above).
Long-Term Incentive Plan
Overview
LTI grants are a significant component of each NEO’s compensation package. In 2024, 78% of the total target
direct compensation provided to the CEO and an average of 69% of the total target direct compensation provided
to all other NEOs was LTI-based.
The emphasis on LTI grants motivates executives to drive the long-term performance of the company and aligns
their long-term interests with those of stockholders. This alignment is furthered by requiring executive officers to
satisfy the stock ownership guidelines discussed in the section below “—Additional Compensation Governance—
Stock Ownership Guidelines for Executive Officers.”
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Executive Compensation
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|
|
|
|
Similar to the approach taken with respect to base salaries and the annual incentive target awards, the CHC
Committee (or the independent members of the Board, in the case of the CEO) determines target annual LTI
grant values using competitive compensation data from the annual total compensation study of the
Compensation Peer Group to inform its decisions. The CHC Committee applies judgment and discretion, taking
into account not only competitive market data, but also factors such as company, business and individual
performance, scope of responsibility, critical needs and skill sets, leadership potential and succession planning.
The same factors that influence the setting of base salaries and annual incentive target awards also impact the
establishment of the target annual LTI grant values.
2024 Annual LTI Grants
LTI Grant Structure
In order to support the stability and focus required of senior leadership in connection with the proposed
separation of the Kidney Care business, the company made its 2024 annual LTI grant to all equity-eligible
employees (including all NEOs, with the exception of Messrs. Almeida and Grade) in the form of 100% RSUs.
Messrs. Almeida and Grade received 50% of their 2024 annual equity grants in the form of RSUs and 50% of
their annual equity grants in the form of PSUs, as the company recognizes the importance of the CEO and CFO
to have a significant portion
of their equity awards in performance-based equity. To mitigate potential
complications of setting multi-year targets in the year in which the Kidney Care separation could have been
completed, PSUs granted in 2024 are based on Baxter’s relative TSR versus the S&P 500 Healthcare Equipment
& Services Index.
All NEOs received regular annual LTI equity grants in March 2024, and no off-cycle LTI grants were made to
NEOs in 2024.
Annual LTI grant values are aligned to market for all individuals and are assessed annually to
ensure market competitiveness.
In connection with her promotion to EVP and COO, Ms. Knight received an
increase in her 2025 annual LTI equity grant target value.
|
NEO
|
2024 Target Annual
LTI Grant Value
1
|
# of PSUs (50% of
Target Annual LTI
Grant Value for CEO
and CFO)
2
|
# of Restricted Stock Units
(50% of Target Annual LTI
Grant Value for CEO and
CFO; 100% for All
Others)
3
|
||
|
Mr. Almeida
|
$12,000,000
|
142,891
|
142,891
|
||
|
Mr. Grade
|
$3,600,000
|
42,867
|
42,867
|
||
|
Ms. Knight
|
$4,500,000
|
—
|
107,168
|
||
|
Mr. Sonig
|
$3,500,000
|
—
|
83,353
|
||
|
Mr. Toth
|
$5,000,000
|
—
|
119,076
|
1.
The grant date for the 2024 annual LTI grants was March 6, 2024.
2.
Reflects the target number of PSUs granted. The actual number of shares earned, if any, will be determined after the three-
year performance period ending on December 31, 2026. The target number of PSUs is calculated based on the five-day
average of Baxter’s closing share prices beginning two weeks before the grant date and ending one week prior to the grant
date (Average Share Price). The target grant value attributable to the 2024 PSUs differs from the value disclosed in the
Summary Compensation Table and the Grants of Plan-Based Awards table below, which
use
the accounting values including
a Monte Carlo valuation for TSR PSUs.
3.
The number of RSUs is calculated based on the Average Share Price.
2024 Annual PSU Grants.
To mitigate potential complications of setting multi-year targets in the year in which
the Kidney Care separation could have been completed, yet maintain focus on Baxter’s performance relative to
its industry peers, PSUs granted in 2024 to Messrs. Almeida and Grade are based on Baxter’s relative TSR
versus the S&P 500 Healthcare Equipment & Services Index, with the actual payouts ranging between 0% and
200% of target depending on actual company performance. The performance period is three years and runs
from January 1, 2024 through December 31, 2026.
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The performance and payout schedule for 2024-2026 relative TSR PSUs,
which is aligned with typical peer
and broad market practice
, and is unchanged from prior years, is provided below:
|
Peer Group Achievement Level
|
Payout as a %
of Target
|
||
|
80th Percent Rank or higher
|
200
%
|
||
|
50th Percent Rank
|
100
%
|
||
|
35th Percent Rank
|
50
%
|
||
|
Below 35th Percent Rank
|
0
%
|
Payout between each percent rank is based on linear interpolation. Additionally, if Baxter’s TSR is negative at the
end of the three-year performance period, the maximum PSU payout will be capped at 100%.
When dividends are paid on Baxter’s common stock, DEUs accrue on unvested PSUs during the performance
period and are paid out upon vesting of such PSUs based on the number of shares actually earned.
2024 Annual RSU Grants.
All annual RSUs granted to NEOs in 2024 are scheduled to vest ratably over a three-
year period, starting on the first anniversary of the grant date.
2022—2024 PSU Performance
In February 2025, the CHC Committee certified the final results for PSU awards granted to certain NEOs on
March 2, 2022 for the performance period of January 1, 2022 through December 31, 2024 (the 2022 PSUs). The
chart below details the applicable performance metrics, weightings, targets, certified performance results and
payout as a percentage of target shares. The payout for performance between the ranges is based on linear
interpolation. Performance below threshold would result in a 0% payout for that performance metric, while
performance at or above maximum would result in a 200% payout.
The CHC Committee did not apply any
discretion to adjust the final performance achievement for the 2022 PSUs.
|
Performance Metric
|
Weighting
|
||
|
Relative TSR against the TSR performance of the companies
in the S&P 500 Healthcare Equipment & Services Index
|
33-1/3%
|
||
|
Adjusted ROIC
|
33-1/3%
|
||
|
Adjusted Net Sales CAGR
|
33-1/3%
|
|
Performance Metric
|
Weighting
|
Threshold
(50% Payout)
|
Target
(100% Payout)
|
Maximum
(200% Payout)
|
Result
4
|
Payout as
a
% of
Target
|
|
Relative TSR against the TSR
performance of the companies in
the S&P 500 Healthcare
Equipment & Services Index
1
|
33-1/3%
|
35th Percent
Rank
|
50th Percent
Rank
|
80th Percent
Rank
|
6.3
rd
Percent
Rank
|
0%
|
|
Adjusted ROIC
2
|
33-1/3%
|
7.7%
|
9.6%
|
11.5%
|
6.5%
|
0%
|
|
Adjusted Net Sales CAGR
3
|
33-1/3%
|
2.6%
|
4.4%
|
6.2%
|
2.6%
|
0%
|
|
Weighted Payout as a % of Target
|
0%
|
|||||
1.
The TSR PSUs described in this section are measured for the company and companies in the S&P 500 Healthcare
Equipment & Services Index based on the following formula: average closing stock price over the last 20 consecutive trading
days of the performance period end date (December 31, 2024)
minus
average closing stock price over the last 20
consecutive trading days immediately preceding the commencement of the performance period (January 1, 2022)
plus
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Executive Compensation
|
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reinvested dividends
divided by
average closing stock price over the last 20 consecutive trading days immediately preceding
the commencement of the performance period.
2.
Adjusted ROIC (Return on Invested Capital) performance for purposes of this grant is calculated by first determining the
annual Adjusted ROIC performance target for each of 2022, 2023 and 2024 and then determining the simple average
Adjusted ROIC performance over the three-year performance period. Adjusted ROIC performance is measured by
considering each applicable calendar year’s adjusted operating income less adjusted income tax expense, divided by
average invested capital and adjusted for any business or asset acquisition or divestiture with annualized revenue of greater
than $75 million at the time of the acquisition or divestiture. This amount was adjusted for the divestiture of the company's
BPS business in October 2023 prospectively
but includes Adjusted ROIC associated with the company's former Kidney Care
business, which was divested after year end 2024
.
3
.
Adjusted Net Sales means “net sales” of the company that shall be (i) computed on a constant currency basis using the
average foreign exchange rates in each applicable jurisdiction for the calendar year immediately preceding the grant date
and (ii) adjusted to exclude the revenue for any business or asset acquisition or divestiture with annualized revenue of
greater than $75 million at the time of the acquisition or divestiture. Adjusted Net Sales CAGR (compound annual growth
rate) performance for purposes of this grant is calculated by taking the Adjusted Net Sales for the last calendar year of the
three-year performance period (or 2024) and comparing it against Adjusted Net Sales
for 2021,
the calendar year
immediately preceding the grant date. This amount was adjusted to exclude BPS related revenue for the periods following
the company’s divestiture of that business.
4
.
Actual results for Adjusted Net Sales CAGR were slightly below 2.6%, but appear at 2.6% due to rounding conventions.
Considering the performance disclosed above, the table below illustrates the target number of 2022 PSUs and
final number of shares earned for each NEO eligible to receive PSUs at the time of grant. Messrs. Grade, Sonig
and Toth joined Baxter after the beginning of this performance cycle and therefore were not eligible for this grant.
|
NEO
|
Target # of PSUs
|
# of Shares Earned
|
||
|
Mr. Almeida
|
65,398
|
0
|
||
|
Ms. Knight
|
5,351
|
0
|
Perquisites
Baxter provides a very limited range of perquisites to its NEOs. While Baxter permits limited personal travel on
the company aircraft in connection with potential
efficiencies
and security risk reduction associated with such
use, all personal aircraft usage for senior executives other than the CEO must be pre-approved by the CEO in
accordance with the terms of the company’s aircraft policy. In conjunction with Mr. Almeida's July 2023 amended
offer letter, as described below, and until February 3, 2025, the Board granted Mr. Almeida the ability to use the
company aircraft, or if unavailable, charter aircraft, for personal use for up to 50 hours each calendar year. Any
personal use in excess of the 50 hours each calendar year was reimbursed by Mr. Almeida pursuant to the
Aircraft Time Sharing Agreement in place between Mr. Almeida and the company and based on rates set by the
Federal Aviation Regulations. This agreement was terminated as of February 3, 2025. In connection with Mr.
Shafer’s appointment as Chair and Interim CEO, he has entered into an Aircraft Time Sharing Agreement
pursuant to which he will reimburse the company for any personal, non-commuting use of the company aircraft.
Additionally, NEOs are eligible for reimbursement of executive physical examinations and related health services.
Retirement and Other Benefits
E
ach NEO still employed by Baxter is eligible to participate in Baxter’s U.S. tax-qualified Section 401(k) plan
(401(k) Plan) on the same terms as all eligible U.S. employees. All eligible employees in the 401(k) Plan are
eligible to receive immediately vested 100% matching contributions up to 4% of eligible compensation.
Eligible
employees, including NEOs,
also receive an additional non-elective 401(k) Plan employer contribution equal to
3% of eligible compensation.
Additionally, each NEO still employed by Baxter is eligible to participate in Baxter’s U.S. nonqualified deferred
compensation plan (Deferred Compensation Plan) on the same terms and conditions as eligible U.S. employees,
which allows them to accumulate additional retirement savings and tax deferral opportunities beyond the
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limitations for tax-qualified retirement plans under the Internal Revenue Code of 1986, as amended (the Code).
The terms of the Deferred Compensation Plan are more fully described below under “Executive Compensation
Tables—2024 Nonqualified Deferred Compensation Plan.”
Employment Arrangements, Executive Severance Plan and Change in Control Agreements
In July 2023, Mr. Almeida entered into an amended offer letter (Almeida Offer Letter) governing the terms and
conditions of his employment. Under the terms of the Almeida Offer Letter, Mr. Almeida was entitled to receive
two times base salary and target annual incentive and certain health and welfare benefit coverage in the event
that his employment with Baxter was terminated by Baxter other than for cause or by Mr. Almeida for good
reason. In conjunction with the renewal of his offer letter and as discussed above, the Board granted Mr. Almeida
the ability to use the company aircraft or, if unavailable, charter aircraft, for personal use of up to 50 hours each
calendar year. Any personal use in excess of the 50 hours each calendar year was to be reimbursed by Mr.
Almeida pursuant to his Aircraft Time Sharing Agreement and based on rates set by the Federal Aviation
Regulations.
In April 2023, Mr. Toth entered into an offer letter. In accordance with the terms of his offer letter, his sign-on cash
bonus is not subject to repayment as the Kidney Care business had not emerged as a standalone public
company by December 31, 2024. Additionally, his onboarding RSU equity grant accelerated as of the same date
for the same reason.
See "Executive Compensation Tables—Potential Payments Upon Termination or Following
a Change in Control—Mr. Toth's Offer Letter" for additional details.
For other U.S.-based executives, the company generally executes an offer of employment before an executive
joins the company
and in some cases, a standard offer letter
. The offer describes the basic terms of the
executive’s employment, including his or her start date, title, annual base salary, annual incentive target and
long-term incentive equity award target.
Stock ownership guidelines
and perquisites are also included, if
applicable. Except as described herein with respect to Messrs. Almeida and Toth (who are no longer serving in
the same roles with the company), the other NEOs have entered into a standard offer letter with the company,
the material terms of which have been described herein.
The company maintains an executive severance plan for all U.S.-based executives (other than the CEO)
(Executive Severance Plan), including Messrs. Grade and Sonig and Ms. Knight. Mr. Toth was a party to the
Executive Severance Plan prior to completion of the Kidney Care sale on January 31, 2025. If within 12 months
of an executive’s termination of employment the executive violates any obligations under an employment
agreement, restrictive covenant or similar agreement, or it is determined that the executive could have been
terminated for cause, then the executive will be required to repay all amounts received and future payments will
cease.
Beginning in February 2023, each NEO became subject to an executive cash severance policy that limits cash
severance benefits to 2.99 times the sum of the NEO’s base salary plus target annual bonus opportunity.
Payments cannot exceed this threshold without prior stockholder ratification or approval.
Additionally, as of December 31, 2024, each NEO was a party to a change in control (CIC) agreement, which
provides for certain severance payments if Baxter undergoes a CIC and the NEO ceases to be employed.
Providing for payments in a CIC situation is consistent with market practice and helps to ensure that if a CIC is in
the best interests of the company’s stockholders (as determined by the Board), the NEOs have appropriate
incentives to remain focused on their responsibilities before, during and after the transaction without undue
concern for their personal circumstances.
For a more detailed discussion of these arrangements, please refer to the information under “Executive
Compensation Tables—Potential Payments Upon Termination or Following a Change in Control.”
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Senior Management Transitions and Related Compensation Beginning in February 2025
On February 3, 2025, Baxter announced that Mr. Almeida had ceased serving as Chair, President and CEO
effective as of the same date (the CEO Transition Date), but would continue serving as Special Advisor through
October 31, 2025 (the CEO Separation Date). As part of this announcement, the company announced the
appointment of Mr. Shafer as Chair and Interim CEO effective as of the CEO Transition Date.
In addition, Ms.
Knight was appointed Executive Vice President, COO and Interim Group President, Medical Products &
Therapies.
