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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

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West Pharmaceutical Services, Inc.

(Name of Registrant as Specified In Its Charter)

 

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CEO Letter

Dear Shareholders,

At West, our mission is to improve patient lives. We do this through the products we offer to our customers—the world's leading pharmaceutical and biotechnology companies. However, supporting patient health means more to us than simply delivering products to the market, especially at this time across the globe as we deal with the COVID-19 pandemic.

Our team of more than 8,000 people across the globe knows that behind every product we make, is a patient for whom that product helps deliver life-saving medicines or treatments. This patient-first focus drives our team to pursue excellence in the quality of everything we produce, to serve as scientific and technical experts in our field, and to operate with integrity every day. As a result, our customers continue to seek West as a supplier of choice, and in 2019, our team's work resulted in another year of strong growth for our business.

We launched several new products to address the unique needs of our biologic, generic and pharmaceutical customers. With more than 150 patents issued to West in 2019 alone, we know we are making good progress to develop and deliver the next generation of packaging and drug delivery advancements that will drive our future growth. Our scientific and regulatory teams supported our customers throughout the year, by delivering more than 100 technical conference presentations, peer-reviewed articles and book chapters. Operating with the highest levels of quality, safety and service is a key priority for our teams across our global enterprise. We created greater efficiency by further optimizing our manufacturing footprint this past year, and we maintained the industry-leading quality levels for which we are known, while improving the safety record for our teams.

In 2019, we were proud to be recognized for our commitment to the communities in which we live and work. As will be further detailed in our 2019 Corporate Responsibility ("CR") Report (to be published later this year) we have made significant improvements across the six pillars of our CR strategy: Compliance and Ethics; Philanthropy; Health and Safety; Diversity and Talent; Environmental Sustainability; and Quality. Our team's success in these areas was noted by Newsweek, which named West to its America's Most Responsible Companies 2020 list, as well as by Investor's Business Daily, which named West one of its 50 Best ESG (Environmental, Social and Governance) Companies.

Our Board of Directors, led by Chair Patrick Zenner, is integrally engaged in our work to continually refine our strategy and in overseeing how we manage our risks. We are fortunate to have a board diverse in thought, experience and background, to help guide us. As in years past, we have worked to ensure the performance of our team is reflected in their compensation and awards framework and is aligned with the business results we have delivered. The detailed pay-for-performance plans of our executives, which in the past have received more than 97 percent support from you, our shareholders, are detailed in this Proxy Statement.

As we look to the future, we feel confident that we are well-positioned to continue to grow our business, by expanding the products and services we provide to customers, while operating with greater efficiency and embracing technology and digital advances. All of this will result in our ability to more effectively and sustainably fulfill our mission to improve patient lives as we stand by your side during these difficult times. On behalf of West, please stay safe and well.

Thank you for your continued support of West.

GRAPHIC

Eric M. Green
President & Chief Executive Officer


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West Pharmaceutical Services, Inc.
Notice of 2020 Annual Meeting

530 Herman O. West Drive
Exton, Pennsylvania 19341

March 25, 2020

It is expected that the 2020 Annual Meeting of Shareholders of West Pharmaceutical Services, Inc. will be held at our corporate headquarters on:

    Tuesday, May 5, 2020
    9:30 AM, local time
    530 Herman O. West Drive
    Exton, Pennsylvania 19341

With the global COVID-19 pandemic, and in light of current restrictions on travel and gatherings around the globe, including in the area surrounding our headquarters in Exton as of the date of this letter, West is monitoring whether the 2020 Annual Meeting will be held in person or whether we will use an alternate means of participation in the Meeting. Changes may include a change to the the date, time or venue of the meeting and/or holding a virtual meeting in accordance with Pennsylvania law. Given the fluidity of the situation, we will make a decision to change the closer to the date of the Annual Meeting. The Securities Exchange Commission ("SEC") has announced guidance permitting these changes, as long as they are announced via a press release and publicly filed with the SEC. If West decides to hold a virtual meeting, additional details will be timely provided to enable shareholder participation.

The items of business are:

    1.
    Election of nominees named in the Proxy Statement as directors, each for a term of one year or until their successor is appointed or elected.

    2.
    Consideration of an advisory vote to approve Named Executive Officer compensation.

    3.
    A proposed amendment of Article 5 of our Amended and Restated Articles of Incorporation to increase the number of shares of common stock that West is authorized to issue from 100 million to 200 million.

    4.
    Ratification of the appointment of PricewaterhouseCoopers LLP ("PwC") as our independent registered public accounting firm for 2020.

    5.
    Transaction of other business as may properly come before the meeting and any adjournments or postponements thereof.

Shareholders of record of West common stock at the close of business on March 10, 2020 are entitled to notice of, and to vote at, the meeting and any postponements or adjournments thereof.

    George L. Miller
    Sr. Vice President, General Counsel
and Corporate Secretary

Important Notice Regarding the Internet Availability of Proxy Materials for the Shareholder Meeting on May 5, 2020

This Notice of Annual Meeting and Proxy Statement ("Notice") and the 2019 Annual Report on Form 10-K ("2019 Annual Report") are available on our website at:

investor.westpharma.com/financial-information/annual-reports-and-proxy

Your Vote is Important

Please vote as promptly as possible electronically via the Internet or by completing, signing, dating and returning the proxy card or voting instruction card.


Table of Contents

Table of Contents

Proxy Summary

  1

Election of Directors

  6

Director Nominations, Skills and Criteria

  6

Board Commitment to Diversity and Inclusion

  7

Board Refreshment and Retirement Age

  8

Board Evaluation Process

  8

Proposal 1—Election of Directors

  9

Director Nominee Biographies

  9

Board and Director Information and Policies

  15

Board Leadership Structure

  15

Chair of the Board of Directors

  15

Committees

  16

The Board's Role in Risk Oversight

  18

Executive Officer Succession Planning

  19

CEO Evaluation Process

  19

Corporate Responsibility

  20

2019 Shareholder Outreach

  20

Communicating with the Board

  21

Director Education and Onboarding

  21

Corporate Governance Documents and Polices

  22

Corporate Governance Principles

  22

Ethics and Code of Business Conduct

  22

Director Independence

  23

Related Person Transactions and Procedures

  23

Political Contributions and Lobbying

  23

Anti-Hedging and Pledging Policies

  23

Share Ownership Goals

  24

Stock Ownership

  25

Director Compensation

  27

2019 Non-Employee Director Compensation

  27

Outstanding Director Stock Awards at Year-End 2019

  28

Director Deferred Compensation Plan at Year-End 2019

  29

Compensation Committee Report

  30

Compensation Discussion and Analysis

  31

Executive Summary: 2019 Performance at a Glance

  31

Governance and Compensation

  32

Say-on-Pay

  33

Executive Compensation Program Design

  34

Factors Used in the Compensation Process

  36

Business Segment Group

  37

Impact of Business Results on our 2019 Incentive Plans

  38

Incentive Compensation: Important Facts about Our Incentive Targets

  39

Our Annual Incentive Compensation

  40

Financial Measures and Adjustments

  42

Our Long-Term Equity Incentive Compensation

  42

2019 Compensation Decisions

  44

Other Compensation Practices

  49

Compensation Tables

  51

2019 Summary Compensation Table

  51

2019 Grant of Plan-Based Awards Table

  55

Outstanding Equity Awards at Year-End 2019

  56

2019 Option Exercises and Stock Vested Table

  58

2019 Pension Benefits Table

  60

2019 Nonqualified Deferred Compensation Table

  61

Payments on Disability

  61

Payments on Death

  62

Estimated Payments Following Termination

  62

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PROXY SUMMARY     GRAPHIC

Proxy Summary

Below is a summary of important information you will find in this Proxy Statement. This summary does not contain all the information that you should consider, and you should read the entire Proxy Statement carefully before voting.

Summary of Shareholder Voting Matters

Our Board of Directors is soliciting your vote on matters that will be presented at our 2020 Annual Meeting of Shareholders and at any adjournment or postponement thereof. This Proxy Statement contains information to assist you in voting your shares.

The Notice, the accompanying proxy card or voting instruction card and our 2019 Annual Report, including our annual report wrap, are being mailed starting on or about March 25, 2020.

                Recommended  
    Proposal 1: Election of Directors   Page 9     FOR    

 

 

Mark A. Buthman

 

Deborah L. V. Keller

 

 

 

Each Nominee

 

 
    William F. Feehery   Myla P. Lai-Goldman                
    Robert F. Friel   Douglas A. Michels                
    Eric M. Green   Paolo Pucci                
    Thomas W. Hofmann   Patrick J. Zenner                
    Paula A. Johnson                    
    Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation   Page 66     FOR    
    Proposal 3: Approval of Amendment to our Amended and Restated Articles of Incorporation to Increase the Number of Authorized Shares of Common Stock from 100 Million to 200 Million   Page 67     FOR    
    Proposal 4: Ratification of the Appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for 2020   Page 71     FOR    

2019 Business Highlights

Our strategy to globalize our operations and address the unique needs of the distinct customer groups we serve with a market-led focus, has delivered another strong year of growth for the Company. Some of the trends we are seeing in the pharmaceutical and biotech industry are driving our business today, and will fuel our long-term growth strategy, including the following:

    Biotechnology has emerged as one of the most promising sources of therapies and products for patient care, leading to a rise in Food and Drug Administration ("FDA") approved drugs derived from biologics.

    Research has demonstrated that in certain circumstances subcutaneous administration can be as effective as intravenous administration, while significantly reducing infusion-related reactions and administration time.

