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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Baxter International Inc.

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Notice of 2022

Annual Meeting

of Stockholders

and Proxy Statement

May 3, 2022

Baxter International Inc.

Headquarters

One Baxter Parkway

Deerfield, Illinois 60015

Baxter International Inc. One Baxter Parkway Deerfield, Illinois 60015	March 10, 2022
Dear Fellow Stockholder: It is my pleasure to invite you to attend Baxter’s Annual Meeting of Stockholders on Tuesday, May 3, 2022, at 9 a.m., Central Daylight Time. The attached Notice of Annual Meeting of Stockholders and Proxy Statement will serve as your guide to the business to be conducted. In 2021, Baxter International Inc. (Baxter or the company) celebrated 90 years of advancing its Mission to Save and Sustain Lives. Sadly, this remarkable milestone unfolded against the backdrop of the protracted COVID-19 pandemic, which has been a constant reminder of both the urgency of our Mission and the depth of our commitment. Baxter’s portfolio of medically essential products has kept us squarely on the front lines of this global public health crisis from the start. Beginning in 2021, we have also played a vital role in the manufacture of vaccines through our BioPharma Solutions manufacturing business. I am so proud of our colleagues worldwide who continue working tirelessly to serve our stakeholders in the face of new variants and an ever-shifting pandemic trajectory. Together we salute the caregivers who are combating this pandemic daily. Baxter’s years-long, enterprise-wide transformation – powered by increased innovation, an ongoing focus on patient safety and quality, enhanced operational effectiveness and disciplined capital allocation – has given us a strong foundation from which to manage through challenges like the ongoing pandemic while simultaneously embracing our opportunities to expand our impact and accelerate performance. In late 2021, we took the next leap forward in our transformation through our acquisition of Hillrom Holdings, Inc. (Hillrom). This combination of two recognized medical technology leaders does more than extend our already diverse healthcare portfolio; it unlocks new potential for innovation in connected care spanning our united product lines. That means new possibilities to spark clinical insights, enhance patient outcomes and increase workflow efficiencies – and generate greater value for the patients, clinicians, employees, communities and stockholders who rely on us. This is the largest acquisition in Baxter’s history, creating remarkable opportunities for growth across our global footprint as well as anticipated synergies driving meaningful cost reduction and margin expansion. Our organization is energized by the promise of this combination and I am fully committed to personally overseeing the successful integration of our organizations – a process that is already well underway. Also providing critical leadership is Giuseppe Accogli, who was recently named our executive vice president and chief operating officer (COO). Giuseppe is a 14-year Baxter veteran, experienced across an array of senior management positions. As COO, his top priorities include advancing a rapid, smooth integration and building upon the opportunities presented by this acquisition. Our diverse portfolio of essential products, global reach, passion to innovate and enhanced operational efficiency continue to fuel our performance and resilience. In 2021, Baxter drove year-over-year reported and constant currency growth in global sales across all of its businesses and geographies. We increased our dividend rate by approximately 14% and returned approximately $1.1 billion to investors through dividends and share repurchases. Like our peers across countless industries, we are not immune to inflationary pressures and the rising cost of raw materials, commodities, components, fuel and shipping. As always, our response is driven foremost by our Mission and colleagues from across our operations are working diligently to ensure steady access to the lifesaving products used by patients and clinicians globally. Both our Mission and dedication to making a meaningful difference compel us to address the environmental, social and governance (ESG) issues touching the lives of our patients, employees and myriad of communities we serve. These efforts are bolstered by our emphasis on good governance, ethics and compliance, inclusion and diversity and numerous other factors that define our impact as a leading corporate citizen. In 2021, Baxter introduced its 2030 Corporate Responsibility Commitment, comprising ten goals for prioritized action over the next decade and beyond across three key pillars: Empower our Patients, Protect our Planet and Champion our People and Communities. You can find more details in the “Corporate Responsibility” section of the proxy statement and in the Corporate Responsibility section of www.baxter.com.

Our focus on sound corporate governance continues to be realized through the composition and practices of our Board of Directors (the Board). The Board maintained its outreach and engagement with Baxter investors throughout 2021, which is vital to helping set our priorities and trajectory.

As part of our steady emphasis on Board refreshment, we were privileged to welcome two new Board members in 2021: David S. Wilkes, M.D., former dean of the University of Virginia School of Medicine, who joined us in February; and Nancy M. Schlichting, retired president and chief executive officer of Henry Ford Health System, who joined us in December in conjunction with the closing of the Hillrom acquisition.

We also offer our appreciation to two Board members departing this May: John D. Forsyth, who has served since 2003; and Thomas T. Stallkamp, who joined us in 2000 and served as lead director between May 2014 and February 2021. They have my deepest thanks for their longtime service and commitment to Baxter’s Mission.

As part of our COVID-19 precautions, the Annual Meeting of Stockholders will once again be held by means of remote communications. We hope that you are able to join us to discuss our 2021 results and learn more about our strategic priorities and trajectory for 2022 and beyond. Please review the information on attendance provided on p. 92 of the attached Notice of 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 very important to us and I urge you to vote your shares as promptly as possible. You may vote your shares by Internet or by telephone. If you received a paper copy of the proxy card by mail, you may sign, date and return the proxy card in the enclosed envelope.

You will be able to submit questions in advance of and during the Annual Meeting.

It is the greatest honor of my career to serve as Baxter’s leader and, with the acquisition of Hillrom, to set forth on the next chapter of this company’s remarkable story. As always, our success is due entirely to the hard work and dedication of our 60,000 colleagues globally, a proudly diverse team united in a single Mission: Save and Sustain Lives.

On behalf of the Board, management team and employees, thank you for your continued confidence and support as we advance this Mission for patients globally. We look forward to your participation in this year’s Annual Meeting of Stockholders.

Sincerely yours,

José (Joe) E. Almeida

Chairman of the Board,

President and Chief Executive Officer

Baxter International Inc. One Baxter Parkway Deerfield, Illinois 60015	March 10, 2022
Dear Stockholder: First and foremost, on behalf of the Board, I would like to thank you for your investment in Baxter and for the confidence you place in the Board to oversee your interests in our company. While COVID-19 and its variants posed ongoing challenges to the healthcare system in 2021, we are proud of how Baxter made significant progress executing against its long-term strategy while continuing to provide support to hospitals, healthcare providers and patients. The Board is committed to providing critical oversight and nurturing a culture that values protecting and growing your investment over the long term. As directors, we continue to play an integral role in overseeing the strategic direction of the company, monitoring the execution by Baxter’s management and helping to ensure that the company’s corporate culture supports and aligns with its long-term strategy. The Annual Meeting provides a moment to reflect on some of the Board’s key focus areas over the last fiscal year: •    Effectively Overseeing Baxter’s Strategy: An essential role of the Board is to provide effective oversight related to Baxter’s corporate strategy and execution. The Board works closely with Joe and other members of senior leadership in developing the company’s strategy and positioning Baxter to drive long-term value as a global medical technology leader. As we reflect on the past year, our results demonstrate continued momentum in our business as we executed on priorities we believe will continue to drive growth. In December 2021, we closed on the acquisition of Hillrom, a global medical technology leader that shares a common vision for transforming healthcare to better serve all patients and providers. In addition to unlocking the next phase of Baxter’s transformation, the combination presents a new wave of potential to drive greater impact for patients, clinicians, employees, stockholders and other communities. We are excited to move forward with our new Hillrom colleagues and are invigorated by the potential to create value for patients and customers in new ways as a combined company. •    Refreshing Our Board with New Perspectives: The Board includes a diverse and experienced group of independent directors with a wide range of skills and qualifications that support Baxter’s strategy and help to position the company for long-term success in a complex and rapidly changing healthcare environment. We invigorate Board discussion through the appointment of new directors and the rotation of directors through different Board roles. Thoughtful and ongoing attention to Board composition is an important part of our role as we seek to ensure an appropriate mix of tenure and expertise that provides a balance of fresh perspectives and significant institutional knowledge. This year we appointed Nancy Schlichting to the Board. Nancy, who joined us from the Hillrom board of directors, joined our Compensation and Nominating, Corporate Governance & Public Policy (NCGPP) Committees and will be assuming the role of Compensation Committee chairman upon John Forsyth’s retirement on May 1, 2022. She possesses a deep understanding of (and experience leading) complex health systems. This experience, coupled with her significant human capital management experience and knowledge of the Hillrom business, will bring valuable insights to our Board. We would also like to thank John Forsyth and Tom Stallkamp for their years of service to the Board and Baxter. John served as the longstanding chair of the Compensation Committee and a key member of the NCGPP Committee. Tom served as Lead Independent Director for seven years before I succeeded him in 2021 and was a critical member of the Audit Committee which oversaw the company’s internal investigation into certain intra-company transactions undertaken to generate foreign exchange gains or avoid foreign exchange losses and the remediation of the related material weakness. Both John and Tom helped oversee the company and Board through significant milestones and periods of transition, including the July 2015 spin-off of Baxalta Incorporated, the recruitment and appointment of Joe as Chairman and Chief Executive Officer, the continued refreshment of the Board and a significant expansion of the company’s stockholder engagement efforts. We have benefited greatly from their insights and contributions as Board members and through their leadership positions on the Board. •    Engaging Regularly with Stockholders. Engagement with stockholders remains a key focus for Baxter and an important part of the Board’s longstanding commitment to sound governance practices. Our annual stockholder engagement program involves meeting with a broad base of stockholders to discuss corporate governance, executive compensation, corporate responsibility practices and other matters of importance (including the company’s recently announced 2030 Corporate Responsibility Commitment and Goals). Our commitment to this program enables ongoing dialogue that results in adopting sound and effective

corporate governance practices. It also provides us with valuable insight and feedback from stockholders throughout the year, allowing the Board to better understand our stockholders’ priorities and perspectives and to incorporate them into its deliberations and decision-making process. During 2021, we proactively reached out to stockholders representing nearly 53% of Baxter’s outstanding common stock and we engaged with stockholders representing nearly 30% of Baxter’s outstanding common stock.

•    Responding to Stockholder Feedback. In addition to the Board’s commitment to being responsive to the views of stockholders, it remains committed to maintaining strong corporate governance practices and protecting stockholder rights. This commitment is evidenced by, among other things, Baxter’s proxy access bylaw, the complete declassification of the Board in 2018, majority voting standard for directors, the removal of super-majority voting provisions from Baxter’s organizational documents and Board composition and refreshment efforts (including with respect to my appointment of as the Board’s Lead Independent Director in 2021 and the recent appointments of David Wilkes and Nancy Schlichting to the Board).

Following stockholder approval of a written consent proposal at the 2021 Annual Meeting and extensive engagement efforts (including as part of the company’s annual stockholder engagement program), the Board has taken action to permit stockholders to act by written consent. After taking into account feedback received from stockholders during fall 2021, the Board is asking stockholders to approve a written consent charter amendment, which if approved, will be implemented promptly following the Annual Meeting. The company’s organizational documents currently allow holders of 25% of the outstanding shares of the company’s common stock to call a special meeting. The Board is proposing a reduction to its special meeting threshold from 25% to 15%, a threshold that strikes an appropriate balance in the best interests of the company and its stockholders.

As we move forward in 2022 and beyond, we will continue to work hard on your behalf as stewards of the company to help ensure the continued success of Baxter, including the successful integration of the Hillrom business. I am confident the company will continue to build on its momentum with the Board’s active involvement, valuable input and support. On behalf of my fellow directors, thank you for your investment in, and support of, Baxter. We look forward to hearing your views at the Annual Meeting and in the year to come.

Best regards,

Albert P.L. Stroucken

Lead Independent Director

Table of Contents                   i

Table of Contents

Table of Contents	i
Notice of 2022 Annual Meeting of Stockholders and Proxy Statement	1
Proxy Statement Highlights	2
Corporate Governance at Baxter International Inc.	13
Proposal 1 Election of Directors	13
Nominees for Election as Directors	14
Board of Directors	20
Other Corporate Governance Information	22
Board Responsibilities	23
Board Structure and Processes	24
Committees of the Board	25
Director Compensation	29
Corporate Responsibility	31
Executive Compensation	35
Proposal 2 Advisory Vote to Approve Named Executive Officer Compensation for 2021	35
Compensation Committee Report	36
Compensation Discussion and Analysis	36
Executive Summary	37
Compensation Philosophy and Governance Practices	42
Structure of Executive Compensation Program	44
Components of Executive Compensation	46
Elements of Executive Compensation	47
Additional Compensation Governance	56
Executive Compensation Tables	59
2021 Summary Compensation Table	59
2021 Grants of Plan-Based Awards	61
Outstanding Equity Awards at 2021 Fiscal Year-End	62
2021 Option Exercises and Stock Vested	64

2021 Pension Benefits	64
2021 Nonqualified Deferred Compensation	65
Potential Payments Upon Termination or Following a Change in Control	66
CEO Pay Ratio	72
Audit Matters	73
Proposal 3 Ratification of Appointment of Independent Registered Public Accounting Firm	73
Audit Committee Report	75
Audit and Non-Audit Fees	76
Pre-Approval of Audit and Permissible Non-Audit Fees	76
Ownership of Baxter Stock	77
Security Ownership by Directors and Executive Officers	77
Security Ownership by Certain Beneficial Owners	78
Delinquent Section 16(a) Reports	78
Management Proposals	79
Proposal 4 Approval of Certificate of Incorporation Amendment to Permit Stockholder Action by Written Consent	79
Proposal 5 Approval of Certificate of Incorporation Amendment to Lower the Special Meeting Threshold	81
Stockholder Proposals	84
Proposal 6 Special Shareholder Meeting Improvement	84
Proposal 7Independent Board Chairman	88
General Information	92
Questions and Answers about the Annual Meeting	92
Other Information	95
Appendix A—Proposed Changes to Article Eleventh of Certificate of Incorporation	A-1
Appendix B—Proposed Changes to Section 3 of Bylaws	B-1

investor.baxter.com

Notice of 2022 Annual Meeting of Stockholders and Proxy Statement                   1   

Notice of 2022 Annual Meeting of Stockholders and Proxy Statement

The 2022 Annual Meeting of Stockholders of Baxter International Inc. (the Annual Meeting) is scheduled to be held by means of a virtual format only, due to the public health and safety concerns related to the ongoing COVID-19 pandemic, on Tuesday, May 3, 2022 at 9:00 a.m., Central Time. Online access to the meeting will begin at 8:30 a.m., Central Time. The Annual Meeting will be held for the following purposes:

	To elect the 11 directors named in the attached proxy statement.
	Advisory vote to approve named executive officer compensation for 2021.
	To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for Baxter International Inc. (Baxter or the company) in 2022.
	To approve a Certificate of Incorporation Amendment to Permit Stockholder Action by Written Consent.
	To approve a Certificate of Incorporation Amendment to Lower the Special Meeting Threshold.
	To vote on the two stockholder proposals as described in the proxy statement, if such proposals are properly presented at the Annual Meeting.
	To transact any other business that may properly come before the meeting.

The Board recommends that stockholders vote FOR Items 1, 2, 3, 4 and 5. The Board recommends that stockholders vote AGAINST each of the stockholder proposals referred to in Item 6. Stockholders of record at the close of business on March 11, 2022 will be entitled to vote at the meeting.

By order of the Board,

Ellen K. Bradford

Corporate Secretary

  How Do I Vote?

	By Internet, following the instructions on the Notice of Internet Availability of Proxy Materials 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.

Important Notice Regarding

the Availability of Proxy Materials for

the Annual Meeting of Stockholders

The proxy statement relating to the

Annual Meeting and the

Annual Report to Stockholders for the year

ended December 31, 2021 are available at

http://materials.proxyvote.com/071813.

Due to the COVID-19 pandemic, the Annual Meeting will be held only in a virtual format to provide a safe experience for Baxter stockholders and employees. 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 “Other Information—Attending the Annual Meeting.”

Proxy Statement

The accompanying proxy is solicited on behalf of the Board for use at the Annual Meeting to be held on Tuesday, May 3, 2022. On or about March 22, 2022, 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 22, 2022.

investor.baxter.com

  2                 Proxy Statement Highlights

Proxy Statement Highlights

To assist you in reviewing the proposals to be acted upon at the Annual Meeting, this section presents concise 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, 2021 (the 2021 Form 10-K) and the complete proxy statement.

	Election of Directors What am I voting on? You are asked to vote for the election of the 11 directors 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 6, the Board believes that the 11 directors standing for election possess a desirable mix of professional and industry experience and qualifications, reflective of the Board’s ongoing board refreshment efforts, including with respect to the recent appointment of Ms. Nancy Schlichting in connection with the closing of the Hillrom acquisition, and commitment to diversity. The Board has demonstrated an ability to effectively consult with management on the company’s strategic and operational plans and oversee the company’s performance, including in the midst of the ongoing COVID-19 pandemic crisis and in connection with the ongoing Hillrom integration. See below for additional information regarding the qualifications, experiences and backgrounds of the Board and recent Board developments. Where can I find more information? Concise supporting information is presented below.
		See also “Corporate Governance at Baxter International Inc.—Proposal 1—Election of Directors” for additional information.