Below are the related compensation decisions approved by the Board and CHC Committee, as applicable, in
connection with Mr. Shafer's appointment, Mr. Almeida's separation without cause and Ms. Knight's appointment.
Mr. Shafer:
In order to recognize the significant time and effort required to serve as Chair and Interim CEO, while Mr. Shafer
holds this position, his compensation will consist of:
•
An annual base salary payable at the rate $108,333.33 per month (equivalent to annualized base salary
of $1,300,000);
•
A bonus equal to $600,000, payable upon the earlier of a) the six month anniversary of the CEO
Transition Date (the Interim CEO Term) and b) when the successor CEO begins; and
•
An equity award with a target grant value of $2,500,000 made in RSUs on February 5, 2025, that will
vest upon the completion of the Interim CEO Term.
Mr. Shafer is also eligible to use the company aircraft, or, if unavailable, charter aircraft for any required business
and commuting travel to company offices. The company will reimburse Mr. Shafer to make him whole for any
taxes he incurs in connection with taxable income allocated to him based on his commuting travel (which
includes any taxes payable in connection with any tax gross up paid to him). As discussed in "—Elements of
Executive Compensation—Perquisites," Mr Shafer has entered into an Aircraft Time Sharing Agreement pursuant
to which he will reimburse the company for any personal, non-commuting use of the company aircraft.
The terms of Mr. Shafer's offer letter were structured to align with market practice and developed in consultation
with the CHC Committee's independent compensation consultant.
Mr. Almeida:
In connection with his separation, Mr. Almeida’s outstanding equity awards will continue to vest in accordance
with their terms through the CEO Separation Date, and, subject to his compliance with certain release
requirements, he will receive a lump-sum separation payment equal to $6,890,000, payable no later than 60 days
following the CEO Separation Date. This amount is equivalent to what Mr. Almeida would have received had he
been terminated without “Cause” under the provisions of the Almeida Offer Letter.
As compensation for services performed as Special Advisor during the period between the CEO Transition Date
and the CEO Separation Date, Mr. Almeida will receive a salary based on an annual rate of $650,000 and
continue to be eligible for the company’s health benefits. Mr. Almeida will not be eligible to receive any bonus
under the 2025 annual incentive plan or any LTI awards for his service during 2025. The company will also
arrange to provide him and his dependents health insurance benefits substantially similar to those provided to
him and his dependents immediately prior to the CEO Separation Date for a period of 24 months
following the
CEO Separation Date
(Post-Separation Health Benefits).
Ms. Knight:
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In connection with her appointment as Executive Vice President, COO and Interim Group President, Medical
Products & Therapies, effective as of the CEO Transition Date, Ms. Knight’s (i) annual target bonus under the
MICP increased to 110% and (ii) a
nnual target LTI award under the LTI plan i
ncreased to $5,000,000.
Additional
Compensation Governance
Risk Assessment of Compensation Policies and Practices
With the assistance of the CHC Committee’s independent compensation consultant, the CHC Committee
reviewed Baxter’s material compensation policies and practices and concluded that these policies and practices
do not create risks that are reasonably likely to have a material adverse effect on the company.
The key features
of the executive compensation program as well as incentive and commission arrangements below the executive
level that support this conclusion include:
•
appropriate pay philosophy, peer group and market positioning;
•
effective balance in cash and equity mix, short- and long-term focus, corporate, business unit and
individual performance focus and financial and non-financial performance measurement and discretion;
and
•
meaningful policies that mitigate risk, such as the stock ownership guidelines and recoupment policies
discussed below.
Stock Ownership Guidelines for Executive Officers
In order to align their long-term economic interests with those of stockholders, executive officers are required to
own a certain amount of Baxter stock within five years of becoming an executive officer.
Stock Ownership Requirements by
Role
:
|
Role
|
Stock Ownership
Guideline Minimum
(Multiple of Base Pay)
|
||
|
CEO
|
6x
|
||
|
All Other NEOs Still In Role
|
4x
|
Below summarizes the types of equity that are included and excluded from the stock ownership guideline
requirement:
|
Equity Type
|
Included
|
Excluded
|
||
|
Unexercised Stock Options (Vested or
Unvested)
|
X
|
|||
|
Shares retained from a stock option exercise
|
X
|
|||
|
RSUs (Vested or Unvested or DEUs)
|
X
|
|||
|
PSUs (Vested and Certified)
|
X
|
|||
|
PSUs (Unvested)
|
X
|
|||
|
Shares purchased through the Employee
Stock Purchase Program
|
X
|
|||
|
Shares purchased on the open market
|
X
|
As of December 31, 2024, Mr. Almeida had met his stock ownership requirements and
Messrs. Grade, Sonig,
and Toth and Ms. Knight, while not yet subject to this ownership requirement as they have been executive
officers with the company for less than five years, were, using reasonable assumptions, on track to achieve his or
her stock ownership objective within the prescribed time frame.
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Executive Compensation
|
61
|
|
|
|
This requirement, like the Mandatory Clawback Policy and Compensation Recoupment Policy discussed below,
helps to align the interests of the executive officers with those of the company’s stockholders and help ensure
appropriate levels of risk-taking by executive officers.
Prohibitions on Trading; No-Hedging
Baxter has
adopted
a Securities Trading Policy governing the purchase, sale and/or other disposition of the
company’s securities by, among others, its directors, officers and employees, as well as by the company itself,
that is reasonably designed to promote compliance with insider trading laws, rules and regulations and NYSE
listing standards. Pursuant to Baxter’s Securities Trading Policy, all company employees (regardless of role or
title), directors, consultants, contract workers, temporary staff worldwide, and, in certain instances, former
directors and employees, together with their family members, are prohibited from directly or indirectly
participating in certain trading activities with respect to company securities that by their nature are aggressive or
speculative or may give rise to an appearance of impropriety. Such prohibited activities include:
•
Same-day or short-term trading (
i.e.,
“day trading”) of company stock.
•
Selling company stock that the seller does not own or a sale that is completed by delivery of borrowed
company stock (
i.e.,
a “short sale”).
•
Purchasing or holding company securities on margin.
•
Pledging company securities as collateral for a loan.
•
Entering into any derivative (including purchasing, selling or writing put or call options, forward
contracts, “equity” or “performance” swaps or any similar agreements denominated in company
securities) or similar transactions with respect to company securities.
Prior to effecting most transactions in company securities, certain executive officers, directors and other company
employees who are routinely exposed to information that would necessarily be considered material (such as
certain financial information or important press releases) before it is released to the public must first obtain pre-
clearance of the transaction from the Corporate Secretary or General Counsel. A copy of the Securities Trading
Policy is filed as Exhibit 19 to the 2024 Form 10-K.
R
ecoupment Policies; Non-Competition Agreement Clawback
Baxter has a Mandatory Clawback Policy, applicable to executive officers, and a Compensation Recoupment
Policy, applicable to all employees, including executive officers (together, the Recoupment Policies). The
Mandatory Clawback Policy is consistent with the SEC’s adoption of rules to implement Section 954 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act of 2010 and corresponding NYSE listing standards and
provides for the recoupment of erroneously awarded incentive-based compensation received by current and
former executive officers (as defined in Rule 10D-1 of the Exchange Act), including the NEOs, during the three
completed fiscal years immediately preceding the date that Baxter is required to prepare an accounting
restatement.
The Compensation Recoupment Policy applies to all payments under Baxter’s incentive plans as
well as all LTI grants (including without limitation all time-based incentive awards) to any person, including
executives (including all NEOs). Under the Compensation Recoupment Policy, following any restatement of the
company’s financial results or where a participant violates a restrictive covenant contained in any agreement, the
Board (with respect to executives (including all NEOs)) or the CEO (with respect to all other persons) will review
the facts and circumstances related to the violation and take any actions it deems appropriate under the
Compensation Recoupment Policy, including recovery, reduction or forfeiture of all or part of any annual incentive
or any previously awarded LTI grant (or to be awarded LTI grant), disciplinary actions and the pursuit of any other
remedies. The company made no such recoupments under the Recoupment Policies in 2024.
Additionally, all LTI participants, including the NEOs, are required to execute updated non-competition, non-
solicitation and confidentiality agreements (the Non-Competition Agreement). All LTI participants who execute a
Non-Competition Agreement, including the NEOs, are subject to a clawback provision in the event a participant
violates the terms of the Non-Competition Agreement following a termination of employment for any reason. In
the event of any such violation, all unvested LTI grants (including grants that would otherwise have vested if the
participant were retirement eligible) are immediately forfeited. Additionally, in that case, all LTI grants that vested
|
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62
|
Executive Compensation
|
|
|
|
or became exercisable within the 12 months prior to the termination date that have not otherwise been sold or
exercised are cancelled and the shares are returned to the company and any gain from the sale or exercise of
any LTI grant that vested within 12 months prior to the termination date is subject to repayment.
|
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|
Executive Compensation
|
63
|
|
|
|
Executive Compensation Tables
2024 Summary Compensation Table
The following table shows compensation provided to the NEOs for the years indicated below.
|
Name and
Principal Position
|
Year
|
Salary
($)
1
|
Bonus
($)
2
|
Stock
Awards
($)
3
|
Option
Awards
($)
4
|
Non-Equity
Incentive
Plan
Compensation
($)
5
|
All Other
Compensation
($)
6
|
Total
|
|
José E. Almeida
|
2024
|
1,300,000
|
—
|
14,319,107
|
—
|
2,016,300
|
435,608
|
18,071,015
|
|
Former Chair of the Board,
President and Chief Executive
Officer
|
2023
|
1,300,000
|
—
|
7,527,469
|
2,635,170
|
2,187,900
|
136,132
|
13,786,671
|
|
2022
|
1,300,000
|
—
|
8,730,301
|
2,760,487
|
675,675
|
121,773
|
13,588,236
|
|
|
Joel Grade
|
2024
|
810,000
|
500,000
|
4,295,702
|
—
|
839,608
|
62,238
|
6,507,548
|
|
Executive Vice President and Chief
Financial Officer
|
2023
|
164,384
|
—
|
3,636,661
|
902,897
|
167,671
|
4,608
|
4,876,222
|
|
Heather Knight
|
2024
|
883,333
|
—
|
4,607,152
|
—
|
1,039,500
|
66,505
|
6,596,490
|
|
Executive Vice President, Chief
Operating Officer and Interim Group
President, Medical Products &
Therapies
|
2023
|
791,507
|
—
|
2,395,122
|
838,466
|
771,091
|
64,057
|
4,860,243
|
|
Alok Sonig
|
2024
|
787,500
|
—
|
3,583,345
|
—
|
904,000
|
70,961
|
5,345,806
|
|
Executive Vice President and Group
President, Pharmaceuticals
|
2023
|
725,000
|
—
|
1,710,802
|
598,904
|
794,568
|
36,759
|
3,866,033
|
|
Christopher Toth
|
2024
|
1,000,000
|
—
|
5,119,077
|
—
|
1,387,500
|
78,224
|
7,584,801
|
|
Former Executive Vice President
and Group President, Kidney Care
|
2023
|
586,301
|
3,200,000
|
4,385,140
|
—
|
730,238
|
738,636
|
9,640,315
|
1.
Amounts shown in this column represent base salary actually earned in the applicable year. For additional information
regarding each NEO’s salary for 2024, see “Compensation Discussion and Analysis—Elements of Executive Compensation
—Base Salary—2024 Actions.”
2.
The amount shown for 2024 represents a $500,000 cash sign-on bonus for Mr. Grade, in connection with his hiring to (i)
compensate for equity awards from his former employer that were scheduled to vest in the near term and (ii) increased costs
associated with traveling
to his work location in Deerfield, Illinois
. The amount shown for 2023 for Mr. Toth represents a
$3,200,000 cash sign-on bonus in connection with his hiring, to compensate Mr. Toth for (i) a portion of equity awards from
his former employer that were scheduled to vest in the near term, as well as (ii) loss of bonus with his former employer, and
(iii) increased costs due to his work location in Deerfield, Illinois prior to his permanent relocation
.
3.
Amounts shown for 2024 represent the grant date fair value of TSR PSUs granted in 2024 (to Messrs. Almeida and Grade
only) and the grant date fair value of RSUs granted in 2024 (to all NEOs). Amounts shown for 2023 represent the grant date
fair value of TSR PSUs, Adjusted ROIC PSUs and Adjusted Net Sales CAGR PSUs granted in 2023, and the grant date fair
value of RSUs granted in 2023. Amounts shown for 2022 represent the grant date fair value of TSR PSUs, Adjusted ROIC
PSUs and Adjusted Net Sales CAGR PSUs granted in 2022, and the grant date fair value of RSUs granted in 2022. PSU
awards reflect the grant date fair value computed in accordance with FASB ASC Topic 718. Refer to Note 9 to the
Consolidated Financial Statements included in the 2024 Form 10-K for a discussion of how grant date fair value of PSU
awards were calculated. DEUs accrue on the unvested PSUs included in this table but are paid only if the underlying awards
vest. The grant date fair value for the maximum performance of the PSUs granted in 2024 is as follows: $8,176,223
for Mr.
Almeida, and $2,452,850 for Mr. Grade
. For further information on these awards, see the “—2024 Grants of Plan-Based
Awards” table.
4.
Amounts shown in this column represent the value of Baxter stock options based on the grant date fair value computed in
accordance with FASB ASC Topic 718. For more information on how these amounts are calculated, please see Note 9 to the
Consolidated Financial Statements included in the
2023 Form 10-K
. For further information on these awards, see the “—
2024 Grants of Plan-Based Awards” table.
|
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| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
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|
Executive Compensation
|
|
|
|
5.
Amounts shown in this column represent annual incentives paid for performance in the applicable year. The methodology
applied in determining the annual incentive amounts earned by the NEOs is discussed under “Compensation Discussion and
Analysis—Elements of Executive Compensation—Annual Incentive Plan.”
6.
Amounts shown in this column represent
(i) the dollar value of term life insurance premiums paid by the company on behalf
of M
essrs. Almeida, Grade, Sonig and Toth, and Ms. Knig
ht; (ii) the cost related to executive physicals for Messrs. Toth and
Sonig and Ms. Knight (iii) contributions made by the company to the 401(k) Plan for
Messrs. Almeida, Grade, Sonig and Toth
and Ms. Knight;
and (iv)
contributions made by the company to the Deferred Compensation Plan for Messrs. Almeida,
Grade, Sonig and Toth, and Ms. Knight. Deferred Compensation Plan and 401(k) Plan contributions on behalf of Messrs.
Almeida, Grade, Sonig and Toth and Ms. Knight include an additional employer contribution equal to 3% of eligible
compensation as a result of their ineligibility to participate in, or accumulate additional benefits under, the company’s pension
and supplemental pension plans. This additional employer contribution is made to all eligible U.S. employees and
attributable to 2024 but was credited to accounts in February 2025. Mr. Toth also received $3,148 in relocation benefits (and
$2,503 in additional related gross up benefits) in 2024 related to the sale of his home and relocation to Kidney Care's current
headquarters in Deerfield, Illinois in preparation for the proposed separation of the Kidney Care business segment.
Mr.
