MRK DEF 14A Report ended April 3, 2023

Notice of Annual Meeting
of Shareholders

To Merck Shareholders:

You are invited to the Annual Meeting of Shareholders of Merck & Co., Inc. on Tuesday, May 23, 2023, at 9:00 a.m. (Eastern Time) via Webcast at www.virtualshareholdermeeting.com/MRK2023.

 

The purposes of the meeting are to:

1. Elect the 13 Director nominees named in this proxy statement;

2. Consider and act upon a proposal to approve, by non-binding advisory vote, the compensation of our Named Executive Officers;

3. Consider and act upon a proposal to approve, by non-binding advisory vote, the frequency of future votes to approve the compensation of our Named Executive Officers;

4. Consider and act upon a proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2023;

5. Consider and act upon a shareholder proposal regarding business operations in China, if properly presented at the meeting;

6. Consider and act upon a shareholder proposal regarding access to COVID-19 products, if properly presented at the meeting;

 

7. Consider and act upon a shareholder proposal regarding indirect political spending, if properly presented at the meeting;

8. Consider and act upon a shareholder proposal regarding patents and access, if properly presented at the meeting;

9. Consider and act upon a shareholder proposal regarding a congruency report of partnerships with globalist organizations, if properly presented at the meeting;

10. Consider and act upon a shareholder proposal regarding an independent board chairman, if properly presented at the meeting; and

11. Transact such other business as may properly come before the meeting.

By order of the Board of Directors,

 

 

Kelly E. W. Grez

Corporate Secretary

 

 

Vote Right Away—Advance voting methods and deadlines   We encourage all shareholders of record to read this proxy statement with care and vote right away using any of the following methods, even if they intend to attend the Annual Meeting. In all cases, have your proxy card or voting instruction form in hand and follow the instructions.
		BY INTERNET*		www.proxyvote.com
		BY PHONE*		In the U.S. or Canada dial toll-free 1-800-690-6903
		BY QR CODE		Scan this QR code to vote with your mobile device (may require free app)
		BY MAIL**		Cast your ballot, sign your proxy card and send in our prepaid envelope
Only shareholders listed on the Company’s records at the close of business on March 24, 2023 are entitled to vote.   Merck began distributing its Notice of Internet Availability of Proxy Materials, proxy statement, the 2022 Annual Report on Form 10-K and proxy card/voting instruction form, as applicable, to shareholders and to employee benefit and stock purchase plan participants on April 3, 2023.   IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON May 23, 2023:   The Notice of Annual Meeting of Shareholders, proxy statement and the 2022 Annual Report on Form 10-K are available free of charge at www.proxyvote.com. The principal executive offices of the Company are located at 126 East Lincoln Avenue, Rahway, N.J. 07065 U.S.A.   * The telephone and internet voting facilities will close at 11:59 p.m. Eastern Time on May 22, 2023. ** You will need the 16-digit control number included on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials. If your shares are held in a stock brokerage account or by a bank or other nominee, your ability to vote by telephone or over the internet depends on your broker’s voting process. Please follow the directions provided to you by your broker, bank or nominee.

 

Merck & Co., Inc. 2023 Proxy Statement

Dear Merck Shareholders,

was studied as an add-on to PAH background therapy. We’ve also received encouraging results from the Phase 2b trial evaluating MK-0616, an oral PCSK9 inhibitor for the treatment of hypercholesterolemia. As a result of these positive data, we plan to move to Phase 3 in the second half of this year. Our progress with sotatercept and MK-0616 is also supplemented by strong momentum in other strategic areas including our Factor XI inhibitor, MK-2060, which received fast-track designation from the U.S. Food and Drug Administration (FDA) in August. Based on these most recent data readouts and the progress we’ve made across our pipeline, we are even more confident in our potential to achieve greater than $10 billion in revenue from our cardiovascular program by the mid-2030s.

Oncology products KEYTRUDA, Lenvima, Lynparza and WELIREG are driving key growth for our business, and we remain focused on our expansive oncology research efforts, including moving to earlier stages of disease where there is a higher probability of achieving improved long-term outcomes for patients. In 2022, we continued our momentum, with approvals for KEYTRUDA and Lynparza in additional tumor types and earlier-stage cancers.

In collaboration with Moderna, we announced that KEYTRUDA in combination with mRNA4157/V940, a personalized mRNA therapeutic cancer vaccine, received breakthrough therapy designation from the FDA for adjuvant treatment of certain patients with high-risk melanoma. This follows results demonstrating statistically significant recurrence-free survival in the Phase 2b trial studying the combination, the first demonstration of efficacy for an investigational mRNA cancer treatment in a randomized clinical trial. We believe this combination has great potential for patients. We also recently received approval for KEYTRUDA for adjuvant treatment after resection and platinum-based chemotherapy for certain adult patients with non-small cell lung cancer based on the results of KEYNOTE-091, which represents its seventh indication in earlier-stage cancers. Early lung cancer detection and screening remain an important unmet need. It is our ambition, along with stakeholders, to improve lung cancer screening rates to levels similar to other cancer types, such as breast and colon, where screening programs have been more widely adopted.

We have made substantial progress in advancing our oncology program through our internal R&D and business development, and we believe that our suite of antibody-drug conjugates and small molecules represent greater than $10 billion of commercial potential by the mid-2030s. This excludes additional innovation we are investing in to expand, deepen and extend our current commercial assets, and does not include the personalized mRNA therapeutic cancer vaccine.

Our vaccines business remains a key growth pillar, anchored by our HPV vaccines GARDASIL and GARDASIL 9. We expect our HPV vaccines to continue growing substantially, potentially more than doubling 2021 sales and generating over $11 billion

Merck & Co., Inc. 2023 Proxy Statement

in revenue by 2030. Additionally, we are advancing our population-specific strategy in pneumococcal vaccines. VAXNEUVANCE is approved in infants, children and adults for protection against invasive pneumococcal disease, and later this year, we look forward to completing the Phase 3 clinical trials from our V116 program for the protection of adults against pneumococcal disease. In December, Instituto Butantan in Brazil – an organization we are collaborating with for vaccine development – reported encouraging topline results for its vaccine candidate to prevent dengue, which will help inform future development of our own dengue vaccine candidate, V181, which uses a similar approach with the same antigenic content. In addition, we have begun a Phase 3 trial of our monoclonal antibody to provide passive immunity against respiratory syncytial virus in infants.

