Zoetis Inc. ZTS

Removed from 2025

• 40Zoetis 2025 Proxy Statement
• PolzerEVP and President, Research and DevelopmentRoxanne Lagano(b)EVP, General Counsel and Corporate SecretaryHeidi C.
• Chen(c)Former EVP, General Counsel and Corporate Secretary; Business Lead of Human Health DiagnosticsWafaa Mamilli(d)Former EVP, Chief Digital and Technology Officer and Group President for China, Brazil and Precision Animal Health
• (a)Mr. Brannan previously served as EVP and Group President International Operations, Aquaculture and Global Diagnostics until November 10, 2024, and thereafter served in his current position as EVP and Chief Commercial Officer.
• (b)Ms. Lagano previously served as EVP, Chief Human Resources Officer and Global Operations until April 16, 2024, as interim General Counsel and Corporate Secretary until May 6, 2024, and thereafter served in her current position as EVP, General Counsel and Corporate Secretary.
• (c)Ms. Chen served in this position until April 15, 2024, and as an employee advisor to the Company until July 16, 2024.
• Ms. Chen’s employment was terminated by the Company effective July 16, 2024.
• Additional detail is provided in the “Executive Transitions” section of this CD&A.
• (d)Ms. Mamilli served in this position until November 10, 2024, at which point she transitioned to being an employee advisor to the Company for the remainder of 2024.
• 2024 Business Highlights422024 Compensation Highlights43Our Compensation Program45Compensation Philosophy45Basic Principles of Our Executive Compensation Practices46Elements of 2024 Compensation47The Human Resource Committee’s Process50Role of the Compensation Consultant50Peer Group and Compensation Benchmarking51Role of Management in Compensation Decisions522024 Compensation Program and Decisions52Compensation Structure52Base Salary53Annual Incentive Plan54Company 2024 Performance55CEO 2024 Performance56Other NEO 2024 Performance58NEO AIP Decisions60Long-Term Incentives602024 LTI Mix61NEO LTI Decisions63Retirement Benefits64Severance64Perquisites65Compensation Governance Policies and Practices65Stock Ownership Requirements65Anti-Hedging and Anti-Pledging Policies66Clawback and Compensation Recovery Policies66Equity Award Grant Practices66Compensation Risk Assessment66Tax Deductibility of NEO Compensation67Executive Transitions67Report of the Human Resources Committee68
• Zoetis 2025 Proxy Statement 41
• 2024 Business Highlights
• Purpose, resiliency and passion for animal health powered Zoetis’ excellent performance in 2024 in the face of complex conditions around the world.
• Cementing our position at the forefront of the essential and durable animal health industry, we grew revenue and adjusted net income in 2024 and returned value to our shareholders.
• We are driving sustainable growth through our unique model of innovation and commercial excellence and in 2024, we expanded our product portfolio with more than 100 geographic expansions and nearly 20 enhancements, introduced groundbreaking animal health solutions, met evolving customer needs and strengthened our collaborations with stakeholders worldwide.
• In 2024, we delivered revenue growth and increased profitability.
• For full year 2024, reported revenue was $9,256 million, an increase of 8% from 2023 with operational revenue growth(2) of 11%.
• Our operational adjusted net income growth(1)(2) was 15% in 2024.
• Adjusted diluted EPS(1) for 2024 was $5.92 per diluted share, compared to $5.32 per diluted share in 2023.
• Page 40 of our 2024 Annual Report on Form 10-K contains a reconciliation of this non-GAAP financial measure to reported revenue growth under GAAP for 2024.
• 2024 Compensation Highlights
• Annual Incentive Plan (“AIP”) payouts for NEOs who were executive officers at the end of 2024 averaged 140% of target.
• In 2024, the Human Resources Committee approved two changes to the design of the Company’s performance award units, effective for grants made in 2025: (1) use of the S&P 500 Health Care index companies to measure Relative TSR performance, replacing the full S&P 500 Group (as described below under “Long-Term Incentives”); and (2) incorporation of a three-year operational revenue growth metric.
• •In 2024, the target number of performance award units represented 50% of each NEO’s annual long-term incentive opportunity based on the grant date fair value of the awards.•Three-year cliff vesting: units earned based on Relative TSR, the Company’s TSR results over the three-year performance period relative to the TSR results of the S&P 500 Group (as described below under “Long-Term Incentives”), vest 100% on the third anniversary of the date of grant, subject to the NEO’s continued employment through such date (with vesting on certain earlier terminations, such as retirement, death, restructuring, change in control, etc., that are generally aligned with market practice).•Paid out in shares of Company common stock upon vesting, with the payout ranging from 0% to 200% of target (including dividend equivalents), depending on the extent to which the pre-determined performance goals have been achieved.•Dividend equivalents are accrued over the vesting period and paid when and if the performance award units vest (subject to the same vesting conditions as the underlying performance award units).