    Self-administration is driving key industry developments, most notably the rise of combination products that place easy-to-use delivery systems in the hands of individual patients.

    The regulatory landscape is evolving, particularly related to combination products. Both the FDA and the European Union have introduced updated guidance on how such products are reviewed and approved for sale, and the quality and regulatory documentation that is required.

Each year, we have seen growing interest and demand for our high-value product offerings, delivery device platforms and our contract-manufacturing services. Customers are also coming to West for our scientific expertise and insight into the regulatory landscape that governs our industry. This demand has translated into positive results for the business. In 2019, we reported:

2020 Annual Meeting and Proxy Statement   |   1


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GRAPHIC      PROXY SUMMARY

    Full-year 2019 net sales of $1.840 billion grew 7.1%; organic sales growth was 10.0%; sales from a recent acquisition contributed an additional 10 basis points of growth; currency translation reduced sales by 300 basis points.

    Full-year 2019 reported-diluted Earnings-per-Share ("EPS") of $3.21 increased 17%. Full-year 2019 adjusted-diluted EPS of $3.24 increased 15%.

    Full-year 2019 gross profit margin was 32.9%, a 110-basis point increase from the prior year. The Proprietary Products segment gross profit margin expanded by 150 basis points, and Contract-Manufactured Products segment gross profit margin increased by 10 basis points.

    Full-year 2019 operating cash flow was $367.2 million, an increase of 27%. Capital expenditures were $126.4 million, compared to $104.7 million over the same period last year, and represented 6.9% of full-year 2019 net sales. Free cash flow (operating cash flow minus capital expenditures) was $240.8 million, an increase of over 30%.

Please refer to our Earnings Release filed on February 13, 2020 on Form 8-K for a full reconciliation of our reported results to the adjusted (non-U.S. GAAP) financial measures referred to above.

Long-Term Shareholder Return

Examining our results over the past five years, West has consistently delivered against its objectives, posting long-term sales growth and steady EPS improvements. The Company has also outperformed both our peers and the market overall in Total Shareholder Return ("TSR") during this same period.

GRAPHIC

(1)
Based on 2019 Consolidated Net Sales.

(2)
Please refer to our Forms 8-K report dated February 13, 2020 and January 9, 2019 for the reconciliation of non-U.S. GAAP financial matters.

(3)
Source: NASDAQ IR Insight.

Certain forward-looking statements are included in this Proxy Statement. They use such words as "will," "continue," "estimate," "expect," "looking to the future," and other similar terminology. These statements reflect Management's current expectations regarding future events and operating performance and speak only as of the date of this document. These statements are based on Management's beliefs and assumptions, current expectations, estimates, and forecasts. There are many factors that can influence the Company's future results that are beyond the ability of the Company to control or predict. Because of these known or unknown risks or uncertainties, actual results could differ materially from past results and those expressed or implied in any forward-looking statement. For a description of factors that could cause the Company's future results to differ from those expressed in any such forward-looking statements, see Item 1A, entitled "Risk Factors," in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and as revised or supplemented by our quarterly reports on Form 10-Q or Form 8-K. Except as required by law or regulation, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

2   |   2020 Annual Meeting and Proxy Statement


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PROXY SUMMARY     GRAPHIC

Our Director Nominees

You are being asked to vote on the directors nominated below. All directors are elected annually by a majority of votes cast, except in the case of a contested election where the number of nominees exceeds the number of open positions, in which case plurality voting is used. The charts below summarize some key characteristics of the members of our Board of Directors. All data is as of March 25, 2020. Detailed information about each director's background and areas of expertise can be found beginning on page 9.

    NAME   AGE   DIRECTOR
SINCE

 
PRIMARY
OCCUPATION

 
CURRENT
COMMITTEE
MEMBERSHIP


 
EXPERIENCE &
EXPERTISE

 
INDEPENDENT  
    Mark A. Buthman   59   2011   Retired EVP & CFO,
Kimberly-Clark
  Compensation, Nominating & Corp
Governance, Finance
  GRAPHIC GRAPHIC   GRAPHIC    
    William F. Feehery   49   2012   CEO, Certara   Compensation, Audit, Nominating & Corp
Governance (Chair)
  GRAPHIC GRAPHIC GRAPHIC GRAPHIC GRAPHIC   GRAPHIC    
    Robert F. Friel   64   2020   Retired CEO and Chair,
PerkinElmer, Inc.
  Audit, Finance   GRAPHIC GRAPHIC GRAPHIC GRAPHIC GRAPHIC GRAPHIC GRAPHIC   GRAPHIC    
    Eric M. Green   50   2015   President & CEO,
West Pharmaceutical
Services, Inc.
      GRAPHIC GRAPHIC GRAPHIC GRAPHIC GRAPHIC GRAPHIC        
    Thomas W. Hofmann   68   2007   Retired Sr. VP & CFO,
Sunoco, Inc.
  Compensation, Audit (Chair)   GRAPHIC GRAPHIC   GRAPHIC    
    Paula A. Johnson   60   2005   President,
Wellesley College
  Innovation &
Technology, Nominating & Corp
Governance
  GRAPHIC GRAPHIC GRAPHIC   GRAPHIC    
    Deborah L. V. Keller   57   2017   Principal, Black Frame
Advisors, LLC & Retired CEO,
Covance Drug Development
  Innovation & Technology, Audit, Finance   GRAPHIC GRAPHIC GRAPHIC GRAPHIC GRAPHIC GRAPHIC   GRAPHIC    
    Myla P. Lai-Goldman   62   2014   Executive Chair
GeneCentric Therapeutics, Inc.
  Innovation & Technology (Chair), Finance   GRAPHIC GRAPHIC GRAPHIC GRAPHIC   GRAPHIC    
    Douglas A. Michels   63   2011   Retired President & CEO, OraSure
Technologies, Inc.
  Compensation (Chair), Audit   GRAPHIC GRAPHIC GRAPHIC GRAPHIC   GRAPHIC    
    Paolo Pucci   58   2016   Retired CEO, ArQule, Inc.   Innovation & Technology, Finance (Chair)   GRAPHIC GRAPHIC GRAPHIC GRAPHIC GRAPHIC GRAPHIC   GRAPHIC    
    Patrick J. Zenner   73   2002   Chair, West Pharmaceutical Services;
Retired Pres. & CEO,
Hoffmann-La Roche Inc.
  Nominating & Corp Governance   GRAPHIC GRAPHIC GRAPHIC GRAPHIC GRAPHIC   GRAPHIC    
GRAPHIC   Financial   GRAPHIC   Healthcare
Industry
  GRAPHIC   International
Experience
  GRAPHIC   Global
Operations/
Supply Chain
  GRAPHIC   Science &
Technology
  GRAPHIC   Marketing   GRAPHIC   Mergers &
Acquisitions
  GRAPHIC   Regulatory

2020 Annual Meeting and Proxy Statement   |   3


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GRAPHIC      PROXY SUMMARY

2019 Corporate Governance Highlights

    Corporate Governance Features

  GRAPHIC
    Annual director elections with majority voting in uncontested elections  

 

 

Active shareholder engagement program on corporate governance and compensation matters

 

 

 

 

Significant risk management oversight by the Board, including an enhanced enterprise risk management process

 


 

 

Board is led by an Independent Non-Employee Chair

 

 

 

 

Board Commitment to Corporate Responsibility ("CR"), including Compliance and Ethics, Philanthropy, Diversity and Inclusion, Health and Safety, Environmental Sustainability and Quality

 


 

 

Five new directors appointed within past six years

 

 

 

 

Effective self-assessment and evaluation procedures that include individual interviews with Board members

 


 

 

Annual evaluation of all directors to ensure the right mix of experience and diversity of opinion and background

 

 

 

 

Robust executive officer and Board succession planning




 

 

Robust curriculum of topics regularly presented to the Board to aid in their understanding of our business, the markets in which we operate and the Board's responsibilities in respect of all our stakeholders

 

 

 

 

Maintain and enforce effective executive and board stock ownership guidelines

 


 

 

Prohibition on pledging or hedging of securities by members of the Board and executive officers

 

 


    Board Governance Activities and Accomplishments

    Approved and monitored Management's enterprise strategy


 

 

Reviewed performance of Chief Executive Officer ("CEO") against pre-established goals and strategy

 

 

 

 

Oversaw Management's human resources strategy to create a pipeline of talent to ensure the continuance of first-rate teams

 


 

 

Implementation of enhanced Enterprise Risk Management Program

 

 

 

 

Reviewed the Company's capital allocation strategy, increasing the annual dividend and continuing our strategic share buyback program

 


 

 

Oversaw significant improvements in safety and quality

 

 

 

 

Multiple awards and international recognition of our CR, philanthropic and sustainability efforts

 


 

 

Oversaw efforts to further drive a culture of diversity and inclusivity, with Company-wide training efforts, and the initiation of two new employee resource groups

 

 

 

 

All directors attended more than 88% of the combined total of Board and Committee meetings in 2019

 


 

 

All directors received greater than 99.4% support from shareholders in 2019

 

 

4   |   2020 Annual Meeting and Proxy Statement


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PROXY SUMMARY     GRAPHIC

2019 Executive Compensation Highlights

    Executive Compensation Program Features

    Strong linkage between pay and performance and support by shareholders regarding our performance metrics, targets and goals as evidenced by 97.9% shareholder approval annually of our executive compensation  

 

 

Total direct compensation ("TDC"), which is the sum of an officer's base salary, short-term incentive target and long-term incentive target, targeted at the median level by our Compensation Committee

 

 

 

 

Annual incentive plan ("AIP") based on EPS, net sales and Operating Cash Flow ("OCF") targets to drive shareholder value in day-to-day decision making

 


 

 

Long-term incentive ("LTI") plan utilizing stock options and performance share units based upon return on invested capital ("ROIC") and sales consolidated annual growth rate ("CAGR") to ensure long-term profitable growth and alignment with shareholders' interests

 

 

 

 

Usage of two comparator groups to ensure pay and performance are aligned, and enable us to attract and retain the best talent

 


 

 

Robust share ownership guidelines for all officers and directors

 

 

 

 

All Change-in-Control ("CIC") agreements for our current officers contain double-trigger provisions requiring termination of the executive following a CIC before payments are made. These payments also will be reduced if they exceed excise tax threshold.