Our Animal Health business remained a market leader in 2022, with consistent, above-market growth driven by higher demand in livestock from our ruminant, poultry and swine products. Sales growth in companion animal reflected higher demand for the BRAVECTO parasiticide line of products. We look forward to continuing to build our biopharmaceutical and technology offerings and driving growth, innovation and strong performance in Animal Health.

Our business development strategy is helping position Merck for growth well into the next decade and complements our diverse pipeline and product portfolio. In 2022, we executed several important transactions, including the acquisition of Imago Biosciences and collaborations with Orion Corporation, Orna Therapeutics, Moderna Therapeutics and Kelun-Biotech. We will continue to take a disciplined and focused look at opportunities to add novel assets and technologies to our portfolio in 2023.

We are delivering on our longstanding commitment to operating responsibly, and in 2022, we continued to make significant progress across our goals of expanding access to health, developing a diverse and inclusive workforce, protecting our environment, and operating with the highest standards of ethics. We expanded access to our innovative portfolio to ensure Merck’s science advances global health. We are more than halfway toward reaching our goal of providing 100 million more people access to our innovative portfolio globally – through access strategies, solutions and partnerships, by 2025. In addition, recognizing the ongoing need for multiple approaches to treat COVID-19, we continued to accelerate global access to LAGEVRIO through our comprehensive supply and access approach.

We continued to cultivate a diverse and inclusive workforce, implementing critical strategies and leveraging our 10 employee business resource groups, which represent the various dimensions of diversity that span our company. These groups enhance employee engagement, enable career growth and development, and help ensure we achieve our business objectives. We also made strong progress toward our climate goals and further developed the tools and processes required to reduce our company’s carbon footprint. And, we are committed to conducting ourselves with integrity, fully complying with regulatory requirements.

Our success in 2022 was underpinned by our understanding that the work we do has a truly profound effect on global health. Throughout the year, we continued to build on our legacy of putting patients first, focusing on how we can address unmet medical needs and work to prevent and treat devastating diseases. We will continue to leverage our size, scope, scale and strength to invest in our pipeline and capitalize on opportunities that deliver lifesaving and life-changing benefits to patients worldwide, as well as great returns for our shareholders. I am deeply inspired by and proud of the progress we’ve made. Still, I am keenly aware that our work is never done and that patients around the world are waiting for the kind of scientific innovation that Merck can uniquely deliver now and well into the future.

In 2022, we also marked the conclusion of a leadership transition as Ken Frazier retired from our company after a distinguished 30-year tenure. Throughout his Merck career, Ken set and exceeded a high bar of excellence in both executive and board leadership. He led with principle, embodied our core values, and made immense contributions to global health. On behalf of our entire company, I want to thank Ken and wish him the best in his next chapter.

Thank you for your confidence and support of our company. We hope you will participate in the Annual Meeting either by attending virtually or by voting, as promptly as possible, through other alternative means as described in this proxy statement. Your participation is important, so please exercise your right to vote.

Merck & Co., Inc. 2023 Proxy Statement

A Message from Merck’s Independent Lead Director

Dear Merck Shareholders,

As you read in the letter from our Chairman and CEO, Robert M. Davis, 2022 was a truly exceptional year for the Company as it continued working to fulfill its purpose of using the power of leading-edge science to save and improve lives around the world. This purpose has guided the Company throughout its long history. It also guides my fellow Directors and me in our work overseeing the Company’s affairs and fulfilling our responsibilities.

Both as a full Board and through our four standing committees composed of independent directors only, we are dedicated to the effective oversight of the Company’s business and the key risks the Company faces. Our annual self-evaluation process helps us identify ways to continue to enhance the overall effectiveness of the Board and its committees. It also gives us the opportunity to discuss other important topics through feedback from each of our Directors that is then considered by the full Board.

Part of our annual evaluation process includes a review of the Board’s leadership structure. Board leadership is a topic considered by the independent Directors to ensure the current structure remains the most appropriate leadership structure for the Company and the Board at a given time. In connection with the Company’s CEO transition in 2021, when the Board unanimously elected Mr. Davis to succeed Kenneth C. Frazier as CEO, and Mr. Frazier’s retirement as Executive Chairman at the end of 2022, in particular, the independent Directors gave significant consideration to the Board’s leadership structure. As independent Lead Director during this period, I led a process with my fellow Directors, working closely with Mr. Davis and Mr. Frazier, that found Rob to be an innovative and strategic leader with a deep understanding of the Company and its industry and well-suited to serve as Chairman of the Board. Effective December 1, 2022, Mr. Davis was unanimously elected by the Board to serve as Chairman.

The Board believes that having Mr. Davis serve as Chairman and CEO provides strategic and operational expertise and perspective to the Chairman role because he can draw on his detailed institutional knowledge of the Company and his industry experience. At the same time, we have strong independent oversight through (a) the key duties and responsibilities I discharge as independent Lead Director and (b) our four independent Board committees chaired by independent Directors. Together, we ensure that Merck achieves the highest level of corporate governance, which includes having diverse perspectives in the boardroom and dialogue with shareholders.

We are deliberate in ensuring that we have the right mix of perspectives, skills and expertise to address the Company’s current and anticipated needs as opportunities and challenges facing the Company evolve. Our Directors draw on their unique experiences to provide guidance on corporate strategy and monitor its implementation in areas such as research and development, capital allocation, risk management, operating results, human capital management and global manufacturing. The Board also provides oversight of the Company’s ESG strategy and performance as a whole and through our committees based on their specific areas of competency. This year, our Compensation and Management Development Committee approved for 2023 a Company Scorecard that will, for the first time, include ESG metrics. Our Company Scorecard helps translate our strategic priorities into operational terms that enable tracking and measurement of our progress and performance against annual operating goals and the long-term strategic drivers of sustainable value creation. These key objectives include our research and development pipeline and, beginning in 2023, two key strategic ESG priorities of enabling access to the Company’s innovative portfolio to patients around the world and engagement and inclusion of the Company’s employees.