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Proxy Statement Highlights                   3   

Name1   Primary Occupation	Age	Director Since	Independent Y/N	Key Attributes and Skills	A	C	NCG PP	QCT
José (Joe) E. Almeida Chairman, President and Chief Executive Officer, Baxter International Inc.	59	2016	N	✓  Significant experience in the medical device industry ✓  Extensive experience leading and helping to transform global, multi-faceted corporations
Thomas F. Chen Senior Vice President and President of International Nutrition, Abbott Laboratories (retired)	72	2012	Y	✓  Extensive international business experience in hospital products and pharmaceuticals ✓  Global perspective resulting from a focus on emerging markets (including China)			⬛	⬛
Peter S. Hellman President and Chief Financial and Administrative Officer, Nordson Corporation (retired)	72	2005	Y	✓  Extensive financial and capital markets experience ✓  Significant experience leading global industrial companies, including a multi-billion-dollar information technology (IT) business	⬛	⬛
Michael F. Mahoney Chairman, President and CEO, Boston Scientific Corporation	57	2015	Y	✓  Extensive experience leading global, medical products companies, including most recently as a Chairman and CEO		⬛	⬛
Patricia B. Morrison Executive Vice President, Customer Support Services & Chief Information Officer, Cardinal Health, Inc. (retired)	62	2019	Y	✓  Significant experience in IT and cybersecurity at global healthcare companies	⬛			⬛
Stephen N. Oesterle, M.D. Healthcare Industry Consultant, former Senior Vice President, Medicine and Technology, Medtronic plc	71	2017	Y	✓  Significant experience in the medical products and healthcare industries ✓  Strong scientific and medical background, including as a former practicing cardiologist			⬛	⬛
Nancy M. Schlichting President and CEO, Henry Ford Health System (retired)	67	2021	Y	✓  Significant experience in healthcare administration in senior-level executive roles ✓  Meaningful human capital management experience		⬛2	⬛
Cathy R. Smith Chief Financial Officer, Bright Health Inc.	58	2017	Y	✓  Significant financial expertise and corporate leadership experience, including in response to cybersecurity incidents and in the area of human capital management (as a Chief Administrative Officer)	⬛
Albert P.L. Stroucken (Lead Independent Director) Chairman and Chief Executive Officer, O-I Glass, Inc. (retired)	74	2004	Y	✓  Extensive experience leading large, complex organizations ✓  Significant financial expertise	⬛		⬛
Amy A. Wendell Senior Vice President of Strategy and Business Development, Covidien (retired)	61	2019	Y	✓  Extensive experience in business development and strategy in healthcare industry, including significant restructuring and integration experience		⬛		⬛
David S. Wilkes, M.D. Former Dean of University of Virginia School of Medicine Chief Scientific Officer and Co-Founder, ImmuneWorks, Inc.	65	2021	Y	✓  Significant scientific and medical experience ✓  Extensive experience leading large, complex organizations, including as a former dean of two large medical schools				⬛

Key

⬛   Committee Chairperson ⬛   Committee Member A    Audit Committee C   Compensation Committee NCGPP Nominating, Corporate Governance & Public Policy Committee QCT    Quality, Compliance and Technology Committee    

¹ Directors standing for reelection on May 3, 2022.

² Ms. Schlichting is scheduled to become the next chair of the Compensation Committee on May 1, 2022, in connection with the retirement of Mr. John Forsyth from the Board on the same date. See “Corporate Governance at Baxter International Inc.—Proposal 1—Election of Directors—Board of Directors” for additional information.

investor.baxter.com

  4                 Proxy Statement Highlights

2021 Board and Governance Highlights

Board Refreshment Activities	See pages 20 and 21
•  Continued Board focus on refreshment and diversity during 2021 led to the appointment of two new independent directors in 2021, as described below. 1  Calculations represent the Board’s composition on March 21, 2022, after giving effect to the appointment of Ms. Schlichting. After giving effect to the departures of Messrs. John Forsyth and Thomas Stallkamp, average tenure will decrease to 6.5 years and greater than 35% of directors will have served less than four years.
Governance Practices	See pages 22 and 23
•  Stockholder Outreach: As part of the company’s corporate governance outreach program, the company approached select institutional investors to engage in discussions with Mr. Albert Stroucken (the Lead Independent Director and former Audit Committee chair) and Mr. Thomas Chen (the chair of the NCGPP Committee) and certain members of management. •  In the fall of 2021, the company engaged in discussions with stockholders representing approximately 30% of the company’s outstanding shares (calculated as of December 31, 2021). The company, with participation from select directors (including Messrs. Chen and Stroucken), intends to continue having these conversations with interested investors. •  Topics discussed with stockholders in 2021 included company strategy and performance (including the company’s response to the ongoing COVID-19 pandemic), the proposed Hillrom acquisition, corporate governance matters (including board composition, diversity and refreshment and proposed changes to

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Proxy Statement Highlights                   5   

the company’s Certificate of Incorporation to adopt written consent, the Board’s leadership structure, executive compensation and corporate responsibility initiatives (including the company’s recently adopted 2030 Corporate Responsibility goals). Stockholder feedback was shared with the full Board and relevant committees and informed the matters being presented in Proposal 4 of the proxy statement.

•  Written Consent and Special Meeting Rights: In response to a related stockholder proposal that received majority support at the 2021 Annual Meeting, the Board adopted an amendment to the Certificate of Incorporation to give stockholders the ability to act by written consent. To further enhance stockholder rights, the Board also adopted an amendment to the Certificate of Incorporation to lower the ownership threshold required for stockholders to call a special meeting (from 25% to 15%). The effectiveness of these amendments is subject to stockholder approval of the related proposals. Stockholders voiced support for these changes during the company’s stockholder engagements (as discussed below).

•  Board Refreshment and Overboarding: As part of the Board’s continuing refreshment efforts, the Board appointed David Wilkes and Nancy Schlichting to the Board in 2021. In connection with these appointments, Dr. Wilkes joined the QCT Committee and Ms. Schlichting joined the Compensation and NCGPP Committees. Upon the retirement of Mr. Forsyth on May 1, 2022, Ms. Schlichting will become the chair of the Compensation Committee. After giving effect to this appointment, two of the Board’s four standing committees will be chaired by women. Additionally, in February 2022, the Board amended its Corporate Governance Guidelines to reduce the maximum number of boards of directors on which a director may serve to two public companies (from three) for directors who are employed full time or to four public companies (from five) for all other directors, subject to a related transition period.

investor.baxter.com

  6                 Proxy Statement Highlights

Board Qualifications, Experiences and Backgrounds

The director skills matrix included below represents some of the key skills and experiences that the Board has identified as particularly valuable to the oversight of the company and illustrates how the current directors individually and collectively represent these key competencies. While all of these qualifications were considered by the Board and the NCGPP Committee in connection with this year’s director nomination process, the matrix does not encompass all of the skills, experience, qualifications and attributes of the director nominees. 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 skill, experience, qualification or attribute. The Board firmly believes that its highly qualified director nominees provide the Board with a diverse complement of specific business skills, experience and perspectives necessary to help ensure effective oversight.

Joe Almeida Thomas Chen Peter Hellman Mike Mahoney Patricia Morrison Steve Oesterle Nancy Schlichting Cathy Smith Amy Wendell David Wilkes Skills and Experience Healthcare Marketing/Delivery Expertise required to effectively assess Baxters portfolio management and innovation strategies in light of the competitive landscape in which Baxter operates Quality, Regulatory and Compliance Critical skills (including the development and oversight of clinical trials) needed to help Baxter launch new products, line extensions and geographic expansions and to maintain top quartile industry leading performance on patient safety and quality matters Financial Expertise / Risk Management Critical skills necessary to help sustain the companys top quartile industry leading performance and to help maintain appropriate internal controls Manufacturing and R&D Critical knowledge to help oversee Baxters global manufacturing and research & development operations and to help the company navigate ongoing supply chain challenges M&A / Transactional Important skills to help Baxter achieve its long range plan and strategies. Critical as the company works to successfully integrate the Hillrom business Cyber/ IT Essential expertise to help Baxter pursue digital health opportunities, consistent with best cyber security practices and evolving market demands and privacy regulations International Key growth priority and integral to Baxters strategy. Approximately 58% of Baxters 2021 revenues were from outside the U.S. Human Capital Management Essential skills to help oversee the companys talent/leadership development, diversity & inclusion, employee compensation and employee engagement efforts Other Sector Leadership Enables the Board to incorporate best practices from, and consider emerging trends or issues in, other industries Diversity Gender M M M M F M F F F M Ethnically/Racially Diverse

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Proxy Statement Highlights                   7   

¹  Calculations represent the Board’s composition on March 10, 2022. After giving effect to the departures of Messrs. John Forsyth and Thomas Stallkamp, the average age will decrease to 65.3 years and the average tenure will decrease to 6.5 years.

² Calculations represent the Board’s composition on March 10, 2022. After giving effect to the departures of Messrs. John Forsyth and Thomas Stallkamp, the percentage of women on the Board will increase to 36% and the percentage of ethnically/racially diverse directors will increase to 27%.

	Advisory Vote to Approve Named Executive Officer Compensation What am I voting on? You are asked to cast a non-binding advisory vote to approve Baxter’s 2021 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 Compensation Committee believe that Baxter’s executive compensation programs appropriately align executives’ interests with Baxter’s strategies and long-term objectives, including Baxter’s ongoing pursuit of top quartile financial performance. See “—Performance Highlights” below for additional information regarding 2021 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 additional information.

investor.baxter.com

  8                 Proxy Statement Highlights

Performance Highlights

	Further Information
Financial results for 20211	See page 37

¹  The amounts set forth above represent Baxter’s publicly disclosed results for 2021. Free cash flow represents cash flow from continuing operations calculated in accordance with U.S. generally accepted accounting principles (GAAP) less capital expenditures. See Baxter’s Periodic Report on Form 8-K dated February 17, 2022 for a reconciliation of the amounts set forth above to the applicable measure calculated in accordance with GAAP.

   For purposes of calculating performance under the company’s 2021 annual incentive plan, net sales were calculated at budgeted exchange rates (as of January 1, 2021) and were adjusted to exclude results associated with sales of the company’s newly acquired Hillrom business (which otherwise represented 19 days of contribution to the company’s 2021 results). This measure is referred to as Adjusted Net Sales in the proxy statement. Adjusted Net Sales for the purposes of Baxter’s 2021 annual incentive plan were $12.4 billion, a 5% increase from 2020.

   Adjusted Earnings Per Share (EPS) and Free Cash Flow were adjusted (for performance calculations under the company’s 2021 annual incentive plan) to exclude Hillrom results. These measures are referred to as Further Adjusted Earnings Per Share or Further Adjusted EPS and Adjusted Free Cash Flow in the proxy statement. Further Adjusted EPS and Adjusted Free Cash Flow for the purposes of Baxter’s 2021 annual incentive plan were $3.5 billion and $1.6 billion respectively, representing a 15% increase from 2020 in Adjusted EPS and a 37% increase from 2020 in Free Cash Flow (as there were no Hillrom results to exclude from 2020 Adjusted EPS or 2020 Free Cash Flow).

   See “Executive Compensation—Compensation Discussion and Analysis—Elements of Executive Compensation—Annual Incentive Plan—Determination of 2021 Annual Incentive Plan Payouts” for a reconciliation of Adjusted Net Sales, Further Adjusted EPS and Adjusted Free Cash Flow to the applicable measures calculated in accordance with GAAP.

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Proxy Statement Highlights                   9   

Compensation Design for 2021	See page 46
Base Salary
•  Provides a base level of competitive compensation •  Used to attract and retain executive talent
2021 Annual Incentive Plan
•  Motivates and rewards executives for company and individual performance against annually established financial targets and individual objectives •  Financial targets and relative weightings for 2021 included: •  Adjusted Net Sales (50%); •  Further Adjusted EPS (25%); and •  Adjusted Free Cash Flow (25%)
2021 Long-Term Incentive (LTI) Plan
Performance Share Units (PSUs) (50%) •  Motivates and rewards executives for company performance against financial targets tied to Baxter’s long-term strategy and relative total shareholder return (TSR) •  PSUs recognize that a portion of an executive’s LTI grants should be completely “at risk” •  PSUs are subject to measurement over the entire three-year performance period (as described below) •  Financial measures for 2021 PSU awards included: •  Adjusted Net Sales Compound Annual Growth Rate (CAGR) (33-1/3%)—based on company performance as compared to the three-year Adjusted Net Sales CAGR target •  Adjusted Return on Invested Capital (ROIC) (33-1/3%)—based on company performance as compared to the three-year Adjusted ROIC target •  Relative TSR (33-1/3%)—based on the change in company stock price over a three-year performance period, including reinvested dividends, as compared to the TSR of the company’s peer group over the same performance period (as further described in “Executive Compensation—Compensation Discussion and Analysis—Elements of Executive Compensation—Long-Term Incentive Plan”) •  In the event TSR is negative during the three-year performance period, the maximum PSU payout is capped at 100% of target
Stock Options (50%) •  Motivates and rewards an executive’s contributions to achieve the company’s long-term objectives and increasing stockholder value, including direct alignment with the company’s stock price performance
Other Compensation Matters As described in greater detail in the Compensation Discussion and Analysis section below, beginning with the 2021 annual incentive, the company’s Senior Leadership Team’s individual performance assessment was initially determined in connection with an assessment of the company’s performance against pre-established measures for strategic 2021 priorities. The strategic 2021 priorities are included in three categories: Patient Safety and Quality, Best Place to Work and Growth Through Innovation. This change was made to further motivate and incent the company’s senior leadership team to meet key 2021 priorities focused on various strategic areas, including ESG issues, while continuing to help ensure the delivery of strong financial results through the financial metrics used to calculate aggregate financial performance.

investor.baxter.com

  10                 Proxy Statement Highlights

	Approval of Certificate of Incorporation Amendment to Permit Stockholder Action by Written Consent What am I voting on? You will be asked to vote on a proposal by management to approve an amendment to the Certificate of Incorporation of Baxter International Inc. (the Certificate of Incorporation) to include a provision allowing stockholder action by written consent.
	What is the Board’s recommendation? The Board of Directors recommends a vote FOR this proposal. Where can I find more information? Concise supporting information is presented below.
		See “Management Proposals—Proposal 4—Approval of Certificate of Incorporation Amendment to Permit Stockholder Action by Written Consent.”

Items to consider when evaluating this proposal:

At the 2021 Annual Meeting, a majority of stockholders—nearly 54%—indicated their support for Proposal 6—Right to Act by Written Consent. The proposal encouraged the company to reconsider its current stance on stockholders’ ability to act by written consent and take such steps as may be necessary to permit written consent by stockholders. The Board has determined it is in the best interest of the company to permit stockholders to have the right to take action by written consent, subject to reasonable safeguards to enhance transparency and prevent the disenfranchisement of minority stockholders and the inefficient use of corporate resources. During the company’s annual corporate governance outreach efforts in the fall of 2021, a majority of the stockholders with whom the company engaged expressed support for the material terms of this proposal. With the adoption of this written consent proposal, stockholders will have multiple opportunities to impact the governance and operations of the company, such as by action by written consent or by calling a special meeting.

	Approval of Certificate of Incorporation Amendment to Lower the Special Meeting Threshold What am I voting on? You will be asked to vote on a proposal by management to approve an amendment to the Certificate of Incorporation to lower the company’s special meeting threshold from 25% to 15%.
	What is the Board’s recommendation? The Board of Directors recommends a vote FOR this proposal. Where can I find more information? Concise supporting information is presented below.
		See “Management Proposals—Proposal 5—Approval of Certificate of Incorporation Amendment to Lower the Special Meeting Threshold.”

Items to consider when evaluating this proposal:

Currently, under the Certificate of Incorporation and Bylaws, holders of 25% of the outstanding shares of the company’s common stock are entitled to call special meetings of the company’s stockholders so long as they satisfy certain procedural requirements. In response to the company’s receipt of a stockholder proposal on this topic, the Board has carefully evaluated Baxter’s corporate governance practices (including by reviewing best practices and market trends) and has decided that lowering the company’s special meeting threshold from 25% to 15% would be in the best interests of the company and its stockholders. The Board believes the 15% threshold strikes an appropriate balance of facilitating enhanced stockholder engagement while maintaining procedural safeguards against corporate waste, disruption and abuse by a small minority of stockholders.

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Proxy Statement Highlights                   11   

	Special Shareholder Meeting Improvement What am I voting on? If properly presented, you will be asked to vote on a stockholder proposal that asks the Board to take the steps necessary to amend the appropriate company governing documents to give the owners of a combined 10% of our outstanding common stock the power to call a special shareholder meeting.
	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 Proposals—Proposal 6—Special Shareholder Meeting Improvement” for additional information.

Items to consider when evaluating this proposal:

•  The Board has decided to lower the percentage of shares required to be held by stockholders to call a special meeting from 25% to 15%: As described in Proposal 5—Approval of Certificate of Incorporation Amendment to Lower the Special Meeting Threshold, the Board carefully evaluated the corporate governance practices at other companies. Based on this evaluation, the Board has decided to lower the percentage of shares required to be held by stockholders to call a special meeting from 25% to 15%.

•  The company’s proposed 15% threshold strikes an appropriate balance of facilitating stockholder engagement while maintaining procedural safeguards against corporate waste, disruption and abuse by a small minority of stockholders: The company believes that a 10% threshold, as suggested by this proposal, increases the risk of special meetings being called by a few stockholders who have special, narrow or short-term interests rather than the long-term, best interests of the company and its stockholders.

•  A special meeting threshold below 15% is unnecessary in light of the company’s robust stockholder engagement program and corporate governance practices: In light of the 15% threshold to call a special meeting, the Board concluded that allowing stockholders to call a special meeting with the support of only 10% of the company’s shares is unnecessary, considering the company’s robust stockholder engagement program, its corporate governance practices and the company’s current stockholder base.

investor.baxter.com

  12                 Proxy Statement Highlights

	Independent Board Chairman What am I voting on? If properly presented, you will be asked to vote on a stockholder proposal that asks the Board to amend the company’s governing documents to require the Chairman of the Board, whenever possible, to be an independent member of the Board.
	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 Proposals—Proposal 7—Independent Board Chairman” for additional information.