• Agilent Technologies, Inc. Boston Scientific Corporation Illumina, Inc. Stryker Corporation Baxter International Inc. Elanco Animal Health Incorporated Intuitive Surgical, Inc. Thermo Fisher Scientific Inc. Becton, Dickinson and Company Gilead Sciences, Inc. IQVIA Holdings Inc. Zimmer Biomet Holdings, Inc. Biogen Inc. IDEXX Laboratories, Inc. Mettler-Toledo International Inc.
• In 2024, as part of its annual review of the compensation peer group, the Human Resources Committee reviewed the above companies and decided to remove Illumina, Inc. and Mettler-Toledo International Inc., and to add Edwards Lifesciences Corporation, Vertex Pharmaceuticals, Inc., and Bristol-Myers Squibb Company.
• These changes were made to align our peer group more closely with our financial size and industry, and with our competitors for talent.
• Peck $1,300,000 $1,950,000 $12,750,000 $16,000,000 8 %12 %80 %Wetteny Joseph $750,000 $712,500 $3,187,500 $4,650,000 16 %15 %69 %Jamie Brannan$720,000 $648,000 $1,215,000 $2,583,000 28 %25 %47 %Robert J.
• Polzer$660,000 $528,000 $1,450,000 $2,638,000 25 %20 %55 %Roxanne Lagano$650,000 $487,500 $1,362,500 $2,500,000 26 %20 %55 %Heidi C.
• Chen$635,000 $444,500 $1,415,000 $2,494,500 25 %18 %57 %Wafaa Mamilli$650,000 $520,000 $1,380,000 $2,550,000 25 %20 %54 %
• * Amounts in this table are as of December 31, 2024, except for Ms. Chen, whose amounts are as of July 16, 2024, which is the date the Company terminated her employment.
• Ms. Lagano’s base salary was approved at $600,000 effective January 1, 2024, and was increased to $650,000 effective August 1, 2024, to reflect the new role she assumed as of May 6, 2024.
• Mr. Brannan’s base salary was approved at $650,000 effective January 1, 2024, and was increased to $720,000 effective November 11, 2024, to reflect the new role he assumed as of that date.
• Company 2024 Performance
• 2024 ReportedResultsAdjustments**2024 AIPResults2024 AIPTarget AIP Resultsas a Percentof Target Revenue* $9,256 $187 $9,443 $9,183 103 %Adjusted Diluted EPS $5.92 $0.24 $6.16 $5.81 106 %Free Cash Flow* $2,298 $64 $2,362 $1,789 132 %
• In addition, the 2024 AIP Targets were adjusted to reflect the October 31, 2024 completion of the divestiture of the Company’s medicated feed additive (MFA) product portfolio, certain water soluble products and related assets.
• CEO 2024 Performance
• CEO 2024 Achievements Financial Achievements We continued to create shareholder value through our consistently strong financial performance, delivering operational revenue growth and increased profitability.
• Lead through Innovation Across Our Diverse PortfolioIn 2024, we saw continued growth of our osteoarthritis (OA) pain therapies and ongoing success in our dermatology and parasiticides franchises with new innovations and regulatory approvals:•Growth of our OA pain franchise, Librela® and Solensia®, which is improving the quality of life for pets and pet owners.
• •Additional innovations for dogs included new claims for Simparica Trio® in the U.S. and Canada for prevention against Asian longhorn tick infestation (Haemaphysalis Iongicornis) and the approval in China for Apoquel® Chewable, the first and only chewable treatment for the control of allergic itch and inflammation in dogs.
• •In livestock, we expanded the reach of our innovations through regulatory approvals in markets such as Brazil for Valcor®, a prescription endectocide for the treatment and control of internal and external parasites in cattle; the U.S. for Protivity®, the first modified live vaccine to offer protection against Mycoplasma bovis in healthy cattle; and in Canada for Alpha Ject Micro® 7 ISA, a combination vaccine for Atlantic Salmon, now enhanced with protection against Infectious Salmon Anaemia Virus.Deliver an Exceptional Experience to Delight our Customers We expanded and enhanced manufacturing and distribution facilities and diagnostics capabilities in 2024, to best meet customers’ needs for innovative animal health solutions: •We purchased a manufacturing site in Melbourne, Australia, and expanded our distribution center in Lee’s Summit, Missouri, positioning us to ensure a long-term supply of products for customers.
• •We also expanded our diagnostics tools with the addition of AI urine sediment analysis for our Vetscan Imagyst® platform and the launch of Vetscan OptiCell™, our automated complete blood count analysis to enable advanced hematology insights.