 


 

 

Strong incentive compensation recovery (clawback) and anti-hedging and anti-pledging policies

 

 

 

 

Use of tally sheets, realizable pay analysis, performance metric difficulty analysis and similar tools to ensure our compensation programs remain linked to performance and consistent with Board expectations

 


 

 

Engagement with shareholders during the year regarding executive pay and performance issues

 

 


    Executive Compensation Actions and Results

    Reaffirmed West's compensation philosophy of pay-for-performance that aligns executives' incentive compensation with our performance and with stakeholder interests on both a short- and long-term basis without promoting excessive risk  

 

 

Reviewed and reaffirmed the Company's compensation programs to ensure strong alignment and line of sight to our business objectives and assigned all Corporate Officers to the Corporate AIP pool to drive overall performance and alignment to our "One West" value

 

 

 

 

Conducted broad independent review of the Company's overall executive compensation philosophy, program design and function to ensure alignment with and support of West's priorities and needs

 


 

 

Conducted formal: (1) pay-for-performance review of CEO compensation versus peers, and (2) realizable pay analysis, to assess whether Company performance and CEO realizable pay are aligned over a given period

 

 

 

 

Our 2019 AIP for corporate executives paid at 123.8% based on performance levels of 107.2% for EPS, 103.0% for Net Sales and 111.2% for OCF

 


 

 

Our LTI plan Performance Share Units ("PSUs") for the 2017-19 period paid out at 82.61% based on 84.9% performance (6.88%) for CAGR and 94.3% performance for ROIC (12.63%)

 

 

2020 Annual Meeting and Proxy Statement   |   5


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GRAPHIC      ELECTION OF DIRECTORS

Election of Directors

Director Nominations, Skills and Criteria

Candidates for nomination to our Board are recommended by the Nominating and Corporate Governance Committee ("NCGC") in accordance with the Committee's charter, our Amended and Restated Articles of Incorporation, our Bylaws and our Corporate Governance Principles. All persons recommended for nomination to our Board, regardless of the source of the recommendation, are evaluated by this Committee with the Board determining the final slate of nominees.

The Board and the NCGC consider, at a minimum, the following factors in recommending potential new Board members or the continued service of existing members:

    A director is nominated based on his or her professional experience. A director's traits, expertise and experience add to the skill-set of the Board as a whole and provide value in areas needed for the Board to operate effectively.

    A director must have high standards of integrity and commitment, and exhibit independence of judgment, a willingness to ask hard questions of Management and the ability to work well with others.

    A director should be willing and able to devote enough time to the affairs of the Company and be free of any disabling conflict.

    All the non-employee directors should be "independent" as outlined in our independence determination standards ("Independence Standards").

    A director should exhibit confidence and a willingness to express ideas and engage in constructive discussion with other Board members, Management and relevant persons.

    A director should actively participate in the decision-making process, be willing to make difficult decisions, and demonstrate diligence and faithfulness in attending Board and Committee meetings.

    The Board generally seeks active or former senior executives of public companies, particularly those with international operations, leaders in healthcare or public health fields, with science or technology backgrounds, and individuals with financial expertise.

When reviewing nominees, the NCGC considers whether the candidate possesses the qualifications, experience and skills it considers appropriate in the context of the Board's overall composition and needs. The NCGC also values diversity on the Board in the director nominee identification and nomination process.

To assist it with its evaluation of the director nominees for election at the 2020 Annual Meeting, the NCGC considered the factors listed above and used a skills matrix highlighting the experience of our directors in areas such as industry experience, international experience (including assignments overseas), global operations or supply chain leadership, financial literacy, and independence. We routinely evaluate the skills needed and have added skills relating to marketing (including e-commerce), mergers and acquisitions, regulatory and cyber/digital experience, in recent years.

The NCGC also reviews annually with the Board the size and composition of the Board and its committees to determine the qualifications and areas of expertise needed to further enhance the composition of the Board. In determining whether to add new directors, we review our skills matrix annually to determine the targeted skills that we believe will most significantly enhance the diversity of experience and expertise on our Board. We balance the current skill sets versus the desired optimal mix of skill sets given their relative importance to the Company.

West's mission is to improve patient lives by being the world leader in integrated containment and delivery of injectable medicines, which rests on our foundation values of: Passion for Customers, Leadership in Quality and One West Team. The pillars of our strategy are:

    Customer Experience—Understand and engage our customers to deliver value

    Operational Effectiveness—Organizational focus and alignment to support business growth

    Product and Service Expansion—Develop new products and services to address unmet market need

    People and Culture—Foster a culture that engages our team and drives performance

6   |   2020 Annual Meeting and Proxy Statement


Table of Contents

ELECTION OF DIRECTORS     GRAPHIC

    Financial Goals—Disciplined cost management and plan execution that will result in sales growth, profit margin improvement, increased return on invested capital and increased free cash flow

Board members are expected to oversee and support Management in driving success in our current strategic plans by focusing on following five imperatives that will enable us to prioritize and drive efforts across the strategic pillars:

    Continuing to be a market-led organization with enhanced commercial effectiveness

    Innovating new product offerings

    Optimizing operations and supply chain networks, including automation enablement

    Accelerating digitization to drive performance

    Building and supporting our global team, including enhanced efforts regarding diversity and inclusion

Under the heading "Director Nominee Biographies," we provide an overview of each nominee's principal occupation, business experience and other directorships of publicly-traded companies, together with the qualifications, experience, key attributes and skills the Committee and the Board believe will best serve the interests of the Board, the Company and our shareholders.

Shareholders who wish to recommend or nominate director candidates must provide information about themselves and their candidates and comply with procedures and timelines contained in our Bylaws. These procedures are described under "2021 Shareholder Proposals or Nominations" in this Proxy Statement.

Board Commitment to Diversity and Inclusion

Board diversity and inclusion is critical to the success of West. The Board is committed to ensuring its membership has sufficient diversity of experience, skills and personal characteristics to support the long-term success of the Company. As presently constituted, the Board represents a deliberate mix of members who have a deep understanding of our business as well as members who have different skill sets and points of view. As noted above, our nomination process and our Board's approach to assessment and evaluation of our nominees support this diversity and inclusion commitment.

Our Corporate Governance Principles include a statement regarding the importance of Board diversity and inclusion to ensure that the director nomination process considers a diverse mix of background, age, gender, sexual orientation, as well as cultural and ethnic composition. Additionally, the NCGC's evaluation of director nominees includes consideration of their ability to contribute to the diversity of personal and professional experiences, opinions, perspectives and backgrounds on the Board. The Board continually assesses the size and the mix of experiences and backgrounds of the Board members, including the Board's gender, ethnic, and racial composition.

We are particularly proud of our leadership in female representation on the Board. Thirty percent of our independent directors (27% of all directors) are women. Several of our Board members participate in diversity in leadership programs and others are high-profile speakers on issues of diversity and inclusion.

Our Board has overseen efforts by the Company to increase diversity and inclusion among its employee base. Mr. Green's annual objectives include diversity and inclusion as a key metric, and we have also added new positions responsible for diversity. The Board believes this approach enables us to attract and retain diverse high-quality talent. This has culminated in a diversity mission statement contained in our CR Report which is available at www.westpharma.com/about-west/corporate-responsibility. As part of our diversity mission, we have trained employees at all levels on the importance of diversity and inclusion, introduced affinity groups, accelerated efforts in minority recruiting and modified our culture to increase flexibility and mentoring, which we believe facilitates diversity and inclusion.

The Board has increased its oversight of Management in the area of creating an ethical and sustainable corporate culture, including periodic director education sessions that include culture and engagement topics. The Board firmly believes that it plays a key role in the oversight of West's culture and in holding Management accountable for the creation and stewardship of that culture. Additionally, the Board believes an engaged and empowered workforce contributes significantly to the creation of shareholder value.

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GRAPHIC      ELECTION OF DIRECTORS

Board Refreshment and Retirement Age

We review our Board refreshment practices and retirement age annually and continue to monitor broad governance trends in this area. The Board has considered but does not have term limits on the service of our directors, because it believes that term limits may lead to the loss of valuable director insight into our business and operations that is enhanced with continuity.

The Board believes that a diverse mix of long-tenured and new Board members provides a good and appropriate balance of experience to enhance shareholder value. The Board believes that directors provide meaningful, independent oversight and advice at any age. Our Corporate Governance Principles include a mandatory retirement age of 75. This means that a non-employee director must retire on the date of the Annual Meeting of Shareholders immediately following his or her 75th birthday.

An employee director must submit his or her resignation upon the date he or she ceases to be an executive officer of the Company.