Items to consider when evaluating this proposal:

•  The Board has already adopted a policy implementing the proposal: After extensive engagement with the company’s largest stockholders throughout the spring and fall of 2020, in November 2020, the Board adopted a policy in the company’s Corporate Governance Guidelines to require the Chairman of the Board to be an independent director unless the appointment of an independent Chairman would be inconsistent with the Board’s fiduciary duties. The policy is prospective and will apply upon the next CEO transition.

•  The Board sought feedback and considered the views of the company’s stockholders in adopting its independent chair policy: After the company’s adoption of its current independent chair policy, stockholder support for the 2021 proposal decreased to 27% of votes cast from 55% of votes cast on a substantially similar proposal in 2020. The company believes this significant decrease in support levels (from 2020 to 2021) reflects that an overwhelming majority of the company’s stockholders support the independent chair policy (as set forth in the revised Corporate Governance Guidelines).

•  The Board’s approach strikes the right balance to transition to a new Board leadership structure: The Board’s independent chair policy applies prospectively, thus providing the Board with an appropriate succession period to change its leadership structure without violating the terms of Mr. Almeida’s current offer letter. Until an independent chairman is appointed (and during any periods in which the Board does not have an independent chairman), the Board continues to have a Lead Independent Director, who is charged with robust oversight and leadership responsibilities.

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Corporate Governance at Baxter International Inc.                   13   

Corporate Governance at Baxter International Inc.

  Election of Directors   The Board will consist of 11 members following the departure of two directors immediately prior to the Annual Meeting. The Board has nominated these directors 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.”    

Baxter’s Bylaws require each director to be elected by the majority of the votes cast with respect to that director in uncontested elections; that is, the number of shares voted “for” a director must exceed 50% of the number of votes cast with respect to that director. Abstentions will not be considered votes cast. 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. If a nominee who is serving as a director is not elected at an annual meeting of stockholders, under Delaware law the director would continue to serve on the Board as a “holdover director.” However, under the company’s Bylaws, any incumbent director who fails to be reelected at an annual meeting must offer his or her resignation to the Board. The NCGPP Committee would then make a recommendation to the Board whether to accept or reject the resignation, or whether other action should be taken. In accordance with the Bylaws, the Board would 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. The director who offers his or her resignation would not participate in the Board’s decision.

All of the nominees have indicated their willingness to serve if elected, but if any nominee should be unable or unwilling to stand for election, proxies may be voted for a substitute nominee designated by the Board. No nominations for directors were received from stockholders (including as a result of any proxy access nominations) and no other candidates are eligible for election as directors at the Annual Meeting. Accordingly, there is no director election contest and each director nominee must receive a majority of the votes cast with respect to that director 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.

Set forth below under “—Nominees for Election as Directors” is information concerning the nominees for election.

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  14                 Corporate Governance at Baxter International Inc.

Nominees for Election as Directors

    José (Joe) E. Almeida   Chairman of the Board, President and CEO Age 59 Director since 2016   Biography Mr. Almeida was appointed Chairman of the Board, President and CEO effective January 1, 2016. He began serving as an executive officer of the company in October 2015. He served as Senior Advisor with The Carlyle Group, a multinational private equity, alternative asset management and financial services corporation, from May 2015 to October 2015. Previously, he served as the Chairman, President and Chief Executive Officer of Covidien plc (Covidien), a global healthcare products company, from March 2012 through January 2015, prior to the acquisition of Covidien by Medtronic plc (Medtronic), and President and Chief Executive Officer of Covidien from July 2011 to March 2012. Mr. Almeida served as a member of the Board of Directors of Walgreens Boots Alliance, Inc. from 2017 to 2022. Mr. Almeida also served on the board of directors of Partners in Health from 2013 to 2021 and Ortho-Clinical Diagnostics, Inc. from 2015 to 2020.   Key Attributes, Experience and Skills Substantial knowledge of the medical device industry and extensive experience leading, operating and transforming global corporations as a result of his roles as Chairman and Chief Executive Officer at Baxter and Covidien and in other senior management roles at other medical device companies.     Thomas F. Chen   Independent Director Age 72 Director since 2012   Committees: Nominating, Corporate Governance & Public Policy and Quality, Compliance and Technology   Biography Mr. Chen served as Senior Vice President and President of International Nutrition of Abbott Laboratories (Abbott), a global healthcare company, before retiring in 2010. During his 22-year career at Abbott, Mr. Chen served in a number of roles with expanding responsibilities, primarily in Pacific/Asia/Africa where he oversaw expansion into emerging markets. Prior to Abbott, he held several management positions at American Cyanamid Company, which later merged with Pfizer Inc. Mr. Chen currently serves as a director of Stericycle, Inc. and an advisor to Cooperation Fund, a partnership between Goldman Sachs and the sovereign fund, China Investment Cooperation, to bolster U.S. manufacturers’ market presence in China.   Key Attributes, Experience and Skills Extensive international business experience in pharmaceuticals, hospital products and nutritionals through his 22-year career at Abbott, with a distinct global perspective resulting from his focus on emerging markets, particularly in China, India and other Asia Pacific regions.

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Corporate Governance at Baxter International Inc.                   15   

    Peter S. Hellman   Independent Director Age 72 Director since 2005   Committees: Audit and Compensation   Biography From 2000 until his retirement in 2008, Mr. Hellman held various positions at Nordson Corporation, a manufacturer of systems that apply adhesives, sealants and coatings during manufacturing operations, the most recent of which was President and Chief Financial and Administrative Officer. From 1989 to 1999, Mr. Hellman held various positions with TRW Inc., the most recent of which was President and Chief Operating Officer. Mr. Hellman currently serves as a director of The Goodyear Tire & Rubber Company and O-I Glass, Inc. (previously known as Owens-Illinois, Inc.), a glass packaging company (O-I Glass). Mr. Hellman previously served as a director of Qwest Communications International Inc.   Key Attributes, Experience and Skills Significant experience leading global industrial companies and a multi-billion dollar IT business and overseeing global supply operations, manufacturing and distribution practices. Extensive financial, capital markets and operational expertise and experience leading complex corporations with a considerable global presence as a result of the various senior positions held at Nordson Corporation and TRW Inc. as well as extensive experience serving on public company boards, including as the audit committee chair of The Goodyear Tire & Rubber Company and O-I Glass.     Michael F. Mahoney   Independent Director Age 57 Director since 2015   Committees: Compensation and Nominating, Corporate Governance & Public Policy   Biography Mr. Mahoney is the Chairman, President and Chief Executive Officer of Boston Scientific Corporation (Boston Scientific), a global developer, manufacturer and marketer of medical devices. He has served in that role since 2016. Between 2012 and 2016, he served as President and Chief Executive Officer of Boston Scientific. He first joined Boston Scientific in 2011, with a 24-year track record of building medical device, capital equipment and healthcare IT businesses. Prior to joining Boston Scientific, Mr. Mahoney served as Worldwide Chairman of Johnson & Johnson Medical Devices and Diagnostics Division and as Worldwide Group Chair of Johnson & Johnson’s DePuy Orthopedics and Neuro Science Business. He was President and Chief Executive Officer of the Global Healthcare Exchange, a leading supply chain solutions company, from 2001 to 2007 before joining Johnson & Johnson. Earlier in his career, he advanced through a series of leadership roles at General Electric Medical Systems. He serves as a director of AdvaMed.   Key Attributes, Experience and Skills Significant knowledge of the global medical products business and extensive experience leading and operating within global, multi-faceted medical products companies as a result of his roles at Boston Scientific and Johnson & Johnson. These experiences include significant merger and acquisition activity.

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  16                 Corporate Governance at Baxter International Inc.

    Patricia B. Morrison   Independent Director Age 62 Director since 2019   Committees: Audit and Quality, Compliance and Technology   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 currently serves as a director of Splunk Inc. She previously served as a director of Aramark Corporation and Virtusa Corporation.   Key Attributes, Experience and Skills Extensive experience of across diverse global industries overseeing strategic, operational and financial aspects of IT including cybersecurity, global IT master planning and digital transformation, including in the medical products industry.     Stephen N. Oesterle, M.D.   Independent Director Age 71 Director since 2017   Committees: Nominating, Corporate Governance & Public Policy and Quality, Compliance and Technology   Biography Dr. Oesterle is a consultant, advising private equity and operating companies in the healthcare industry. From 2002 to 2015, he served as a member of the Executive Committee of Medtronic (Medtronic), a global medical technology, services and solutions company, and 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, Peijia Medical Ltd. and Sigilon Therapeutics, Inc. He previously served as a director of Montes Archimedes Acquisition Corp. (prior to its merger with Roivant Sciences), REVA Medical, Inc. (REVA) and HeartWare International, Inc. (HeartWare), prior to Medtronic’s acquisition of HeartWare.   Key Attributes, Experience and Skills Extensive experience in the medical products and healthcare industries with a strong scientific and medical background. 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 (including HeartWare and REVA) as well as positions held at Harvard Medical School, Stanford University Medical Center and other leading hospitals.

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Corporate Governance at Baxter International Inc.                   17   

    Nancy M. Schlichting   Independent Director Age 67 Director since 2021   Committees: Compensation and Nominating, Corporate Governance & Public Policy   Biography Ms. Schlichting joined the Board following Baxter’s acquisition of Hillrom, where she had previously served as a director. 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 was promoted to Executive Vice President and Chief Operating Officer from 1999 to 2003 and President and Chief Executive Officer of Henry Ford Hospital from 2001 to 2003. She currently serves as a director of Walgreens Boots Alliance, Encompass Health and Pear Therapeutics, Inc., as a trustee of the Kresge Foundation and Duke University and as the vice-chair of the Duke University Health System Board.   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 for leading award-winning customer service, quality and diversity initiatives.       Cathy R. Smith   Independent Director Age 58 Director since 2017   Committees: Audit   Biography Ms. Smith has served as Chief Financial and Administrative Officer of Bright Health, a diversified consumer-focused healthcare company, since January 2020. Prior to that, 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 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 Bright Health, Target, Express Scripts and Walmart. This experience includes work helping to oversee cybersecurity incident response and human capital management expertise (as a Chief Administrative Officer at Bright Health).

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  18                 Corporate Governance at Baxter International Inc.

    Albert P.L. Stroucken   Independent Director Age 74 Director since 2004   Lead Independent Director since 2021   Committees: Audit and Nominating, Corporate Governance & Public Policy   Biography Mr. Stroucken is the Lead Independent Director and has served in that role since February 2021. He served as Executive Chairman of the Board of Owens-Illinois from January 1 to June 30, 2016, having served as Chairman, President and Chief Executive Officer from 2006 through 2015. From 1998 to 2006, Mr. Stroucken served as President and Chief Executive Officer of H.B. Fuller Company, a manufacturer of adhesives, sealants, coatings, paints and other specialty chemicals. Mr. Stroucken served as Chairman of H.B. Fuller Company from 1999 to 2006. From 1997 to 1998, he was General Manager of the Inorganics Division of Bayer AG. From 1992 to 1997, Mr. Stroucken was Executive Vice President and President of the Industrial Chemicals Division of Bayer Corporation. Mr. Stroucken previously served as a director of Baxalta and as a director of Shire until its acquisition by Takeda Pharmaceutical Company Ltd. in January 2019.   Key Attributes, Experience and Skills Substantial experience leading and operating large, complex corporations and significant financial expertise through his leadership roles with Owens-Illinois and H.B. Fuller Company as well as through positions at Bayer Corporation.     Amy A. Wendell   Independent Director Age 61 Director since 2019   Committees: Compensation and Quality, Compliance and Technology   Biography Ms. Wendell served as Senior Advisor at Perella Weinberg Partners L.P., a global financial services firm, consulting on strategy, corporate finance and investing practices in the healthcare industry from January 2016 to May 2019. From 2015 to September 2018, Ms. Wendell served as a Senior Advisor to 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 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. and Hologic, Inc. She previously served as a director of EKSO Bionics Holdings, Inc.   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 a result of her roles at Covidien and its predecessors. She has significant restructuring and integration experience as well.

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Corporate Governance at Baxter International Inc.                   19   

David S. Wilkes, M.D.

Independent Director

Age 65

Director since 2021

Committees: Quality, Compliance and Technology

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. This program seeks to increase underrepresented minority physician-scientists at leading medical schools in the United States. 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.

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 the positions he held with the University of Virginia School of Medicine and the Indiana University School of Medicine, as well as the leadership experience he developed at both institutions and in forming and advising ImmuneWorks.

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  20                 Corporate Governance at Baxter International Inc.

Board of Directors

On December 9, 2021, Mr. Forsyth tendered his notice of retirement from the Board and all committees of the Board effective May 1, 2022. Additionally, in accordance with the mandatory retirement age set forth in Baxter’s Corporate Governance Guidelines, Mr. Stallkamp is not eligible to stand for reelection at the Annual Meeting. Following the departures of Messrs. Forsyth and Stallkamp, the Board will consist of 11 members. Additionally, in connection with Mr. Forsyth’s retirement, Ms. Schlichting will become the chair of the Compensation Committee.

Director Independence

The Board has determined that each of the following directors standing for reelection satisfies Baxter’s independence standards and the listing standards of the New York Stock Exchange (NYSE) for independence: Thomas F. Chen; Peter S. Hellman; Michael F. Mahoney; Patricia B. Morrison; Stephen N. Oesterle, M.D.; Nancy M. Schlichting; Cathy R. Smith; Albert P.L. Stroucken; Amy A. Wendell; and David S. Wilkes, M.D. Please refer to “—Director Independence” below for a discussion of Baxter’s independence standards.

Baxter’s Corporate Governance Guidelines, as most recently amended in February 2022, require that the Board be composed of a majority of directors who meet the criteria for “independence” established by the rules of the NYSE. To be considered independent, the Board must affirmatively determine that a 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 Compensation 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 directors are associated as partner, stockholder or officer. When these transactions, relationships and arrangements have existed, they have generally been in the ordinary course of business and of a type customary for a global diversified company such as Baxter.

Director Attendance

In 2021, the Board held 13 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 in 2021. Baxter’s Corporate Governance Guidelines set forth the company’s expectation that directors attend each annual meeting of stockholders. In 2021, all of the directors then in office attended the 2021 annual meeting.

Director Refreshment and Diversity

The Board has a mix of relatively new and longer-tenured directors. This mix provides the Board with the benefit of new perspectives from shorter-tenured directors. It also helps to maintain the continuity of the Board and the Board’s familiarity with, and knowledge of, the Baxter organization. The directors standing for reelection have an average tenure of 6.5 years. Notably, six directors were appointed in the past five years.

The Board is also committed to achieving a diverse and broadly inclusive membership. As a result, and consistent with the Corporate Governance Guidelines and the NCGPP Committee charter, diversity of background, including diversity of gender, race, ethnic or geographic origin, age and experience (including in business, government and education as well as healthcare, science, technology and other areas relevant to the company’s activities), is a relevant factor in the selection process. Additionally, the Board looks to create a diverse candidate pool for each director search the Board undertakes. Of the six directors most recently appointed to the Board, five are women or ethnically or racially diverse.

The Board believes that having diverse directors with varying perspectives and a breadth of experience will positively contribute to robust discussion at Board meetings and help guide Baxter’s strategy and long-term value creation. A diverse board is also more reflective of Baxter’s global customer base. 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, including by taking into account the overall diversity of the Board.

A nominee’s ability to meet the independence criteria established by the NYSE is a factor in the nominee selection process.

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Corporate Governance at Baxter International Inc.                   21   

The Corporate Governance Guidelines require directors to retire at the age of 75, subject to certain exceptions (such as, during a CEO succession or during a material merger, acquisition or disposition). To date, the Board has not granted any waivers with respect to this mandatory retirement age.

Director Qualifications

As discussed below in “—Nomination of Directors,” directors are selected on the basis of the specific criteria set forth in Baxter’s Corporate Governance Guidelines. The experience, expertise and knowledge represented by the Board as a collective body allow the Board to lead Baxter in a manner that serves its stockholders’ interests appropriately. 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.”

Nomination of Directors; Evaluation of Board

It is the policy of the NCGPP Committee to consider candidates for director recommended by stockholders, members of the Board and management.

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 assess how the Board and each Board committee functions in light of the company’s strategic objectives, the company’s Corporate Governance Guidelines and each committee charter. As part of this process, the Board considers the structure and composition of the Board and each committee to identify any potential gaps or areas that the Board would like to augment by appointing new directors, rotating existing directors off the Board or refreshing committee assignments.

In 2021, the Board hired an independent third party to conduct this self-assessment process.

Additionally, in 2021, the Board retained outside several search firms to identify potential new Board members with strong healthcare experience and those with strong finance and accounting backgrounds, including those with diverse backgrounds and experiences.

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 should include the same information required by Baxter’s Bylaws for stockholder director nominees and be sent to the Nominating, Corporate Governance & Public Policy Committee, c/o Corporate Secretary, Baxter International Inc., One Baxter Parkway, Deerfield, Illinois 60015.