• •We established a Global Medical Affairs team to provide comprehensive medical support, education and training across the product lifecycle, fostering engagement among medical professionals, and driving global strategies for clinical studies, education and key opinion leader partnerships.Power our Business through Digital Solutions and Data Insights Through responsible use of digital technologies and data insights, we continued to revolutionize animal health, from disease prediction to drug discovery: •In collaboration with researchers at PHARMAQ Analytiq, we created a novel AI-powered prediction model to help Norwegian salmon farmers anticipate potential pancreas disease outbreaks minimizing potential losses and safeguarding their operations.
• •We expanded access to generative AI solutions by implementing Microsoft Copilot for all Zoetis colleagues, to boost efficiency in our work.
• Additionally, our research scientists deployed advanced AI tools to analyze vast datasets, accelerating the discovery and development of innovative medicines and vaccines.
• CEO 2024 Achievements Support a Workplace Where Colleagues can Thrive Success across our business starts with our greatest asset – our colleagues – and we remained committed to their growth and well-being.
• In 2024, we expanded career development programs, offered professional coaching, and enhanced benefits to help them thrive: •We offered continuing education for people leaders to support goal-setting, individual development plans, and effective feedback, and began a 6-month pilot program for individual contributors as we cultivate our next generation of innovative and adaptive leaders.
• •A new pet care benefit in the U.S. was adopted, offering telehealth and ready access to pet-sitters, dog-walkers, and boarders, ensuring colleagues can focus on their work while caring for their pets.
• •Our high colleague engagement and culture earned Zoetis numerous recognitions in 2024 -- including Great Place to Work honors in Germany, Austria, and Switzerland; Working Mothers and Working Parents 100 Best Companies lists; and Fair360’s Top 50 Companies -- affirming our commitment to fostering a supportive workplace.Advance Sustainability for a Better Future In 2024, we made significant strides toward our Driven to Care sustainability aspirations, expanding initiatives and delivering impactful support to communities, animals, and the planet: •The African Livestock Productivity and Health Advancement (A.L.P.H.A.) initiative continued to expand in Sub-Saharan Africa while the Zoetis Foundation provided millions in funding to supporting veterinarians, farmers, and humanitarian relief efforts.
• •Grants included funding for the American Red Cross to aid global disaster preparedness and relief, and for World Food Program USA to enhance farmer livelihoods and access to veterinary services in Kenyan and Ethiopian livestock communities.
• •We formed a strategic partnership with Danone to pioneer sustainable innovation in dairy farming, leveraging genetics to breed healthier cows and reimagine the industry’s approach to sustainability.Perform with Excellence and Agility At Zoetis, we recognize that the rapid pace of evolving technologies, competition, and global dynamics demand resilience and resourcefulness.
• In 2024, actions we’ve taken to meet these challenges include: •Transforming our critical business systems from finance to supply chain to enhance our efficiency, collaboration, and customer service while driving cost savings and scalability.
• This multi-phased, global effort will enhance our processes, systems, and data to support the complexity of our growing business and strengthen our competitive edge and stay adaptable to market changes.
• •In line with our focus on high-growth opportunities, we divested our MFA product portfolio, certain water-soluble products and related assets to Phibro.
• This strategic move underscores our discipline in investing in areas aligned with our core strengths, such as vaccines, biologics, and genetics in livestock.
• NEO *2024 AchievementsWetteny JosephEVP and CFO As EVP and CFO, Mr. Joseph:•Delivered strong financial results and exceeded goals across revenue, Adjusted Diluted EPS and Free Cash Flow in 2024.•Maintained strong emphasis on SOX with corrective actions taken when deviation rates increased early in the year.•Increased colleague engagement scores over 2023 levels and saw improvement for 2024 “Zoetis Supports My Individual Development” colleague engagement scores.
• •Active co-sponsor of our program to upgrade and transform our enterprise resource planning systems, known as “Next Gen ERP” proving critical input and direction to the team to ensure a successful design and transition to the build phase.•Completed the double materiality assessment with plans in place to prepare for the completion of the work to comply with the European Union’s Corporate Sustainability Reporting Directive and other related regulations.Robert J.
• Polzer EVP and President of Research and DevelopmentAs EVP, President of Research and Development, Dr. Polzer led efforts that advanced the Zoetis’ innovative portfolio and generated new product approvals and lifecycle innovations across our product lines worldwide.