We appreciate your investment in Merck and your support for the Board. We remain committed to serving you and the patients around the world that depend on Merck’s life-saving work.

		Thomas H. Glocer Independent Lead Director April 3, 2023

Merck & Co., Inc. 2023 Proxy Statement

Contents

Merck & Co., Inc. 2023 Proxy Statement

This summary highlights information contained elsewhere in this proxy statement and does not contain all of the information that you should consider. You should read the entire proxy statement carefully before voting.

Merck & Co., Inc. 2023 Proxy Statement

2022 NEOs and Compensation Highlights (Page 48)

Below is a list of our 2022 Named Executive Officers, or “NEOs”, and select compensation highlights from 2022. For additional information on our elements of 2022 compensation, please refer to the Compensation Discussion and Analysis (“CD&A”), beginning on page 43.

												Annual Base Salary$				Target Annual Incentive%				Target Long-Term Incentive$				Target TDC   Increase%(1)
				2022 NEOs
				Robert M. Davis Chairman, Chief Executive Officer and President								$1,545,000				150%				$11,750,000				+7.7%
												.............................................................................................................................................................................
				Kenneth C. Frazier Former Executive Chairman(5)								1,250,000				100(2)				5,000,000				-43.4
												.............................................................................................................................................................................
				Caroline Litchfield Executive Vice President and Chief Financial Officer								975,000				100				2,750,000				+17.5
												.............................................................................................................................................................................
				Chirfi Guindo Chief Marketing Officer, Human Health								700,000				80				—(3)				—(4)
												.............................................................................................................................................................................
				Dean Li, M.D., Ph.D. Executive Vice President and President, Merck Research Laboratories								1,250,000				100				3,900,000				+30.6
												.............................................................................................................................................................................
				Jennifer Zachary Executive Vice President and General Counsel								974,702				95				3,000,000				+7.8

Variable Compensation is Critical to Achieve Our Objectives (Page 51)

Merck’s compensation programs are designed to align the interests of our executives with the interests of our shareholders, among other objectives. For this reason, a significant portion of our NEOs’ pay is variable and at-risk, subject to Company performance as measured against financial, operating and strategic objectives, as well as Relative Total Shareholder Return or R-TSR (as defined in Appendix B). The Company’s variable incentives demonstrate a strong linkage between pay and performance.

Annual Cash Incentive

The Company Scorecard (described in more detail on page 53) focuses on our most critical business drivers — the Company’s revenue (“Revenue”), non-GAAP pre-tax income (“Pre-Tax Income”) and the Company’s research and development goals for the incentive program (“Pipeline”) — and is used to determine the payout of our annual incentive for all eligible employees, including our NEOs under the Executive Incentive Plan. Our Scorecard performance during 2022 resulted in above-target achievement of 178%.

Merck & Co., Inc. 2023 Proxy Statement

Long-Term Incentive (“LTI”)

The long-term incentive program, consisting of a mix of Performance Share Units (“PSUs”) and stock options, provides our NEOs with the opportunity to own Merck stock, directly linking a substantial portion of their compensation to the returns realized by our shareholders.

The 2020 PSU program (described in more detail on page 57) paid out at 110% based on achievement of one-year Earnings Per Share (“EPS”) and three-year R-TSR metrics during the performance period (2020-2022), weighted at 33% and 67%, respectively. As previously disclosed, one-year EPS was used due to the complexities associated with disentangling our Organon & Co. (“Organon”) business from a multi-year financial plan. Organon was successfully spun off in June 2021.

We ask that our shareholders approve, on an advisory basis, the compensation of our NEOs as further described in Proposal 2 on page 42. This year, we are also asking shareholders to cast a non-binding, advisory vote on the frequency of future votes to approve the compensation of our NEOs. Shareholders will be able to specify one of four choices for this proposal on the proxy card; one year, two years, three years or abstain. The Board believes that it is appropriate and in the best interest for our shareholders to continue to cast a non-binding, advisory vote on the compensation of our NEOs on an annual basis.

For additional information, please refer to the CD&A beginning on page 43 of this proxy statement.

Shareholder Engagement and Feedback (Page 25)

Merck communicates regularly with shareholders to better understand their perspectives and has established a shareholder engagement program that is both proactive and cross-functional. In addition, our independent Lead Director, who is also Chair of our Governance Committee, participates in substantive engagements with some of the Company’s largest shareholders. In 2022, discussions with shareholders covered a wide range of topics of interest to shareholders, including Environmental, Social and Governance (“ESG”) reporting and goals, the Board’s leadership structure and composition, management and director succession, executive compensation programs, human capital management and other governance matters. These discussions provided valuable insights into shareholder views, and we heard from many shareholders that they greatly appreciated the opportunity to engage with our Company.

We will continue to engage with shareholders on a regular basis to better understand and consider their views, including on our ESG approach, our executive compensation programs and our corporate governance practices.

Board Composition and Refreshment

At least annually, the Governance Committee considers the size, structure and needs of the Board. The Governance Committee reviews possible candidates for the Board and recommends Director nominees to the Board for approval. In addition, as part of the Board’s annual self-evaluation process, Directors provide feedback on Board composition-related matters.

In selecting Director nominees, the Board considers its composition, including its diversity, and the skills, areas of expertise and experience then-represented on the Board. The Board also considers the Company’s current and future global business strategies, opportunities and challenges. Such considerations have resulted in the election of five new independent Directors over the last three years. For more information, see “Board Succession Planning, Criteria for Board Membership and Director Nomination Process” beginning on page 21.

Merck & Co., Inc. 2023 Proxy Statement

Nominees for Director (Page 33)

The following provides summary information about each Director nominee. Each Director stands for election annually. Detailed information about each individual’s background, skillsets and areas of expertise can be found beginning on page 33.