Baxter’s Corporate Governance Guidelines provide that (as described below) 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 (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 the independent search firm will engage in a process that includes a thorough investigation of

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  22                 Corporate Governance at Baxter International Inc.

the candidate, an examination of his or her business background and education, research on the individual’s accomplishments and qualifications, in-person interviews and reference checking. If this process generates a positive indication, the Lead Independent Director, members of the NCGPP Committee and the Chairman of the Board will meet separately 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. If the full Board agrees, the Chairman of the Board is then authorized to extend an offer to the individual candidate to join the Board at that time 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 through the proxy access provisions of Baxter’s Bylaws. Subject to compliance with the related requirements (including with respect to the nominating stockholders and the nominee), the nominee will be included in the proxy statement as a stockholder nominee. The proxy access provision provides that a group of up to 20 stockholders that have held at least 3% of Baxter’s outstanding shares for at least three years can nominate up to two individuals or 20% of the Board, whichever is greater, for election at an annual stockholders’ meeting. No stockholders submitted any proxy access nominees for consideration at the Annual Meeting.

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, 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 ensure effective corporate governance. Since 1995, the Board has had in place a set of corporate governance guidelines reflecting these principles. Baxter’s current Corporate Governance Guidelines, most recently revised in February 2022, cover topics including director qualification standards, mandatory retirement age, director responsibilities (including those of the Lead Independent Director), 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 2020 revisions to the guidelines include incorporation of the Board’s commitment to split the roles of CEO and Chairman (in connection with the appointment of Mr. Almeida’s successor), subject to the exercise of the Board’s fiduciary duties. They also clarify the Board’s ability to meet with or otherwise engage with the company’s Chief Compliance Officer (CCO) and the frequency of the CCO’s interactions with the CEO. 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.”

In February 2022, the guidelines were further amended to reduce 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 to four (inclusive of the Board) for all other directors; provided that any director who is no longer in compliance with these limitations shall 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.

Stockholder Engagement

Baxter sponsors an ongoing stockholder engagement program. At the direction of the Board, this program was expanded in 2017 to cover additional topics, including corporate responsibility matters, and to solicit feedback from additional stockholders. The company is committed to engaging in constructive dialogue with its stockholders. Management is primarily responsible for stockholder communications and engagement and provides regular updates to the Board on topics or concerns raised by stockholders. The Board

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Corporate Governance at Baxter International Inc.                   23   

considers this feedback as well as the interests of all stakeholders when overseeing company strategy, formulating governance practices and designing or evaluating compensation programs.

During the fall of 2021, Messrs. Chen and Stroucken and select members of management met with stockholders representing approximately 30% of Baxter’s outstanding shares (calculated as of December 31, 2021) as part of the company’s annual outreach program. These investors include institutional investors, hedge funds, mutual funds and public pension funds. Topics covered in these discussions included Baxter’s strategy and performance, the company’s COVID-19 response, the proposed Hillrom acquisition, Board composition, structure and refreshment, succession planning, executive compensation and corporate responsibility matters (including the company’s new 2030 Corporate Responsibility goals). Additionally, company representatives, including Messrs. Chen and Stroucken, shared proposed changes to the Certificate of Incorporation to memorialize the Board’s commitment to adopt written consent in response to a related stockholder proposal from the 2021 Annual Meeting. Input from these discussions informed the proposed amendments to the Certificate of Incorporation, which are being presented to stockholders for their approval as part of Proposal 4—Approval of Certificate of Incorporation Amendment to Permit Stockholder Action by Written Consent.

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, Chief Financial Officer, Controller and other senior financial officers. Any amendment to, or waiver from, a provision of the Code of Conduct that applies to the CEO, Chief Financial Officer, 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 Quality, Compliance and Technology (QCT) Committee is responsible for overseeing compliance with the Code of Conduct.

The Board’s Oversight of Risk

Baxter’s risk management activities include the identification and assessment of the key risks facing the company among the universe of business risks (strategic, operational, financial, regulatory/compliance, cybersecurity, etc.). These risks are identified across the organization and originate from multiple businesses, regions and functions. 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 (including in connection with the company’s enterprise risk management (ERM) program, as described below). The Board and, as appropriate, its committees review each of the top risks identified and assessed by management on at least an annual basis and regularly receive updates on management’s related mitigation strategies and practices.

ERM Oversight

The ERM program is designed to identify, assess and prioritize strategic, financial, operational, technological and reputational risks with the potential to have sustained impact on the company. In connection with the annual refreshment of the company’s long-range plan, company management (including its internal auditors) revisits these risks and identifies top risks for regular monitoring and for the development of related mitigation plans. Additionally, an internal, executive level ERM committee comprised of cross-functional leadership meets regularly to evaluate and prioritize risks with further escalation and updates to the CEO and the Board as appropriate.

The Board and its committees maintain broad oversight over various functions within Baxter, including with respect to the company’s strategic objectives and the associated risks derived from the company’s ERM efforts.

In addition to the Board’s role in ERM, various committees of the Board are also expressly tasked by their charters to be responsible for the oversight of certain risks. More specifically and in addition to the IT and cybersecurity matters 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 QCT Committee is charged with oversight of Baxter’s quality, compliance and innovation strategy programs. The NCGPP Committee has assumed oversight for the review of strategic issues and corporate actions related to corporate citizenship and public policy, including current and emerging political issues.

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Cybersecurity Oversight

The Audit Committee has assumed oversight responsibility for the company’s IT functions generally, including non-product related cybersecurity matters. The QCT Committee is responsible for overseeing product or service-based IT matters, including with respect to product cybersecurity matters. The Audit Committee has, however, maintained responsibility for the oversight of any cybersecurity incident, including ones related to Baxter products and services. Both committees receive updates from company management on these topics throughout the year. During 2021, the QCT Committee received updates on product-related IT matters four times and the Audit Committee received updates on IT matters two times. Additionally, the full Board generally receives at least one update on IT and cybersecurity matters annually from company management and external advisors.

Human Capital Management Oversight

The Board and the Compensation Committee oversee and regularly engage with the President and CEO, the Senior Vice President, Human Resources and other members of senior leadership on a broad range of human capital management issues, including workforce composition and diversity, compensation and pay equity, talent attraction, recruitment and turnover, workforce training, learning and development and employee engagement, health and well-being. 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 committee meetings. Additionally, the entire Board is invited to participate in meetings of the NCGPP Committee at which the topics of CEO succession, CEO goal setting and performance evaluations are discussed and to meetings of the Compensation Committee at which CEO compensation recommendations are made (for approval by the independent directors of the Board). Succession planning for other roles across the organization is discussed during talent reviews made to the full Board throughout the year.

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 regardless of whether the transactions are reportable pursuant to applicable rules of the U.S. Securities and Exchange Commission (SEC). 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 $50,000 when aggregated with all similar transactions. For any related person transaction to be consummated or to continue, the NCGPP Committee must approve or ratify the transaction. The NCGPP Committee reviews related person transactions as they arise and are reported to the committee. The NCGPP Committee also reviews materials prepared by the Corporate Secretary to determine whether any related person transactions have occurred that have not been reported. These materials are prepared based in part upon information provided by executive officers and directors in their annual director and officer questionnaires as well as a review of certain accounting records of the company.

Board Structure and Processes

Board Leadership Structure; Lead Independent Director

Mr. Almeida has served as Chairman of the Board and CEO since January 1, 2016. Mr. Stroucken was elected as the Lead Independent Director by the other independent directors in February 2021 and was elected to serve in the role until the Annual Meeting. In February 2022, he was reappointed to serve in this role until February 2023.

The Board regularly reviews the leadership structure of the company, including whether the position of Chairman should be held by an independent director. In connection with Mr. Almeida’s appointment, the Board determined that it was in Baxter stockholders’ best interests to keep the Chairman and CEO roles combined until the next CEO transition. The Board reached this decision in light of Mr. Almeida’s significant industry and leadership experience, including as Chairman and CEO of Covidien. The Board also believed that Mr. Almeida would be well positioned to effectively connect the Board and Baxter management as he worked to establish Baxter’s new strategic framework and refresh its long-range plan (including in connection with the completion of the recently launched Hillrom integration). Additionally, Mr. Almeida’s offer letter contemplates and provides for this combined role. Over the course of his tenure at Baxter, he has worked to develop a process through which each component of this strategic framework is reviewed with the Board on a regular basis.

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Corporate Governance at Baxter International Inc.                   25   

As Chairman of the Board and pursuant to Baxter’s Bylaws, Mr. Almeida 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 CEO and pursuant to Baxter’s Bylaws, Mr. Almeida 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 created a robust Lead Independent Director position with clearly-defined responsibilities. 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 Chairman is not present;

• acting as principal liaison between the independent directors and the Chairman and CEO;

• reviewing and approving meeting agendas for the Board and working with the Chairman to facilitate timely and appropriate information flow to the Board;

• reviewing and approving meeting schedules to assure 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 Chairman 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 environmental, social and sustainability matters; and

• serving as the contact person for interested parties to communicate directly with the independent directors.

In 2021, executive sessions of the Board occurred as part of every regularly scheduled meeting of the Board (led by Mr. Stroucken, as the Lead Independent Director) and covered critical issues facing the company, including matters related to the company’s product portfolio and inventory levels, the company’s response to the ongoing COVID-19 pandemic, capital allocation strategies and potential and ongoing business development opportunities (including the recently completed Hillrom acquisition). The Lead Independent Director, together with the chairs of the Compensation and NCGPP Committees, also lead the non-employee directors in the annual review and approval of compensation for the CEO. The Board believes that the regular use of executive sessions of the independent directors, along with the Board’s independent committees further enhances the Board’s ability to effectively oversee management. Mr. Stroucken, as 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 stockholders on selected topics, including corporate governance matters.

In sum, the Board has determined that the combined CEO—Chairman structure serves the best interests of the company and its stockholders at this time in light of Mr. Almeida’s significant industry and leadership experience and the strong role played by the Lead Independent Director in accordance with Baxter’s Corporate Governance Guidelines. The Board made this determination in advance of extending an offer to Mr. Almeida to serve as Baxter’s Chairman and CEO and it continues to evaluate the leadership structure regularly.

Executive Sessions

As discussed above, independent directors of the Board met in executive session without management at every regularly scheduled meeting during 2021 in accordance with Baxter’s Corporate Governance Guidelines. Mr. Stroucken, as the Lead Independent Director, led these executive sessions. Additionally, the Audit Committee is required to hold separate sessions of its committee during meetings with each of the internal auditor, the independent registered public accounting firm and management. The Compensation, NCGPP and QCT Committees generally meet in executive session at each regularly scheduled meeting of the Board.

Committees of the Board

The standing committees of the Board consist of the Audit Committee, the Compensation Committee, the NCGPP Committee and the QCT Committee.

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.”

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Audit Committee

The Audit Committee is currently composed of Cathy R. Smith (Chair), Peter S. Hellman, Patricia B. Morrison, Thomas T. Stallkamp and Albert P.L. Stroucken, each of whom is independent under the rules of the NYSE and Rule 10A-3 of the Securities Exchange Act of 1934, as amended (Exchange Act). Ms. Smith was appointed as Chair of the Audit Committee in February 2021. The Board has determined that Ms. Smith and Messrs. Hellman, Stallkamp and Stroucken 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 (including with regard to cybersecurity matters).

The Audit Committee’s duties include:

(1) reviewing the adequacy and effectiveness of Baxter’s internal control over financial reporting with management and the external and internal auditors and reviewing with management Baxter’s disclosure controls and procedures;

(2) retaining and evaluating the qualifications, independence and performance of the independent registered public accounting firm;

(3) approving audit and permissible non-audit engagements to be undertaken by the independent registered public accounting firm;

(4) reviewing the scope of the annual external and internal audits;

(5) reviewing and discussing Baxter’s financial statements (audited and unaudited), as well as earnings press releases and related information, prior to their filing or release;

(6) overseeing legal and regulatory compliance as it relates to financial matters;

(7) overseeing the company’s IT functions, including non-product related cybersecurity matters;

(8) holding separate executive sessions with the independent registered public accounting firm, the internal auditor and management;

(9) discussing guidelines and policies governing the process by which Baxter assesses and manages risk; and

(10) approving certain financing matters, proposed corporate transactions and capital expenditures.

The Audit Committee met 10 times in 2021. The Audit Committee Report appears on page 75.

Compensation Committee

The Compensation Committee is currently composed of John D. Forsyth (Chair), Peter S. Hellman, Michael F. Mahoney, Nancy M. Schlichting, Thomas T. Stallkamp 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 SEC under Section 16 of the Exchange Act. Effective on May 1, 2022, following Mr. Forsyth’s retirement from the Board, Ms. Schlichting will become Chair of the Compensation Committee. The Compensation Committee exercises the authority of the Board relating to employee benefit, compensation and equity-based plans of the company’s officers.

The Compensation 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/her performance for the subject period;

(2) determining the compensation of the company’s key executives (other than the CEO) and advising the Board of such 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 exercise the authority of the Board to issue Baxter stock as compensation or incentive to non-employee directors, officers, employees, consultants or advisors;

 | 2022 Annual Meeting of Stockholders and Proxy Statement

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(5) making recommendations to the Board concerning director compensation;

(6) reviewing the adequacy of the company’s stock ownership guidelines and periodically assessing compliance with these guidelines; and

(7) overseeing the company’s compensation philosophy and strategy and periodically assessing the risk related to its compensation policies and practices.

The NCGPP and Compensation Committees work together to establish a link between the CEO’s performance and decisions regarding his compensation. All compensation actions relating to the CEO are subject to the approval of the independent directors of the Board. The Compensation Committee met three times in 2021. The Compensation Committee Report begins on page 36.

The Compensation Committee has the sole and direct responsibility for the appointment, compensation and oversight of the work of any advisor retained by the Compensation Committee and it has directly engaged George B. Paulin, Senior Managing Director and Partner of Meridian Compensation Partners, LLC (Meridian), as its independent compensation consultant effective September 2021. Prior to September 2021, Frederic W. Cook & Co., Inc. (FW Cook) advised the Compensation Committee, including Mr. Paulin, prior to his departure from FW Cook. The Compensation Committee elected to change its independent compensation consultant to Meridian following a request for proposal process. Additionally, Aon’s Human Capital Solutions practice, a division of Aon plc (Aon), assists the Compensation Committee with the compilation of market data from time to time. The Compensation Committee consultant reports directly and exclusively to the Compensation Committee and neither Meridian nor FW Cook provides any services to Baxter except advising on executive and Board compensation matters. The Compensation Committee consultant provides analyses and recommendations that help inform the Compensation Committee’s decisions, but does not decide or approve any compensation actions. During 2021, the Compensation Committee consultant advised the Compensation Committee Chair on agenda items for Compensation Committee meetings, reviewed management proposals presented to the Compensation Committee, assisted in the Compensation 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. In accordance with the rules of the SEC and the NYSE regarding the independence of compensation consultants, the Compensation Committee consultant provided the Compensation Committee information regarding any personal, financial, or business relationships between FW Cook or Meridian and Baxter, FW Cook’s and Meridian’s management or the members of the Compensation Committee that could impair its independence or present a conflict of interest. Based on its review of this information, the Compensation Committee determined that there were no relationships that impair the independence or create a conflict of interest between Baxter and FW Cook or Meridian (as applicable) and the partners, consultants and employees who provide services to the Compensation Committee. In addition, the Compensation Committee annually reviews the substantive performance of the independent Compensation Committee consultant as part of its engagement process.

Nominating, Corporate Governance & Public Policy Committee

The NCGPP Committee is currently composed of Thomas F. Chen (Chair), John D. Forsyth, Michael F. Mahoney, Stephen N. Oesterle, M.D., Nancy M. Schlichting and Albert P.L. Stroucken, each of whom is independent under the rules of the NYSE. The NCGPP Committee assists and advises the Board on director nominations, corporate governance and general Board organization and planning matters.

The NCGPP Committee’s duties include:

(1) developing general criteria for use in evaluating and selecting candidates for election or reelection to the Board;

(2) assisting the Board in identifying and attracting qualified independent 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;

(5) reviewing the suitability for continued service of each director when his or her term expires and when he or she has a change in circumstances under Baxter’s Corporate Governance Guidelines;

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(6) reviewing periodically the size and composition of the Board and each committee, including whether the Board possesses an appropriate mix of skills, experiences and backgrounds;

(7) recommending to the Board any changes in number, authority, procedures and duties of Board committees and the chairpersons and members who should serve thereon;

(8) advising the Board and the Chairman/CEO on major organizational matters, including the election of officers;

(9) overseeing the succession planning process for the Chairman/CEO as well as certain key management succession plans, which includes oversight of the evaluation of the executive management team;

(10) overseeing the annual process for evaluating the performance of the Chairman/CEO;

(11) 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;

(12) to the extent not delegated to other committees, reviewing matters impacting Baxter’s image and reputation and its standing as a responsible corporate citizen;

(13) overseeing the orientation of new Board members to Baxter and its business as well as the continuing education of the directors;

(14) in the event of the death, incapacity, resignation or other absence (temporary or permanent) of the CEO, conferring and recommending for election by the full Board an acting or successor CEO;

(15) implementing 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 the adequacy of its charter at least annually and recommending any proposed changes to the Board for approval.

The NCGPP Committee met six times in 2021.

Quality, Compliance and Technology Committee

The QCT Committee is currently composed of Stephen N. Oesterle, M.D. (Chair), Thomas F. Chen, Patricia B. Morrison, Amy A. Wendell and David S. Wilkes, M.D. The QCT Committee assists the Board in fulfilling its oversight responsibilities with respect to quality and other compliance matters and scientific and technical direction. These responsibilities include oversight over cybersecurity and other IT matters as they relate to the development of Baxter products and services.

The QCT Committee’s duties include:

(1) overseeing risk management in the area of product quality and safety;

(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 its oversight of quality and compliance issues;

(4) overseeing the company’s innovation strategy (including with respect to product cybersecurity matters); and

(5) 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.

The QCT Committee met five times in 2021.