• Examples of new product approvals included:•Protivity® for cattle in the UK;•Valcor® for cattle in Brazil;•Draxxin® KP for cattle in Japan;•Lawsotek™ for swine in Mexico;•AlphaJect® micro7 ISA in Canada Our product lifecycle innovations included: •Geographic expansion, new claim, new formulation or new species approvals for these key franchises: Vanguard®, Excenel® RTU EZ, Revolution® Plus, Simparica®, Simparica Trio®, Rispoval® and Synovex®.•Approval of Apoquel® Chewable for dogs in China.Maintained momentum in the R&D portfolio, including regulatory submissions and reviews:•Advanced late-stage development projects such as: long-acting monoclonal antibodies for Pain, long-acting monoclonal antibodies for Allergy-Dermatology, poultry vector vaccines, and avian influenza vaccine.•Integrated and advanced key projects from the PetMedix and Adivo acquisitions.•Advanced research-stage renal, cardio and diabetes projects.•Advanced key long-acting parasitology solutions.
• NEO *2024 AchievementsJamie Brannan EVP and Chief Commercial Officer beginning November 11, 2024; EVP and Group President International Operations, Aquaculture and Global Diagnostics until November 10, 2024In 2024, Mr. Brannan’s notable achievements were: •Exceeded revenue commitments for International Commercial operations while effectively mitigating challenges in the Asia Pacific region, building resilience, focused execution and customer experience.
• •Achieved strong progress across key pet care franchises (parasiticides, dermatology and OA Pain) and livestock species groups, reinforcing our market leadership position in the international animal health segment.•Successfully advanced commercial organizational readiness for transformation projects, including the launch of the Next Gen ERP initiative.•Maintained high colleague engagement in uncertain macro global dynamic through a strong focus on workplace culture with an emphasis on mental health and wellbeing as key areas.•Advanced colleague development with a focus on internal candidate promotions to build our internal talent bench and increase organization-wide capabilities.Roxanne Lagano EVP, General Counsel and Corporate Secretary beginning May 7, 2024; EVP, Chief Human Resources Officer and Global Operations until May 6, 2024In her role of Chief Human Resources Officer, Ms. Lagano’s achievements included: •Developed action plans across the enterprise to maintain our world-class colleague engagement scores above industry levels throughout 2024, including implementation of targeted strategies to enhance alignment across teams.
• •Expanded talent review and succession planning processes, career development resources and enhanced employee benefits to help our colleagues thrive, with a focus on mental health and well-being, enabling our award-winning culture.
• •Drove strategies to ensure colleague and organizational efficiency and agility.
• In her role of General Counsel and Corporate Secretary, Ms. Lagano’s achievements included:•Initiated an organizational assessment of the Legal and Compliance Functions with the goals of enhancing Legal and Compliance business partnership across the enterprise, developing talent and enabling robust succession planning.
• •Commenced a review of outside counsel utilization, internal capability building and more focused Legal areas of expertise across the function.
• Wafaa Mamilli Former EVP, Chief Digital and Technology Officer and Group President for China, Brazil and Precision Animal Health In her role as EVP, Chief Digital and Technology Officer and Group President for China, Brazil and Precision Animal Health, Ms. Mamilli achieved: •Successfully executed against our Generative Artificial Intelligence (AI) strategy and deployed enterprise-wide AI technology to all computer-based colleagues.
• Advanced our robust AI Governance to continuously monitor and secure AI usage.
• •Successfully extended Zoetis’ predictive analytics platform to thirteen international markets beyond the US to assist our commercial sales teams better understand and meet customer needs.
• •Maintained strong retention and colleague engagement scores.
• Inaugurated our capability center in India, improving access to highly-skilled talent crucial for achieving our Tech & Digital objectives.
• •Exceeded revenue commitments in Brazil with growth in both livestock and companion animal segments.
• Navigated through challenging economic down-turn in China and maintained our leadership position in companion animal segments.
• * Ms. Chen’s employment was terminated by the Company effective July 16, 2024, and she received an AIP payout pursuant to the Letter Agreement filed with the SEC as an exhibit to the Form 8-K on May 20, 2024.
• Peck $1,950,000 140 %$2,730,000 Wetteny Joseph $712,500 140 %$997,500 Jamie Brannan(a)$537,231 140 %$752,123 Robert J.
• Polzer $528,000 140 %$739,200 Roxanne Lagano(b)$448,125 140 %$627,375 Heidi C.
• Chen(c)$242,766 128 %$310,740 Wafaa Mamilli $520,000 120 %$623,740
• (a)Mr. Brannan’s AIP Target Amount for the full year 2024 reflects an increase in his AIP target effective November 11, 2024, pursuant to the new role he assumed as of November 11, 2024.
• (b)Ms. Lagano’s AIP Target Amount for the full year 2024 reflects an increase in her AIP target effective August 1, 2024, pursuant to the new role she assumed as of May 6, 2024.
• (c)Ms. Chen’s AIP Target Amount is pro-rated through her termination of employment date of July 16, 2024.
• Ms. Chen received an AIP payout in accordance with the terms of her Letter Agreement filed with the SEC as an exhibit to the Form 8-K on May 20, 2024.