																Current Committee Memberships
																Audit					C&MD					Governance					Research
		Director Nominee		Age					Director          Since					Title
		Douglas M. Baker, Jr.				64					2022			Former Executive Chairman and Chief Executive Officer, Ecolab Inc.
		Mary Ellen Coe				56					2019			Chief Business Officer, YouTube Inc.
		Pamela J. Craig				66					2015			Former Chief Financial Officer, Accenture plc
		Robert M. Davis Management				56					2021			Chairman, Chief Executive Officer and President, Merck & Co., Inc.
		Thomas H. Glocer Lead Director				63					2007			Former Chief Executive Officer, Thomson Reuters Corporation
		Risa J. Lavizzo-Mourey, M.D.				68					2020			Professor Emerita, Robert Wood Johnson Foundation Population Health and Health Equity, University of Pennsylvania
		Stephen L. Mayo, Ph.D.				61					2021			Bren Professor of Biology and Chemistry, California Institute of Technology
		Paul B. Rothman, M.D.				65					2015			Former Dean of Medical Faculty and Vice President for Medicine, The Johns Hopkins University, and Former CEO, Johns Hopkins Medicine
		Patricia F. Russo				70					1995			Chair, Hewlett Packard Enterprise Company; Former Chief Executive Officer and Director, Alcatel-Lucent
		Christine E. Seidman, M.D.				70					2020			Thomas W. Smith Professor of Medicine and Genetics, Harvard Medical School, and Director, Cardiovascular Genetics Center, Brigham and Women’s Hospital
		Inge G. Thulin				69					2018			Former Chairman of the Board, President and Chief Executive Officer, 3M Company
		Kathy J. Warden				51					2020			Chair, Chief Executive Officer and President, Northrop Grumman Corporation
		Peter C. Wendell				72					2003			Managing Director, Sierra Ventures
		Number of Meetings in 2022														9					5					4					5

  ^{Committee Chair}

Merck & Co., Inc. 2023 Proxy Statement

Our 2023 Director Nominees Snapshot

Our Director nominees possess broad expertise, skills, experience and perspectives that will facilitate the strong oversight and strategic direction required to govern the Company’s business and strengthen and support senior management. As illustrated by the following charts, our slate of Director nominees consists of individuals with expertise in fields that align with the Company’s business and long-term strategy, includes a mixture of tenure that allows for both new perspectives and continuity and reflects the Board’s commitment to diverse perspectives.

* See page 22 of this proxy statement under Individual Experience, Qualifications, Attributes and Skills for how these Board skills and qualifications are represented by each Director nominee individually.

Merck & Co., Inc. 2023 Proxy Statement

The Board has the legal responsibility for overseeing the affairs of the Company and for the overall performance of the Company. The Board’s primary mission is to represent and protect the interests of our shareholders. To that end, the Board selects and oversees the senior management team, which is charged with conducting Merck’s daily business.

Governance Highlights

We believe good corporate governance is essential to achieving long-term shareholder value. We are committed to governance policies and practices that serve the interests of our Company and its many stakeholders. For this reason, we devote considerable time and resources to making sure that our policies reflect our values and business goals, we have an effective corporate governance structure, and we operate in an open, honest and transparent way. In addition, we evaluate our practices against prevailing best practices as well as emerging and evolving topics identified in a variety of ways, including through shareholder engagement and corporate governance organizations.

Merck & Co., Inc. 2023 Proxy Statement

We highlight some significant aspects of our corporate governance practices below.

Board Leadership Structure

Currently, the Board is led by Robert M. Davis, who serves as the Chairman of the Board and CEO of Merck, and by Thomas H. Glocer, an independent Director, who serves as the Board’s Lead Director. The Board believes that the Company and our shareholders are best served by allowing the Board to exercise its judgment regarding the most appropriate leadership structure for the Company and the Board at a given time. The Board’s discretion should not be unduly constrained in advance because the most appropriate leadership structure at any given time will depend on a variety of factors, including the leadership, skills and experience of each of the CEO, the independent Lead Director and the other members of the Board, as well as the needs of the business and other factors.

Merck & Co., Inc. 2023 Proxy Statement

The independent Directors evaluate our Board leadership structure at least annually. In connection with the Company’s CEO transition in 2021, when the Board unanimously elected Mr. Davis to succeed Kenneth C. Frazier as CEO, and Mr. Frazier’s retirement as Executive Chairman at the end of 2022, in particular, the independent Directors gave significant consideration to the Board’s leadership structure. During this period, the independent Lead Director led a process with his fellow Directors working closely with Mr. Davis and Mr. Frazier that found Mr. Davis to be an innovative leader with deep understanding of the Company and its industry and well-suited to serve as Chairman of the Board. Effective December 1, 2022, Mr. Davis was unanimously elected by the Board to serve as the Chairman.

As Chairman, Mr. Davis presides over meetings of the Board and shareholders and focuses on Board operations and governance matters. He serves as the liaison between the Board and management, working closely with the independent Lead Director. Mr. Davis is also in charge of the general supervision, direction and control of the business and affairs of the Company subject to the Board’s overall oversight. The Board meets in executive session without Mr. Davis at each regular Board meeting. During these executive sessions led by Mr. Glocer as independent Lead Director, the Directors discuss topics such as the Board’s leadership structure, succession planning for the CEO and key management positions, and points of follow-up with management on strategic issues. The Board believes that having Mr. Davis serve as Chairman and CEO adds strategic and operational perspective to the Chairman role because he can draw on his detailed institutional knowledge of the Company and industry experience, while at the same time having strong independent oversight with Mr. Glocer as independent Lead Director vested with key duties and responsibilities and four independent Board committees chaired by independent Directors.

Lead Director

Merck’s independent Lead Director is appointed by the independent members of the Board of Directors to a three-year term. The position of Lead Director has a clear mandate and significant authority and responsibilities set forth in the Policies of the Board, including:

Merck & Co., Inc. 2023 Proxy Statement

As further described below, the Board’s four standing committees, each of which is composed solely of independent Directors, also play an active role in the Board’s leadership structure. The independent chairs of each of these committees provide strong leadership to guide the important work of the Board. They work with the Company’s senior executives to ensure the committees are discussing key strategic risks and opportunities of the Company. The Board believes the Company and its shareholders are well-served by the current leadership structure for all the foregoing reasons.