Almeida received $315,839 in value related to use of company aircraft under his personal 50-hour allotment, as described in
the Almeida Offer Letter. The amount shown reflects actual expenses incurred during the personal 50-hour allotment,
including the cost of fuel, crew travel expenses, security, parking, facility, concessions and after-hours fees.
The following table quantifies the amounts paid to each NEO in 2024 for the components discussed above that exceed the
greater of $25,000 or 10% of the total amount of perquisites and personal benefits for that NEO:
|
|
Personal
Aircraft
Usage
Allowance
($)
|
Deferred
Compensation
Contributions
($)
|
||
|
Mr. Almeida
|
315,839
|
94,287
|
||
|
Mr. Grade
|
—
|
42,103
|
||
|
Ms. Knight
|
—
|
35,736
|
||
|
Mr. Sonig
|
—
|
37,054
|
||
|
Mr. Toth
|
—
|
41,557
|
|
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|
|
Executive Compensation
|
65
|
|
|
|
2024 Grants of Plan-Based Awards
The following table summarizes grants of plan-based awards to NEOs in 2024.
|
Name
|
Grant Date
|
CHC
Committee
Approval
Date
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
|
Estimated Future Payments
Under Equity Incentive
Plan Awards
|
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)
(1)
|
Grant
Date Fair
Value of
Stock
and
Option
Awards
($)
|
|||||
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
||||||
|
Mr.
Almeida
|
|||||||||||
|
Annual
Incentive
2
|
0
|
2,145,000
|
5,362,500
|
||||||||
|
RSU Grant
|
3/6/2024
|
2/12/2024
|
142,891
|
6,142,884
|
|||||||
|
2024 PSU
Grant
3
|
3/6/2024
|
2/12/2024
|
71,446
|
142,891
|
285,782
|
8,176,223
|
|||||
|
Mr. Grade
|
|||||||||||
|
Annual
Incentive
2
|
0
|
812,000
|
2,030,000
|
||||||||
|
RSU Grant
|
3/6/2024
|
2/12/2024
|
42,867
|
1,842,852
|
|||||||
|
2024 PSU
Grant
3
|
3/6/2024
|
2/12/2024
|
21,434
|
42,867
|
85,734
|
2,452,850
|
|||||
|
Ms.
Knight
|
|||||||||||
|
Annual
Incentive
2
|
0
|
945,000
|
2,362,500
|
||||||||
|
RSU Grant
|
3/6/2024
|
2/12/2024
|
107,168
|
4,607,152
|
|||||||
|
Mr. Sonig
|
|||||||||||
|
Annual
Incentive
2
|
0
|
800,000
|
2,000,000
|
||||||||
|
RSU Grant
|
3/6/2024
|
2/12/2024
|
83,353
|
3,583,345
|
|||||||
|
Mr. Toth
|
|||||||||||
|
Annual
Incentive
2
|
0
|
1,250,000
|
3,125,000
|
||||||||
|
RSU Grant
|
3/6/2024
|
2/12/2024
|
119,076
|
5,119,077
|
|||||||
1.
RSUs are scheduled to vest ratably (33-1/3% per year) over the three-year vesting period beginning on the grant date.
2.
The amounts shown represent award opportunities under Baxter’s 2024 annual incentive plan at threshold, target and
maximum payouts incorporating both financial and individual performance. The threshold, target and maximum incentive
opportunity for financial performance is 50% of target, 100% of target and 200% of target, respectively. The financial
performance is multiplied by a NEO’s individual performance assessment, which ranges between 0%—125% and is based
as an initial matter on the company’s performance versus key 2024 strategic priorities, including various corporate
responsibility matters as discussed in “Compensation Discussion and Analysis—Elements of Executive Compensation—
Annual Incentive Plan—Determination of 2024 Annual Incentive Plan Payouts—Individual Performance". The actual annual
incentive paid to each NEO for 2024 performance is reported in the “Non-Equity Incentive Plan Compensation” column in the
Summary Compensation Table.
3.
PSUs granted to Messrs. Almeida and Grade in 2024 will be paid out in shares of Baxter common stock based on
performance against relative TSR during the three-year performance period ending on December 31, 2026. For more
information on how these payouts are determined, please
see “Compensation Discussion and Analysis—Elements of
Executive Compensation— Long-Term Incentive Plan—2024 Annual LTI Grants—LTI Grant Structure—2024 Annual PSU
Grants”
.
|
|
| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
66
|
Executive Compensation
|
|
|
|
Outstanding Equity Awards at 2024 Fiscal Year-End
The following table summarizes equity awards outstanding for the NEOs as of December 31, 2024
.
|
Option Awards
|
Stock Awards
|
|||||||||
|
Name
|
Grant Date
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
1
|
Option
Exercise
Price
($)
|
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
($)
2
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)
3,4,5
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($)
3,4,5
|
|
|
Mr.
Almeida
|
10/28/2015
|
720,000
|
37.25
|
10/28/2025
|
||||||
|
3/2/2017
|
534,759
|
50.77
|
3/2/2027
|
|||||||
|
3/1/2018
|
373,435
|
66.31
|
3/1/2028
|
|||||||
|
2/28/2019
|
342,933
|
74.73
|
2/28/2029
|
|||||||
|
3/20/2020
|
381,437
|
75.75
|
3/20/2030
|
|||||||
|
3/3/2021
|
348,483
|
77.15
|
3/3/2031
|
|||||||
|
3/2/2022
|
101,064
|
50,532
|
85.23
|
3/2/2032
|
||||||
|
3/1/2023
|
93,815
|
187,630
|
39.06
|
3/1/2033
|
||||||
|
3/2/2022
|
11,659
|
339,988
|
||||||||
|
3/1/2023
|
47,331
|
1,380,182
|
||||||||
|
3/6/2024
6
|
139,310
|
4,062,279
|
||||||||
|
3/2/2022
|
—
|
—
|
||||||||
|
3/1/2023
|
141,995
|
4,140,578
|
||||||||
|
3/6/2024
|
72,638
|
2,118,138
|
||||||||
|
Mr.
Grade
|
12/1/2023
|
34,091
|
68,182
|
36.55
|
12/1/2033
|
|||||
|
12/1/2023
|
19,239
|
561,022
|
||||||||
|
12/1/2023
|
17,315
|
504,917
|
||||||||
|
3/6/2024
|
43,583
|
1,270,874
|
||||||||
|
12/1/2023
|
51,945
|
1,514,721
|
||||||||
|
3/6/2024
|
21,791
|
635,437
|
||||||||
|
Ms.
Knight
|
2/28/2019
|
18,861
|
74.73
|
2/28/2029
|
||||||
|
3/1/2019
|
20,000
|
75.84
|
3/1/2029
|
|||||||
|
3/20/2020
|
20,979
|
75.75
|
3/20/2030
|
|||||||
|
3/3/2021
|
21,780
|
77.15
|
3/3/2031
|
|||||||
|
3/2/2022
|
16,538
|
8,269
|
85.23
|
3/2/2032
|
||||||
|
investor.baxter.com
|
|
Executive Compensation
|
67
|
|
|
|
|
Option Awards
|
Stock Awards
|
|||||||||
|
Name
|
Grant Date
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
1
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)
2
|
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)
2
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)
3,4,5
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($)
3,4,5
|
|
|
3/1/2023
|
29,850
|
59,701
|
39.06
|
3/1/2033
|
||||||
|
3/2/2022
|
3,817
|
111,292
|
||||||||
|
3/1/2023
|
15,060
|
439,160
|
||||||||
|
3/6/2024
|
108,957
|
3,177,200
|
||||||||
|
3/2/2022
|
—
|
—
|
||||||||
|
3/1/2023
|
45,180
|
1,317,450
|
||||||||
|
Mr.
Sonig
|
9/1/2022
|
17,069
|
8,535
|
56.76
|
9/1/2032
|
|||||
|
3/1/2023
|
21,321
|
42,644
|
39.06
|
3/1/2033
|
||||||
|
9/1/2022
|
6,250
|
182,256
|
||||||||
|
3/1/2023
|
10,758
|
313,694
|
||||||||
|
3/6/2024
|
84,745
|
2,471,159
|
||||||||
|
3/1/2023
|
32,272
|
941,053
|
||||||||
|
Mr.
Toth
7
|
6/1/2023
|
74,158
|
2,162,436
|
|||||||
|
3/6/2024
|
121,064
|
3,530,235
|
||||||||
1.
The chart below represents stock options scheduled to vest as follows (as of December 31, 2024).
|
Name
|
March
2025
|
September
2025
|
December
2025
|
March
2026
|
December
2026
|
Totals
|
|
Mr. Almeida
|
144,347
|
—
|
—
|
93,815
|
—
|
238,162
|
|
Mr. Grade
|
—
|
—
|
34,091
|
—
|
34,091
|
68,182
|
|
Ms. Knight
|
38,119
|
—
|
—
|
29,851
|
—
|
67,970
|
|
Mr. Sonig
|
21,322
|
8,535
|
—
|
21,322
|
—
|
51,179
|
|
Mr. Toth
|
—
|
—
|
—
|
—
|
—
|
—
|
2.
T
he amounts in this column represent unvested RSU awards. Amounts shown in this column also include DEUs accrued on
the unvested RSUs. The market value is based on the closing price of Baxter common stock on December 31, 2024
($29.16). These RSUs were scheduled to vest as follows as of December 31, 2024 and excluding DEUs accrued on the
unvested RSUs.
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|
Executive Compensation
|
|
|
|
|
Name
|
March
2025
|
June
2025
|
September
2025
|
December
2025
|
March
2026
|
June
2026
|
December
2026
|
March
2027
|
Totals
|
|
Mr. Almeida
|
75,191
|
—
|
—
|
—
|
70,258
|
—
|
—
|
47,631
|
193,080
|
|
Mr. Grade
|
14,289
|
—
|
—
|
17,725
|
14,289
|
—
|
17,727
|
14,289
|
78,319
|
|
Ms. Knight
|
46,490
|
—
|
—
|
—
|
42,923
|
—
|
—
|
35,723
|
125,136
|
|
Mr. Sonig
|
32,927
|
—
|
5,869
|
—
|
32,927
|
—
|
—
|
27,785
|
99,508
|
|
Mr. Toth
|
39,692
|
35,453
|
—
|
—
|
39,692
|
35,453
|
—
|
39,692
|
189,982
|
3.
For the grants made on March 2, 2022, amounts represent the
actual numbe
r and value of shares of common stock that an
NEO would have received under the 2022 PSU grant based on performance of relative TSR, Adjusted ROIC and Adjusted
Net Sales and related DEUs, as of December 31, 2024. The final payout under the 2022 PSUs was 0% of target, which is
reflected in the number above following CHC Committee certification in February 2025.
The market value of the PSUs
included in these columns is based on the closing price of Baxter common stock on December 31, 2024 ($29.16).
4.
For the grants made on March 1, 2023, amounts represent the target number and value of shares of common stock that an
NEO would receive under the 2023 PSU grant based on performance of relative TSR, Adjusted ROIC and Adjusted Net
Sales and related DEUs as of December 31, 2024. The 2023 PSUs are scheduled to vest following CHC Committee
certification after the end of the three-year performance period (December 31, 2025) in early 2026. The market value of the
PSUs included in these columns is based on the closing price of Baxter common stock on December 31, 2024 ($29.16).
5.
For the grants made on March 6, 2024 to Messrs. Almeida and Grade, amounts represent the threshold number and value of
shares of common stock and related DEUs that an NEO would receive under the 2024 PSU grant based on performance of
relative TSR as of December 31, 2024. The 2024 PSUs are scheduled to vest following CHC Committee certification after
the end of the three-year performance period (December 31, 2026) in early 2027. The market value of the PSUs included in
these columns is based on the closing price of Baxter common stock on December 31, 2024 ($29.16).
6.
Because Mr. Almeida qualified for the company's equity retirement provisions, accelerated Federal Insurance Contributions
Act taxes were due on his RSU grants in the year of grant. For his 2024 RSU grant, Mr. Almeida chose to satisfy this
obligation by having RSUs withheld. As a result, as of December 31, 2024, his RSUs that have not vested are less than the
number of RSUs granted in the Grants of Plan-Based Awards Table.
7.
As specified in his offer letter, the remaining unvested RSUs from Mr. Toth's June 1, 2023 RSU grant had their vesting
accelerated to December 31, 2024. See “
Compensation Discussion and Analysis—Elements of Executive Compensation—
Employment Arrangements, Executive Severance Plan and Change in Control Agreements
” for additional information
regarding Mr. Toth’s onboarding RSU equity grant.
The amounts set forth for Mr. Toth do not reflect the impact of the Kidney
Care sale on January 31, 2025, at which time his unvested RSUs were partially accelerated and partially converted into
replacement Carlyle awards in accordance with the terms of the related equity purchase agreement.
2024 Option Exercises and Stock Vested
The following table sets forth stock options exercised and RSUs and PSUs that vested in 2024 for the NEOs.
|
Option Awards
|
Stock Awards
|
||||
|
Name
|
Number of
Shares
Acquired on
Exercise
(#)
|
Value
Realized on
Exercise
($)
|
Number of
Shares
Acquired on
Vesting
(#)
|
Value
Realized on
Vesting
($)
1
|
|
|
Mr. Almeida
|
—
|
—
|
67,400
|
2,758,031
|
|
|
Mr. Grade
|
—
|
—
|
18,276
|
613,173
|
|
|
Ms. Knight
|
—
|
—
|
26,522
|
991,948
|
|
|
Mr. Sonig
|
—
|
—
|
11,456
|
450,213
|
|
|
Mr. Toth
|
—
|
—
|
36,469
|
1,242,857
|
|
1.
Amounts represent the market value of Baxter RSU and PSUs (and related DEUs), as applicable, on the date of vesting as
determined by the closing price of Baxter's common stock on the vesting date.
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|
|
|
|
2024 Nonqualified Deferred Compensation Plan
|
Name
|
Executive
Contributions in
2024
($)
1
|
Registrant
Contributions in
2024
($)
2
|
Aggregate
Earnings in 2024
($)
3
|
Aggregate
Balance at
December 31,
2024
($)
4, 5
|
|
Mr. Almeida
|
$
—
|
$
94,287
|
$
131,044
|
$
1,063,806
|
|
Mr. Grade
|
$
39,095
|
$
42,103
|
$
4,589
|
$
67,989
|
|
Ms. Knight
|
$
115,664
|
$
35,736
|
$
103,765
|
$
838,333
|
|
Mr. Sonig
|
$
—
|
$
37,054
|
$
326
|
$
15,103
|
|
Mr. Toth
|
$
—
|
$
41,557
|
$
153
|
$
7,214
|
1.
Amounts in this column are included in either the “Salary” or “Non-Equity Incentive Plan Compensation” column of the
Summary Compensation Table.
2.
Amounts in this column are included in the “All Other Compensation” column of the Summary Compensation Table and
include company non-matching contributions attributable to 2024 and credited to accounts in February 2025.
3.
Amounts in this column are not included in the Summary Compensation Table as the Deferred Compensation Plan provides
participants with a subset of investment elections available to all eligible employees under the 401(k) Plan.
4.