Board Evaluation Process

Each year the Board and each of its committees review their performance during executive sessions. This review centers around questions directors are asked to contemplate regarding their individual performance and the performance of the Board/Committee. These questions include topics such as contributions made to Board deliberations, the relationship between members, quality of the materials provided, the relationship with Management, contributions to key functions/responsibilities of the Board, and topics that they would like to see added or deleted to meeting agendas.

Additionally, the NCGC assesses the evaluation process annually and adjusts the process when desirable improvements are identified. The NCGC reviews several matters, including the issues to focus on in the evaluation and the form and manner of assessment. The NCGC periodically re-assesses its position on self-evaluation.

Members of the NCGC reach out to each director individually to discuss performance and any concerns and relay them to the Board using an interview template approved by the NCGC. This process assists the full Board with obtaining different perspectives, encourages the collection of candid information and ensures a high level of engagement.

The Board believes this evaluation system, coupled with our strong Chair of the Board and open-door policy, which encourages sharing of ideas among all directors, makes for a robust process that ensures the Board's effectiveness.

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DIRECTOR NOMINEE BIOGRAPHIES     GRAPHIC

Proposal 1 — Election of Directors

Our shareholders are asked to consider 11 nominees for election to our Board to serve for a one-year term until the 2021 Annual Meeting of Shareholders, or until their successors, if any, are elected or appointed, or their earlier death, resignation, retirement, disqualification or removal. The names of the nominees for director, their current positions and offices, tenure as a Company director, their qualifications and other characteristics are set forth in the biographies below. The table below also lists each nominee's current Board committees.

All the nominees are current Company directors and all non-employee directors have been determined by our Board to be independent. Our NCGC reviewed the qualifications of each of the nominees, finding each nominee to possess the required attributes and all nominees collectively to strike the appropriate balance of diversity of knowledge, age, skills, expertise, gender and race, and recommended to our Board that each nominee be submitted to a vote of our shareholders at the Annual Meeting. The Board approved the Committee's recommendation at its meeting on February 18, 2020.

Each of the nominees has agreed to be named and to serve, and we expect each nominee to be able to serve if elected. If any nominee is unable to serve, the NCGC will recommend to our Board a replacement nominee. The Board may then designate the replacement nominee to stand for election. If you voted for the unavailable nominee, your vote will be cast for his or her replacement.

Director Nominee Biographies

Mark A. Buthman

GRAPHIC

Age: 59
Director since 2011

Committees:
Compensation
Finance
Nominating & Corp. Gov.

 

Mr. Buthman retired from Kimberly-Clark Corporation—a global producer of branded products for the consumer, professional and healthcare markets—in December 2015, where he was Executive Vice President and Chief Financial Officer from January 2003 to April 2015. During his 33-year career at Kimberly-Clark, Mr. Buthman held a wide range of leadership roles in finance, strategy and operations, and led or participated in more than 50 acquisitions during his tenure as Chief Financial Officer. Mr. Buthman is a Board member of IDEX Corporation and Vice Chair of the Board of Directors of Pavillon International.

Relevant Board Skills and Experience

Mr. Buthman possesses deep financial and accounting management experience, as well as experience in managing real estate, investor relations, information technology, finance and accounting shared services, and global procurement, from his time at Kimberly-Clark, a Fortune 150 company with significant international operations. He brings this expertise and counsel to the Board and serves on the Compensation, Finance, and Nominating and Corporate Governance Committees.

Other public company directorships in the last five years

IDEX Corporation

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William F. Feehery, Ph.D.

GRAPHIC

Age: 49
Director since 2012

Committees:
Audit
Compensation
Nominating & Corp. Gov. (Chair)

 

Dr. Feehery joined Certara as CEO and a member of Certara's board of directors beginning June 2019. Certara provides services and software that assist with the drug development lifecycle. Prior to becoming Certara's CEO, he was President of Industrial Biosciences at DowDuPont (previously, E. I. du Pont de Nemours and Company)—a provider of innovative products and services for markets including agriculture, biotechnology, nutrition, electronics, communications, safety and protection, home and construction, and transportation—since November 2013. He served as Global Business Director, DuPont Photovoltaic Solutions and previously as Global Business Director, Electronics Growth Businesses and as President of DuPont Displays, Inc. during his tenure at DuPont which began in 2002. Before joining DuPont, he was engaged in venture capital and was a management consultant for the Boston Consulting Group.

Relevant Board Skills and Experience

Dr. Feehery currently provides executive leadership as the CEO of a development services company. Dr. Feehery is the only independent member of our Board who currently serves as a CEO, experience we believe significantly enhances our Board capabilities. He also possesses extensive global public company leadership from his time at the DuPont organization, including the direct responsibility for business operations in over 20 countries and leading a global manufacturing business. In addition, Dr. Feehery has considerable technical experience, with a Ph.D. in chemical engineering and over 15 years of experience in the technology industry. He brings this corporate insight, and his technical background, to the Board by serving on three committees of the Board and chairing the Nominating and Corporate Governance Committee.

Public company directorships in the last five years

None

 

Robert F. Friel

GRAPHIC

Age: 64
Director since 2020

Committees:
Audit
Finance

 

Mr. Friel is the former Chair, President and CEO of PerkinElmer, Inc. and a former member of PerkinElmer's board of directors. Mr. Friel recently retired as Chair and CEO of PerkinElmer, Inc., a global business dedicated to serving the diagnostics, life sciences, food and applied markets. He served in this role for more than ten years. During his 20-year career at PerkinElmer, Mr. Friel held roles of increasing responsibility that included Chief Operating Officer, President of the Life and Analytical Sciences Division and Chief Financial Officer. Prior to joining PerkinElmer, Mr. Friel served in several finance-focused senior management positions with AlliedSignal, Inc., now Honeywell International.

Relevant Board Skills and Experience

Mr. Friel's experience in the healthcare and scientific fields, as part of large, complex, and multinational organizations assists the Board in setting its growth strategy and overseeing operational and financial risks. His extensive experience serving as both the Chair and CEO of a global business focused on improving human health is well-aligned with West's mission and with the pharmaceutical and medical device customers we serve. In addition to the public board memberships listed below, Mr. Friel is a director of New York Life Insurance Company, one of the largest life insurers in the world. His service on this board and others, together with his in-depth finance and tax expertise, as well as his training and education in these fields, makes him a strong contributor to the Board and the two Committees on which he serves.

Public company directorships in the last five years

Nuvasive, Inc.
PerkinElmer, Inc. (through 2019)
Xylem Inc.

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DIRECTOR NOMINEE BIOGRAPHIES     GRAPHIC

 

Eric M. Green

GRAPHIC

Age: 50
Director since 2015

Committees:
None

 

Mr. Green has been our President and CEO since April 2015 and a member of our Board of Directors since May 2015. Mr. Green is responsible for leading West's market-led business strategy, focused on tailoring our approach to the specific needs of Biologics, Generics, Pharmaceutical and Diagnostic customer groups. Prior to joining the Company, Mr. Green worked at Sigma-Aldrich Corporation—a leading life science and technology company focused on human health and safety—where he served as Executive Vice President and President of their Research Markets business unit since 2013. Mr. Green also serves as a member of Bethel University's Board of Trustees.

Relevant Board Skills and Experience

Mr. Green has significant public company experience having served as a corporate officer and member of the senior executive team of Sigma-Aldrich prior to joining the Company. Mr. Green had research and development responsibility and managed a $1.4 billion business unit—the largest at that company. Prior to serving in that role, he held key positions of increasing responsibility, including international sales and operations, corporate strategic planning and country management positions in the UK, Ireland and Canada. As West's President and CEO, Mr. Green is our only non-independent director, and, in addition to the aforementioned experience, brings insight to the Board as the Company's executive leader.

Public company directorships in the last five years

None

 

Thomas W. Hofmann

GRAPHIC

Age: 68
Director since 2007

Committees:
Audit (Chair)
Compensation

 

Mr. Hofmann retired from Sunoco, Inc.—a diversified energy company—in 2008, where he was Senior Vice President and CFO from January 2002 to December 2008. In that role, he was responsible for managing the accounting, auditing, investor relations and strategic planning, tax and treasury functions of the organization. He also chaired the Company's Capital Management Committee and served as the management liaison to the Audit Committee. Mr. Hofmann served Sunoco in various other senior management roles since joining in 1977. Mr. Hofmann serves on the boards of Fox Chase Cancer Center and Temple University Health System. He also serves on the President's Leadership Council of the University of Delaware and is a member of the advisory board for Drexel University's Center for Corporate Governance.

Relevant Board Skills and Experience

Mr. Hofmann possesses substantial financial, corporate governance and management experience with a global, publicly-traded company. He is well-versed in strategic planning, risk-management and capital-market issues, including acquisitions and divestitures. He brings this comprehensive financial background to his role on the Board, as Chair of the Audit Committee and as a member of the Compensation Committee.

Public company directorships in the last five years

Northern Tier Energy GP LLC (through May 2016)
Columbia Pipeline Partners LP (through February 2017)

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Paula A. Johnson, M.D., MPH

GRAPHIC

Age: 60
Director since 2005

Committees:
Innovation & Technology
Nominating & Corp. Gov.

 

Dr. Johnson has been President of Wellesley College since July 2016. Before joining Wellesley, Dr. Johnson founded and served, beginning in 2002, as the inaugural Executive Director of the Connors Center for Women's Health and Gender Biology, as well as Chief of the Division of Women's Health at Brigham and Women's Hospital. A cardiologist, Dr. Johnson was the Grace A. Young Family Professor of Medicine in the Field of Women's Health—an endowed professorship named in honor of her mother—at Harvard Medical School. She was also Professor of Epidemiology at the Harvard T.H. Chan School of Public Health. Dr. Johnson is the recipient of many awards recognizing her contributions to women's and minority health and is featured as a national leader in medicine by the National Library of Medicine and is a member of the National Academy of Medicine and the American Academy of Arts and Sciences.