The Board of Directors has four standing committees, each of which is made up solely of independent Directors: Audit Committee; C&MD Committee; Governance Committee; and Research Committee. In addition, the Board from time to time establishes special purpose committees. All of our standing committees are governed by Board-approved charters, which are available on our website at www.merck.com/company-overview/leadership/board-of-directors/. The committees evaluate their performance and review their charters annually. Additional information about the committees is provided below. As a non-independent director, Mr. Davis is not a member of any Board committee, but may participate in meetings at the request of the committees.

Merck & Co., Inc. 2023 Proxy Statement

⁽¹⁾ Mr. Baker was appointed to the Audit Committee as of March 27, 2023. He previously served on the C&MD Committee.

⁽¹⁾ Ms. Coe was appointed to the C&MD Committee as of March 27, 2023. She previously served on the Audit Committee.

Merck & Co., Inc. 2023 Proxy Statement

Merck & Co., Inc. 2023 Proxy Statement

Board’s Role in Strategic Planning

The Board — acting both as a whole and through its four standing committees — is fully engaged and involved in the Company’s strategic planning process. All of our Directors have an obligation to keep informed about the Company’s business and strategies, so they can provide guidance to management in formulating and developing plans and knowledgeably exercise their decision-making authority on matters of importance to the Company.

The Board’s oversight and guidance are inextricably linked to the development and review of the Company’s strategic plan. By exercising sound and independent business judgment on the strategic issues that are important to the Company’s business, the Board facilitates Merck’s long-term success.

Our Strategic Planning Cycle

Merck & Co., Inc. 2023 Proxy Statement

Risk Oversight

Overseeing risk is an important component of the Board’s engagement on strategic planning. The Board’s approach to overseeing risk management leverages the Board’s leadership structure and ensures the Board oversees risk through both a Company-wide approach and specific areas of competency. A summary of this risk oversight approach follows:

The ERM process allows for full Board oversight of the most significant risks facing the Company and was established to ensure a complete Company-wide approach to evaluating risk over six distinct but overlapping risk areas:

Merck & Co., Inc. 2023 Proxy Statement

Our ERM process seeks to identify emerging risks and address them appropriately to limit negative consequences to the Company and the data it maintains. Its goal is to provide an ongoing review, implemented across the Company and aligned to Company values and ethics, to identify and assess risk and to monitor risk and agreed-upon mitigating action. Furthermore, if a risk transforms into an incident, the ERM process ensures that effective response and business continuity plans are in place. If the ERM process identifies a material risk, it will be elevated through the CEO and the Executive Team to the full Board for consideration. Through the ERM process, each Board committee oversees specific areas of risk relevant to the committee through direct interactions with the CEO, members of the Company’s Executive Team and the heads of business divisions, compliance and corporate functions. A committee may address risks directly with management or, where appropriate, may elevate a risk for consideration by the full Board or another Board committee. The Board committees also oversee risk based on their specific areas of competency. Additional detail with respect to certain key areas of oversight are provided below.

Cybersecurity and Privacy

As our Company becomes more dependent on technology and data, the need for a robust cybersecurity, privacy, and technology risk management program is increasingly critical. We have developed and implemented a comprehensive program designed to protect the confidentiality of sensitive information, ensure the integrity of critical data and automated processes, and safeguard the availability of our information technology capabilities.

Cybersecurity has been an area of management attention for over two decades and we have aligned our cybersecurity program to the National Institute of Standards and Technology (NIST) Cybersecurity Framework and the Payment Card Industry Data Security Standard (PCI-DSS). We have implemented appropriate policies, processes, and technology to reduce the likelihood or impact of a breach and have cyber insurance. We have an employee awareness program to regularly educate our workforce on the cybersecurity risks they face and how they can operate safely. We regularly assess our cybersecurity capabilities using third party security firms.

We have also developed and continually evolve our Global Privacy Program to promote organizational accountability for privacy, data governance, and data protection across our business and with our collaborative partners and suppliers. The program helps us uphold our commitment to data security and privacy, including maintaining 100% compliance to regulatory requirements for active incident monitoring, risk/harm analysis, and on-time notification of data breaches. Our commitment applies not only to our Company’s information, but also to the information entrusted to us by others. We were the first company in the world to obtain regulatory certification in the European Union for Binding Corporate Rules based in part on our existing Asia Pacific Economic Cooperation Cross Border Privacy Rules certification.

We are aware that we must continuously evolve our controls to address new threats, adhere to changing laws and standards, and reduce the risk associated with the introduction of new, innovative technology. While everyone at the Company plays a part in information security, cybersecurity, and data privacy, oversight responsibility is shared by the Board, its committees, and management.

Merck & Co., Inc. 2023 Proxy Statement

Environmental, Social and Governance (“ESG”) Matters

The Board of Directors and its Committees are responsible and accountable for the Company’s ESG matters, while management is responsible for reviewing, refining, and implementing the long-term ESG strategy and for updating the Board and its Committees.

For more information about our approach to ESG, please visit our 2021/2022 ESG Progress Report at https://www.merck.com/company-overview/esg/.

Providing Access to Health to Patients Around the World

We are continuing to make progress in ESG areas that matter most to our Company and our stakeholders which include Access to Health, Employees, Environmental Sustainability, and Ethics & Values. Of these four priorities, Access to Health is central to our purpose as a research-intensive biopharmaceutical company, helping to create value for our stakeholders and improve the lives of patients around the world. Our approach is guided by our Access to Health Guiding Principles, focused in four main areas:

Merck & Co., Inc. 2023 Proxy Statement

Our Access to Health Guiding Principles (the “Principles”) guide our work in addressing global burdens of disease with our products and pipeline. We aim to make a safe global supply of quality medicines and vaccines available to the greatest number of patients today while meeting the needs of patients in the future. The Principles inform our efforts to address barriers to accessing our medicines and vaccines, as well as the systemic barriers to health care around the world.

Discovery and Invention

Pursuing the most promising science, we discover and invent medicines and vaccines that address vital global health needs where we can have the greatest impact, now and in the future.