Special Litigation Committee

The Special Litigation Committee was composed of Stephen N. Oesterle, M.D. (Chair), Michael F. Mahoney and Cathy R. Smith. The committee was established in September 2017 by the Board to investigate, on behalf of Baxter stockholders, a stockholder demand relating to alleged breaches of fiduciary duties by certain Baxter directors and officers. The Special Litigation Committee met once in 2021. It was dissolved in July 2021.

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Corporate Governance at Baxter International Inc.                   29   

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 Baxter stockholders. No changes were made to director compensation programs in 2021, other than as set forth below.

Cash Compensation

In 2021, each non-employee director was paid a $100,000 annual cash retainer and a $2,000 fee for each committee meeting attended. Directors do not receive additional compensation for each Board meeting attended or for attending meetings for committees on which the directors do not sit.

Each non-employee director who acts as the chairperson of any standing committee receives an additional annual retainer of $15,000, except for the Chairs of the Audit and Compensation Committees who receive an additional retainer of $20,000 in light of competitive market data. Effective July 1, 2021, the retainer for the Chair of the Audit Committee was increased to $25,000 following a review of the competitive market data. The Lead Independent Director is paid an additional annual cash retainer of $50,000. 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 tax-qualified 401(k) Plan.

Equity Grant

For 2021, the aggregate value of a non-employee director’s annual equity grant was $195,000. One hundred percent (100%) of this grant was made in fully vested Baxter shares unless a director elected to receive 50% of the value of the grant in fully vested stock options. 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.

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 retainer provided to directors. As of December 31, 2021, 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 2021 compensation for non-employee directors who served during any portion of 2021.

Name	Fees Earned or Paid in Cash ($)(1)		Stock Awards ($)(2)		Option Awards ($)(3)		All Other Compensation ($)(4)		Total ($)
Thomas F. Chen		132,000		194,991		—		9,965		336,956
John D. Forsyth		140,000		97,583		97,643		20,000		355,226
James R. Gavin, M.D., Ph.D.		42,833		—		—		14,883		57,716
Peter S. Hellman		126,000		194,991		—		20,000		340,991
Michael F. Mahoney		120,000		97,583		97,643		20,000		335,226
Patricia B. Morrison		128,000		194,991		—		—		322,991
Stephen Oesterle		139,000		194,991		—		18,500		352,491
Nancy M. Schlichting		8,333		61,818		—		—		70,151
Cathy Smith		142,000		194,991		—		—		336,991
Thomas T. Stallkamp		134,250		194,991		—		20,000		349,241
Albert P.L. Stroucken		178,250		194,991		—		—		373,241
Amy A. Wendell		116,000		97,583		97,643		20,000		331,226
David S. Wilkes		108,000		223,806		—		15,000		346,806

¹ Consists of the amounts described above under “—Cash Compensation.”

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 8 to the Consolidated Financial Statements included in the 2021 Form 10-K. Each non-employee director had the following number of fully vested shares granted in May 2021: Mr. Chen (2,230); Mr. Forsyth (1,116); Mr. Hellman (2,230); Mr. Mahoney (1,116); Ms. Morrison (2,230); Dr. Oesterle (2,230); Ms. Smith (2,230); Mr. Stallkamp (2,230); Mr. Stroucken (2,230); Ms. Wendell (1,116); and Dr. Wilkes (2,230). In connection with his appointment to the Board in February 2021, Dr. Wilkes received 366 fully vested shares for his service between his appointment and the 2021 annual meeting. In connection with her appointment to the Board in December 2021, Ms. Schlichting received 743 fully vested shares for her service between her appointment and the Annual Meeting.

³  The amounts shown in this column are valued based on the grant date fair value of the underlying stock option award computed in accordance with FASB ASC Topic 718. For more information on how these amounts are calculated, please see Note 8 to the Consolidated Financial Statements included in the 2021 Form 10-K. Each of Messrs. Forsyth and Mahoney and Ms. Wendell elected to receive 50% of the value of their May 2021 equity grant in the form of fully vested stock options. These elections resulted in the issuance of 5,685 fully vested stock options to each re-elected independent director. As of December 31, 2021, each non-employee director had the following number of stock options outstanding, all of which were fully vested as of such date: Mr. Chen (33,306); Mr. Forsyth (56,496); Dr. Gavin (0); Mr. Hellman (56,104); Mr. Mahoney (37,893); Ms. Morrison (0); Dr. Oesterle (1,060); Ms. Schlichting (0); Ms. Smith (17,868); Mr. Stallkamp (36,723); Mr. Stroucken (29,209); Ms. Wendell (17,116); and Dr. Wilkes (0).

⁴ The amounts in this column include matching gift contributions made by Baxter’s charitable foundation as of March 1, 2022 on qualifying charitable donations made by the following directors in 2021: Mr. Forsyth ($20,000); Mr. Hellman ($20,000); Mr. Mahoney ($20,000); Dr. Oesterle ($18,500); Mr. Stallkamp ($20,000); Ms. Wendell ($20,000); and Dr. Wilkes ($15,000). In addition, all other amounts in this column include the dividend equivalent payments made in 2021 on previously deferred restricted stock units (RSUs) pursuant to the deferred compensation plan: Mr. Chen ($9,965); and Dr. Gavin ($14,883).

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Corporate Responsibility                   31   

Corporate Responsibility

What Corporate Responsibility Means to Baxter

Driven by the company’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 tackling ESG issues that affect its patients, customers, employees, communities and other stakeholders. Baxter’s approach to corporate responsibility supports the company’s goals to achieve top quartile results relative to industry peers and other comparators across four dimensions: patient safety and quality, growth through innovation, best place to work and industry-leading performance.

Advancing its corporate responsibility goals contributes to business value, employee attraction and retention, enhanced operational efficiency and implementation of enterprise risk management strategies, among others. Baxter recently launched its 2030 Corporate Responsibility Commitment featuring ten goals for focused action (as discussed in “—Corporate Responsibility Commitment and Goals”). The 2030 Corporate Responsibility Commitment and Goals are bolstered by the company’s approach to sound governance and an overarching commitment to ethics and compliance, human rights, inclusion and diversity and privacy and data protection.

Management and Board Oversight

ESG matters receive strategic guidance and oversight at the highest levels of the company, including Baxter’s Chairman and CEO, Baxter’s Senior Leadership Team and the Board. With the inauguration of the 2030 Corporate Responsibility Commitment and Goals, an executive cross-functional corporate responsibility steering committee (the Corporate Responsibility Steering Committee) was launched to provide direction and oversight regarding the company’s ESG initiatives. The Corporate Responsibility Steering Committee meets quarterly to monitor policies, action plans and strategies and other matters of significance to the company’s reputation as a socially responsible organization and provides guidance to the Corporate Responsibility Council (the Council). The Council meets quarterly to track progress against the company’s corporate responsibility commitments and goals and provides oversight to help ensure high standards of accountability. The Council provides regular updates to select members of the Senior Leadership Team and the Board (and committees thereof that are charged with various components of the Board’s ESG oversight responsibilities). Day-to-day ESG matters are managed by a combination of corporate responsibility, environmental, health & safety, human resources, finance, investor relations, legal, communications and other personnel depending on the nature of the matter.

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  32                 Corporate Responsibility

To drive further accountability and beginning in 2021, the Senior Leadership Team’s individual performance assessment is based as an initial matter on the company’s performance against pre-established measures for certain strategic priorities, including those related to ESG. The strategic 2021 priorities that impact this 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 2021 Annual Incentive Plan Payouts—Individual Performance” for additional information.

In addition, the Board plays a critical role in corporate responsibility oversight. The full Board is regularly updated on corporate responsibility matters (including a discussion of related goals and industry trends). The QCT Committee and the NCGPP Committee share oversight for ESG-related matters. The QCT Committee provides oversight for issues related to environmental sustainability and compliance, while the NCGPP Committee provides oversight for other areas related to Baxter’s corporate responsibility, including charitable contributions, public policy, access to healthcare and other social and governance issues. The diversity of background and experience represented by the Board provides key insights for corporate responsibility and strategic initiatives, operational performance and financial control. See “Proxy Statement Highlights—Board Qualifications, Experiences and Backgrounds” for additional information regarding these diverse backgrounds and experiences.

Pursuant to Baxter’s enhanced stockholder engagement program, Baxter directors and management regularly engage in corporate responsibility discussions with many of the company’s investors. Outputs from these discussions (including with respect to the company’s proposed 2030 Corporate Responsibility Commitment and Goals) 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.

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Corporate Responsibility                   33   

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 it operates in and the people who use its products. Setting goals across a broad range of corporate responsibility focus areas demonstrates the company’s commitment to this important topic, reinforces accountability and helps to drive ongoing improvement across the organization.

In 2021, Baxter announced the company’s corporate responsibility commitment for 2030. The new goals demonstrate the connection between its corporate responsibility initiatives and business priorities and align with the company’s top quartile goals which are fundamental components of Baxter’s strategy. Anchored by three pillars—Empower Our Patients, Protect Our Planet and Champion Our People and Communities—this commitment features a new set of ten strategic goals. These goals were created after input and consultation with many of Baxter’s internal and external stakeholders, including the Board, non-governmental organizations and key members of the investment community. Additionally, the company’s new corporate responsibility goals are aligned with certain of the United Nations Sustainable Development Goals (UN SDG 3, 6 and 12) and 2030 Agenda for Sustainable Development. The 2030 goals highlight the company’s corporate responsibility focus and should help to further advance its ESG performance.

Baxter’s leadership team is accountable for role modeling inclusive leadership and has pledged to listen, learn and take action to the social and racial issues and concerns of internal and external stakeholders. Consistent with Baxter’s strong diversity and inclusion platform, senior leadership continues to work closely with the Baxter Black Alliance business resource group and colleagues from across the company on Activating Change Today (ACT), a multi-dimensional and multi-year program to advance inclusion and racial justice. The ACT initiative is focused on driving results across four key areas—Workforce, Workplace, Community and Marketplace—encompassing employees, external stakeholders and the markets and communities Baxter serves. Among the numerous initiatives put in place to date, the company has solicited candid feedback on racism through global listening channels to inform programs and activities, offered needs-based scholarships to support students at Historically Black Colleges and Universities, launched an initiative to increase awareness and education in communities about Kidney Health, provided a $2 million grant through the Baxter International Foundation to address health disparities for people with diabetes in underserved communities and a three-year 2:1 match of employee contributions to select nonprofit organizations committed to fighting racial injustice. A complete list of actions the company is taking to fight racial injustice is available on Baxter’s website at www.baxter.com/fighting-racial-injustice.

Baxter has been consistently recognized by external rankings and ratings organizations as a corporate responsibility leader. In 2021, Baxter was again honored for its efforts as an employer of choice and a socially responsible and sustainable business, receiving a number of recognitions including: 3BL Media’s 100 Best Corporate Citizens, Forbes’ America’s Best Employers for Diversity, Best Employers for Women and World’s Top Female-Friendly Companies and Seramount’s (formerly Working Mother Media) 100 Best Companies, Best Companies for Dads, Top Companies for Executive Women, as well as being named a Leading Inclusion Company and Global Inclusion Index Company. Baxter was again named one of America’s Most JUST Companies by JUST Capital and appeared on the Disability Equality Index, designating Baxter as a Best Place to Work for Disability Inclusion. Baxter has consistently received a top score of 100 percent on the Human Rights Campaign Foundation’s Corporate Equality Index (CEI) for LGBTQ+ Equality and is proud to have also been included in the Dow Jones Sustainability Index, the FTSE4Good Index Series, Newsweek Magazine’s

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  34                 Corporate Responsibility

America’s Most Responsible Companies and Wall Street Journal’s Management Top 250. CDP also scored Baxter for its environmental leadership with B scores in both Climate Change and Water Security. These awards are among numerous other regional and country-specific recognitions across the globe.

Annual Reporting and Disclosures

Transparent reporting is a longstanding focus for Baxter, as it has a 30-year history of publishing environmental performance reports. The company’s corporate responsibility disclosures have evolved and broadened in scope, in line with stakeholders’ material interests combined with the increasing sophistication of its corporate responsibility strategy. 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. With the acquisition of Hillrom, Baxter plans to undertake a new materiality assessment in 2022 to help ensure the company’s corporate responsibility commitment and goals align with its stakeholders’ interests.

In 2021, Baxter published its Sustainability Accounting Standards Board (SASB) Index in its annual Corporate Responsibility Report, in alignment with the Medical Equipment and Supplies Sustainability Accounting Standard. The company elected to make this voluntary public disclosure 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”).

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 activities. In 2021, Baxter enhanced its data disclosures pertaining to workforce demographics and product safety and quality data in its appendix. In addition, the company has published a redacted version of its 2020 U.S. Employer Equal Opportunity report on its website to provide additional transparency into Baxter’s continuing efforts to increase underrepresented populations in its workforce. A copy of the redacted report is available on Baxter’s website at www.baxter.com/inclusion-and-diversity-reporting. The company is actively evaluating its ability to begin reporting against the framework established by the Task Force on Climate-Related Financial Disclosure.

The Corporate Responsibility Report is not incorporated by reference into the proxy statement or any other document filed with the SEC. More information about Baxter’s corporate responsibility efforts and initiatives, including the 2020 Corporate Responsibility Report, is available on Baxter’s website under “Our Story—Corporate Responsibility.”

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Executive Compensation                   35   

Executive Compensation

  Advisory Vote to Approve Named Executive Officer Compensation for 2021   At the 2017 annual meeting, stockholders recommended that the Board continue to hold annual advisory votes approving the compensation of Baxter’s named executive officers (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 named executive officers as disclosed in the proxy statement.   The Board of Directors recommends a vote FOR approval of the compensation of the company’s named executive officers for 2021.  

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 named executive officers for 2021. The Board encourages stockholders to carefully review the “Executive Compensation—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 Compensation Committee and the Board with respect to the compensation of the company’s named executive officers for 2021.

The company has designed its executive compensation programs 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 and long-term performance requirements are met.

In addition, Baxter has adopted policies, like the stock ownership guidelines and the Executive Compensation Recoupment Policy, to help ensure long-term focus and appropriate levels of risk-taking by 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:

  RESOLVED, that the stockholders of Baxter International Inc. approve the compensation paid to the company’s named executive officers as described in the 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 Compensation Committee will review and thoughtfully consider the voting results when making future decisions concerning the compensation of the company’s future named executive officers. The next say-on-pay advisory vote will be held at the 2023 Annual Meeting of Stockholders.

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  36                 Executive Compensation

Compensation Committee Report

The Compensation Committee is responsible for the oversight of Baxter’s compensation programs on behalf of the Board. In fulfilling its oversight responsibilities, the Compensation 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 Compensation Committee recommended to the Board that the following Compensation Discussion and Analysis be included in the 2021 Form 10-K and the proxy statement, each of which has been or will be filed with the SEC.

Compensation Committee

John D. Forsyth (Chair)

Peter S. Hellman

Michael F. Mahoney

Nancy M. Schlichting

Thomas T. Stallkamp

Amy A. Wendell

Compensation Discussion and Analysis

This Compensation Discussion and Analysis (CD&A) discusses the 2021 compensation paid to Baxter’s executive officers who are identified as named executive officers (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 2021, Baxter’s NEOs are:

Named Executive Officer	Title
José E. Almeida	Chairman of the Board, President and CEO
James K. Saccaro	Executive Vice President and Chief Financial Officer
Giuseppe Accogli*	Executive Vice President and COO
Cristiano Franzi	Senior Vice President and President, Europe, Middle East And Africa (EMEA)
Andrew Frye	Senior Vice President and President, Asia Pacific (APAC)

* Prior to November 29, 2021, Mr. Accogli served as the Company’s Senior Vice President and President, Americas and Global Business Units.

The Executive Summary section of this CD&A highlights the following:

• 2021 Company Results

• 2021 Executive Compensation Program Actions and Changes

• 2019 – 2021 PSU Performance

• 2021 Say-on-Pay Vote

• 2022 Executive Compensation Program Changes

The remainder of this CD&A discusses the following:

• Compensation Philosophy and Governance Practices

• Structure of Executive Compensation Program

• Components of Executive Compensation

• Elements of Executive Compensation

• Additional Compensation Governance

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Executive Compensation                   37   

Executive Summary

2021 Company Results

Baxter achieved strong 2021 financial results as it continued to navigate the ongoing COVID-19 pandemic and completed the Hillrom acquisition. This performance was evidenced in part by results under the 2021 annual incentive plan (which results have been adjusted to exclude 19 days of contribution from Hillrom):

• Adjusted Net Sales (calculated at budgeted exchange rates established on January 1, 2021) of $12,382 million, which was 100.3% of the annual incentive target of $12,349 million;

• Further Adjusted EPS of $3.54, which is 98.9% of the annual incentive target of $3.58; and

• Adjusted Free Cash Flow of $1,587 million, which is 106.6% of the annual incentive target of $1,490 million.

See “—2021 Executive Compensation Program Actions and Changes—2021 Annual Incentive Design and Performance” below for an overview of Baxter’s 2021 annual incentive plan and “—Elements of Executive Compensation—Annual Incentive Plan—Determination of 2021 Annual Incentive Plan Payouts” for a description of Adjusted Net Sales, Further Adjusted EPS and Adjusted Free Cash Flow (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.

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  38                 Executive Compensation

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, 2021. As set forth below, the TSR for Baxter for the three-year period totaled approximately 35%, as compared to 100% for the S&P 500 Composite Index and 73% for the S&P 500 Health Care Index over the same period. These numbers reflect softness in the Baxter stock which may have resulted from the company’s withdrawal of long-term guidance during the ongoing COVID-19 pandemic, market uncertainty regarding the proposed Hillrom acquisition and delays in certain product launches. For the five-year period, the TSR for Baxter totaled approximately 105%, as compared to 133% for the S&P 500 Composite Index and 125% for the S&P 500 Health Care Index over the same period.