Amounts in this column exclude company non-matching contributions attributable to 2024 but not credited to participant
accounts as of December 31, 2024.
5.
The aggregate balance includes amounts previously reported as compensation for the NEOs in the Summary Compensation
Table for prior years, which are as follows:
|
Name
|
Amount
Previously
Reported ($)
|
||
|
Mr. Almeida
|
706,625
|
||
|
Mr. Grade
|
—
|
||
|
Ms. Knight
|
160,132
|
||
|
Mr. Sonig
|
13,015
|
||
|
Mr. Toth
|
7,062
|
A participant in the Deferred Compensation Plan may elect to defer a portion of his or her eligible compensation
(up to 50% of base salary and up to 100% of eligible annual incentive) during the calendar year as long as the
participant makes such election prior to the beginning of the calendar year. For NEOs, eligible compensation
under the Deferred Compensation Plan includes base salary and any annual incentive. Participants in the
Deferred Compensation Plan may select from a subset of investment elections available to all eligible employees
under the 401(k) Plan, which are described in greater detail below. Amounts in a participant’s account are
adjusted upward or downward to reflect the investment return that would have been realized had such amounts
been invested in the investments selected by the participant. Participants may elect to change their investment
elections daily. Baxter is also required to match contributions to the Deferred Compensation Plan up to 4% of a
participant’s eligible compensation in the same manner as under the 401(k) Plan. Any participant who either was
hired after December 31, 2006, or elected not to continue to accrue benefits in the pension plan, receives a
company contribution equal to 3% of his or her eligible compensation in excess of the compensation that is
recognized in the 401(k) Plan, regardless of whether the participant is otherwise eligible to elect to defer a portion
of his or her compensation.
Deferrals under the plan are not recognized in calculating benefit pay under Baxter’s
welfare benefit plans and result in lower compensation recognized for company matching under the 401(k) Plan
.
Participants may elect to be paid distributions either in a lump sum payment or in annual installment payments
over two to 15 years. Distributions will be paid in the first quarter of the plan year following such participant’s
termination of employment unless such participant is a “specified employee” as defined in Section 409A of the
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|
|
Code. No distributions will be paid in connection with the termination of a specified employee until at least six
months following such termination and any amounts that would have otherwise been paid during such six-month
period shall be accumulated and paid in a lump sum, without interest, at the expiration of such period.
The table below lists the available investment options under the Deferred Compensation Plan and their annual
return as of December 31, 2024.
|
Name of Fund
|
Annual Rate of
Return as of
December 31,
2024
|
||
|
Stable Income Fund
|
2.53
%
|
||
|
S&P 500 Equity Index Fund
|
25.01
%
|
||
|
International EAFE Fund
|
3.89
%
|
||
|
Extended Equity Market Index Fund
|
16.85
%
|
Potential Payments Upon Termination or Following a Change in Control
The narrative and tables below describe the potential payments to each NEO upon certain terminations,
including following a CIC event. All information described in this section is presented as if the triggering events
took place on December 31, 2024 (other than with respect to Messrs. Almeida and Toth who no longer serve as
executive officers of the company).
Mr. Almeida’s Amended Offer Letter
In July 2023, Mr. Almeida entered into the Almeida Offer Letter (as described above in “Compensation
Discussion and Analysis—Elements of Executive Compensation—Employment Arrangements, Executive
Severance Plan and Change in Control Agreements”).
The Almeida Offer Letter
provided for Mr. Almeida’s
annual base salary, target annual incentive and target LTI opportunity, which amounts were subject to adjustment
by the independent members of the Board in accordance with the terms of the Almeida Offer Letter. He was
eligible to receive benefits to the same extent and on the same terms as those benefits provided to other senior
executives of the company, such as health, disability, insurance and retirement benefits.
The Almeida Offer Letter provided Mr. Almeida with the right to receive cash severance equal to two times base
salary and target annual incentive in the event of an involuntary termination without cause or termination with
good reason. Good reason means a voluntary termination within 180 days of the occurrence of any of the
following events (provided notification is given to the company within 90 days and the company fails to cure the
related event within 30 days): assignment of any duties inconsistent with the executive status as a senior
executive officer of the company; material reduction in annual base salary; material change in the location of the
executive’s principal place of employment greater than 50 miles; failure to pay any portion of current
compensation or nonqualified deferred compensation; or any material breach of the Almeida Offer Letter.
In addition, beginning with Mr. Almeida’s 2020 annual LTI grant and for all subsequent annual LTI grants, Mr.
Almeida was eligible to receive retirement treatment when he attained 60 years of age (as opposed to 65 years
of age), which benefit provides for continued vesting of his stock option, RSU and PSU grants and a longer
period of time to exercise his outstanding stock options.
Prior to the CEO Transition Date, Mr. Almeida, like the other NEOs, was eligible for certain payments in the event
of his termination for good reason or involuntary
termination without cause
following a CIC, which is described in
greater detail below.
On February 1, 2025, the company and Mr. Almeida entered into a letter agreement (the Almeida Letter
Agreement), pursuant to which his service as
Chair of the Board, President and CEO
ceased as of the CEO
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|
Executive Compensation
|
71
|
|
|
|
Transition Date and on the CEO Transition Date, he transitioned into the role of Special Advisor and will continue
employment in this role through the CEO Separation Date.
In accordance with the terms of the Almeida Letter Agreement, Mr. Almeida’s outstanding equity awards will
continue to vest in accordance with their terms through the CEO Separation Date, and, subject to his compliance
with certain release requirements, he will receive a lump-sum separation payment equal to $6,890,000, payable
no later than 60 days following the CEO Separation Date. This amount is equivalent to what Mr. Almeida would
have received had he been terminated without “Cause” under the provisions of the Almeida Offer Letter.
Mr. Toth’s Offer Letter
In connection with his hiring, Mr. Toth entered into
an offer letter on April 22, 2023.
On December 31, 2024, in
accordance with the terms of his offer letter, Mr. Toth's onboarding RSU grant accelerated and his obligation to
repay any portion of his sign-on cash bonus was terminated as the Kidney Care separation had not been
completed as of that date. See “Compensation Discussion and Analysis—Elements of Executive Compensation
—Employment Arrangements, Executive Severance Plan and Change in Control Agreements” for additional
information.
Executive Severance Plan
The company maintains an Executive Severance Plan, which covers all U.S.-based executives, presidents and
vice presidents, including Messrs. Grade and Sonig and Ms. Knight. Mr. Toth was covered by the Executive
Severance Plan prior to the completion of the sale of the
Kidney Care business
on January 31, 2025.
Mr.
Almeida was not a participant in the Executive Severance Plan as he was entitled to receive related benefits
under the Almeida Offer Letter.
The Executive Severance Plan provides for various severance payments upon an involuntary termination for any
reason other than due to death, disability, or for cause. Cause means the willful and continued failure to
substantially perform the executive’s duties that has not been cured within 30 days or the willful engaging by the
executive in conduct which is demonstrably and materially injurious to the company or its subsidiaries, monetarily
or otherwise. Upon a qualifying involuntary termination, Messrs. Grade and Sonig and Ms. Knight would be
entitled to the following:
•
a cash payment generally equal to 1.5x the aggregate amount of the executive’s annual base salary
and target annual incentive for the year in which termination occurs;
•
if the executive terminates February 1
st
or later, a prorated annual incentive determined using the
number of days worked in the calendar year based on actual company performance and target
individual performance;
•
a lump-sum cash payment equivalent to 18 months of employer benefits costs (if enrolled at the time of
termination); and
•
outplacement expense reimbursement in an amount not to exceed $35,000.
All benefits under the Executive Severance Plan are reduced by any amount paid or provided to an executive
under any other applicable plan or arrangement providing for a payment upon a termination of employment,
including but not limited to, statutory severance or other termination pay arrangements, any CIC payments, or
payments associated with individual employment or retention agreements, but not including payments associated
with any LTI grants.
Additionally, if within 12 months of an executive’s termination of employment: (i) the executive violates any
obligations under an employment agreement, restrictive covenant or similar agreement; or (ii) it is determined
that the executive could have been terminated for cause, then the executive will be required to repay all amounts
received and future payments will cease. All payments and other benefits under the Executive Severance Plan
are subject to the timely execution of a general release of claims in favor of the company and the expiration of
the period of revocation for such release.
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Executive Compensation
|
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|
|
LTI Grants
Outstanding LTI grants to the NEOs are governed by the terms and conditions and applicable plan, which are the
Baxter International Inc. 2011 Incentive Plan, the Baxter International Inc. 2015 Incentive Plan and the Baxter
International Inc. Amended and Restated 2021 Incentive Plan. The table below outlines the vesting treatment of
LTI grants upon various scenarios under each plan.
|
Scenario
|
Vesting Treatment
|
Definitions
|
|
Death or Disability
|
Stock Options
All unvested stock options vest upon death
or Disability with a participant having the
lesser of five years from the death or
Disability date, or 10 years from the grant
date to exercise.
RSUs
All unvested RSUs vest upon death or
Disability.
PSUs
All unvested PSUs vest upon death or
Disability based on target company
performance.
|
Disability
means (i) as defined in any
employment, consulting or similar
agreement; or (ii) in the absence of any
such employment, consulting or similar
agreement, a condition entitling the
participant to receive benefits under a
long-term disability plan of the company in
which such participant is eligible to
participate, or, in the absence of such a
plan, the complete and permanent inability
of the participant by reason of illness or
accident to perform the duties of the
occupation at which the participant was
employed or served when such disability
commenced.
|
|
Voluntary or
Involuntary
Termination
|
Stock Options
All unvested stock options forfeit upon a
voluntary or involuntary termination with a
participant having the lesser of 90 days or
10 years from the grant date to exercise.
However, if a participant is “retirement
eligible,” then all stock options granted in
years prior to the year of termination vest
on their original vesting dates and stock
options granted in the year of termination
are prorated based on the number of
months worked in the year of termination
and vest on their original vesting dates.
Retirement eligible participants have the
lesser of five years from the termination
date or 10 years from the grant date to
exercise.
RSUs
All unvested RSUs forfeit upon a voluntary
or involuntary termination. However, if a
participant is “retirement eligible,” then all
RSUs granted in years prior to the year of
termination vest on their original vesting
dates and RSUs granted in the year of
termination are prorated based on the
number of months worked in the year of
termination and vest on their original
vesting dates.
|
To qualify as
retirement eligible
, a
participant must terminate employment (for
any reason other than disability, death or
for cause) at a time when the participant is
55 years of age or older with at least 10
years of continuous service, or 65 years of
age with no consideration for service.
As of December 31, 2024, Mr. Almeida
was the only NEO who was retirement
eligible based on the terms of the Almeida
Offer Letter.
|
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|
Executive Compensation
|
73
|
|
|
|
|
Scenario
|
Vesting Treatment
|
Definitions
|
|
PSUs
All unvested PSUs forfeit upon a voluntary
or involuntary termination. However, if a
participant is “retirement eligible,” then all
PSUs granted in years prior to the year of
termination vest upon certification of the
performance results and PSUs granted in
the year of termination are prorated based
on the number of months worked in the
year of termination and vest upon
certification of the performance results. In
all cases, PSUs are subject to actual
company performance for the full
performance period.
|
||
|
Qualifying Termination
Following a CIC
|
Stock Options
All unvested stock options immediately
vest upon a “qualifying termination” within
24 months following a CIC (unless the
stock options are not assumed in the
transaction).
RSUs
All unvested RSUs immediately vest upon
a “qualifying termination” within 24 months
following a CIC (unless RSUs are not
assumed by the acquirer in the
transaction, in which case they will vest on
the closing of the transaction).
PSUs
All unvested PSUs immediately vest upon
a “qualifying termination” within 24 months
following a CIC (unless PSUs are not
assumed by the acquirer in the
transaction, in which case they will vest on
the closing of the transaction). The PSUs
vest assuming target company
performance.
|
A
qualifying termination
includes an
involuntary termination of employment for
any reason other than death, disability or
cause or termination for good reason (as
defined in the CIC Agreement).
CIC or change in control
is defined as (i)
the acquisition by any person of more than
30% of company common stock; (ii)
individuals who, on the grant date,
constitute the Board cease for any reason
to constitute at least a majority of the
Board unless the appointment is approved
by 2/3 of the Board; (iii) a merger or
consolidation of the company; or (iv) the
sale, transfer or other disposition of all or
substantially all company assets.
|
As described above under “Compensation Discussion and Analysis—Additional Compensation Governance—
Recoupment Policies; Non-Competition Agreement Clawback”, all LTI participants, including the NEOs, are
required to execute a Non-Competition Agreement. All LTI participants who execute a Non-Competition
Agreement, including the NEOs, are subject to a clawback provision in the event a participant violates the terms
of the Non-Competition Agreement following a termination of employment for any reason. In the event of any
such violation, all unvested LTI grants (including grants that would otherwise have vested if the participant were
retirement eligible) are immediately forfeited. Additionally, in that case, all LTI grants that vested or became
exercisable within the 12 months prior to the termination date that have not otherwise been sold or exercised are
cancelled and the shares are returned to the company and any gain from the sale or exercise of any LTI grant
that vested within 12 months prior to the termination date is subject to repayment.
|
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| 2025 Annual Meeting of Stockholders and Proxy Statement
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|
Executive Compensation
|
|
|
|
Change in Control Agreements
In July 2020, the company amended its form of CIC agreement (CIC Agreement) on a go forward basis to
provide reduced CIC benefits with respect to lump sum cash payments, the term of continued health and welfare
coverage and the value of outplacement services that may be delivered consistent with the CHC Committee’s
evaluation of evolving market trends. The CIC Agreement provides for certain payments (as described below) in
the event Baxter undergoes a CIC and
the NEO
is terminated by the company (other than for cause or as a
result of death or Disability (as defined in the CIC Agreement)) or t
he NEO
terminates employment for good
reason during the term (which generally lasts two years and automatically extends each year unless applicable
notice is provided). Good reason means a voluntary termination within 180 days of the occurrence of any of the
following events (provided notification is given to the company within 90 days and the company fails to cure the
related event within 30 days): assignment of any duties inconsistent with the executive status as a senior
executive officer of the company; material reduction in annual base salary; material change in the location of the
executive’s principal place of employment greater than 50 miles; failure to pay any portion of current
compensation or nonqualified deferred compensation; or any material breach of the CIC Agreement.
In September 2020, Mr. Almeida entered into an amended CIC Agreement, which was subsequently terminated
effective as of the CEO Transition Date. Mr. Grade entered into this amended form of agreement in connection
with his hiring and Ms. Knight and Mr. Sonig entered into this amended form of agreement in connection with
their officer appointments. Mr. Toth entered into a modified version of this form of agreement in connection with
his hiring, consistent with the terms of certain restrictive covenants contained in his prior employment agreement.
Mr. Toth's agreement was terminated in connection with the sale
of the Kidney Care business
on January 31,
2025.