Availability

Making available a reliable and safe global supply of quality medicines and vaccines, we invest in solutions to enable timely access to our products, in a responsible and sustainable manner.

Affordability

Grounded in a deliberate systematic approach, we develop, test, and implement innovative solutions that address barriers to access and affordability of our medicines and vaccines.

Strengthening Systems and Addressing Inequity

Applying our expertise to address systemic barriers to access to health, we believe we can make the strongest contributions to health systems, communities and our patients around the world.

Guided by these Principles, we will continue to expand access to our products through market-based solutions that help address unmet need, taking into consideration public health need, economic conditions and health-care infrastructure.

Board Succession Planning, Criteria for Board Membership, and Director Nomination Process

In Board succession planning, the Governance Committee and the Board consider, among other things, the needs of the Board and the Company in light of the overall composition of the Board, with a view toward achieving a balance of the skills, experience and attributes that are essential to the Board’s oversight role. In particular, the Board is deliberate in ensuring the Board has the right mix of diverse perspectives, skills and expertise to address the Company’s current and anticipated needs as opportunities and challenges facing the Company evolve. The Board also strives to ensure an appropriate mix of tenure on the Board and being balanced with both experienced and newer directors. Such considerations have resulted in the election of five new independent Board members over the last three years. The Board also has a policy set forth in the Policies of the Board that Directors may not be nominated for re-election to the Board after they reach the age of 75. The Board believes that, in addition to its ongoing review of the overall composition of the Board, this policy promotes regular refreshment of the Board and is considered as part of overall succession planning.

The Governance Committee is responsible for screening and nominating director candidates to be considered for election by the Board. As part of this process, the Governance Committee considers the composition of the Board at the time, including the depth of experience, balance of professional skills, expertise and diversity of perspectives represented by its members at the time. The Governance Committee evaluates prospective nominees identified on its own initiative as well as candidates recommended by other Board members, management, shareholders or search consultants. In 2022, the Governance Committee retained a search firm to identify possible candidates who meet the Board’s qualifications, to interview and screen such candidates (including conducting reference checks) and to assist in scheduling candidate interviews with Board members.

To be considered for membership on the Board, a candidate must meet the following minimum criteria:

Merck & Co., Inc. 2023 Proxy Statement

Individual Experience, Qualifications, Attributes and Skills

In its regular discussions regarding Board composition — and especially in conjunction with the annual Board and committee evaluations — the Governance Committee works with the Board to determine the appropriate mix of professional experience, expertise, educational background and other qualifications that are particularly desirable in light of our current and future business strategies. The Governance Committee uses this input in its planning and Director search process. In addition to the five broad criteria listed above, the following chart highlights the key skills and qualifications the Board considers for future candidates. As reflected below, these attributes are amply represented by our current Director nominees.

Board Skills and Qualifications

CEO Leadership

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Health Care Industry

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Global Strategy & Operations

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Marketing / Sales

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Digital

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Public Company Governance

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Public Policy & Regulation

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Talent Management

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Capital Markets Experience

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Board Skills and Qualifications Categories

Merck & Co., Inc. 2023 Proxy Statement

Diversity

As a Company, Merck knows that diversity and inclusion are fundamental to the Company’s success and core to future innovation. As a Board, diversity is an important factor considered when identifying prospective nominees for our Board, and the Policies of the Board include a formal diversity policy. The policy reflects the Board’s longstanding commitment to ensuring that Directors represent diverse perspectives and areas of expertise important to fostering the Company’s business success. The policy provides that the Board does not discriminate against potential Directors on the basis of gender, race, age, sexual orientation or ethnic and national background and that having a board composed of diverse individuals is an important contributor to the Board’s overall effectiveness.

Shareholder Recommendations of Director Candidates

The Governance Committee will consider recommendations for Director candidates made by shareholders and will evaluate those individuals using the same criteria applied to other candidates. Shareholder recommendations must be sent to the Office of the Secretary, Merck & Co., Inc., 126 East Lincoln Avenue, Rahway, N.J. 07065 U.S.A., and must include detailed background information regarding the recommended candidate that demonstrates how that candidate meets the Board membership criteria.

Candidates are evaluated initially based on materials submitted by them or on their behalf. If a proposed or recommended candidate continues to be of interest to the Governance Committee, we obtain additional information through inquiries to various sources and, if warranted, interviews.

Management Succession Planning

Succession planning and talent development are important at all levels within the Company. The Board regularly reviews short- and long-term succession plans for the CEO and other executive officers. In assessing possible CEO candidates, the independent Directors identify the skills, experience and attributes they believe are required for an effective CEO in light of the Company’s global business strategies, opportunities and challenges. More broadly, the Board engages with the Company’s leadership team on matters of talent and culture, including around the development of the Company’s talent pipeline and advancing diversity and inclusion efforts across the enterprise. The Board’s succession planning activities are strategic, long-term and supported by the Board’s committees and external consultants, as needed, and Directors have substantial opportunities to engage with possible succession candidates.

Merck & Co., Inc. 2023 Proxy Statement

Annual Board Evaluation

The Board conducts an evaluation of its performance and effectiveness, as well as that of its four standing committees, on an annual basis. The purpose of the evaluation is to track progress in certain areas targeted for improvement, identify ways to enhance the overall effectiveness of the Board and its committees and provide opportunities to discuss other important topics. Among other topics, each Director provides feedback on the following topics that the full Board then considers:

In addition, each Committee member evaluates their respective Committees, including with respect to leadership, composition, and functioning. The independent Lead Director leads the evaluation process. In 2022, the evaluation was conducted in 3 phases.

Merck & Co., Inc. 2023 Proxy Statement

Shareholder Engagement and Feedback

Merck regularly communicates with shareholders to better understand their perspectives and has established a shareholder engagement program that is proactive and cross-functional. Throughout the year, members of Investor Relations, the Office of the Secretary, Human Resources and the ESG Strategy and Engagement Team, as well as other subject-matter experts within the Company, engage with our shareholders to remain well-informed regarding their perspectives on current issues and to address any questions or concerns. These teams serve as liaisons between shareholders, members of senior management and the Board. We also regularly seek to take advantage of other engagement opportunities and events.