¹ TSR calculations (as provided by Bloomberg) include reinvested dividends.

¹ TSR calculations (as provided by Bloomberg) include reinvested dividends.

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Executive Compensation                   39   

2021 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: (1) 2021 annual incentive design and performance; (2) 2021 annual PSU grant design; and (3) other 2021 executive compensation actions.

2021 Annual Incentive Design and Performance

The 2021 annual incentive design remained consistent with the 2020 design, except for the individual performance assessment for members of Baxter’s Senior Leadership Team. As described in detail below, each NEO’s individual performance assessment was initially based on a qualitative assessment against key strategic 2021 priorities, inclusive of various ESG issues, in three categories: (1) Patient Safety and Quality; (2) Best Place to Work; and (3) Growth Through Innovation.

The 2021 annual incentive for each NEO was calculated using the following formula:

(x) NEO’s target annual incentive multiplied by

(y) the aggregate performance across the three applicable financial performance metrics with a payout range between 0%-200% multiplied by

(z) the NEO’s individual performance assessment that ranges between 0%-125%.

The following highlights the financial performance results for Baxter’s 2021 annual incentive plan for each NEO:

Messrs. Almeida and Saccaro

Annual Incentive Financial Metric	Weighting			Target			Actual Performance			Payout as a % of Target
Company—Adjusted Net Sales (in millions)1		50	%		$	12,349		$	12,382		103	%
Further Adjusted EPS2		25	%		$	3.58		$	3.54		94	%
Adjusted Free Cash Flow (in millions)3		25	%		$	1,490		$	1,587		122	%
Weighted Financial Performance Payout as a % of Target											105	%

Mr. Accogli

Annual Incentive Financial Metric	Weighting			Target			Actual Performance			Payout as a % of Target
Americas Region—Adjusted Net Sales (in millions)1		50	%		$	6,591		$	6,640		108	%
Further Adjusted EPS2		25	%		$	3.58		$	3.54		94	%
Adjusted Free Cash Flow (in millions)3		25	%		$	1,490		$	1,587		122	%
Weighted Financial Performance Payout as a % of Target											108	%

Mr. Franzi

Annual Incentive Financial Metric	Weighting			Target			Actual Performance			Payout as a % of Target
EMEA Region—Adjusted Net Sales (in millions)1		50	%		$	3,111		$	3,136		108	%
Further Adjusted EPS2		25	%		$	3.58		$	3.54		94	%
Adjusted Free Cash Flow (in millions)3		25	%		$	1,490		$	1,587		122	%
Weighted Financial Performance Payout as a % of Target											108	%

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  40                 Executive Compensation

Mr. Frye

Annual Incentive Financial Metric	Weighting			Target			Actual Performance			Payout as a % of Target
APAC Region—Adjusted Net Sales (in millions)1		50	%		$	2,595		$	2,580		94	%
Further Adjusted EPS2		25	%		$	3.58		$	3.54		94	%
Adjusted Free Cash Flow (in millions)3		25	%		$	1,490		$	1,587		122	%
Weighted Financial Performance Payout as a % of Target											101	%

¹ See page 49 for the calculation of Adjusted Net Sales.

² See page 49 for the calculation of Further Adjusted EPS.

³ See page 49 for the calculation of Adjusted Free Cash Flow.

As mentioned above, beginning with the 2021 annual incentive, each NEO’s individual performance assessment, as well as that of the broader Senior Leadership Team, was determined in connection with an assessment of Baxter’s performance against pre-established measures for key strategic 2021 priorities, which include various ESG issues. The strategic 2021 priorities are included in the three categories highlighted below along with the applicable weightings used to calculate the overall weighted payout. Following a rigorous qualitative year-end performance assessment, the payout percentage for each category as well as the weighted total payout is as follows:

Category	Weighting			Payout1			Notable Items2
Patient Safety and Quality (including product safety and quality systems)		50	%		105	%	•    No new Warning Letters received in 2021 •    Enhanced manufacturing quality culture program •    Improved internally assessed site risk scores
Best Place to Work (including diversity in the workforce, culture, talent, ACT program and environmental, health and safety (EH&S) measures)		30	%		110	%	•    Diversity in leadership (for women at or above the director level globally and for U.S. ethnic minorities at or above the director level) •    Increased manager effectiveness scores and retention of key talent •    Significant ACT investment •    Achieved various EH&S measures, including a reduction in the number of major EH&S incidents and environment non-conformances
Growth Through Innovation (including the on-going digital transformation and innovative ecosystem)		20	%		95	%	•    Enhanced digital operating model •    Significant employee engagement in digital upskilling and learning •    Below target performance on several new product development related priorities
Weighted Payout as a % of Target for Senior Leadership Team					105	%

¹ The 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 notable items in each category, which is not comprehensive of all strategic priorities.

Based on the strategic priority qualitative assessment described above, input from the independent members of the Board (in the case of the CEO’s individual performance assessment) and the Compensation Committee (for all other NEOs), the 2021 individual performance assessment for each NEO is 105%, which is aligned to the weighted payout above.

See “Elements of Executive Compensation—Annual Incentive Plan” for additional detail on Baxter’s 2021 annual incentive plan, including targets and total payouts.

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Executive Compensation                   41   

2021 Annual PSU Grant Design

For 2021, PSUs comprised 50% of each NEO’s target annual LTI grant (with stock options comprising the other 50%) and the design remained unchanged from 2020:

	2021 Plan Design
Metrics	Relative TSR Adjusted ROIC Adjusted Net Sales CAGR
Weightings	Equal weighting: 33-1/3% for each metric
Measurement	All metrics are measured over three-year performance period

See “Elements of Executive Compensation—Long-Term Incentive Plan—2021 Annual LTI Grants” for additional detail on Baxter’s 2021 PSU grants.

2021 Executive Compensation Actions

Consistent with historical practice, Mr. Almeida did not receive a salary increase in 2021. In 2021, Mr. Accogli received two base salary increases—one during the annual compensation review cycle in March and one in November in connection with him assuming Executive Vice President and COO responsibilities. Messrs. Franzi, Frye and Saccaro each received a base salary increase during the annual compensation review cycle.

All NEOs received a 2021 annual LTI grant and Mr. Frye received an additional retention-based PSU grant. See “Elements of Executive Compensation—Long-Term Incentive Plan—Retention PSU Grant” for additional details on this award.

2019—2021 PSU Performance

The following highlights the performance results for the PSUs granted in February 2019 with a performance period of January 1, 2019 to December 31, 2021, which were calculated as follows:

PSU Metric	Weighting	Target	Actual Performance	Payout as a % of Target
Relative TSR	50%	50th Percent Rank	44th Percent Rank	82%
Annual Further Adjusted Operating Margin	50% (Total)
2019 Further Adjusted Operating Margin1	16-2/3%	18.3%	18.5%	111%
2020 Adjusted Operating Margin1	16-2/3%	19.6%	18.0%	39%
2021 Further Adjusted Operating Margin1	16-2/3%	18.4%	17.9%	82%
Weighted Payout as a % of Target				80%

¹ See pages 53 and 54 for the calculation of Further Adjusted Operating Margin and Adjusted Operating Margin.

See “Elements of Executive Compensation—Long-Term Incentive Plan—2019 – 2021 PSU Performance” for additional detail on PSU performance, including targets and performance ranges.

2021 Say-on-Pay Vote

At the 2021 annual meeting, approximately 91% of the stockholders voting at the meeting approved, in an advisory vote, the compensation for Baxter’s NEOs in 2020. Due to the strong level of stockholder support and consistent with discussions with select institutional investors during the company’s annual corporate governance outreach program, the company substantially maintained the parameters of its executive compensation program for 2021 (except as otherwise described above).

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The Compensation Committee and management are committed to continuing to strengthen pay-for-performance alignment, as well as the overall design of Baxter’s executive compensation programs, informed by stockholder feedback obtained from corporate governance outreach discussions (as discussed in “Corporate Governance at Baxter International Inc.—Other Corporate Governance Information—Stockholder Engagement”).

2022 Executive Compensation Program Changes

For the 2022 annual incentive design, the individual performance assessment for members of Baxter’s Senior Leadership Team will continue to be based on performance against key strategic 2022 priorities, inclusive of various ESG issues, based on the same three categories as 2021 with slightly revised weightings as follows: Patient Safety and Quality (40% weighting), (2) Best Place to Work (30% weighting) and (3) Growth Through Innovation (30% weighting).

Beginning with the 2022 annual LTI grant, the equity mix for all NEOs will be revised to reflect 25% of the annual equity grant value in stock options, 25% in RSUs and the remaining 50% in PSUs. Additionally, for PSUs made under the 2022 annual LTI grant with a 2022-2024 performance cycle, the peer group used to measure Relative TSR performance will change from the Dow Jones Medical Equipment Index to the S&P 500 Healthcare Equipment and Services Index (S&P Healthcare Equipment Index). See “Elements of Executive Compensation—Long-Term Incentive Plan—2022 Annual LTI Grant Changes” for additional details.

Compensation Philosophy and Governance Practices

Baxter’s compensation program is designed to:

• Compare competitively to companies where Baxter competes for executive talent.

• Attract, retain and motivate high-performing executives.

• Recognize company and individual performance.

• Drive the company’s long-term financial and stockholder value performance.

• Encourage innovation and appropriate levels of risk-taking.

• Equitably reflect the value of each executive’s position in the market and within the company.

The objectives of the program are to:

• 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.

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Executive Compensation                   43   

What Baxter Does

What Baxter Does Not Do

✓ Emphasize company performance. 91% of the CEO’s 2021 total target direct compensation and an average of 81% of the other NEOs’ 2021 total target direct compensation is “at risk” based on company and stock price performance. ✓ Align with stockholders. 76% of the CEO’s 2021 total target direct compensation and an average of 64% of the other NEOs’ 2021 total target direct compensation is based on long-term incentives aligned with stockholders’ interests. ✓ Incorporate ESG metrics into the annual incentive plan. NEOs have shared ESG goals embedded into their annual incentive individual performance assessment measured under three categories: (1) Patient Safety and Quality, (2) Best Place to Work and (3) Growth Through Innovation. ✓ Require significant stock ownership. Executive officers are subject to certain stock ownership requirements and neither unvested PSUs for which actual performance has not been certified nor stock options (or any portions thereof) count towards the requirements. ✓ Retain an independent compensation consultant to advise the Compensation Committee. The independent consultant does not provide services to the company other than advising the Compensation Committee. ✓ 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 Executive Compensation Recoupment Policy. Various actions can be taken with regard to annual and long-term incentive payouts to executives upon a financial restatement or for violation of restrictive covenants between the executive and the company, including recovery, reduction or forfeiture of all or part of any annual incentive or previously awarded long-term incentive grant (or to be awarded long-term incentive grant), disciplinary actions and the pursuit of other remedies. ✓ 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 or otherwise. Taxes are each NEO’s sole responsibility. X  No re-pricing or exchanging of underwater stock options. The company does not re-price outstanding stock options, whether vested or unvested, without prior stockholder approval. X  Pay dividend equivalents on unvested RSUs or PSUs. Dividend equivalents on RSUs and PSUs in the form of additional shares are paid only upon the vesting of such RSUs and PSUs with the number of dividend equivalents for PSUs based on actual company performance. X  Offer excessive perquisites. Executives are eligible for a very limited number of perquisites.

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  44                 Executive Compensation

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 “at risk” and subject to specific annual and long-term performance requirements (including in the case of stock options, the performance of Baxter common stock). As shown below for 2021, 91% of Mr. Almeida’s total target direct compensation and 81% of the average total target direct compensation for the other NEOs was at risk and subject to various performance metrics.

Named Executive Officer Total Target Direct Compensation¹

¹ Percentages are calculated using annual base salary, target annual incentive and target LTI grant values as of December 31, 2021. Excludes the one-time retention PSU grant provided to Mr. Frye in March 2021.

Peer Group and Use of Peer Group Data

The use of peer group data plays a significant role in the structure of the company’s executive compensation program. It is a primary input in assessing the appropriate ranges for base salary, target annual incentive and target annual LTI grants and helps to ensure that compensation is market competitive and reasonable.

Baxter uses peer compensation data from companies that the Compensation Committee selected as comparable based on the factors described below (Compensation Peer Group). If data are not available for a particular executive’s position at the company, the Compensation Committee utilizes general industry information that is available to Aon through its Total Compensation Measurement survey as well as internal equity principles to set an executive’s compensation targets at levels that are consistent with other executives at Baxter.

The Compensation 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 Compensation Committee considers companies with all of the following factors:

• Similar Global Information Classical Standards sub-industries to Baxter.

• Revenues and market capitalization within a reasonable range of Baxter’s revenue and market capitalization.

• Constituents of the Dow Jones Medical Equipment Index.

• 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 following year-over-year changes to the Compensation Peer Group:

• Additions: Edwards Lifesciences Corporation, Hologic, Inc. and Intuitive Surgical, Inc.

• Removals: Cerner Corporation

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Executive Compensation                   45   

For 2021, the Compensation Peer Group is as follows:

Abbott Laboratories	DENTSPLY Sirona Inc.	Quest Diagnostics Incorporated
Agilent Technologies, Inc.	Edwards Lifesciences Corporation	Stryker Corporation
Becton, Dickinson and Company	Hologic, Inc.	Thermo Fisher Scientific Inc.
Boston Scientific Corporation	Intuitive Surgical, Inc.	Varian Medical Systems, Inc.1
Danaher Corporation	Laboratory Corporation of America Holdings	Zimmer Biomet Holdings, Inc.
DaVita Inc.	Medtronic Public Limited Company

¹  On April 15, 2021, Varian Medical Systems, Inc. was acquired by Siemens Healthineers AG. All benchmark information was completed based on available fiscal year 2020 results for Varian Medical Systems, Inc.

The median revenue and market capitalization for the Compensation Peer Group was approximately $11.5 billion and $66.1 billion, respectively, for the year ended December 31, 2021. Baxter’s revenue of $12.8 billion for the year ended December 31, 2021 (net sales as reported under GAAP for 2021 and including 19 days of Hillrom results) placed Baxter at the 56^th percentile of this peer group. Baxter’s market capitalization of approximately $43.0 billion as of December 31, 2021 placed Baxter at the 38^th percentile of this peer group.

Individual Performance

The Compensation 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.

The Compensation Committee’s assessment of individual performance and future potential relies on informed judgement and requires significant input from the CEO, who reviews the performance goals and evaluations of each of the other executive officers and key executives and shares his insights and recommendations with the Compensation Committee. Based on that input, the Compensation Committee assesses how well an executive officer or other key executive fulfilled his or her obligations in the past year and such executive officer 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 Compensation 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 base salary, annual incentive grant and annual LTI grant. As part of this assessment, they review the extent to which the CEO satisfied his goals for the year. This review is conducted with the support of the Lead Independent Director and the NCGPP and Compensation Committees, which oversee the establishment of the CEO’s goals and the annual performance and compensation review process.

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Components of Executive Compensation

The table below describes the components of Baxter’s executive compensation for 2021. See “—Elements of Executive Compensation” below for additional information on each component. In addition to the compensation components listed below, and in order to ensure an overall competitive total compensation program, executives are also eligible for employee benefits that are generally available to all employees.

Component	Objectives	Determination of Amount
Base Salary
•  Fixed component of compensation	•  Provides a base level of competitive compensation •  Used to attract and retain executive talent	•  A competitive range consisting of the 25th, 50th and 75th percentile of the Compensation Peer Group is determined •  Relevant factors for determining the applicable amount against the competitive range include individual performance, overall experience, tenure in position, impact on company results, current comparison to benchmark position(s) and an assessment of internal equity among peers •  Reviewed annually and when executives are hired or take on additional responsibilities
Annual Incentive
•  Variable short-term compensation component •  Target annual incentive is based on a percentage of base salary	•  Used to motivate and reward executives for company and individual performance against annually established financial targets and individual objectives, including ESG measures •  For 2021, financial targets included Adjusted Net Sales (50%), Further Adjusted EPS (25%) and Adjusted Free Cash Flow (25%), which are subject to additional adjustment based on the individual performance assessment and strategic priorities	•  Annual incentive targets are set against a competitive range consisting of the 25th, 50th and 75th percentile of the Compensation Peer Group using the same factors described above for base salary •  Reviewed annually and when executives are hired or take on additional responsibilities
Long-Term Incentive Grants
•  Variable LTI compensation component •  Represent a significant component of each executive’s compensation package •  In 2021, annual LTI grants to NEOs consisted of 50% stock options and 50% PSUs	•  Used to motivate and reward an executive’s contributions to achieving the company’s long-term objectives and increasing stockholder value •  Stock options recognize that it is in the best interests of the company to provide LTI that will vest as long as the executive continues to serve at Baxter and the value of which depends, in part, on the company’s stock price performance over the exercise period •  PSUs recognize that a portion of at least 50% of an executive’s annual LTI grant value should be completely “at risk” •  For 2021, performance metrics for PSU grants include Relative TSR (33-1/3%), Adjusted ROIC (33-1/3%) and Adjusted Net Sales CAGR (33-1/3%)	•  Target LTI grant values are set against a competitive range consisting of the 25th, 50th and 75th percentile of the Compensation Peer Group using the same factors described above for base salary •  Reviewed annually and when executives are hired or take on additional responsibilities •  Target LTI grant values may be adjusted based on an assessment of the NEO’s individual performance and future potential •  At least 50% of an executive officer’s target annual LTI grant value is in PSUs

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Executive Compensation                   47   

Elements of Executive Compensation

Base Salary

Overview

As discussed above, the Compensation 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 a competitive range consisting of the 25^th, 50^th and 75^th percentile of the Compensation Peer Group based on relevant factors, including the executive’s individual performance, overall experience, tenure in position, impact on company results, current comparison to benchmark position and an assessment of internal equity among peers.