Relevant Board Skills and Experience

Dr. Johnson brings a wealth of leading healthcare expertise to our Board. She is a nationally recognized expert in cardiology and women's and minority healthcare issues. In her role as Executive Director of the Connors Center for Women's Health and Gender Biology and as Chief of the Division of Women's Health at Brigham and Women's Hospital, and a Professor of Medicine at Harvard Medical School and Professor of Epidemiology at the Harvard T.H. Chan School of Public Health, Dr. Johnson built a novel, interdisciplinary research, education, clinical and policy program in women's health whose mission is to improve the health of women and to transform their medical care. She has an extensive background in quality and safety in healthcare and in public health systems. She is a member of our Innovation and Technology and Nominating and Corporate Governance Committees.

Public company directorships in the last five years

Eaton Vance Corporation

 

Deborah L. V. Keller

GRAPHIC

Age: 57
Director since 2017

Committees:
Audit
Finance
Innovation & Technology

 

Ms. Keller serves as a Principal at Black Frame Advisors, LLC, having recently retired as CEO of Covance Drug Development—a business segment of Laboratory Corporation of America Holdings. Prior to serving as CEO, Ms. Keller spent more than 28 years at Covance in several leadership roles, including Corporate Executive Vice President and Group President of Research and Development Laboratories, Corporate Senior Vice President and President of Discovery and Translational Services, and Vice President of Analytical Services in Europe. She is a trustee of the Wisconsin Alumni Research Foundation, Operating Partner of HealthCloud Capital Fund and serves on the Dean's Advisory Board for the University of Wisconsin School of Business, where she is also an adjunct professor. Ms. Keller was named one of FierceBiotech's 10 Top Women in Biotech in 2012.

Relevant Board Skills and Experience

Ms. Keller possesses substantial global public company management experience from her time at Covance. After several positions of increasing responsibility in Quality Assurance, Marketing, and Scientific Operations, she also led Covance's European chemistry business, and the Central Laboratories Services business unit, the world's largest provider of laboratory services for clinical trials. She brings her corporate management expertise in the life sciences industry to her role on the Board, serving on the Audit, Finance and Innovation and Technology Committees.

Public company directorships in the last five years

None

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DIRECTOR NOMINEE BIOGRAPHIES     GRAPHIC

 

Myla P. Lai-Goldman, M.D.

GRAPHIC

Age: 62
Director since 2014

Committees:
Finance
Innovation & Technology (Chair)

 

Dr. Lai-Goldman is the Executive Chair of GeneCentric Therapeutics, Inc.—a precision medicine company—where she previously served as CEO and President since June 2011. She is also managing partner of Personalized Science, LLC, a clinical diagnostic consulting company that she founded in 2008. Previously, Dr. Lai-Goldman was CEO and Chief Scientific Officer of CancerGuide Diagnostics,  Inc. Before joining CancerGuide Diagnostics, she held various roles including Executive Vice President, Chief Medical Officer and Chief Scientific Officer—at Laboratory Corporation of America Holdings (LabCorp) and its predecessor company, Roche Biomedical Laboratories, Inc. Additionally, Dr. Lai-Goldman has been a venture partner at Hatteras Venture Partners since August 2011. Dr. Lai-Goldman is Board-certified in anatomic and clinical pathology.

Relevant Board Skills and Experience

Dr. Lai-Goldman is a recognized author and speaker on clinical diagnostics and has substantial leadership experience at companies like those that our Company serves. Dr. Lai-Goldman spent more than 18 years at LabCorp where she served on LabCorp's Executive and Management Committees, with strategic and operations responsibilities for three major genomic laboratories comprising more than 700 people. During her tenure at LabCorp, she led all clinical, scientific and medical activities, including the introduction of more than 400 clinical assays. Her experience includes the development of partnerships, licensing and acquisitions. She brings her unique perspective as both a physician, researcher and corporate executive to the Board as Chair of the Innovation and Technology Committee and as a member of the Finance Committee.

Other public company directorships in the last five years

Sequenom, Inc.

 

Douglas A. Michels

GRAPHIC

Age: 63
Director since 2011

Committees:
Audit
Compensation (Chair)

 

Mr. Michels retired from OraSure Technologies, Inc.—a leader in the development, manufacture and distribution of oral fluid diagnostic and collection devices and other technologies designed to detect or diagnose critical medical conditions—in March 2018, after serving as President and CEO, as well as a member of the Board of Directors, since June 2004. Prior to joining OraSure, Mr. Michels served as Group Vice President, Global Marketing of Ortho-Clinical Diagnostics, President of Ortho-Clinical Diagnostics International, and President of Johnson & Johnson Healthcare Systems, Inc. In February 2010, Mr. Michels was appointed to the Presidential Advisory Council on HIV/AIDS. He previously served on the Board of the National Blood Foundation, the Board of the National Committee for Quality Health Care and the Coalition to Protect America's Health Care. He now serves on the boards of Tyme Technologies Inc. and St. Luke's University Health Network.

Relevant Board Skills and Experience

Mr. Michels possesses considerable expertise and executive leadership skills in the pharmaceutical, medical device and diagnostic industry, having spent 13 years with OraSure Technologies, Inc. During his tenure, OraSure developed the nation's first FDA-approved over-the-counter home rapid HIV self-test and the first and only FDA-approved rapid hepatitis C test. Mr. Michels brings his in-depth corporate leadership perspective to his role as Chair of the Compensation Committee, and his experience as a former CEO of a public company to his role on the Audit Committee.

Other public company directorships in the last five years

Tyme Technologies Inc.
OraSure Technologies, Inc. (through March 2018)

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GRAPHIC      DIRECTOR NOMINEE BIOGRAPHIES

 

Paolo Pucci

GRAPHIC

Age: 58
Director since 2016

Committees:
Finance (Chair)
Innovation & Technology

 

Mr. Pucci is the recently retired CEO and a former member of the Board of Directors of ArQule, Inc.—a biopharmaceutical company engaged in the research and development of targeted therapeutics. Merck & Co. completed its acquisition of ArQule in January 2020, resulting in Mr. Pucci's retirement. Before joining ArQule in 2008, Mr. Pucci worked at Bayer A.G., where he served in several leadership capacities including Senior Vice President of the Global Specialty Medicine Business Unit and was a member of the Bayer Pharmaceuticals Global Management Committee. Before Bayer, Mr. Pucci held positions of increasing responsibility with Eli Lilly and Company, culminating with his appointment as Managing Director, Eli Lilly Sweden AB.

Relevant Board Skills and Experience

Mr. Pucci possesses a wealth of knowledge regarding biopharmaceutical markets from his experience as an executive leader of several large biopharmaceutical companies. Mr. Pucci's service as a public company CEO through the beginning of 2020 brings an experience we believe is important in terms of Board diversity. His international background also adds to the diverse knowledge base of our Board. Mr. Pucci's expertise in new drug development, his executive experience working for large multinationals and his non-U.S. training are valuable additions to our Board, and to his roles as Chair of the Finance Committee and a member of the Innovation and Technology Committee.

Other public company directorships in the last five years

ArQule Inc. (through January 2020)
NewLink Genetics Inc. (through October 2018)
Dyax Inc. (through 2016)

 

Patrick J. Zenner

GRAPHIC

Age: 73
Director since 2002
Chair since 2015

Committees:
Nominating & Corp. Gov.

 

Mr. Zenner was first elected Chair of the Board effective July 1, 2015. He retired from Hoffmann-La Roche Inc., North America—the prescription drug unit of the Roche Group, a leading research-based healthcare enterprise—in 2001, where he served as President and CEO from 1993 to 2001. He served as Interim CEO of CuraGen Corporation from May 2005 through March 2006. Since then, Mr. Zenner was a director and Chair of the Board of Exact Sciences Corporation until July 2010 and served as its Interim CEO from July 2007 to March 2008. Mr. Zenner served as Chair of the Board of ArQule, Inc. until its acquisition in January 2020, and he also serves as a director of Selecta Biosciences, Inc. Mr. Zenner is currently a member of the Board of Trustees of Creighton University and is Chair of the Board of Trustees of Fairleigh Dickinson University.

Relevant Board Skills and Experience

Mr. Zenner possesses more than 40 years of experience and expertise in the pharmaceutical industry. Since retiring from Hoffmann-La Roche, Mr. Zenner has devoted his considerable industry expertise and corporate governance knowledge to small and early-stage pharmaceutical and technology companies in various capacities, including board member, chair and interim CEO.

As the lead independent director for West, Mr. Zenner has served in several leadership roles, including membership on each of the Company's board committees. He organized and led the search for West's new CEO in 2015. He also oversaw the development and implementation of a robust enterprise risk management process at West and led the development of a comprehensive director education program. The continuity of his membership and length of service on the Board is a valuable asset, particularly considering changes to executive management members, changes to our enterprise strategic plan and additions of new Board members over the past several years.

Other public company directorships in the last five years

ArQule, Inc. (through January 2020)
Selecta Biosciences, Inc.

The Board unanimously recommends a vote FOR the election of each of these nominees as directors.