In addition, we conduct a formal shareholder outreach program twice a year focused on governance, executive compensation and ESG matters. We believe it is most productive to discuss these matters well in advance of the Annual Meeting to enable management and the Board to gather information about investor perspectives and make educated and deliberate decisions that are balanced and appropriate for Merck’s diverse shareholder base and in the Company’s best interests. Given our large shareholder base, we concentrate our formal outreach efforts on those of our largest 50 shareholders, who have stewardship teams involved in proxy voting. Our largest 50 shareholders represented approximately 49% of our ownership as of December 31, 2022, based on filings made by our shareholders with the SEC on or before March 1, 2023.

In 2022, specifically, we followed this process and held discussions with a number of our shareholders in the spring before the Annual Meeting and once again in late fall. Our independent Lead Director, who is also Chair of the Governance Committee, participated in substantive engagements with some of the Company’s shareholders.

Merck & Co., Inc. 2023 Proxy Statement

Some key themes emerged as part of our various engagements as set forth below.

What We Heard		What We Did
Shareholders appreciated the Company’s disclosures regarding the Board’s mix of skills but also expressed interest in understanding this mix on an individualized basis.		•  We added a matrix on page 22 displaying how the skills and qualifications that the Board considers for future candidates are represented by each Director nominee.
Shareholders are interested in understanding how the Company is accountable for ESG matters.		•  Beginning with our 2021/2022 ESG Progress Report, we have begun to disclose our progress against our ESG goals that represent our public commitments to delivering greater value to society. In addition, the C&MD Committee approved for 2023 a Company Scorecard that includes ESG metrics. As discussed on page 59, the Company Scorecard helps translate our strategic priorities into operational terms that enable tracking and measurement of our progress and performance against annual operating goals and critically important long-term strategic drivers of sustainable value creation tied to our research and development pipeline and, beginning in 2023, our key ESG focus areas of access to health and employees.

Proxy Access

After engaging with a number of our largest shareholders, our Board proactively amended our By-Laws in 2015 to give shareholders a right to proxy access for Director nominations. Our By-Laws allow a shareholder (or a group of no more than twenty shareholders) who has maintained continuous qualifying ownership of at least 3% of the Company’s outstanding common stock for at least three years to include Director nominees constituting up to 20% of the Board in the Company’s proxy materials for an annual meeting of shareholders. Our By-Laws, which prescribe additional requirements for proxy access, are available on our website at www.merck.com/company-overview/leadership/board-of-directors/.

Shareholder Communications with the Board

The Board of Directors welcomes input from shareholders and other interested parties and has established a process to receive these communications. Shareholders and interested parties may communicate directly with the Board, the independent Lead Director, the non-management or independent Directors as a group or other members of the Board by emailing office.secretary@merck.com, or by writing to the following address: Board of Directors, 126 East Lincoln Avenue, P.O. Box 2000, Rahway, N.J. 07065 U.S.A.

In order to manage efficiently the volume of correspondence received, communications will be reviewed by the Office of the Secretary for the purpose of determining whether the contents are appropriate for submission to the entire Board, the Chairman, the independent Lead Director or the Chair of a particular committee. The Office of the Secretary will not transmit:

Comments or questions regarding the nomination of Directors and other corporate governance matters will be referred to the Chair of the Governance Committee. Comments or questions regarding executive compensation will be referred to the Chair of the C&MD Committee.

In addition, the Audit Committee has established procedures for the receipt, retention and treatment, on a confidential basis, of complaints regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. These procedures are described in the Merck Code of Conduct — Our Values and Standards.

The Merck Code of Conduct is available on our website at www.merck.com/company-overview/culture-and-values/code-of-conduct/values-and-
standards/ .

Merck & Co., Inc. 2023 Proxy Statement

Political Contributions and Lobbying Expenditure Oversight and Disclosure

Merck is committed to participating constructively and responsibly in the political process and to providing clarifying analysis and information regarding the issues that affect our business and patient care. The Company advocates for public policies that foster research into innovative medicines and improve access to medicines, vaccines and health care. Our participation in the political process is guided by the following principles: improving patient access to healthcare, including access to medicines and vaccines, improving access to animal health products, and encouraging innovation. The Company’s public policy positions are determined by senior management with oversight by the Governance Committee. Our political contributions are made in accordance with all applicable laws and Company policies and procedures and are overseen by senior management. The Governance Committee monitors all such contributions, and the full Board receives a bi-annual report.

In addition, the Company publicly discloses and regularly updates information regarding its public policy positions and advocacy expenditures on our website at www.merck.com/company-overview/responsibility/transparency-disclosures/. This information includes the Company’s contributions, categorized by state, candidate and amount, for our corporate political and political action committee contributions in the U.S., Canada and Australia. These disclosures include information for the past 5 years. In addition, this information includes a list of U.S. industry and trade groups in which we are members where our dues are greater than $25,000 and the portion of our dues that these groups use for advocacy and/or political activities.

Governance and Transparency around Drug Pricing

In order to provide information about the Company’s pricing practices, the Company annually posts on its website its Pricing Transparency Report for the United States. The report provides the Company’s average annual list price, net price increases and average discounts across the Company’s U.S. portfolio dating back to 2010. In 2022, the Company’s gross U.S. sales were reduced by 39.7% as a result of rebates, discounts and returns. Our process around pricing our products includes regular presentations to the Board on drug pricing strategies. In addition, on balance, over the last few years, our revenue growth has been primarily attributable to increased volume arising from increased demand for our products rather than price increases.

Independence of Directors

The Policies of the Board require that a substantial majority of our Directors be independent. In making independence determinations, the Board observes all relevant criteria established by the U.S. Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange (the “NYSE”), as well as categorical independence standards set forth in the Policies of the Board. The Board considers all relevant facts and circumstances in making an independence determination.

To be considered independent, an outside director must meet the bright line independence tests established by the NYSE, and the Board must affirmatively determine that the director has no direct or indirect material relationship with the Company.