2021 Actions

For 2021, Mr. Almeida’s annual base salary remained $1,300,000. Effective in March 2021, in connection with the annual compensation cycle, Mr. Saccaro’s annual base salary increased from $739,000 to $761,000 and Mr. Franzi’s annual base salary increased from Swiss Francs (CHF) 728,000 to CHF 743,000 (or from $795,340 to $811,728, converted from CHF to United States Dollars (USD) using the December 31, 2021 exchange rate). Effective in April 2021, in connection with the annual compensation cycle, Mr. Frye’s annual base salary increased from Singapore Dollars (SGD) 972,000 to SGD 1,011,000 (or from $718,697 to $747,533, converted from SGD to USD using the December 31, 2021 exchange rate). Effective in March 2021, in connection with the annual compensation cycle, Mr. Accogli’s annual base salary increased from $800,000 to $824,000. Mr. Accogli’s annual base salary was further increased in November 2021 to $875,000 in connection with his assumption of Executive Vice President and COO responsibilities.

The following table provides each NEO’s 2021 annual base salary as of December 31, 2021, incorporating all the increases described above (if any):

NEO	2020 Base Salary1			2021 Base Salary			% Increase
Mr. Almeida		$	1,300,000		$	1,300,000		0.0	%
Mr. Saccaro		$	739,000		$	761,000		3.0	%
Mr. Accogli		$	800,000		$	875,000		9.4	%
Mr. Franzi2		$	795,340		$	811,728		2.1	%
Mr. Frye3		$	718,697		$	747,533		4.0	%

¹ Reflects each NEO’s annual base salary as of December 31, 2020.

² Mr. Franzi’s 2020 and 2021 annual base salary has been converted from CHF to USD using the December 31, 2021 exchange rate (1 CHF = 1.0925 USD). Mr. Franzi’s annual base salary was CHF 728,000 and CHF 743,000 as of December 31, 2020 and December 31, 2021, respectively.

³ Mr. Frye’s 2020 and 2021 annual base salary has been converted from SGD to USD using the December 31, 2021 exchange rate (1 SGD = 0.7394 USD). Mr. Frye’s annual base salary was SGD 972,000 and SGD 1,011,000 as of December 31, 2020 and December 31, 2021, respectively.

Annual Incentive Plan

Overview

Like with base salary, the Compensation Committee (or the independent members of the Board, in the case of the CEO) determine annual incentive targets using a competitive range consisting of the 25^th, 50^th and 75^th percentile of the Compensation Peer Group. The same factors that influence the setting of base salary also influence the establishment of annual incentive targets.

Annual incentive payouts are calculated using the following formula:

(x) NEO’s target annual incentive multiplied by

(y) the aggregate performance across the three applicable financial performance metrics with a payout range between 0%-200% multiplied by

(z) the NEO’s individual performance assessment that ranges between 0%-125%.

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  48                 Executive Compensation

For the 2021 annual incentive plan, consistent with the 2020 annual incentive plan, the Compensation Committee selected Adjusted Net Sales, Further Adjusted EPS and Adjusted Free Cash Flow as the financial performance metrics for funding the annual incentive plan. Also, consistent with the 2020 design, Baxter placed greater emphasis on Adjusted Net Sales to recognize the criticality of continuing Baxter’s organic sales growth. The weightings for Further Adjusted EPS and Adjusted Free Cash Flow continued to be equally weighted for 2021, as the two measures remain important measures of Baxter’s operational strategy used by stockholders to assess Baxter’s financial performance. All three measures exclude Hillrom’s 2021 financial results and are referred to in the proxy statement as Adjusted Net Sales, Further Adjusted EPS and Adjusted Free Cash Flow.

The initial calculation of individual performance assessment for members of the Senior Leadership Team (which includes all NEOs) described in clause (z) includes the company’s performance against pre-established key strategic 2021 priorities, inclusive of various ESG issues, in three categories: (1) Patient Safety and Quality; (2) Best Place to Work; and (3) Growth Through Innovation.

Annual Incentive Targets

NEOs’ annual incentive targets are set within a competitive range of the annual incentive targets for the Compensation Peer Group.

The 2021 annual incentive target for each NEO is outlined below:

NEO	Target Annual Incentive as a % of Base Salary
Mr. Almeida		165	%
Mr. Saccaro		95	%
Mr. Accogli		90	%
Mr. Franzi		85	%
Mr. Frye		85	%

Determination of 2021 Annual Incentive Plan Payouts

Financial Performance. The tables below provide Adjusted Net Sales, Further Adjusted EPS and Adjusted Free Cash Flow targets for 2021, as well as actual results for each NEO. The payout for performance in between the payout ranges is based on linear interpolation. While Baxter appointed Mr. Accogli Executive Vice President and COO effective November 2021, he was responsible for Adjusted Net Sales for the Americas region for all of 2021. Given his regional oversight responsibilities and the regional oversight of each of Mr. Franzi and Mr. Frye, the performance of each was measured on the Adjusted Net Sales for their respective regions (excluding Hillrom), the Americas (Mr. Accogli), EMEA (Mr. Franzi) and APAC (Mr. Frye). The Adjusted Net Sales metric for each of Messrs. Almeida and Saccaro continues to be based on overall Baxter results (excluding Hillrom) to recognize their enterprise-wide responsibilities. Performance for all NEOs continues to be measured on overall Baxter results (excluding Hillrom) for Further Adjusted EPS and Adjusted Free Cash Flow metrics.

Messrs. Almeida and Saccaro

	2021
	Threshold (50% Payout)		Target (100% Payout)		Mid-Point (125% Payout)		Maximum (200% Payout)		Actual		Achievement as a % of Target4		Payout as a % of Target
Company—Adjusted Net Sales (in millions)1	$	11,732	$	12,349	$	12,658	$	12,967	$	12,382		100.3%		103	%
Further Adjusted EPS2	$	3.22	$	3.58	$	3.76	$	3.94	$	3.54		98.9%		94	%
Adjusted Free Cash Flow (in millions)3	$	1,341	$	1,490	$	1,601	$	1,713	$	1,587		106.6%		122	%
		Weighted Financial Payout as a % of Target:												105	%

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Executive Compensation                   49   

Mr. Accogli

	2021
	Threshold (50% Payout)		Target (100% Payout)		Mid-Point (125% Payout)		Maximum (200% Payout)		Actual		Achievement as a % of Target4	Payout as a % of Target
Americas Region—Adjusted Net Sales (in millions)1	$	6,261	$	6,591	$	6,755	$	6,920	$	6,640	100.8%		108	%
Further Adjusted EPS2	$	3.22	$	3.58	$	3.76	$	3.94	$	3.54	98.9%		94	%
Adjusted Free Cash Flow (in millions)3	$	1,341	$	1,490	$	1,601	$	1,713	$	1,587	106.6%		122	%
				Weighted Financial Payout as a % of Target:									108	%

Mr. Franzi

	2021
	Threshold (50% Payout)		Target (100% Payout)		Mid-Point (125% Payout)		Maximum (200% Payout)		Actual		Achievement as a % of Target4	Payout as a % of Target
EMEA Region—Adjusted Net Sales (in millions)1	$	2,955	$	3,111	$	3,188	$	3,266	$	3,136	100.8%		108	%
Further Adjusted EPS2	$	3.22	$	3.58	$	3.76	$	3.94	$	3.54	98.9%		94	%
Adjusted Free Cash Flow (in millions)3	$	1,341	$	1,490	$	1,601	$	1,713	$	1,587	106.6%		122	%
				Weighted Financial Payout as a % of Target:									108	%

Mr. Frye

	2021
	Threshold (50% Payout)		Target (100% Payout)		Mid-Point (125% Payout)		Maximum (200% Payout)		Actual		Achievement as a % of Target4	Payout as a % of Target
APAC Region—Adjusted Net Sales (in millions)1	$	2,465	$	2,595	$	2,660	$	2,725	$	2,580	99.4%		94	%
Further Adjusted EPS2	$	3.22	$	3.58	$	3.76	$	3.94	$	3.54	98.9%		94	%
Adjusted Free Cash Flow (in millions)3	$	1,341	$	1,490	$	1,601	$	1,713	$	1,587	106.6%		122	%
				Weighted Financial Payout as a % of Target:									101	%

¹ Adjusted Net Sales for purposes of the 2021 annual incentive plan is calculated as the company’s reported net sales (determined in accordance with GAAP) using budgeted exchange rates as of January 1, 2021. These amounts were adjusted to reflect the elimination of $212 million of Hillrom net sales in 2021 (which represents 19 days of contribution from Hillrom). Company Adjusted Net Sales, Americas Adjusted Net Sales, EMEA Adjusted Net Sales and APAC Adjusted Net Sales totaled $12.4 billion, $6.7 billion, $3.1 billion and $2.6 billion, respectively, for 2021. Company net sales, Americas net sales, EMEA net sales, APAC net sales and 19 days of Hillrom net sales as reported under GAAP for 2021 totaled $12.8 billion, $6.7 billion, $3.1 billion, $2.8 billion and $0.2 billion, respectively. The company uses net sales at budgeted exchange rates as a target under the 2021 annual 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 for purposes of the 2021 annual incentive plan was calculated as the company’s diluted earnings per share (determined in accordance with GAAP) as adjusted for special items and the impact of 19 days of Hillrom results. Special items for 2021 totaled $743 million (or $552 million on an after-tax basis), or $1.08 per diluted share. These adjustments primarily related to intangible asset amortization, acquisition and integration costs related to multiple acquisitions and upfront payment related to research and development collaborations and license agreements, business optimization initiatives, costs associated with European regulations (medical devices reporting regulations), investigation and related costs, a litigation matter, a loss on early extinguishment of debt and tax matters. Further Adjusted EPS for the 2021 annual incentive plan was further adjusted to remove the impact of $39 million, or $0.08 per diluted share, of Hillrom results from the year. Total GAAP diluted EPS in 2021 was $2.53. Further Adjusted EPS may not foot due to rounding.

³ The company uses Adjusted Free Cash Flow (rather than operating cash flow) as it gives effect to the company’s capital expenditures and better reflects the cash available for future investment. Adjusted Free Cash Flow is calculated from the company’s operating cash flow from continuing operations calculated in accordance with GAAP less capital expenditures. This amount excluded $743 million in capital expenditures in 2021. Adjusted Free cash flow was adjusted to reflect the elimination of Hillrom associated interest expense and transaction expenses of $43 million, 19 days of Hillrom operating cash outflows from continuing operations were $59 million in 2021 and Hillrom capital expenditures of $6 million over the same period.

⁴ Level of achievement used to determine funding of the annual incentive may not foot due to rounding.

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  50                 Executive Compensation

Individual Performance. Beginning with the 2021 annual incentive, each NEO’s individual performance assessment, as well as that of the broader Senior Leadership Team, was initially determined in connection with an assessment of Baxter’s performance against pre-established measures for key strategic 2021 priorities. This change was intended to further motivate and incentivize the NEOs and broader Senior Leadership Team to meet key 2021 priorities focused on various strategic areas, including ESG issues, while continuing to help ensure the delivery of strong financial results through the financial metrics used to calculate aggregate financial performance.

The strategic 2021 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 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%.

Following a rigorous qualitative year-end performance assessment, the payout percentage for each category as well as the weighted total payout is as follows:

Category	Weighting			Payout			Notable Items1
Patient Safety and Quality (including product safety and quality systems)		50	%		105	%	•    No new Warning Letters received in 2021 •    Enhanced manufacturing quality culture program •    Improved internally assessed site risk scores
Best Place to Work (including diversity in the workforce, culture, talent, ACT program and EH&S measures)		30	%		110	%	•    Diversity in leadership (for women at or above the director level globally and for U.S. ethnic minorities at or above the director level) •    Increased manager effectiveness scores and retention of key talent •    Significant ACT investment •    Achieved various EH&S measures, including a reduction in the number of major EH&S incidents and environment non-conformances
Growth Through Innovation (including the on-going digital transformation and innovative ecosystem)		20	%		95	%	•    Enhanced digital operating model •    Significant employee engagement in digital upskilling and learning •    Below target performance on several new product development related priorities
Weighted Payout as a % of Target for Members of the Senior Leadership Team					105	%

¹ Reflects notable items in each category, which is not comprehensive of all strategic priorities.

Based on the strategic priority qualitative assessment described above, input from the independent members of the Board (in the case of the CEO’s individual performance assessment) and the Compensation Committee (for all other NEOs), the 2021 individual performance assessment for each NEO is 105%, which is aligned to the weighted payout above.

Taking into account both financial and individual performance, the table below outlines the 2021 annual incentive payout for each NEO. Additionally, despite a continued challenging environment and the significant contributions made by the NEOs (including with respect to the recently completed Hillrom acquisition), no discretionary adjustments were made to the annual incentive payout for any NEO.

 | 2022 Annual Meeting of Stockholders and Proxy Statement

Executive Compensation                   51   

NEO	Base Salary			Target Annual Incentive as a % of Base Salary			Target Annual Incentive Amount			Weighted Financial Payout			Individual Performance Assessment			Total Annual Incentive Payout			Total Annual Incentive Payout as a % of Target
Mr. Almeida		$	1,300,000		165	%		$	2,145,000		105	%		105	%		$	2,364,863		110	%
Mr. Saccaro		$	761,000		95	%		$	722,950		105	%		105	%		$	797,052		110	%
Mr. Accogli		$	875,000		90	%		$	787,500		108	%		105	%		$	893,025		113	%
Mr. Franzi1		$	811,728		85	%		$	689,968		108	%		105	%		$	782,424		113	%
Mr. Frye2		$	747,533		85	%		$	635,403		101	%		105	%		$	673,845		106	%

¹ Mr. Franzi’s base salary has been converted from CHF to USD using the exchange rate as of December 31, 2021 (1 CHF = 1.0925 USD).

² Mr. Frye’s base salary has been converted from SGD to USD using the exchange rate as of December 31, 2021 (1 SGD = 0.7394 USD).

2022 Annual Incentive Plan Changes

For the 2022 annual incentive design, the individual performance assessment for members of Baxter’s Senior Leadership Team will continue to be based on performance against key strategic 2022 priorities, inclusive of various ESG issues, based on the same three categories as 2021 with slightly revised weightings as follows:

Category	2021 Weighting			2022 Weighting
Patient Safety and Quality		50	%		40	%
Best Place to Work		30	%		30	%
Growth Through Innovation		20	%		30	%

Long-Term Incentive Plan

Overview

LTI grants are a significant component of each NEO’s compensation package. In 2021, 76% of the total target direct compensation provided to the CEO and an average of 64% 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.”

Similar to the approach taken with respect to base salary and the annual incentive plan, the Compensation Committee (or the independent members of the Board, in the case of the CEO) determines target annual LTI grant values using a competitive range consisting of the 25^th, 50^th and 75^th percentile of the Compensation Peer Group. The same factors that influence the setting of base salary and annual incentive targets also impact the establishment of the target annual LTI grant values. Additionally, the target LTI grant values may be adjusted based on an assessment of the NEO’s individual performance and future potential.

LTI Grant Structure

Baxter’s annual LTI grants for NEOs in 2021 consisted of 50% PSUs and 50% stock options.

The company also periodically makes off-cycle LTI grants to NEOs for recognition, recruitment and retention purposes and, as discussed above, utilizes LTI grants as a primary vehicle to attract and retain high performing executives. In general, the Compensation Committee views one-time LTI grants and grants not tied to performance as appropriate in limited circumstances and avoids their use to the extent such grants would be inconsistent with the company’s pay-for-performance philosophy.

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  52                 Executive Compensation

2021 Annual LTI Grants

For 2021, the Compensation Committee (or the independent members of the Board, in the case of the CEO) made target annual LTI grants in the form of 50% PSUs and 50% stock options to each NEO as outlined in the table below:

NEO	2021 Target Annual LTI Grant Value1		# of PSUs (50% of Target Annual LTI Grant Value)2		# of Stock Options (50% of Target Annual LTI Grant Value)3
Mr. Almeida		$11,000,000		70,010		348,483
Mr. Saccaro		$2,600,000		16,548		82,369
Mr. Accogli		$3,850,000		24,504		121,969
Mr. Franzi		$2,500,000		15,911		79,201
Mr. Frye4		$2,500,000		15,911		79,201

¹ The grant date for the 2021 annual LTI grants was March 3, 2021.

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, 2023. 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 2021 PSUs differs from the value disclosed in the Summary Compensation Table and Grants of Plan-Based Awards table below, which uses the accounting values including a Monte Carlo valuation for TSR PSUs.

³ The number of stock options is calculated based on a Black-Scholes valuation incorporating the Average Share Price.

⁴ Mr. Frye’s annual LTI grant value excludes his retention PSU grant with a target grant value of $450,000.

2021 Annual PSU Grants. In order to maintain focus on Baxter’s long-range objectives and balance between key internal metrics and performance relative to its industry peers, the 2021 PSU grants have the following three performance metrics and weightings in the table below with the actual payout ranging between 0% and 200% of target for each performance metric depending on actual company performance. The performance period for each performance metric is January 1, 2021 through December 31, 2023.