Upon a qualifying involuntary termination following a CIC, as of December 31, 2024, the NEOs would have been
entitled to the following:
|
NEO
|
Lump Sum Cash
Payment Equal to:
|
Prorated Annual
Incentive for the
Year of
Termination:
|
Continued Health
and Welfare
Benefit Coverage
Equal to:
|
Outplacement
Services Not to
Exceed:
|
|
Mr. Almeida
|
2x annual salary and
target annual incentive
|
Eligible
|
Two years
|
$50,000
|
|
Mr. Grade
|
1.5x annual salary and
target annual incentive
|
Eighteen months
|
$35,000
|
|
|
Ms. Knight
|
||||
|
Mr. Sonig
|
||||
|
Mr. Toth
|
Additionally, the CIC Agreement provides that payments may be reduced to avoid excise taxes imposed under
Section 280G and Section 4999 of the Code if the after-tax benefit to the
NEO
would be greater than outright
paying the excise taxes.
In all cases, no CIC Agreement provides any NEO with a gross-up payment to cover
potential excise taxes that may be payable in connection with a CIC
.
In consideration for the benefits provided under the CIC Agreement, each NEO, other than Messrs. Almeida and
Toth, has agreed to be bound to non-competition and non-solicitation covenants as well as a perpetual non-
disparagement covenant for 18 months from the date of a qualifying termination. Each NEO would be required to
execute a customary release of claims in favor of the company in connection with any such termination.
The following chart
illustrates payments and benefits the NEOs (other than Mr. Toth) would have received upon
the occurrence of various separation scenarios, including a qualifying termination within two years following a
CIC, an involuntary termination without cause and death or disability, in each case, assuming such event
occurred as of December 31, 2024. In the event that an NEO is involuntarily terminated with cause or voluntarily
|
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Executive Compensation
|
75
|
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|
|
terminates for good reason (except for Mr. Almeida and other than in connection with a CIC), the executive would
not be entitled to receive any severance payments or LTI vesting. Under the Almeida Offer Letter, Mr. Almeida
was entitled to receive certain severance payments in the event of his termination without cause or for good
reason outside of a CIC. No incremental severance payments or
LTI vesting occurs (unless a participant is
retirement eligible) following a voluntary resignation for all NEOs.
|
Qualifying Termination
Following a CIC
($)
|
Involuntary Termination
without Cause
($)
|
Death or Disability
($)
|
|
|
Mr. Almeida
|
|||
|
Severance Payments
1
|
6,890,000
|
6,890,000
|
—
|
|
Prorated Annual Incentive Payments
2
|
2,145,000
|
2,016,300
|
2,016,300
|
|
Health & Welfare Benefits Coverage
|
49,000
|
49,000
|
—
|
|
Accelerated Vesting of Equity Awards
3
|
16,367,200
|
—
|
16,367,200
|
|
Outplacement Expenses
|
50,000
|
—
|
—
|
|
Total
|
25,501,200
|
8,955,300
|
18,383,500
|
|
Mr. Grade
|
|||
|
Severance Payments
1
|
2,436,000
|
2,436,000
|
—
|
|
Prorated Annual Incentive Payments
2
|
812,000
|
763,280
|
763,280
|
|
Health & Welfare Benefits Coverage
|
35,000
|
34,000
|
—
|
|
Accelerated Vesting of Equity Awards
3
|
5,122,407
|
—
|
5,122,407
|
|
Outplacement Expenses
|
35,000
|
35,000
|
—
|
|
Total
|
8,440,407
|
3,268,280
|
5,885,686
|
|
Ms. Knight
|
|||
|
Severance Payments
1
|
2,767,500
|
2,767,500
|
—
|
|
Prorated Annual Incentive Payments
2
|
945,000
|
945,000
|
945,000
|
|
Health & Welfare Benefits Coverage
|
30,000
|
29,000
|
—
|
|
Accelerated Vesting of Equity Awards
3
|
5,212,007
|
—
|
5,212,007
|
|
Outplacement Expenses
|
35,000
|
35,000
|
—
|
|
Total
|
8,989,506
|
3,776,500
|
6,157,006
|
|
Mr. Sonig
|
|||
|
Severance Payments
1
|
2,400,000
|
2,400,000
|
—
|
|
Prorated Annual Incentive Payments
2
|
800,000
|
904,000
|
904,000
|
|
Health & Welfare Benefits Coverage
|
35,000
|
34,000
|
—
|
|
Accelerated Vesting of Equity Awards
3
|
3,908,162
|
—
|
3,908,162
|
|
Outplacement Expenses
|
35,000
|
35,000
|
—
|
|
Total
|
7,178,163
|
3,373,000
|
4,812,162
|
1.
Upon a qualifying termination following a CIC, severance payments reflect two times the sum of the NEO’s base salary plus
target annual incentive for Mr. Almeida and one and a half times the sum of Messrs. Grade’s and Sonig’s and Ms. Knight’s
base salary plus target annual incentive, which is provided for under each NEO’s CIC Agreement. Upon an involuntary
termination without cause, Mr. Almeida’s severance payments, which were governed by the Almeida Offer Letter, would have
been equal to the benefits provided under his CIC Agreement. Additionally, Mr. Almeida was eligible for severance payments
under his Almeida Offer Letter upon a termination for good reason. Messrs. Grade and Sonig and Ms. Knight are covered
under the Executive Severance Plan, which provides each will receive 1.5 times the sum of base salary plus target annual
incentive following an involuntary termination without cause.
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|
Executive Compensation
|
|
|
|
2.
Reflects the pro rata 2024 annual incentive, which each NEO would be eligible to receive. Upon an involuntary termination
without cause and death or disability, the amount reflects actual 2024 financial performance and target individual
performance. Upon a qualifying termination following a CIC, the amount reflects target financial and individual performance.
3.
Amounts reflect the “in-the-money” value of unvested stock options, if applicable, which is the difference between the
applicable share price and the exercise price, and the value of unvested PSUs assuming target performance and applicable
DEUs. All amounts are based on the closing stock price on December 31, 2024 ($29.16).
In connection with Mr. Almeida's separation, and pursuant to the Almeida Letter Agreement, (i) his outstanding
equity awards will continue to vest in accordance with their terms through the Separation Date, (ii) Mr. Almeida will
receive a lump-sum separation payment equal to $6,890,000 (equal to
what Mr. Almeida would have received had
he been terminated without “Cause” under the provisions of the Almeida Offer Letter
), payable no later than 60
days following the CEO Separation Date, and (iii)
the company will arrange to provide him and his dependents
Post-Separation Health Benefits for a period of 24 months
. The Post-Separation Health Benefits will be eliminated
if Mr. Almeida receives benefits of the same type during the 24 month period following the CEO Separation Date.
Mr. Toth’s employment with the company ceased on January 31, 2025 in connection with the closing of the sale of
the company's Kidney Care business to certain affiliates of Carlyle on the same date. Pursuant to the related
equity purchase agreement, (i) effective as of the closing, each outstanding and unvested equity award granted to
a transferring Baxter employee within the perimeter of the sale (including Mr. Toth) generally vested on a pro rata
basis, with such pro rata portion computed based on the number of calendar days elapsed from the start of the
vesting period applicable to such award through January 31, 2025, relative to the total number of calendar days in
such vesting period, (ii) any such accelerated portion was (or will be) settled within the time period set forth in the
applicable award agreement (such treatment described in clauses and (i) and (ii), the
LTIP Award Treatment
) and
(iii) the purchaser became obligated to grant cash-based replacement awards in respect of the forfeited portion of
each such award in accordance with the terms and conditions of the equity purchase agreement. Mr. Toth was
eligible to receive the
LTIP Award Treatment
as of the closing, and the value of the accelerated vesting of his
equity awards on a pro rata basis as of such date was equal to $2,196,465.04. Mr. Toth was not eligible to receive
payments or benefits under
his CIC Agreement
or the Executive Severance Plan in connection with the sale of the
Kidney Care business.
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Executive Compensation
|
77
|
|
|
|
CEO Pay Ratio
As required by Item 402(u) of Regulation S-K, the company is providing the following estimated information about
the relationship between the annual total compensation of its median employee and the annual total
compensation of Mr. Almeida, Former Chair, President and CEO.
For the year ended December 31, 2024:
•
the annual total compensation of the median Baxter employee (identified in accordance with the
procedures described below) calculated in the same manner as the NEOs in the Summary
Compensation Table above was $70,331; and
•
the annual total compensation of Mr. Almeida as reported in the “Total” column of the Summary
Compensation Table above was $18,071,015.
Based on this information, the estimated ratio of Mr. Almeida’s annual total compensation for 2024 to the annual
total compensation of the median Baxter employee in 2024 is 257 to 1.
The company believes this ratio is a reasonable estimate based on Baxter-specific employee demographics and
compensation. The company’s ratio may not be comparable to the ratio disclosed by its peer companies due to a
number of factors, including the geographic distribution of its employees, the nature of the business (products or
services), the performance of the company and whether and where the company manufactures its own products.
Given there was no change in the company’s employee population or employee compensation arrangements as
of December 31, 2024 that the company believes would result in a significant change to the pay ratio disclosure,
the same median employee was used for the 2024 analysis as was used for the 2023 analysis, as permitted
under the applicable SEC rules.
To identify the median employee from Baxter’s employee population for the 2023 proxy statement, the company
analyzed its consistently applied compensation measure—the sum of base salary and target annual incentive
opportunity—for its approximately 60,000 full-time, part-time, seasonal and temporary employees as of
November 1, 2023. The company did not utilize any exceptions permitted under the applicable SEC rules to
exclude any individuals from the total employee population when identifying the median employee. For
employees outside of the United States, the amounts were converted to U.S. dollars using the applicable
exchange rates as of November 1, 2023. Based on application of this methodology, the median employee is a
full-time employee based outside the United States.
|
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| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
78
|
Executive Compensation
|
|
|
|
Pay Versus Performance Disclosure
Protection Act of 2010, the company is providing the following disclosure regarding executive compensation for
the company’s principal executive officer (PEO) and Non-PEO NEOs and company performance for the fiscal
years listed below.
|
Year
|
Summary
Compensation
Table
Total for
PEO¹
($)
|
Compensation
Actually Paid to
PEO
1,2,3
($)
|
Average
Summary
Compensation
Table Total for
Non-PEO
NEOs
1
($)
|
Average
Compensation
Actually Paid
to Non-PEO
NEOs
1,2,3
($)
|
Value of Initial
Fixed $100
Investment
based on:
4
|
Net Income
(Loss)
($ Millions)
5
|
Net Sales
($ Millions)
6
|
|
|
TSR
($)
|
Peer
Group
TSR
($)
|
|||||||
|
2024
|
|
|
|
|
|
|
(
|
|
|
2023
|
|
|
|
|
|
|
|
|
|
2022
|
|
(
|
|
|
|
|
(
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
|
|
|
|
|
|
presented are listed below.
|
2020
|
2021
|
2022
|
2023
|
2024
|
|
|
James K. Saccaro
|
James K. Saccaro
|
James K. Saccaro
|
Joel Grade
|
Joel Grade
|
|
|
Giuseppe Accogli
|
Giuseppe Accogli
|
Giuseppe Accogli
|
James K. Saccaro
|
Heather Knight
|
|
|
Cristiano Franzi
|
Cristiano Franzi
|
Cristiano Franzi
|
Brian Stevens
|
Alok Sonig
|
|
|
Sean Martin
|
Andrew Frye
|
David Rosenbloom
|
Cristiano Franzi
|
Christopher Toth
|
|
|
Heather Knight
|
|||||
|
Alok Sonig
|
|||||
|
Christopher Toth
|
2.
The amounts set forth above for compensation actually paid to PEO and non-PEO NEOs (as set forth in the “Compensation
Actually Paid to PEO” and “Average Compensation Actually Paid to Non-PEO NEOs” columns) have been calculated in
accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized or received by the
company’s NEOs. These amounts reflect the Summary Compensation Table total with certain adjustments as described in
footnote 3 below.
3.
Compensation actually paid to PEO and non-PEO NEOs (as set forth in the “Compensation Actually Paid to PEO” and
“Average Compensation Actually Paid to Non-PEO NEOs” columns) reflects the exclusions and inclusions of certain
amounts for the PEO and the Non-PEO NEOs as set forth below. Related information regarding compensation paid in 2020,
2021, 2022, and 2023 has not changed from what was included in the company’s 2023 proxy statement and what is set forth
in the proxy statement, and as such, information for such years has not been included in the following tables. Equity values
are calculated in accordance with FASB ASC Topic 718. Amounts in the “Exclusion (or Average Exclusion) of Stock Awards
and Option Awards” columns are the totals from the “Stock Awards” and “Option Awards” columns set forth in the Summary
Compensation Table. Amounts in the “Exclusion (or Average Exclusion) of Change in Pension Value” columns reflect the
amounts attributable to the “Change in Pension Value” reported in the Summary Compensation Table. Amounts in the
“Inclusion (or Average Inclusion) of Pension Service Cost” columns are based on the service cost for services rendered
during the listed year.
|
investor.baxter.com
|
|
Executive Compensation
|
79
|
|
|
|
|
Year
|
Summary
Compensation
Table Total for
PEO
($)
|
Exclusion of
Change in Pension
Value for
PEO
($)
|
Exclusion of Stock
Awards and
Option Awards for
PEO
($)
|
Inclusion of
Pension Service
Cost for PEO
($)
|
Inclusion of Equity
Values for PEO
($)
|
Compensation
Actually Paid to
PEO
($)
|
|
2024
|
|
|
(
|
|
|
|
|
Year
|
Average
Summary
Compensation
Table Total for
Non-PEO
NEOs
($)
|
Average
Exclusion
of Change in
Pension Value
for
Non-PEO NEOs
($)
|
Average Exclusion
of Stock Awards
and Option
Awards for
Non-PEO NEOs
($)
|
Average Inclusion
of Pension Service
Cost for
Non-PEO NEOs
($)
|
Average Inclusion
of Equity Values
for Non-PEO
NEOs
($)
|
Average
Compensation
Actually Paid to
Non-PEO NEOs
($)
|
|
2024
|
|
|
(
|
|
|
|
The amounts in the "Inclusion (or Average Inclusion) of Equity Values" columns in the tables above are derived
from the amounts set forth in the following tables:
|
Year
|
Year-End Fair
Value of Equity
Awards
Granted
During
Year That
Remained
Unvested as of
Last Day of
Year for
PEO
($)
|
Change in Fair
Value from
Last
Day of Prior
Year to Last
Day of Year of
Unvested
Equity
Awards for
PEO
($)
|
Vesting-Date
Fair Value of
Equity Awards
Granted
During
Year that
Vested
During Year for
PEO
($)
|
Change in Fair
Value from
Last
Day of Prior
Year to Vesting
Date of
Unvested
Equity Awards
that Vested
During Year for
PEO
($)
|
Fair Value at
Last Day of
Prior
Year of Equity
Awards
Forfeited
During Year for
PEO
($)
|
Value of
Dividends or
Other Earnings
Paid on Equity
Awards Not
Otherwise
Included for
PEO
|
Total—
Inclusion of
Equity
Values for
PEO
($)
|
|
2024
|
|
(
|
|
|
|
|
|
|
Year
|
Average Year-
End
Fair Value of
Equity Awards
Granted During
Year That
Remained
Unvested as of
Last Day of
Year
for Non-PEO
NEOs
($)
|
Average
Change
in Fair Value
from Last Day
of
Prior Year to
Last Day of
Year
of Unvested
Equity Awards
for Non-PEO
NEOs
($)
|
Average
Vesting-
Date Fair
Value
of Equity
Awards
Granted During
Year that
Vested
During Year for
Non-PEO
NEOs
($)
|
Average
Change in
Fair Value from
Last Day of
Prior
Year to Vesting
Date of
Unvested
Equity Awards
that
Vested During
Year for Non-
PEO
NEOs
($)
|
Average Fair
Value at Last
Day of Prior
Year
of Equity
Awards
Forfeited
During
Year for Non-
PEO NEOs
($)
|
Average Value
of Dividends or
Other Earnings
Paid on Equity
Awards Not
Otherwise
Included for
Non-PEO
NEOs
($)
|
Total—
Average
Inclusion of
Equity
Values
for Non-
PEO
NEOs
($)
|
|
2024
|
|
(
|
|
(
|
|
|
|
4.