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BOARD AND DIRECTOR INFORMATION AND POLICIES     GRAPHIC

Board and Director Information and Policies

Our Board structure reflects our Corporate Governance Principles and commitment to good governance. The Board believes the governance structure we have created between the Board, its Committees, the Board Chair, the CEO and Management, is supporting the sustainable growth of the Company.

During 2019, our full Board met six times. All Board members attended all Board meetings, all but two directors attended all the Board and their assigned Committee meetings, and these two members each attended more than 88% of the combined total of meetings in 2019. Our Board is committed to ensuring that directors attend meetings and that the Board and its Committees devote sufficient time necessary for the effective oversight of the Company and its Management. Additionally, annually during the performance review process, the Board assesses the time commitments for our Board against the time commitments of each member's outside positions to ensure there is sufficient time to devote to their duties as a West director.

Our Board also holds regular executive sessions of only independent directors to review, among other things, the Company's strategy and Management's operating plans, the criteria by which our CEO and other senior executives are measured, Management's performance against those criteria and other related issues and to conduct a self-assessment of its performance. Last year, our independent directors held five executive sessions.

All continuing directors, other than Mr. Friel, who was appointed in 2020, attended the 2019 Annual Meeting and all directors that are standing for election in 2020 are expected to attend the 2020 Annual Meeting.

Board Leadership Structure

The current governance structure of the Board follows:

    The offices of Chair and CEO are separate

    The Board has established and follows robust Corporate Governance Principles

    All Board members, other than Mr. Green, are independent

    All Board Committees are composed solely of independent directors

    Our independent directors meet regularly in executive session both at the Board and Board committee levels

    Our directors as a group possess a broad range of skills and experience sufficient to provide the leadership and strategic direction the Company requires as it seeks to enhance long-term value for shareholders

While the offices of Chair and CEO are currently separate, the Board takes a flexible approach to the issue of whether the offices of Chair and CEO should be separate or combined. This approach allows the Board to regularly evaluate whether it is in the best interests of the Company for the CEO or another director to hold the position of Chair.

The Board does not currently have a lead independent director, although the Board believes it may be useful and appropriate to designate a lead independent director if the offices of Chair and CEO are combined in the future.

The Board believes that the current leadership structure is appropriate now because it allows the Chair to focus on corporate governance and management of the Board's priorities and allows the CEO to focus directly on managing our operations and growing the Company.

Chair of the Board of Directors

The responsibilities of the Chair include:

    Chairing Board meetings, including executive sessions of the independent directors

    Approving agendas and schedules for each Board meeting in consultation with the CEO

    Serving as principal liaison between the CEO and the independent directors

Each independent director may add items to the agenda.

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GRAPHIC      BOARD AND DIRECTOR INFORMATION AND POLICIES

Our current Chair, Mr. Zenner, has been serving on the Board since 2002, and as our Chair since 2015. Each year the Board considers the role of the Chair and who is sitting in that role. We believe Mr. Zenner's experience as a top executive plus independence and history with the Company makes him a valuable asset for the Company, and he provides significant leadership and perspective to our Board.

Committees

The Board has five standing committees:

    Audit Committee

    Compensation Committee

    Finance Committee

    Innovation and Technology Committee

    Nominating and Corporate Governance Committee

From time to time, the Board may form ad hoc committees to address specific situations as they arise. Each committee consists solely of independent directors. All directors may attend any committee meeting, even if he or she is not a member. Our Board Chair and our CEO attend all Board meetings and attend virtually all Committee meetings, unless there is a scheduling conflict. Each standing committee has a written charter, which is posted in the "Investors—Corporate Governance" section of our website at www.westpharma.com. You may also request a copy of each committee's charter from our Corporate Secretary. Below we set forth the current members of each Committee (as of the date of this Proxy Statement) and its core functions.

Audit Committee

Thomas W. Hofmann (Chair)
William F. Feehery
Robert F. Friel
Deborah L. V. Keller
Douglas A. Michels
  The Audit Committee assists our Board in its oversight of: (1) the integrity of our financial statements; (2) the independence and qualifications of our independent auditors; (3) the performance of our internal audit function and independent auditors; and (4) our compliance with legal and regulatory requirements. In carrying out these responsibilities, the Audit Committee, among other things:

Reviews and discusses our annual and quarterly financial statements with Management and the independent auditors

Manages our relationship with the independent auditors, including having sole authority for their appointment, retention and compensation; reviewing the scope of their work; approving non-audit and audit services; and confirming their independence

Oversees Management's implementation and maintenance of disclosure controls and procedures and internal control over financial reporting

Regularly meets with our Chief Financial Officer, internal auditors, Corporate Controller, Chief Digital and Transformation Officer, Senior Director of Cybersecurity and Chief Compliance Officer to assess financial and cyber risks

The Board has affirmatively determined that Mr. Hofmann and Mr. Friel are both "Audit Committee Financial Experts" as defined in SEC regulations. The past Chair of the Audit Committee, Mr. Buthman, also remains an Audit Committee Financial Expert. In 2019, the Audit Committee met eight times. All members of the Audit Committee are independent as defined in the listing standards of the New York Stock Exchange ("NYSE") and the Company's Corporate Governance Principles.

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BOARD AND DIRECTOR INFORMATION AND POLICIES     GRAPHIC

Compensation Committee

Douglas A. Michels (Chair)
Mark A. Buthman
William F. Feehery
Thomas W. Hofmann
  The Compensation Committee develops our overall compensation philosophy, and determines and approves our executive compensation programs, makes all decisions about the compensation of our executive officers, reviews our talent management and succession planning for key positions and oversees our cash and equity-based incentive compensation plans.

Additional information about the roles and responsibilities of the Compensation Committee can be found under the heading "Compensation Discussion and Analysis." In 2019, the Compensation Committee met six times. All members of the Compensation Committee are independent as defined in the listing standards of the NYSE and the Company's Corporate Governance Principles.

Finance Committee

Paolo Pucci (Chair)
Mark A. Buthman
Robert F. Friel
Deborah L. V. Keller
Myla P. Lai-Goldman
  The Finance Committee reviews proposals made by Management and recommends to the full Board an optimal capital structure of the Company and adjustments to the way capital is allocated and deployed by the Company. The Finance Committee analyzes and makes recommendations to the full Board with respect to potential opportunities for business combinations, acquisitions, mergers, dispositions, divestitures and similar strategic transactions involving the Company. The Finance Committee also evaluates the alignment of proposed strategic transactions with the Company's strategic business plan and oversees the process of reviewing, negotiating, consummating and integrating potential strategic transactions. In 2019, the Finance Committee met eight times, including several meetings to assess potential acquisition targets. All members of the Finance Committee are independent as defined in the listing standards of the NYSE and the Company's Corporate Governance Principles.

Innovation and Technology Committee

Myla P. Lai-Goldman (Chair)
Paula A. Johnson
Deborah L. V. Keller
Paolo Pucci
  The Innovation and Technology Committee provides guidance to our Board on the Company's product, service and technology portfolio and its effects on the Company's growth, performance and competitive position. This Committee also reviews, evaluates and makes recommendations related to the Company's research and development programs and initiatives and their alignment with the Company's overall strategy, including the assessment of emerging gaps or opportunities identified by Management, and assists the Company in reviewing emerging science and technology trends and in helping the Board make well-informed choices about investments in new technology. Lastly, this Committee reviews the Company's intellectual property portfolio and strategy. In 2019, the Innovation and Technology Committee met four times.

Nominating and Corporate Governance Committee

William F. Feehery (Chair)
Mark A. Buthman
Paula A. Johnson
Patrick J. Zenner
  The Nominating and Corporate Governance Committee identifies qualified individuals to serve as board members; recommends nominees for director and officer positions; reviews our commitment to diversity; determines the appropriate size and composition of our Board and its committees; monitors a process to assess Board effectiveness; reviews related-party transactions; and considers matters of corporate governance. The Committee also reviews and makes recommendations to the Board regarding compensation for non-employee directors and administers director equity-based compensation plans. In 2019, the Nominating and Corporate Governance Committee met five times. All members of the Committee are independent as defined in the listing standards of the NYSE and the Company's Corporate Governance Principles.

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The Board's Role in Risk Oversight

The Board and its Committees play an active role in overseeing Management's day-to-day responsibility for assessing and managing our risk exposure.

The Board regularly reviews and monitors the risks associated with our enterprise strategy, financial condition and operations and specifically reviews the enterprise risks associated with our five-year plan. In particular, the Board reviews our risk portfolio, confirms that Management has established risk-management processes that are functioning effectively and efficiently and are consistent with our corporate strategy, reviews the most significant risks and determines whether Management is responding appropriately.

The Board performs its risk oversight role by using several different levels of review. Each Board meeting begins with an overview by the CEO that describes the most significant issues, including risks, affecting the Company as well as business updates from each reportable segment. In addition, the Board reviews in detail the business and operations of each reportable business segment quarterly, including the primary risks associated with that segment.

Our Enterprise Risk Management ("ERM") program helps us manage the risks inherent in our business, by gaining a greater understanding and awareness of risks facing the business, ensure risk-appropriate mitigation efforts are in place and regularly monitors and ensures the Company meets or exceeds the expectation of all stakeholders, including investors and regulators.

The ERM program includes a Risk Identification and Management ("RIM") process, crisis management, business continuity and disaster recovery elements. Additionally, during 2019 West created a new senior position responsible for the ERM process and corporate security. This role provides strategic leadership and direction to our enterprise risk management programs and processes, incorporating our corporate values, Code of Business Conduct and health, safety and environmental policies.