The Board also rigorously considers all relevant heightened independence requirements for members of the Audit Committee and the C&MD Committee. The Governance Committee reviews the Board’s approach to determining director independence periodically and recommends changes, as appropriate, for consideration and approval by the full Board.

Independence Determinations

In accordance with the NYSE Corporate Governance Listing Standards and the categorical standards reflected in the Policies of the Board, the Board reviewed relationships between the Company and each Director. As a result of that review, the Board has determined that, with the exception of Robert M. Davis, our Chairman, CEO and President, each Director has only immaterial relationships with the Company, and accordingly, each is independent under these standards. The Board also has determined that each member of the Audit Committee, the C&MD Committee and the Governance Committee is independent within the meaning of the NYSE Corporate Governance Listing Standards and the rules of the SEC.

Merck & Co., Inc. 2023 Proxy Statement

In making these determinations, the Board considered relationships that exist between the Company and other organizations where Directors serve, as well as the fact that in the ordinary course of business, transactions may occur between such organizations and the Company or one of our subsidiaries. The Board also evaluated whether there were any other facts or circumstances that might impair a Director’s independence.

Drs. Lavizzo-Mourey and Seidman are employed at medical or academic institutions with which the Company engages in purchase and/or sale transactions in the ordinary course of business. Dr. Rothman was employed by Johns Hopkins Medicine until July 1, 2022 with which the Company engages in purchase and/or sale transactions in the ordinary course of business. Ms. Coe was employed by Google Inc. until October 3, 2022, and, in 2020, the Company engaged in a purchase transaction with Google Inc. in the ordinary course of business. The Board reviewed transactions with each of these entities and determined that the applicable individual Director had no role with respect to the Company’s decision to make any of the purchases or sales, and the aggregate amounts in each case were less than 2% of the consolidated gross revenues of the other organization and the Company.

Related Person Transactions

Related Person Transaction Policy

The Board has adopted a written Related Person Transaction Policy (the “Policy”) that is incorporated into the Policies of the Board and administered by the Governance Committee. The Policy governs the review and approval of any transactions involving amounts exceeding $120,000 to which the Company or a subsidiary is a party and in which a “related person” has a direct or indirect material interest. A “related person” is any Director, Director nominee, executive officer or holder of more than 5% of any outstanding class of the Company’s voting securities, as well as immediate family members or certain affiliated entities of any of the foregoing persons.

Pursuant to the Policy, management determines whether a transaction requires review by the Governance Committee, in which case the transaction, along with all material information, will be disclosed to the Governance Committee for review, approval, ratification or termination. In the event a related person transaction is approved by the Governance Committee, such transaction will be subject to ongoing monitoring to ensure that the transaction remains fair and reasonable to the Company. For additional information, the full Policy is available on the Company’s website at www.merck.com/company-overview/leadership/board-of-directors/ in the Policies of the Board.

Certain Related Person Transactions

Each Director and executive officer of Merck annually, and each Director nominee before such nominee’s nomination, completes and submits to the Company a Director & Officer (“D&O”) Questionnaire. The D&O Questionnaire requests, among other things, information regarding whether any Director, Director nominee, executive officer or their immediate family members had an interest in any transaction or proposed transaction with Merck or its subsidiaries or has a relationship with a company that has entered or proposes to enter into such a transaction.

After review of the D&O Questionnaires by the Office of the Secretary, the responses are collected, summarized and distributed to responsible areas within the Company to identify any potential transactions. All relevant relationships and any transactions, along with payables and receivables, are compiled for each person and affiliation. Management submits a report of the affiliations, relationships, transactions and appropriate supplemental information to the Governance Committee for its review. Based on this information for 2022, the Governance Committee has determined that no transactions require disclosure under Item 404(a) of SEC Regulation S-K.

Merck & Co., Inc. 2023 Proxy Statement

Compensation Consultants

Role of Compensation Consultants

The C&MD Committee retains the services of a compensation consultant to serve as an objective third-party advisor on the reasonableness of compensation levels and on the appropriateness of the compensation program structure in supporting our business strategy and human resource objectives. Since 2008, the C&MD Committee has retained FW Cook as its compensation consultant. In addition, the Governance Committee has retained, and may in the future retain FW Cook to assist with a review of the Directors’ compensation program.

Independence of the Compensation Consultant

The C&MD Committee annually reviews the services provided by FW Cook and has concluded that FW Cook is independent in providing executive compensation consulting services. The C&MD Committee evaluated its relationship with FW Cook in 2022 and determined that FW Cook’s work for the C&MD Committee did not raise any conflicts of interest, consistent with the guidance provided under the Dodd-Frank Act and by the SEC and the NYSE. In making this determination, the C&MD Committee reviewed information provided by FW Cook on the following factors:

In particular, the C&MD Committee noted that (i) FW Cook provided no other services to Merck; and (ii) FW Cook’s work is performed directly on behalf of the Board working in cooperation with management, to assist both the C&MD Committee and the Governance Committee, as applicable, with executing their respective responsibilities.

Services Performed During 2022

During 2022, FW Cook supported the C&MD Committee in the following areas:

Since 2010, management has retained Pay Governance LLC to provide consulting services on an as-needed basis. In November 2022, Pay Governance performed a biennial risk assessment of our compensation programs. This report was reviewed by FW Cook and presented to the C&MD Committee. The assessment indicated that our compensation programs do not create incentives for excessive risk-taking and include meaningful safeguards to mitigate compensation program risk.

Merck & Co., Inc. 2023 Proxy Statement

Stock Ownership Information

Stock Ownership of Directors and Officers

The table below reflects the number of shares of Merck common stock beneficially owned by (a) each of our Directors; (b) each of our executive officers named in the Summary Compensation table; and (c) all Directors and executive officers as a group. As of February 28, 2023, 2,538,433,111 shares of Merck common stock were issued and outstanding. Unless otherwise noted, the information is stated as of February 28, 2023, and the beneficial owners exercise sole voting and/or investment power over their shares. In addition, unless otherwise indicated, the address for each person named below is c/o Merck & Co., Inc., 126 East Lincoln Avenue, Rahway, New Jersey 07065.