The Peer Group TSR set forth in this table utilizes the S&P 500 Health Care Index which the company also utilizes in the
stock performance graph required by Item 201(e) of Regulation S-K included in the 2024 Form 10-K. The comparison
assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year in the company
and in the S&P 500 Health Care Index, respectively. Historical stock performance is not necessarily indicative of future stock
performance.
5.
The amounts set forth above includes net income (loss) inclusive of discontinued operations.
6.
The company determined
net sales
, inclusive of discontinued operations, to be the most important financial performance
measure used to link company performance to “Compensation Actually Paid” to the company's PEO and Non-PEO NEOs in
2024.
|
|
| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
80
|
Executive Compensation
|
|
|
|
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually
Paid and Company TSR
average of Compensation Actually Paid to the company's Non-PEO NEOs and the cumulative TSR over the five
most recently completed
fiscal
years for the company and the S&P 500 Health Care Index TSR.
106.26
•
Actual Average Non-PEO NEO Compensation Actually Paid for 2022 was $14,410.
|
investor.baxter.com
|
|
Executive Compensation
|
81
|
|
|
|
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually
Paid and Net Income (Loss)
average of Compensation Actually Paid to the company's Non-PEO NEOs and Baxter's net income (loss)
inclusive of discontinued operations during the five most recently completed fiscal years.
•
Actual Average Non-PEO NEO Compensation Actually Paid for 2022 was $14,410.
|
|
| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
82
|
Executive Compensation
|
|
|
|
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually
Paid and Net Sales
average of Compensation Actually Paid to the company's Non-PEO NEOs, and Baxter's net sales during the five
most recently completed fiscal years.
•
Actual Average Non-PEO NEO Compensation Actually Paid for 2022 was $14,410.
and Analysis—Executive Summary—2024 Company Results,” for purposes of calculating performance under the
company’s 2024 annual incentive plan, net sales were calculated at budgeted exchange rates as of January 1,
2024 and include net sales from discontinued operations. This amount (which is referred to as Adjusted Net
Sales Including Discontinued Operations in the proxy statement) was $15,181 million for 2024.
The financial performance measures that the company considers to have been the most important in linking
Compensation Actually Paid to the company's PEO and Non-PEO NEOs to company performance are shown
below. These measures are not ranked.
•
Net Sales
•
Adjusted
Earnings Per Share
•
Free Cash Flow
•
ROIC
•
Relative TSR
|
investor.baxter.com
|
|
Executive Compensation
|
83
|
|
|
|
Option Award Disclosure
material nonpublic information, as required by Item 402(x) of Regulation S-K. The company did not grant any
stock options to executive officers of the company, including NEOs, in the last completed fiscal year. The equity
compensation awards have historically included RSUs, PSUs and stock options and the company is returning to
this mix for NEOs in 2025.
Generally, the company grants equity awards on a predetermined schedule.
In February of each year
, the CHC
Committee or, with respect to the CEO’s equity award, the independent members of the Board, review and
approve the value and amount of the equity compensation to be awarded to executive officers and non-employee
directors. The grant of approved equity awards then typically occurs in early March, which is usually after the
filing of the company’s Annual Report on Form 10-K, which is generally filed in mid-February.
As a result the company does not generally grant stock options during periods in which there is material
nonpublic information about the company, including outside a “trading window” established in connection with the
public release of earnings information under the company’s Securities Trading Policy.
The CHC Committee and, with respect to the CEO’s equity award, the independent members of the Board, do
not take material nonpublic information into account when determining the timing and terms of equity awards.
Stock options may occasionally be awarded on an off-cycle basis, including to new hires. It is the company’s
historic practice to grant off-cycle stock option awards on the first trading date in June, September and
December.
|
|
| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
84
|
Audit Matters
|
|
|
|
|
Audit Matters
|
|
Ratification of Appointment of Independent Registered Public
Accounting Firm for 2025
The Audit Committee of the Board is directly responsible for the appointment,
retention and oversight of the independent registered public accounting firm retained
to audit the company’s financial statements. The Audit Committee has appointed
PricewaterhouseCoopers LLP (PwC) as the independent registered public
accounting firm for Baxter for 2025.
The Audit Committee recommends a vote
FOR
the ratification of the
appointment of PwC as the company’s independent registered public
accounting firm for 2025.
|
In accordance with its charter, the Audit Committee of the Board is directly responsible for the appointment,
compensation (including the negotiation of audit fees), retention and oversight of the independent registered
public accounting firm retained to audit the company’s financial statements. The Audit Committee has appointed
PwC as the independent registered public accounting firm for Baxter in 2025. PwC, or its predecessor firm, has
served as Baxter’s independent registered public accounting firm continuously since 1985.
Before reappointing PwC as the company’s independent auditor for 2025, the Audit Committee carefully
considered PwC’s qualifications as an independent registered public accounting firm as well as their prior
experience auditing
Baxter
. This included a review of PwC’s performance in prior years, its knowledge of the
company and its operations (including its experience in connection with the recent sale of the company's Kidney
Care business) and its reputation for integrity and competence in the fields of accounting and auditing. The Audit
Committee’s review also included matters required to be considered under rules of the SEC on auditor
independence, including the nature and extent of non-audit services, to ensure that the provision of such
services will not impair the independence of the auditors. The Audit Committee expressed its satisfaction with
PwC in all of these respects. In accordance with SEC rules and PwC policies, the lead partner overseeing the
company’s engagement rotates every five years and the Audit Committee and its chair are directly involved in
Baxter’s selection of the lead engagement partner.
A new lead partner was assigned to the Baxter account
beginning in 2025, after consultation with the Audit Committee (including its chair).
The Audit Committee believes that retaining PwC again in 2025 is in the best interests of the company and its
stockholders and therefore, the Audit Committee requests that stockholders ratify the appointment. Further, the
Audit Committee believes that, if handled properly, there are numerous benefits of a long independent auditor
relationship, including:
•
more efficient audit due to PwC’s deep understanding of Baxter’s business and accounting policies
and practices;
•
efficient fee structures due to PwC’s familiarity with Baxter and industry expertise; and
•
avoidance of significant costs and disruptions (including Board and management time and
distractions) that would be associated with retaining a new independent auditor.
Nonetheless, the Audit Committee is also aware that a long-tenured auditor may be believed by some to pose an
independence risk. To address these concerns, there are robust safeguards for auditor independence, including:
•
a strong regulatory framework for auditor independence, including limitations on non-audit services
and mandatory audit partner rotation requirements;
|
investor.baxter.com
|
|
Audit Matters
|
85
|
|
|
|
•
oversight of PwC that includes regular communication on and evaluation of the quality of the audit
and auditor independence;
•
PwC’s own internal independence processes and compliance reviews;
•
annual assessment of PwC’s qualifications, service quality, sufficiency of resources, quality of
communications, independence, working relationship with Baxter management, objectivity and
professional skepticism;
•
conducting regular private meetings separately with each of PwC and certain members of Baxter
management at the end of each regularly scheduled Audit Committee meeting;
•
overseeing the selection of PwC’s new lead engagement partner with each rotation; and
•
considering periodically whether to conduct a search or request for proposal process for a new
independent registered public accounting firm.
If the company’s stockholders do not ratify the appointment of PwC, the Audit Committee may investigate the
reasons for stockholders’ rejection and may consider whether to retain PwC or appoint another independent
auditor. Furthermore, even if the appointment is ratified, the Audit Committee may appoint a different
independent auditor if, in its discretion, it determines that such a change would be in the company’s and its
stockholders’ best interests.
One or more representatives of PwC will be present at the Annual Meeting to respond to appropriate questions
and to make a statement if they so
desire.
|
|
| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
86
|
Audit Matters
|
|
|
|
Audit Committee Report
Dear Stockholders:
The Audit Committee is currently composed of three directors, all of whom meet the independence and other
requirements of the NYSE and Rule 10A-3 of the Exchange Act. Additionally, two Audit Committee members (Ms.
Smith and Mr. Craig) qualify as an “audit committee financial expert.” The Audit Committee’s responsibilities are
set out in its charter, which has been adopted by the Board of Directors and is reviewed annually. These
responsibilities include: (1) reviewing with management, internal audit and the external auditors the adequacy
and effectiveness of Baxter’s internal controls over financial reporting; (2) reviewing with management Baxter’s
disclosure controls and procedures; (3) retaining and evaluating the qualifications, independence and
performance of PwC, the company’s independent registered public accounting firm; (4) approving audit and
permissible non-audit engagements to be undertaken by PwC; (5) reviewing the scope of the annual external
and internal audit plans; (6) reviewing and discussing with management and PwC Baxter’s financial statements
(audited and unaudited), as well as earnings press releases and related information, prior to their filing or
release; (7) overseeing legal and regulatory compliance as it relates to financial matters; (8) overseeing Baxter’s
response to cybersecurity incidents involving the company’s IT systems or products and services; (9) holding
separate executive sessions with PwC, internal audit and management; (10) reviewing guidelines and policies
governing the process by which Baxter assesses and manages risk; (
11) reviewing updates on the company's
directors' and officers' and property liability insurance policies and related matters
; and (12) approving certain
financing matters, proposed corporate transactions and capital expenditures.
Management is responsible for the preparation, presentation and integrity of Baxter’s consolidated financial
statements and Baxter’s internal control over financial reporting. PwC is responsible for performing an
independent integrated audit of Baxter’s consolidated financial statements and of the effectiveness of Baxter’s
internal control over financial reporting in accordance with standards of the Public Company Accounting
Oversight Board (PCAOB). PwC also reviews Baxter’s interim financial statements in accordance with the
applicable auditing standards. Ultimately, it is the Audit Committee’s responsibility to monitor and oversee these
processes on behalf of the Board. The Audit Committee met nine times in 2024, which included discussions with
PwC and internal audit, both privately and with management present, and sessions with
legal counsel
.
In fulfilling its duties, the Audit Committee has reviewed and discussed with management Baxter’s audited
financial statements included in the 2024 Form 10-K as well as Baxter’s interim financial statements included in
the company’s 2024 Quarterly Reports on Form 10-Q, in all cases including discussions of the accompanying
footnotes and related Management’s Discussion and Analysis of Financial Condition and Results of Operations.
These reviews included, among other things, a discussion of Baxter’s critical accounting policies; the
reasonableness of significant financial reporting judgments, including the quality (not just the acceptability) of the
company’s accounting principles; the effectiveness of the company’s internal control over financial reporting;
corrected and uncorrected misstatements noted by PwC during its audit of the company’s annual financial
statements and review of the company’s interim financial statements; and the potential effects of changes in
accounting regulation and guidance on the company’s financial statements. In 2024, these reviews also included
matters related to the proposed separation of the company's Kidney Care business.
In addition, in connection with its review of the company’s annual audited financial statements, the Audit
Committee has discussed with PwC the matters required to be discussed by the applicable requirements of the
PCAOB and the SEC, has received and reviewed the written disclosures and letter from PwC required by
applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit
committee concerning independence and has discussed with PwC its independence, including whether the non-
audit services provided by PwC to Baxter are compatible with maintaining PwC’s independence.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that
Baxter’s audited financial statements referred to above be included in the 2024 Form 10-K for filing with the SEC.
Respectfully submitted,
The Audit Committee
Jeffrey A. Craig (Chair)
Patricia B. Morrison
Cathy R. Smith
|
investor.baxter.com
|
|
Audit Matters
|
87
|
|
|
|
Audit and Non-Audit Fees
The table set forth below lists the fees billed to Baxter by PwC for audit services rendered in connection with the
integrated audits of Baxter’s consolidated financial statements for the years ended December 31, 2024 and 2023
and fees billed for other services rendered by PwC during these periods.
|
2024
|
2023
|
|||
|
(Dollars in thousands)
|
||||
|
Audit Fees
|
$
14,137
|
$
12,490
|
||
|
Audit-Related Fees
|
2,395
|
9,775
|
||
|
Tax Fees
|
651
|
626
|
||
|
All Other Fees
|
4
|
18
|
||
|
Total
|
$
17,301
|
$
22,909
|
||
Audit Fees
include fees for services performed by PwC relating to the integrated audit of Baxter’s consolidated
annual financial statements and internal control over financial reporting, the review of financial statements
included in the company’s quarterly reports on Form 10-Q, statutory audits and related regulatory filings. The
audit fees in 2024 were higher than 2023 primarily due to audit procedures related to the sale of the company's
Kidney Care business, including the related discontinued operations presentation.
Audit-Related Fees
include fees for assurance and related services performed by PwC that are reasonably
related to the performance of the audit or review of the financial statements, including policy and contractual
compliance services. In 2024, the fees primarily related to carve-out audits of the company's Kidney Care
business and related regulatory filings in connection with the recent sale of the Kidney Care business.
Tax Fees
include fees for services performed by PwC for tax compliance, tax advice and tax planning. Of these
amounts, approximately $0.3 million in each of 2024 and 2023 was related to direct and indirect tax compliance
services, including transfer pricing support and tax return preparation. Fees for tax consulting services of
approximately $0.4 million in each of 2024 and 2023 was related to international, federal, state and local tax
planning, assistance with tax controversy matters and other tax consultations.
All Other Fees
include fees for all other services performed by PwC.
Pre-Approval of Audit and Permissible
Non-Audit Fees
The Audit Committee must pre-approve the engagement of the independent registered public accounting firm to
audit the company’s consolidated financial statements. Prior to the engagement, the Audit Committee reviews
and approves a list of services expected to be rendered during that year by the independent registered public
accounting firm. Reports on projects and services are presented to the Audit Committee on a regular basis.
The Audit Committee has established a pre-approval policy for engaging the independent registered public
accounting firm for other audit and permissible non-audit services. Under the policy (which is reviewed at least
annually, with any recommended changes subject to Audit Committee approval), the Audit Committee has
identified specific audit, audit-related, tax and other services that may be performed by the independent
registered public accounting firm. The engagement for these services specified in the policy requires the further,
separate pre-approval of the chair of the Audit Committee or the entire Audit Committee if specific dollar
thresholds set forth in the policy are exceeded. Any project approved by the chair under the policy must be
reported to the Audit Committee at the next meeting. Services not specified in the policy, as well as the provision
of internal control-related services by the independent registered public accounting firm, require separate pre-
approval by the Audit Committee.