Performance Metric	Weighting1
Relative TSR against the TSR performance of the companies in the Dow Jones Medical Equipment Index	33-1/3%
Adjusted Net Sales CAGR over three-year performance period2	33-1/3%
Adjusted ROIC over three-year performance period3	33-1/3%

¹ Additional shares that do not round equally are first applied to the Adjusted ROIC PSUs and then to the Adjusted Net Sales CAGR PSUs.

² 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 performance is calculated by taking the Adjusted Net Sales for the last calendar year of the three-year performance period and comparing it against Adjusted Net Sales for the calendar year immediately preceding the grant date.

³ Adjusted ROIC performance is calculated by first determining the annual Adjusted ROIC performance target for each of the three calendar years in the performance period 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.

The performance and payout schedule for 2021 Relative TSR PSUs 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%.

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Similarly, the payout ranges for the PSUs subject to the Adjusted Net Sales CAGR and Adjusted ROIC are outlined below. Payout for performance between the ranges is based on linear interpolation and performance below threshold results in a 0% payout.

Payout Range (Adjusted Net Sales CAGR/Adjusted ROIC)	Payout as a % of Target
Maximum	200% of target
Target	100% of target
Threshold	50% of target
Below Threshold	0% of target

The Compensation Committee sets the financial performance targets for the Adjusted Net Sales CAGR and Adjusted ROIC performance metrics taking into consideration Baxter’s long-range plan. Specific financial targets are not disclosed on a prospective basis. Prospectively disclosing these specific targets would provide competitors and others with insights into the company’s confidential planning processes and strategies and potentially competitively harm the company. The financial performance targets are designed to be challenging and there is a risk the company will not achieve threshold or target performance, resulting in either no shares being awarded or shares being awarded below target.

When dividends are paid on Baxter’s common stock, dividend equivalent units (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.

2021 Annual Stock Option Grants. All stock options granted to NEOs in 2021 vest ratably over a three-year period, starting on the first anniversary of the grant date. The exercise price for all stock option grants equals the closing price of Baxter’s common stock on the grant date.

2019—2021 PSU Performance

In February 2022, the Compensation Committee certified the final results for PSU awards granted to NEOs on February 28, 2019 for the performance period of January 1, 2019—December 31, 2021, which vested on February 10, 2022 (the 2019 PSUs). The chart below details the applicable performance metrics, weightings, targets, certified performance results and payout as a percentage of target. 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 Compensation Committee did not apply any discretion to adjust the final performance achievement for the 2019—2021 PSUs.

Performance Metric	Weighting		Threshold (25% Payout)		Target (100% Payout)		Above Target (150% Payout)		Maximum (200% Payout)		Result		Payout as a % of Target
Relative TSR against the TSR performance of the companies in the Dow Jones Medical Equipment Index1		50%		25th Percent Rank		50th Percent Rank		65th Percent Rank		75th Percent Rank		44th Percent Rank		82%
Annual Adjusted or Further Adjusted Operating Margin		50% (total)
2019 Further Adjusted Operating Margin2		16-2/3%		16.5%		18.3%		—		20.1%		18.5%		111%
2020 Adjusted Operating Margin2		16-2/3%		17.6%		19.6%		—		21.6%		18.0%		39%
2021 Adjusted Operating Margin2		16-2/3%		16.6%		18.4%		—		20.2%		17.9%		82%
		Weighted Payout as a % of Target												80%

¹ The TSR PSUs described in this section are measured for the company and companies in the Dow Jones Medical Equipment Index based on the following formula: average closing stock price over the last twenty consecutive trading days of the performance period end date (December 31, 2021) minus average closing stock price over the last twenty consecutive trading days immediately preceding the commencement of the performance period (January 1, 2019) plus reinvested dividends divided by average closing stock price over the last twenty consecutive trading days immediately preceding the commencement of the performance period.

² For each calendar year, Adjusted Operating Margin is calculated by dividing adjusted operating income by net sales (each calculated at budgeted exchange rates as of January 1^st of such year). Generally, Baxter calculates Adjusted Operating Margin (for purposes of PSU grants) in the same manner that it calculates and publicly discloses its adjusted operating margin performance. For 2019 and 2021, Adjusted Operating Margin was further adjusted by making additional adjustments beyond those included in the company’s disclosed adjusted operating margin performance (Further Adjusted Operating Margin), each as described below. For 2020, no additional adjustments were made beyond the standard adjustments used to calculate Adjusted Operating Margin for guidance and performance purposes.

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Overall, the adjustments impacting operating income (as included in the company’s publicly disclosed results) totaled $348 million for 2019, $481 million for 2020 and $690 million for 2021. These adjustments primarily related to intangible asset amortization, intangible asset impairments, business optimization initiatives, acquisition and integration costs, Sigma Spectrum infusion pump inspection and remediation activities, Hurricane Maria insurance recoveries, insurance proceeds received pursuant to a settlement and cost-sharing agreement for a legacy product-related matter, costs associated with complying with certain European regulations (medical device reporting regulations), investigation and related costs and a litigation matter.

Additional adjustments made for 2019 (for purposes of calculating Further Adjusted Operating Margin) included eliminating $20 million of net sales and operating income related to the acquisition of Doxil. For 2021, (for purposes of calculating Further Adjusted Operating Margin) additional adjustments included eliminating $108 million of net sales and operating income related to the acquisition of the rights to Caelyx and Doxil, the branded versions of liposomal doxorubicin, for specified territories outside of the U.S (Caelyx and Doxil) and eliminating $212 million of net sales and $54 million of operating income related to the acquisition of Hillrom.

GAAP operating income for 2019, 2020 and 2021 was $1.8 billion, $1.6 billion and $1.7 billion, respectively, and adjusted operating income was $2.1 billion (for 2019), $2.1 billion (for 2020) and $2.4 billion (for 2021).

The company set the Adjusted Operating Margin targets for PSUs granted prior to 2020 in the first quarter of each applicable performance year. The 2019 Further Adjusted Operating Margin target was set in February 2019, the 2020 Adjusted Operating Margin target was set in March 2020 and the 2021 Further Adjusted Operating Margin target was set in March 2021. As a result of this methodology, the accounting rules require the applicable number of PSUs to be considered granted at the time the Adjusted Operating Margin target is approved by the Compensation Committee. This results in the accounting value attributable to the 2021 Further Adjusted Operating Margin performance metric for the 2019 PSUs being disclosed in the Stock Awards column of the Summary Compensation Table despite the grant occurring in February 2019. For additional detail regarding the impact of the values disclosed in the Summary Compensation Table, see the section below titled “Additional Compensation Governance—Additional Summary Compensation Table Information”.

Considering the performance disclosed above, the table below illustrates the target number of 2019 PSUs and final number of shares earned for each NEO, including the additional earned shares because of DEUs.

NEO	Target # of PSUs		# of Shares Earned
Mr. Almeida		68,278		56,307
Mr. Saccaro		17,752		14,639
Mr. Accogli		15,021		12,387
Mr. Franzi		10,924		9,008
Mr. Frye		9,559		7,883

Retention PSU Grant

As described above, a primary goal of the executive compensation program is to attract, retain and motivate high-performing executives. Both the CEO and Compensation Committee extensively review talent retention on an on-going basis, including retention of executives with strong performance who are key to the company’s future success.

As a result of this review, Mr. Frye received a grant of PSUs that was approved in September 2020 with a grant date of March 3, 2021 and a target grant value of $450,000. The grant is comprised of 5,000 target PSUs that vest based on the same performance metrics and at the same time as the 2021 annual PSU grants described above.

This one-time retention-based PSU grant will not affect any regular compensation arrangements for Mr. Frye.

2022 Annual LTI Grant Changes

As mentioned above in the “Executive Summary” and highlighted below, beginning with the 2022 annual LTI grant, the equity mix for all NEOs will change to include the addition of RSUs that vest ratably over three years. 25% of the annual equity grant value will be stock options that vest ratably over three years, 25% will be RSUs that vest ratably over three years and the remaining 50% will continue to be PSUs subject to a three-year performance period. This change for 2022 is to align with peer group trends and to balance the focus on reward and retention, while maintaining a strong pay-for-performance correlation by still requiring 50% of the annual equity grant value to be PSUs and retaining stock options as a meaningful portion of the annual grant.

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Equity Type	2021 Annual Equity Grant Mix		2022 Annual Equity Grant Mix
Stock Options		50%		25%
RSUs		—		25%
PSUs		50%		50%

Additionally, beginning with the PSUs for the 2022 annual LTI grant with a 2022-2024 performance cycle, the peer group used to measure Relative TSR performance will change from the Dow Jones Medical Equipment Index to the S&P Healthcare Equipment Index. The S&P Healthcare Equipment Index has a strong stock price correlation to Baxter’s stock price, contains several industry competitors and peer companies in the business of healthcare service, equipment or distribution and maintains a robust sample size.

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 associated with such use, all personal aircraft usage must be pre-approved by the CEO in accordance with the terms of the company’s aircraft policy. The company and Mr. Almeida entered into an Aircraft Time Sharing Agreement in March 2018, whereby Mr. Almeida leases the company’s aircraft on a non-exclusive, time-sharing basis in accordance with the terms of the company’s aircraft policy. Consistent with the company’s practices, the agreement requires him to pay the company for any personal use at a reimbursement rate set by the Federal Aviation Regulations.

Baxter may, from time to time, reimburse business-related travel and other related entertainment and incidental costs for executives and their significant others to attend key sales meetings at which the attendance of a significant other is encouraged. No such reimbursement occurred in 2021. Additionally, NEOs are eligible for reimbursement of executive physical examinations and related health services.

Retirement and Other Benefits

In general, U.S.-based NEOs (Messrs. Almeida, Accogli and Saccaro) are 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 matching contributions up to 3.5% of eligible compensation (100% match on the first 3% of eligible compensation and a 50% match on the next 1%). Additionally, eligible employees hired or rehired after December 31, 2006 who are not eligible for the pension plans described below receive an additional non-elective 401(k) Plan employer contribution equal to 3% of eligible compensation.

Mr. Saccaro is a participant in Baxter’s pension and supplemental pension plans due to his employment with Baxter prior to December 31, 2006. These plans were closed to new participants as of December 31, 2006. Since Mr. Saccaro departed and rejoined the company after this date, he is not eligible to accrue additional benefits in the company’s pension plans. Messrs. Almeida and Accogli are not eligible to participate in Baxter’s pension plans as each NEO was hired by Baxter or transferred to the United States after the plans were closed to new participants in 2006. A more detailed discussion of the pension plans is provided below under “Executive Compensation Tables—2021 Pension Benefits.”

Additionally, U.S.-based NEOs (Messrs. Almeida, Accogli and Saccaro) are 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 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—2021 Nonqualified Deferred Compensation.”

Mr. Franzi participates in a Swiss Baxter-sponsored defined contribution retirement plan, into which Baxter makes contributions based on the employee’s age. Mr. Frye is provided a monthly allowance in lieu of Baxter contributions to Singapore’s social security fund.

Employment Arrangements, Executive Severance Plan and Change in Control Agreements

In March 2020, Mr. Almeida entered into an amended offer letter governing the terms and conditions of his employment. Under the terms of his amended offer letter, Mr. Almeida is 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 is terminated by Baxter other than for cause or by Mr. Almeida for good reason before December 31, 2023.

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Mr. Franzi entered into an employment contract, dated as of June 8, 2017, governing the terms and conditions of his employment. Under the contract, Mr. Franzi is entitled to receive 18 months’ base salary and target annual incentive as severance, reduced by any severance benefit payable under any applicable Baxter plan, including his change in control agreement (as discussed below), in the event that his employment with Baxter is terminated by Baxter other than for breach of law, regulation or Baxter policy.

Mr. Frye entered into an employment agreement, dated as of June 10, 2019, governing the terms and conditions of his employment. Under the agreement, Mr. Frye is entitled to receive 18 months’ base salary and target annual incentive as severance, reduced by any severance benefit payable under any applicable Baxter plan, including his change in control agreement (as discussed below), in the event that his employment with Baxter is terminated by Baxter other than for disability, gross misconduct, negligence, breach of law or a serious breach of the employment agreement.

The company maintains an executive severance plan for all U.S.-based executives (other than the CEO) (Executive Severance Plan), including Messrs. Accogli and Saccaro. Mr. Almeida is excluded since he is covered under the terms and conditions of his amended offer letter. Generally, the Executive Severance Plan provides for certain severance benefits upon an involuntary termination for any reason other than due to death, disability, or for cause equal to 1.5 times the sum of the NEO’s annual base salary and target annual incentive as well as a payment for health and welfare coverage and reimbursement for outplacement services. If within twelve 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.

Additionally, each NEO is 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.”

Additional Compensation Governance

Risk Assessment of Compensation Policies and Practices

With the assistance of the Compensation Committee’s independent compensation consultant, the Compensation 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 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 Executive Compensation Recoupment Policy 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. 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. Each of the other NEOs 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.

Neither unvested PSUs for which actual company performance has not been certified, nor unvested or vested stock options (or any portions thereof) count towards meeting the stock ownership guidelines.

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As of December 31, 2021, Messrs. Almeida, Accogli, Franzi and Saccaro have met their ownership requirements and Mr. Frye is still within the five-year phase-in period. This requirement, like the Executive 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

Pursuant to Baxter’s securities trading policy, all company employees (regardless of role or title), directors, consultants, contract workers and temporary staff worldwide, 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” swap 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 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, Assistant Corporate Secretary or General Counsel.

Executive Compensation Recoupment Policy; Non-Competition Agreement Clawback

Baxter has an Executive Compensation Recoupment Policy that applies to all payments under its incentive plans as well as all LTI grants to all executives, including the NEOs. Following any restatement of the company’s financial results or if an executive violates a restrictive covenant contained in any agreement, the Board will review the facts and circumstances that led to the requirement for the restatement or the violation, as applicable, and take any actions it deems appropriate under the recoupment policy. With respect to a restatement, the Board will consider, among other things, whether the executive received compensation based on performance reported, but not actually achieved. Actions the Board may take include 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. Baxter intends to disclose the aggregate amount of incentive compensation recovered under this policy, so long as the underlying event has already been publicly disclosed by the company. The company made no such recoupments under the policy in 2021.

Additionally, all LTI participants eligible for PSUs, including the NEOs, are required to execute updated non-competition, non-solicitation and confidentiality agreements (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 such violation, all unvested LTI grants (including grants that would otherwise have vested if the participant were retirement eligible) are immediately forfeited. Additionally, 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 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.

Federal Income Tax Considerations

The Compensation Committee structures Baxter’s compensation program to attract, retain and motivate executives in a manner that serves the long-term interests of the company’s stockholders. In determining executive compensation, the Committee takes into account a variety of considerations, as well as tax and accounting consequences, including that Section 162(m) of the Code limits the

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company’s deductibility of compensation (including performance-based compensation) in excess of $1 million paid to certain NEOs in any calendar year.

Additional Summary Compensation Table Information

In 2020, Baxter revised its PSU metrics from two performance metrics, one with a three-year performance period (Relative TSR) and one with three one-year performance periods (Adjusted or Further Adjusted Operating Margin) to three performance metrics, all with three-year performance periods (Relative TSR, Adjusted ROIC and Adjusted Net Sales CAGR). Given these changes and the underlying accounting rules associated with the PSU grants, the “Stock Awards” column in the Summary Compensation Table for 2021 includes the following:

• The accounting grant date fair value related to PSUs granted in 2019 subject to the Further Adjusted Operating Margin target approved in March 2021.

• The accounting grant date fair value of all PSUs granted in 2021.

The table below outlines the reported accounting grant date fair value in the “Stock Awards” column of the Summary Compensation Table, the accounting grant date fair value attributable to the 2021 Further Adjusted Operating Margin performance metric for the 2019 PSU grant, the 2021 PSU grants and a revised Total compensation excluding the accounting grant date fair value attributable to the 2019 PSU grant. The table below is not a substitute for the information required by the 2021 Summary Compensation Table, which appears on page 59.

NEO	Value Disclosed in the Stock Awards Column of the Summary Compensation Table			Value Attributable to 2019 PSUs reported in the Stock Awards Column of the Summary Compensation Table			Value Attributable to 2021 PSUs reported in the Stock Awards Column of the Summary Compensation Table			Revised Total Compensation in the Summary Compensation Table (excluding 2019 PSUs)
Mr. Almeida		$	6,476,195		$	877,967		$	5,598,228		$	14,756,767
Mr. Saccaro		$	1,551,519		$	228,287		$	1,323,232		$	4,230,228
Mr. Accogli		$	2,152,605		$	193,184		$	1,959,421		$	5,646,856
Mr. Franzi		$	1,412,782		$	140,490		$	1,272,292		$	4,266,876
Mr. Frye		$	1,795,080		$	122,977		$	1,672,103		$	4,585,622

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Executive Compensation Tables

2021 Summary Compensation Table

The following table shows compensation provided to the NEOs for the years indicated below.

Name and Principal Position	Year1		Salary ($)2		Bonus ($)		Stock Awards ($)3		Option Awards ($)4		Non-Equity Incentive Plan Compensation ($)5		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)6		All Other Compensation ($)7		Total
José E. Almeida Chairman of the Board, President and Chief Executive Officer		2021		1,300,000		—		6,476,195		5,443,374		2,364,863		—		50,302		15,634,734
		2020		1,300,000		—		8,374,122		6,120,424		—		—		70,850		15,865,396
		2019		1,300,000		—		6,648,082		5,146,807		690,750		—		128,182		13,913,821
James K. Saccaro Executive Vice President and Chief Financial Officer		2021		757,142		—		1,551,519		1,286,620		797,052