The Board focuses on the overall risks affecting the Company. Each Board Committee has been delegated the responsibility for the oversight of specific risks that fall within its areas of responsibility, as cataloged through the RIM process, including:

    The Audit Committee oversees the processes used in our ERM program and also oversees the management of financial reporting, compliance, litigation and cybersecurity risks as well as the steps Management has taken to monitor and control such exposures

    The Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation policies, plans and arrangements and the extent to which those policies or practices increase or decrease risk for the Company

    The Finance Committee assesses the risks associated with allocation of our capital, potential acquisitions, divestitures and major business partnerships

    The Innovation and Technology Committee reviews risks associated with emerging, and potentially disruptive, science and technology trends, intellectual property, and our innovation, research and development and technology strategy

    The Nominating and Corporate Governance Committee manages risks associated with the independence of the Board, potential conflicts of interest, communications with shareholders and the effectiveness of the Board

Although each Committee is responsible for evaluating certain risks and overseeing the management of those risks, the full Board is regularly informed about those risks through regular Committee reports.

Cybersecurity.    The Audit Committee oversees the vital work necessary to understand our cybersecurity risk and the related risk mitigation activities, including an assessment of the strength of our defenses and processes. The full Board receives regular updates from the Audit Committee and key employees responsible for cybersecurity. The criticality of this work increased with our 2018 launch of an e-commerce website and due to the expansion of privacy regulations in Europe and elsewhere. The Audit Committee reviews cybersecurity risk at every live meeting, holds private sessions with our Chief Digital and Transformation Officer and reviews our Cybersecurity dashboard at all in-person meetings. Additionally, our Senior Director, Infrastructure and Cybersecurity, Senior Director, Internal Audit, and Chief Compliance Officer separately meet with the Committee to provide additional insight into our cybersecurity and privacy strategy and tactics.

Our approach to mitigating cybersecurity risks includes review by third party experts, training for directors (both internally and externally), holding within the Company a global cybersecurity awareness week to cultivate an informed and proactive workforce, and the adoption of the National Institute of Standards and Technology Framework for Improving Critical Infrastructure Cybersecurity (the "NIST Framework"). The NIST Framework provides a comprehensive method for developing a flexible, repeatable, performance-based and cost-effective approach to identifying and managing cybersecurity risks. We measure ourselves against the NIST Framework to assess our own maturity on cybersecurity.

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BOARD AND DIRECTOR INFORMATION AND POLICIES     GRAPHIC

Our cybersecurity defenses utilize technologies such as firewalls, intrusion detection, and encryption to ensure the privacy and security of our customers' data, with a dedicated security information and event management team monitoring our applications constantly.

Executive Officer Succession Planning

One of the primary responsibilities of the Board is to ensure that West has the appropriate Management to execute our long-term strategy. Our Corporate Governance Principles state the Board must plan for succession with respect to the CEO and monitor Management's succession planning for other key executives. In fulfilling this duty, the Board, together with the CEO and Chief Human Resources Officer ("CHRO") reviews at least annually, the development and retention plans of senior Management talent as well as succession plans for the CEO and other senior Management positions.

During these reviews, the Board discusses:

    Management performance

    Strengths and developmental opportunities needed to prepare senior leaders for greater responsibilities

    Potential internal development job changes

    Succession plans including leadership pipeline, development plans and timelines

    Diversity of leadership and pipeline candidates

    Detailed assessment of the members of the executive leadership team who potentially could succeed the CEO. This review includes a discussion about development plans to help prepare each individual for future succession.

In addition, our CEO has as an annual goal for the development of senior leaders and the maintenance of the global succession plan for key positions within the Company. To that end, detailed succession and contingency plans in the event the CEO becomes unable to serve for any reason are in place. These plans are reviewed annually by the NCGC and discussed with the Board. Finally, throughout the year, Board members are exposed to leadership and pipeline candidates through Management presentations, roundtable discussions, and other informal meetings to assess the depth of our leadership pipeline.

CEO Evaluation Process

In assessing the performance of our CEO, the independent directors engage in a robust assessment process that is managed throughout the year and culminates in a formal annual performance review. The assessment includes the following:

    Independent directors approve the CEO annual business objectives consisting of both qualitative and quantitative progress against the pillars of our enterprise strategy including: Customer Experience, Operational Effectiveness, Products & Services Expansion, Enterprise Capabilities, People and Culture and Financial Goals

    A comprehensive analysis is undertaken by our Compensation Committee's independent consultant on the robustness of West's financial targets and compare these against the performance of our Business Segment Group, which is discussed in our Compensation Discussion and Analysis under the External Benchmarking heading

    Each quarter, the independent directors review the progress made against each objective

    The CEO undertakes a self-assessment of performance against the approved annual objectives

    Annual anonymous evaluation of the CEO's individual performance by the independent directors on numerous factors, including leadership, strategic planning, financial performance, employee development and engagement, external and internal relations and interactions with the Board

    An analysis of West's total performance over a multi-year period, a competitive benchmark analysis, and other relevant information is submitted to the independent directors

Working with the Compensation Committee's independent compensation consultant, the Chair of the Compensation Committee considers all this information in developing its recommendations for compensation, as discussed below in our "Compensation Discussion and Analysis."

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GRAPHIC      BOARD AND DIRECTOR INFORMATION AND POLICIES

Corporate Responsibility

As a leader in our industry, we recognize our responsibility to conduct business in a sustainable manner and strive to be a good corporate citizen. Our CR efforts include six key areas of focus: Compliance and Ethics, Philanthropy, Diversity and Inclusion, Health and Safety, Environmental Sustainability and Quality. West's Management routinely reviews materials published by our shareholders and key customers and directly engages with these same stakeholders on governance and responsibility topics. We have also received multiple awards for our Corporate Responsibility efforts this year. Detailed below is a brief overview of our progress, which is generally made available in May on our website at www.westpharma.com/about-west/corporate-responsibility. Information on that website is updated periodically and believed to be true at the time it is posted, but it is not filed and does not constitute part of this Proxy Statement.

Compliance & Ethics.    Our Compliance and Ethics standards include holding ourselves to the highest standards of quality, integrity and respect as outlined in our Code of Business Conduct ("COBC"), described below, which is supported by our training program led by our Chief Compliance Officer, and our annual Compliance Week efforts.

Philanthropy.    West has long-placed importance in supporting charities, particularly as it relates to children, people with disabilities, healthcare and Science Technology Engineering and Math ("STEM") education in the communities where our team members live and work. In 2019, charitable giving by the Company, our employees and the Herman O. West Foundation totaled approximately $2.8 million. Importantly, we also recorded more than 8,000 hours of volunteerism by our team members across our global sites.

Diversity and Inclusion.    As discussed above, we strive to create and maintain a workplace rich with diverse people, talent and ideas, and to create an inclusive environment for all employees to succeed. We have increased awareness, adopted affirmative action programs to identify any gaps, and strengthened programs and policies, which includes a global anti-discrimination and anti-harassment policy. We also maintain a growing number of employee resource groups to support our culture of respect and inclusion.

Health and Safety.    Providing a healthy and safe environment for our employees is a fundamental responsibility for Management. We have developed and implemented new safety protocols and procedures to create a culture of safety, which incorporates behavior-based training and observations. We consistently aim to have a zero-injury workplace and monitor our progress to that goal, which has resulted in a reduction of injuries over the past four years by more than 66%. These goals are set using globally-recognized benchmarks included in our CEO's annual performance objectives.

Environmental Sustainability.    We strive to be stewards of a sustainable future by factoring environmental considerations into our decision making for raw materials, production processes and distribution methods. We exceeded our emissions, energy and water intensity goals established in 2013 for 2020 and reset them in 2019. West has also continuously improved our rating under the Carbon Disclosure Project about 5% annually since 2013, culminating in our highest rating ever in 2019.

Quality.    At West, we are committed to safeguarding the health and safety of patients who use our products and services. We provide high-quality products that are designed to be safe and effective for their intended use. Quality product and system controls are designed to ensure compliance with our high standards and applicable FDA current Good Manufacturing Practices, International Organization for Standardization standards and regulatory requirements. West utilizes customer feedback and in-process manufacturing data to improve processes and product performance. The Company continues to deliver industry-leading quality levels every year.

2019 Shareholder Outreach

Our Board considers its relationship with our shareholders to be important to effective corporate governance. To ensure that the Board considers shareholder views on compensation, corporate governance, corporate responsibility and other significant matters, we maintain an active shareholder engagement program. Throughout the year, Management meets with our actively-managed, institutional shareholders, which own a majority of our shares. At every Board meeting, Management discusses topics raised by our shareholders and solicits Board input.

One area of focus for us and our shareholders is the alignment of pay and performance in a manner that enhances shareholder value. Our shareholders have historically expressed support for our performance goals and metrics.

Additionally, Management continues to hear our shareholders express support for our corporate governance framework, Board membership and Board policies, including our tenure policies. Shareholder interest in environmental, social and governance matters has led to additional disclosures and progress in those areas with the Board's oversight.

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BOARD AND DIRECTOR INFORMATION AND POLICIES     GRAPHIC

Communicating with the Board

You may communicate with the Chair of the Board or the independent directors as a group by sending a letter addressed to the Board of Directors, c/o Corporate Secretary, West Pharmaceutical Services, Inc., 530 Herman O. West Drive, Exton, Pennsylvania 19341. Communications to a particular director should be addressed to that director at the same address. Our Corporate Secretary maintains a log of all communications received through this process. Communications to specific directors are forwarded to those directors. All other communications are given directly to the Chair of the Board who decides whether they should be forwarded to a Board committee or to Management for further handling.