All audit, audit-related, tax and other services provided by PwC in 2024 were approved by the Audit Committee in
accordance with its pre-approval policy.
|
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| 2025 Annual Meeting of Stockholders and Proxy Statement
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88
|
Ownership of Baxter Stock
|
|
|
|
|
Ownership of Baxter Stock
|
Security Ownership by Directors and Executive Officers
Except as set for the below, the following table sets forth information as of February 27, 2025 regarding beneficial
ownership of Baxter common stock by NEOs and directors.
|
Name of Beneficial Owner
|
Shares of
Common
Stock
1
|
Shares
Under
Exercisable
Options
2
|
||
|
Directors:
|
||||
|
Mr. Ampofo
|
10,066
|
—
|
||
|
Mr. Craig
|
3,472
|
—
|
||
|
Ms. Morrison
|
15,758
|
—
|
||
|
Dr. Oesterle
|
28,522
|
1,060
|
||
|
Mr. Rusckowski
|
9,270
|
—
|
||
|
Ms. Schlichting
|
787
|
—
|
||
|
Mr. Shafer
3
|
89,841
|
—
|
||
|
Ms. Smith
|
23,048
|
17,868
|
||
|
Ms. Wendell
|
24,009
|
17,116
|
||
|
Dr. Wilkes
|
2,832
|
—
|
||
|
Named Executive Officers:
|
||||
|
Mr. Almeida
4
|
570,016
|
3,040,273
|
||
|
Mr. Grade
|
93,096
|
34,091
|
||
|
Ms. Knight
|
158,621
|
166,127
|
||
|
Mr. Sonig
|
113,107
|
59,712
|
||
|
Mr. Toth
5
|
105,186
|
—
|
||
|
All directors and executive officers as a group (17 persons)
3-6
|
1,050,732
|
1,038,827
|
1.
In
clu
des
shares over which the person held voting and/or investment power as of February 27, 2025. Pursuant to Baxter’s
Directors’ Deferred Compensation Plan, a non-employee director may elect to defer the receipt of all of his or her shares of
common stock that he or she is entitled to receive as an annual grant of fully vested common stock for his or her service on
the Board, and as a result, this table does not reflect such deferrals as being beneficially owned for those directors who have
elected deferral. None of the holdings (including the holdings of all directors and executive officers as a group) represents
holdings of more than 1% of Baxter’s outstanding common stock based on shares outstanding as of February 13, 2025, as
set forth in the 2024 Form 10-K.
2.
Amount of shares includes options that are exercisable as of February 27, 2025 and options which become exercisable
within 60 days thereafter.
3.
Mr. Shafer was appointed as Chair and Interim CEO on the CEO Transition Date.
4.
All information for Mr. Almeida set forth in this table is as of the CEO Transition Date., the date on which he stopped serving
as Chair, President and CEO.The total number of shares includes 324,976 shares not held directly by Mr. Almeida as of the
CEO Transition Date but in a revocable trust for which he serves as trustee.
5.
All information for Mr. Toth set forth in this table is as of January 31, 2025, the date of the Kidney Care sale and the date on
which he stopped serving as an executive officer of the company.
6.
Share ownership of the former executives, Mr. Almeida and Mr. Toth, is not included in the total of shares owned by all
directors and executive officers as a group.
|
investor.baxter.com
|
|
Ownership of Baxter Stock
|
89
|
|
|
|
Security Ownership by Certain Beneficial Owners
The following entities were the only persons known to Baxter to be the beneficial owners of more than five
percent of Baxter common stock, based on public filings made with the SEC (as described below):
|
Name and Address of Beneficial Owner
|
Amount and
Nature of
Beneficial
Ownership
|
Percent
of Class
1
(%)
|
|
|
The Vanguard Group
2
100 Vanguard Blvd.
Malvern, PA 19355
|
60,155,132
|
11.8%
|
|
|
BlackRock, Inc.
3
50 Hudson Yards
New York, NY 10001
|
59,678,841
|
11.7%
|
|
|
Dodge & Cox
4
555 California Street, 40th Floor
San Francisco, CA 94104
|
51,581,409
|
10.1%
|
|
|
Pzena Investment Management LLC
5
320 Park Avenue, 8th Floor.
New York, NY 10022
|
32,468,070
|
6.3%
|
1.
Based on shares outstanding as of February 13, 2025, as set forth in the 2024 Form 10-K.
2.
Based solely on Amendment No.10 to Schedule 13G filed with the SEC on February 13, 2024, The Vanguard Group has
sole voting power with respect to none of the reported shares, shared voting power with respect to 628,382 of the reported
shares, sole dispositive power with respect to 57,933,960 of the reported shares and shared dispositive power with respect
to 2,221,172 of the reported shares.
3.
Based solely on Amendment No.10 to Schedule 13G filed with the SEC on January 23, 2024, BlackRock, Inc. has sole
voting power with respect to 56,047,721 of the reported shares, shared voting power with respect to none of the reported
shares, sole dispositive power with respect to all of the reported shares and shared dispositive power with respect to none of
the reported shares. As reported on the amended Schedule 13G, a portion of the reported shares are also beneficially
owned by the subsidiaries set forth on Exhibit A to the amended Schedule 13G.
4.
Based solely on Amendment No.3 to Schedule 13G filed with the SEC on March 7, 2025, Dodge & Cox has sole voting
power with respect to 48,813,709 of the reported shares, shared voting power with respect to none of the reported shares,
sole dispositive power with respect to all of the reported shares and shared dispositive power with respect to none of the
reported shares.
5.
Based solely Schedule 13G filed with the SEC on October 21, 2024, Pzena Investment Management LLC has sole voting
power with respect to 27,014,920 of the reported shares, shared voting power with respect to none of the reported shares,
sole dispositive power with respect to all of the reported shares and shared dispositive power with respect to none of the
reported shares.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the company’s executive officers and directors and persons who own
more than 10% of Baxter common stock to file initial reports of ownership and changes in ownership with the
SEC. Based solely on the company’s review of the reports that have been filed by or on behalf of such persons in
this regard and written representations from the company's executive officers and directors, the company
believes that all reports required by Section 16(a) of the Exchange Act were filed on a timely basis during or with
respect to 2024.
|
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| 2025 Annual Meeting of Stockholders and Proxy Statement
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|
90
|
Stockholder Proposal
|
|
|
|
|
Stockholder Proposal
|
|
|
Executives to Retain Significant Stock
Baxter has been advised that John Chevedden will present the following resolution
at the Annual Meeting. Baxter has also been advised that Mr. Chevedden is owner
of at least 60 shares of Baxter common stock. Baxter will furnish the address of Mr.
Chevedden promptly upon oral or written request. After thoughtful consideration,
the Board of Directors recommends that you vote
AGAINST
this proposal for the
reasons set forth in the Board of Directors’ statement that follows the proposal.
In accordance with the rules of the SEC, the proposal and supporting statement are
being reprinted as they were submitted to Baxter’s Corporate Secretary by the
proponent. Baxter takes no responsibility for them.
The Board recommends a vote
AGAINST
this stockholder proposal. Proxies
solicited by the Board will be voted
AGAINST
this proposal unless otherwise
instructed.
|
Stockholder Proposal
Proposal 4 – Executives to Retain Significant Stock
Shareholders ask the Baxter Board of Directors to adopt a policy requiring the 5 Baxter International named
executive officers to retain a significant percentage of stock acquired through equity pay programs until reaching
normal retirement age and to report to shareholders regarding the policy in our Company’s next annual meeting
proxy. For the purpose of this policy, normal retirement age would be an age of at least 60 and be determined by
our executive pay committee. Shareholders recommend a share retention percentage requirement of 30% of net
after-tax shares.
This single unified policy shall prohibit hedging transactions for shares subject to this policy which are not sales
but reduce the risk of loss to the executive. Otherwise our directors might be able to avoid the impact of this
proposal. This policy shall supplement any other share ownership requirements that have been established for
senior executives, and should be implemented without violating current company contractual obligations or the
terms of any current pay or benefit plan. The Board is encouraged to obtain waivers of any current pay or benefit
plan for senior executives that might delay implementation of this proposal.
Requiring senior executives to hold a significant portion of stock obtained through executive pay plans would
focus our executives on our company’s long-term success. A Conference Board Task Force report stated that
hold-to-retirement requirements give executives “an ever-growing incentive to focus on long-term stock price
performance.”
This proposal topic is all the more important at Baxter due to the recent poor stock performance. Baxter stock
has fallen from $83 in 2019. Additionally executive pay was rejected by 22% of shares in 2023 when a 5%
rejection is often the norm at well performing companies.
|
investor.baxter.com
|
|
Stockholder Proposal
|
91
|
|
|
|
Plus Baxter does not have an independent Board Chairman and the Baxter Board of Directors refused to allow
shareholders to cast an advisory vote on Baxter adopting an independent Board Chairman in 2024 in spite of
shareholders voting 54% in favor of this topic at an earlier Baxter annual meeting.
Please vote yes:
Executives to Retain Significant Stock – Proposal 4
|
|
| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
92
|
Stockholder Proposal
|
|
|
|
Board of Directors’ Statement Opposing the Stockholder Proposal
The Board has carefully considered the proposal and the fact that a similar proposal has been rejected by
Baxter’s stockholders in 2023 and 2024, and recommends that stockholders vote AGAINST the proposal for the
following reasons:
The Board has carefully evaluated the appropriate stock ownership requirements for all executive
officers.
The Board remains committed to maintaining strong corporate governance practices and protecting stockholders’
interests. The Board understands that Baxter’s stockholders view stock retention as an important measure to
help hold executives accountable, and Baxter’s robust stock ownership guidelines already require all executive
officers to hold significant amounts of shares:
•
The CEO is required to achieve ownership of Baxter common stock valued at a minimum of six
times annual base salary within five years of appointment; and
•
Each other executive officer (including all of Baxter’s NEOs who would be covered by this proposal)
is required to achieve ownership of Baxter common stock valued at a minimum of four times annual
base salary within five years of becoming an executive officer.
Baxter’s current stock ownership guidelines are rigorous, periodically reviewed by the CHC Committee and
carefully designed to ensure long-term focus and appropriate levels of risk-taking by the company’s executive
and corporate officers, which helps supports sustainable long-term stockholder return while enabling Baxter to
attract and retain talented executives. As of December 31, 2024,
each of the NEOs who is still serving as an
executive officer with the company had met his or her ownership requirements or, using reasonable assumptions,
was on track to achieve his or her stock ownership objective within the prescribed time frame
.
Baxter’s current executive compensation program appropriately aligns executives’ interests with the
company’s and stockholders’ long-term interests.
The Board believes that Baxter’s emphasis on long-term incentive grants motivates executives to drive the long-
term performance of the company and aligns their long-term interests with those of stockholders. For this reason,
a significant majority of executive pay is variable and only delivered if specific annual and long-term performance
requirements are met.
For example, in 2024, the CEO’s compensation was 92% variable, depending on
performance-based elements, and Baxter’s NEOs’ compensation, collectively, excluding the CEO, was 85%
variable, depending on performance-based elements
.
Accordingly, at any particular time, company executives
hold significant unvested equity awards, which helps to align their interests with those of the company’s
stockholders.
Further, the Board believes the proposed retention policy’s prohibition against executive officers entering into
hedging transactions for shares subject to the policy is unnecessary as Baxter already prohibits such hedging
transactions and has other rigorous governance practices in place, such as a prohibition on short sales, entering
into any derivative (
e.g.,
purchasing, selling or writing put or call options, forward contracts or swap agreements)
and pledging company stock. Baxter also has a Mandatory Clawback Policy, which complies with NYSE
requirements, and a Compensation Recoupment Policy, which goes beyond NYSE requirements. Baxter’s
executive compensation program is structured to appropriately motivate and reward executives to achieve
Baxter’s long-term objectives and build sustained stockholder value. The proposal would place excessive
restrictions on CHC Committee’s ability to design a compensation program that drives long-term value.
|
investor.baxter.com
|
|
Stockholder Proposal
|
93
|
|
|
|
The proposal is overly prescriptive and would put Baxter at a competitive disadvantage for attracting and
retaining top executive talent, would create an administrative burden on Baxter without commensurate
value to stockholders and fails to enhance corporate governance.
The Board believes that the proposed stock ownership requirements are not necessary and would put Baxter at
a competitive disadvantage for recruiting and retaining talented executives. Experienced executives in the
healthcare industry are in high demand, and the competition for talent has become increasingly intense. Baxter’s
stock ownership guidelines and retention requirements are consistent with market practice, whereas the stock
retention policy in the proposal, which requires Baxter’s NEOs to retain a significant percentage of stock acquired
through equity pay programs until reaching normal retirement age, is not market practice.
Further, the proposed
retention policy penalizes executives that have been with Baxter the longest, as the number of shares such
executives would be required to retain are greater as compared to executives that have recently joined Baxter.
Requiring executives to hold additional shares (above what is required by the company’s stock ownership
guidelines) would be burdensome to the executives, impact Baxter’s ability to attract and retain top executive
talent, and not provide additional incentives.
Further, Baxter’s NEOs are subject to change year-to-year.
For example, since 2020, the named executive
officers have differed each year, largely due to new appointments and voluntary departures
. This proposal would
effectively place different stock retention requirements on certain executives every year, which would be difficult
for Baxter to administer. Instead, the Board believes Baxter’s current robust stock ownership requirements, which
are applied consistently each year, provide meaningful stock ownership and retention requirements at a low
administrative cost for Baxter to implement.
In short, given Baxter’s current stock ownership guidelines, governance policies, demonstrated openness and
commitment to stockholder responsiveness and accountability, the Board believes this proposal is not necessary
and does not provide additional benefit to the company's stockholders. The proposal, in contrast, fails to strike a
reasonable balance between aligning the interests of stockholders and management and motivating desired
management behavior. It would, therefore, unnecessarily damage Baxter’s ability to attract and retain talent and
would create an unnecessary administrative burden on Baxter, thereby wasting company resources without
commensurate benefit to the company’s stockholders. Moreover, Baxter’s stockholders considered, and rejected,
a similar proposal in 2023 and 2024 with support for the proposal declining year over year. This indicates that
Baxter’s stockholders remain generally supportive of the Board’s position on this proposal and current executive
compensation structure.
The Board of Directors recommends a vote “
AGAINST
” this proposal.
|
|
| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
94
|
General Information
|
|
|
|
|
General Information
|
Questions and Answers about the Annual
Meeting
Q:
Who is entitled to vote?
A:
All record holders of Baxter common stock as of the close of business on March 13, 2025 are entitled to
vote. On that day, approximately 512,924,066 shares were outstanding. Each share is entitled to one vote
on each matter presented at the Annual Meeting.
Q:
How do I vote?
A:
Baxter offers registered stockholders three ways to vote, other than by virtually attending the Annual Meeting
and voting through the online platform:
•
By Internet, following the instructions on the Notice or the proxy card;
•
By telephone, using the telephone number printed on the proxy card; or
•
By mail (if you received your proxy materials by mail), using the enclosed proxy card and return
envelope.
Q:
How do I participate in the Annual Meeting?
A:
To provide a safe, convenient and cost-efficient experience to all stockholders regardless of location, the
Annual Meeting will be held only in a virtual format. Please refer to “—Other Information—Attending the
Annual Meeting” for more information.
Q:
How do I vote shares that are held by my broker?
A:
If you have shares held by a broker or other nominee, you may instruct your broker or other nominee to vote
your shares by following instructions that your broker or nominee provides to you. Most brokers offer voting
by mail, telephone and the Internet.
Q:
What does it mean to vote by proxy?
A:
It means that you give someone else the right to vote your shares in accordance with your instructions. In
this way, you ensure that your vote will be counted even if you are unable to attend the Annual Meeting. If
you give your proxy but do not include specific instructions on how to vote, the individuals named as proxies
will vote your shares in accordance with the following recommendations of the Board:
|
Company Proposals
|
Board Recommendation
|
|
•
Proposal 1
—Election of Directors
|
FOR
|
|
•
Proposal 2
—Advisory Vote to Approve Named Executive Officer
Compensation for 2024
|
FOR
|
|
•
Proposal 3
—Ratification of Appointment of Independent Registered Public
Accounting Firm for 2025
|
FOR
|
|
Stockholder Proposal
|
Board Recommendation
|
|
•
Proposal 4
—Executives to Retain Significant Stock
|
AGAINST
|
|
investor.baxter.com
|
|
General Information
|
95
|
|
|
|
Q:
What if I submit a proxy and later change my mind?
A:
If you have given your proxy and later wish to revoke it, you may do so by giving written notice to the
Corporate Secretary, submitting another proxy bearing a later date (in any of the permitted forms), or voting
online during the Annual Meeting.
Q:
What happens if other matters are raised at the Annual Meeting?
A:
If other matters are properly presented at the Annual Meeting, the individuals named as proxies will have the
discretion to vote on those matters for you in accordance with their best judgment. However, Baxter’s
Corporate Secretary has not received timely and proper notice from any stockholder of any other matter to
be presented at the Annual Meeting.
Q:
How is it determined whether a matter has been approved?
A:
Assuming a quorum is present, the approval of the matters specified in the Notice of Annual Meeting of
Stockholders will be determined as follows:
•
Each director nominee under Proposal 1 receiving a majority of votes cast (meaning, the number of
votes cast “for” the director’s election exceeds the number of votes cast “against” his or her election) will
be elected as a director; and
•
Each other matter requires the affirmative vote of a majority of the shares of common stock, present
virtually or represented by proxy, and entitled to vote on the matter at the Annual Meeting.
Q:
Who will count the vote?
A:
Baxter has engaged Broadridge Financial Solutions, Inc. (Broadridge) to serve as the tabulator of votes and
a representative of Broadridge will serve as the Inspector of Election at the Annual Meeting.
Q:
How do I find out the voting results?
A:
Preliminary results are typically announced at the Annual Meeting. Final voting results will be reported on a
Form 8-K filed with the SEC following the Annual Meeting.
Q:
What constitutes a quorum?
A:
The holders of a majority of the outstanding shares of common stock entitled to vote at the Annual Meeting,
present virtually or represented by proxy, constitutes a quorum. Broker non-votes and abstentions will be
counted for purposes of determining whether a quorum is present.
Q:
What are broker non-votes and what effect do they have?
A:
Broker non-votes occur when nominees, such as banks and brokers holding shares on behalf of beneficial
owners, do not receive voting instructions from the beneficial holders. If that happens, the nominees may
vote those shares only on matters deemed “routine” by the NYSE, such as the ratification of the appointment
of the company’s independent registered public accounting firm. On “non-routine” matters, nominees cannot
vote unless they receive voting instructions from beneficial owners, resulting in so called “broker non-votes.”
The items being considered at the Annual Meeting, except for “Proposal 3—Ratification of Appointment of
Independent Registered Public Accounting Firm for 2025,” are considered “non-routine” matters.
Broker non-votes will have no impact on “Proposal 1—Election of Directors,” “Proposal 2—Advisory Vote to
Approve Named Executive Officer Compensation for 2024,” or “Proposal 4—Executives to Retain Significant
Stock.”
|
|
| 2025 Annual Meeting of Stockholders and Proxy Statement
|
|
96
|
General Information
|
|
|
|
Q:
What effect does an abstention have?
A:
Abstentions or directions to withhold authority will have no effect on the outcome of Proposal 1. Abstentions
will have the same effect as a vote against any of the other matters specified in the Notice of Annual Meeting
of Stockholders.
Q:
What is “householding” and how does it affect me?
A:
Baxter has adopted “householding,” a procedure under which stockholders of record who have the same
address and last name and do not receive proxy materials electronically will receive a single Notice of
Internet Availability of Proxy Materials or set of proxy materials, unless one or more of these stockholders
notifies the company that they wish to continue receiving individual copies. Stockholders who participate in
householding will continue to receive separate proxy cards. This procedure can result in significant savings
to the company by reducing printing and postage costs and reduces the environmental impact of the Annual
Meeting.
If you participate in householding and wish to receive a separate Notice of Internet Availability of Proxy
Materials or set of proxy materials, or if you wish to receive separate copies of future notices, annual reports
and proxy statements, please call 1-866-540-7095 or write to: Broadridge, Householding Department, 51
Mercedes Way, Edgewood, New York 11717. The company has instructed Broadridge to deliver requested
documents to a requesting stockholder of record promptly upon receipt of a related request.
Any stockholders of record who share the same address and currently receive multiple copies of proxy
materials who wish to receive only one copy of these materials per household in the future may contact
Broadridge at the address or telephone number listed above. If you hold your shares through a broker, bank
or other nominee, please contact your broker, bank, or other nominee to request information about
householding.
Q:
What shares are covered by the proxy card?
A:
The proxy card covers all shares held by you of record (registered in your name). If you hold your shares
through a broker, bank or other nominee, you will receive separate instructions from your broker, bank or
other nominee describing how to vote your shares.
Q:
Does the company offer an opportunity to receive future proxy materials electronically?
A:
Yes. If you wish to receive future proxy materials over the Internet instead of receiving copies in the mail,
follow the instructions provided when you vote through the Internet. If you vote by telephone, you will not
have the option to elect electronic delivery while voting.
If you elect electronic delivery, the company will discontinue mailing the proxy materials to you beginning
next year and will send you an e-mail message notifying you of the Internet address or addresses where you
may access next year’s proxy materials and vote your shares. You may discontinue electronic delivery at
any time.
Q:
What are the benefits of electronic delivery?
A:
Electronic delivery reduces the company’s printing and mailing costs as well as the environmental impact of
the Annual Meeting. It is also a convenient way for you to receive your proxy materials and makes it easy to
vote your shares over the Internet.
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Attending the Annual Meeting
The Annual Meeting will be held virtually on Tuesday, May 6, 2025 at 9 a.m., Central Time. Online access to the
Annual Meeting will begin at 8:45 a.m., Central Time. To provide a safe, convenient and cost-efficient experience
to all stockholders regardless of location, the Annual Meeting will be held only in a virtual format. You can attend
the Annual Meeting by accessing www.virtualshareholdermeeting.com/BAX2025 and entering the 16-digit control
number on the proxy card or Notice of Internet Availability of Proxy Materials you previously received. If you hold
your shares in “street name” (
i.e.,
through an account at a broker or other nominee), please follow your broker’s
or nominee’s instructions you previously received to obtain your 16-digit control number or otherwise attend
through the broker or nominee. If you have other questions about attending the Annual Meeting, please contact
Investor Relations at 224-948-3020 or Global_CORP_Investor_Relations@baxter.com.
Asking Questions
If you wish to submit a question, you may do so in two ways. If you want to ask a question before the Annual
Meeting, then beginning on April 22, 2025 and until 11:59 p.m., Central Time, on May 5, 2025, you may log into
www.proxyvote.com and enter your 16-digit control number. Once past the login screen, click on “Question for
Management,” type in your question and click “Submit.” Alternatively, you will be able to submit questions live
during the Annual Meeting by accessing the meeting at www.virtualshareholdermeeting.com/BAX2025, typing
your question into the “Ask a Question” field and clicking “Submit.”
Only questions pertinent to Annual Meeting matters will be answered during the Annual Meeting. If any questions
pertinent to Annual Meeting matters cannot be answered during the Annual Meeting due to time constraints, the
company will post and answer a representative set of these questions online at https://investor.baxter.com. The
questions and answers will be available as soon as reasonably practicable after the Annual Meeting and will
remain available until one week after posting.
Voting Shares at the Virtual Meeting
If you have not voted your shares prior to the Annual Meeting, you will be able to vote your shares electronically
at the Annual Meeting by clicking “Vote Here” on the Annual Meeting website. Whether or not you plan to attend
the Annual Meeting, you are encouraged to vote your shares prior to the Annual Meeting by one of the methods
described in the proxy statement.
Attending the Virtual Meeting as a Guest
If you would like to attend the Annual Meeting as a guest in listen-only mode, please access
www.virtualshareholdermeeting.com/BAX2025 and enter the information requested on the screen. Please note
you will not have the ability to ask questions or vote during the Annual Meeting if you participate as a guest.
Stockholder Proposals for the 2026 Annual Meeting
Any stockholder who intends to present a proposal at the 2026 annual meeting and who wishes to have a
proposal included in Baxter’s proxy statement for that annual meeting, must deliver the proposal to the Corporate
Secretary. All such proposals must be received by the Corporate Secretary no later than
November 25, 2025
and
must satisfy the rules and regulations of the SEC to be eligible for inclusion in the proxy statement for that
meeting.
To be eligible for consideration at the 2026 annual meeting, any proposal that is a proper subject for
consideration which has not been submitted by the deadline for inclusion in the proxy statement (as set forth
above) must comply with the procedures specified in Baxter’s Bylaws. These procedures require, among other
things, that notice of any such proposal be received by the Corporate Secretary no earlier than January 6, 2026
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and no later than February 5, 2026 and contain all of the information required to be included in such notice under
the Bylaws.
All submissions to, or requests of, the Corporate Secretary should be made to Baxter’s principal executive offices
at One Baxter Parkway, Deerfield, Illinois 60015.
Nominations of Individuals for Election as Directors at the 2026 Annual Meeting
A stockholder or group of up to 20 stockholders who have continuously owned Net Long Shares (as defined in
Baxter's Bylaws) representing at least 3% of Baxter’s common stock for at least three years have the ability to
submit director nominees (up to the greater of two and 20% of the Board) for inclusion in the related proxy
statement if the stockholder(s) and the nominee(s) satisfy the requirements specified in the proxy access
provision of Baxter’s Bylaws. Notice of any such nomination must be received by the Corporate Secretary no
earlier than October 26, 2025 and no later than November 25, 2025 and contain all of the information required to
be included in any Access Notice (as defined in Baxter's Bylaws).
To be eligible for consideration at the 2026 annual meeting, any nomination for director that is made outside of
the proxy access procedures (as described above) must comply with the procedures specified in Baxter’s
Bylaws. These procedures require, among other things, that notice of any such nomination be received by the
Corporate Secretary no earlier than January 6, 2026 and no later than February 5, 2026 and contain all of the
information required to be included in such notice under Baxter's Bylaws.
In addition to satisfying the foregoing requirements under Baxter’s Bylaws, to comply with the universal proxy
rules, stockholders who intend to solicit proxies in support of director nominees other than Baxter’s nominees
must also comply with all applicable requirements of Rule 14a-19 under the Exchange Act. The advance notice
requirement under Rule 14a-19 does not override or supersede the longer advance notice requirement under
Baxter’s Bylaws.
All submissions to, or requests of, the Corporate Secretary should be made to Baxter’s principal executive offices
at One Baxter Parkway, Deerfield, Illinois 60015.
Cost of Proxy Solicitation
Baxter will bear the costs of soliciting proxies. Copies of proxy solicitation materials will be mailed to stockholders
and employees of Baxter may communicate with stockholders to solicit their proxies. Banks, brokers and others
holding stock in their names, or in the names of nominees, may request and forward copies of the proxy
solicitation material to beneficial owners and seek authority for execution of proxies and Baxter will reimburse
them for their expenses.
In addition, Baxter has retained D.F. King & Co., Inc. to assist in the distribution and solicitation of proxies. Baxter
has agreed to pay D.F. King & Co., Inc. a fee of approximately $22,000 plus other solicitation-related expenses.
Transfer Agent and Registrar
Correspondence concerning Baxter common
stock holdings or lost or missing certificates or dividend checks
should be directed to: Computershare Trust Company, N.A., P.O. Box 43078, Providence, RI 02940-3078, (888)
359-8645.
Forward-Looking Statements
The proxy statement contains forward-looking statements. Forward-looking statements are based on our current
assumptions regarding future business and financial performance and various strategic and operational initiatives
and actions. These statements by their nature address matters that are uncertain to different degrees. Words
such as “may,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,”
“seeks,” “intends,” “evaluates,” “pursues,” “anticipates,” “continues,” “designs,” “impacts,” “affects,” “forecasts,”
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“target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” “goal,” or the negative of those words or other
similar expressions may identify forward-looking statements that represent the company’s current judgment
about possible future events, although not all forward-looking statements contain such words. These forward-
looking statements are based on certain assumptions and analyses made in light of Baxter’s experience and
perception of historical trends, current conditions, and expected future developments as well as other factors that
it believes are appropriate in the circumstances. While these statements represent the company’s judgment on
what the future may hold, and the company believes these judgments are reasonable, these statements are not
guarantees of any events or financial results. Whether actual future results and developments will conform to
expectations and predictions is subject to a number of risks and uncertainties, including those described in the
2024 Form 10-K, many of which are beyond the company’s control. Further, other unknown or unpredictable
factors could also have material adverse effects on future results. Any forward-looking statement in the proxy
statement speaks only as of the date on which it is made. Except as required by law, Baxter assumes no
obligation, and expressly disclaims any obligation, to update or revise any forward-looking statements included in
the proxy statement to reflect the impact of circumstances or events that may arise after the date the forward-
looking statements were made.
Websites
References to Baxter’s website or other links to its publications or other information are provided for the
convenience of the company’s stockholders. None of the information or data included on its websites or
accessible at these links is incorporated into, and will not be deemed to be a part of, the proxy statement or any
of the company’s other filings with the SEC.
TABLE OF CONTENTS
Table of Contents iNotice of 2025 Annual Meetingof Stockholders and Proxy StatementProxy Statement HighlightsCorporate Governance atBaxter International Inc.Proposal 1 Election of DirectorsNominees for Election as DirectorsBoard of DirectorsOther Corporate Governance InformationBoard ResponsibilitiesBoard Structure and ProcessesCommittees of the BoardDirector CompensationCorporate ResponsibilityProposal 2 Advisory Vote to Approve Named Executive Officer Compensation for 2024Compensation and Human Capital Committee ReportCompensation Discussion and AnalysisExecutive SummaryStructure of Executive Compensation ProgramElements of Executive CompensationAdditional Compensation GovernanceExecutive Compensation Tables2024 Summary Compensation Table