Director Education and Onboarding

The Board believes shareholders are best served by Board members who are well versed in corporate governance principles and other subject matters relevant to board service. The Board arranges for a series of annual educational presentations on its calendar. Also, to encourage continuing director education, all directors may attend any director education programs they consider appropriate to stay informed about developments in corporate governance and the markets we serve. The Company reimburses directors for the reasonable costs of attending director education programs.

The Board also works with Management to ensure that new directors are onboarded through a robust process. The onboarding process includes educational meetings with all officers and other critical members of senior Management who provide insight into the Company's business, strategy and culture, the Board and its Committees, Company policies and fiduciary and legal obligations. All directors have access to online resources maintained by the Company which includes key charters, policies, procedures, principles, corporate governance documents, and similar information. Additionally, all directors are provided access to analyst reports, press releases, and the Company's strategic plan and investor presentations.

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GRAPHIC      CORPORATE GOVERNANCE DOCUMENTS AND POLICIES

Corporate Governance Documents and Policies

Our principal governance documents are our Corporate Governance Principles, Board Committee Charters, director qualification standards, including our Independence Standards, and Code of Business Conduct. Aspects of our governance documents are summarized below. We encourage our shareholders to read our governance documents, as they present a comprehensive picture of how the Board addresses its governance responsibilities to ensure our vitality and success. The documents are available in the "Investors—Corporate Governance" section of our website at www.westpharma.com and copies of these documents may be requested by writing to our Corporate Secretary, West Pharmaceutical Services, Inc., 530 Herman O. West Drive, Exton, PA 19341.

Corporate Governance Principles

Our Board has adopted Corporate Governance Principles to provide guidance to our Board and its committees on their respective roles, director qualifications and duties, Board and committee composition, organization and leadership. Our Nominating and Corporate Governance Committee reviewed and significantly updated our Corporate Governance Principles to meet best practices in corporate governance during 2017. In 2019, the Committee confirmed that the Corporate Governance Principles address our current and long-term business needs and enhanced our sections on diversity. Our Corporate Governance Principles address, among other things:

    Statements of the Board's commitment to high ethical standards, principles of fair dealing and high ethical standards

    The requirement to hold separate executive sessions of the independent directors

    The importance of robust executive succession planning and the role of directors in succession planning

    The Board's policy on setting director compensation and director share-ownership guidelines

    Guidelines on Board organization and leadership, including the number and structure of committees and qualifications of committee members

    The importance of diversity, inclusion and a diverse mix of backgrounds to the Company's long-term business needs

    Guidelines on outside board memberships

    Policies on making charitable contributions and prohibition of political contributions

    Policies on access to Management

    Requirements fostering leadership development by senior executives

    Statements of our executive compensation philosophy and our independent auditor standards

    Director orientation and education

    Assessments of Board and Committee performance to determine their effectiveness

Ethics and Code of Business Conduct

All our employees, officers and directors are required to comply with our Code of Business Conduct as a condition of employment or service. The COBC covers fundamental ethical and compliance-related principles and practices such as accurate accounting records and financial reporting, avoiding conflicts of interest, protection and proper use of our property and information and compliance with legal and regulatory requirements. The Board has adopted a comprehensive Compliance and Ethics Program, which was substantially updated in 2016, and has been reviewed and reaffirmed in subsequent years as meeting the needs of our Company, its shareholders and other stakeholders.

Additionally, the Board adopted a Supply Chain Policy Statement, as required under the laws of the United Kingdom, which are similar to those in California. This Supply Chain Statement indicates West's compliance with various acts and reaffirms our commitment to the Pharmaceutical Supply Chain Initiative ("PSCI"). PSCI supports the efforts of pharmaceutical suppliers to meet industry expectations about ethics, labor, health and safety, environmental and management systems, including a prohibition against the use of forced, bonded or indentured labor. These commitments are also reflected in our Business Partner Code of Conduct. Both codes are available here: www.westpharma.com/about-west/corporate-responsibility/compliance-and-ethics. Susan A. Morris is our Chief Compliance Officer and reports directly to the Audit Committee of the Board on all compliance matters. Ms. Morris trains the Board on compliance matters and delivers regular reports on program developments and initiatives to the Audit Committee and no less than annually to the full Board.

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CORPORATE GOVERNANCE DOCUMENTS AND POLICIES     GRAPHIC

Director Independence

Our Board has adopted a formal set of categorical Independence Standards. The Independence Standards meet or exceed the independence requirements of the NYSE corporate governance listing standards. Under the Independence Standards, a director must have no material relationship with us other than as a director. The Independence Standards specify the criteria for determining director independence, including strict guidelines for directors and their immediate families regarding employment or affiliation with us, members of our senior Management or their affiliates. The full text of the Independence Standards may be found under the "Investors—Corporate Governance" section on our website at www.westpharma.com.

The NCGC undertook its annual review of director independence in February 2020. As a result of this review, the NCGC recommended and the full Board concurred that no revision of the Independence Standards was required. Subsequently, the Board considered whether any relationships described under the Independence Standards between the Company and each individual director existed. The Board affirmatively determined that each of its non-employee directors is independent of the Company and Management as defined under the Independence Standards.

Related Person Transactions and Procedures

The Board has adopted written policies and procedures relating to the Nominating and Corporate Governance Committee's review and approval of transactions with related persons that are required to be disclosed in proxy statements under SEC regulations. A "related person" includes our directors, officers, 5% shareholders and their immediate family members.

Under these policies, the NCGC reviews the material facts of all related-person transactions, determines whether the related person has a material interest in the transaction and may approve, ratify, rescind or take other actions.

In approving a transaction, the Committee will consider, among other factors, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person's interest in the transaction.

The Committee reviews and pre-approves certain types of related person transactions, including certain transactions with companies at which the related person is an employee only, and charitable contributions that would not disqualify a director's independent status. The policy and procedures can be found in the "Investors—Corporate Governance" section of our website, www.westpharma.com.

We have no related person transactions required to be reported under applicable SEC rules.

Political Contributions and Lobbying

While we encourage directors, officers and employees to become involved in the political process in their individual capacity, including personal contributions to political campaigns, no West employee or director may conduct personal political activity on Company time or use Company funds, property or equipment for political activities. We comply with the laws related to contributing to, directly or indirectly, political organizations and government officials. Under our Corporate Governance Principles, the Board is responsible for overseeing the process used by the Company to ensure the Company's policy prohibiting political contributions is effectively implemented.

The Company made no political contributions in 2019 but does hold membership in recognized and reputable industry groups that may conduct lobbying activities.

Anti-Hedging and Pledging Policies

We prohibit directors, officers and employees from engaging in hedging or monetization transactions, such as zero-cost collars and forward sale contracts, which would allow them to continue to own our common stock, but without the full risks and rewards of ownership. We also prohibit directors, executive officers and other senior employees from engaging in pledging or hypothecating our securities as collateral for a loan without demonstrating to the General Counsel that a director or officer has the financial capacity to repay the loan. It is expected that this exception would be permitted only in exceedingly rare circumstances. No pledging is permitted to cover margin debt. Additionally, no West securities may be held in a margin account by directors or officers because there is a risk of the shares being sold without consent. Directors and officers are prohibited from engaging in short sales or other short-position transactions in West securities as well.

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GRAPHIC      CORPORATE GOVERNANCE DOCUMENTS AND POLICIES

Share Ownership Goals

Directors.    To encourage significant share ownership by our directors and further align their interests with the interests of our shareholders, directors are expected to acquire within three years of appointment, and to retain during their Board tenure, shares of our common stock equal in value to at least five times their annual retainer. The ten directors elected prior to 2020 meet this requirement, including directors who are still within the initial three-year period. Mr. Friel, who was appointed in February 2020, has not yet met the ownership goal, but is expected to do so during the required period.

Officers.    Share ownership goals further align an officer's interests with those of our shareholders and encourage a long-term focus. Within five years of attaining their position, all executive officers must acquire shares of common stock with a value equal to designated multiples of their base salary. The Compensation Committee established a goal of six times base salary for the CEO and two times base salary for all other executive officers. A full description of the officer share ownership requirements can be found in our "Compensation Discussion and Analysis."

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STOCK OWNERSHIP     GRAPHIC

Stock Ownership

The table below shows the number of shares of our common stock beneficially owned as of March 5, 2020, by each of our directors, each NEO and all current directors and executive officers as a group. For executive officers, in addition to shares owned directly, the number of shares includes: (a) vested shares held in employee participant accounts under our 401(k) plan, Nonqualified Deferred Compensation Plan for Designated Employees ("Employee Deferred Compensation Plan") and Employee Stock Purchase Plan; and, (b) time-vested restricted stock and Restricted Stock Units ("RSUs") held in various incentive plan accounts, unless receipt of those shares has been deferred. For non-employee directors, in addition to shares owned directly, the common stock column includes vested deferred stock and stock-settled stock units awarded under the Nonqualified Deferred Compensation Plan for Non-Employee Directors ("Director Deferred Compensation Plan").

Name
Common
Stock


Options Exercisable
Within 60 Days


Percent
of Class


Silji Abraham 6,197 7,300 *
Bernard J. Birkett 10,322 7,296 *
Mark A. Buthman 38,222 -0- *
William F. Feehery 26,843 -0- *
Robert F. Friel 244 -0- *
Eric M. Green 79,337 512,856 *
Thomas W. Hofmann 40,412 -0- *
Paula A. Johnson 45,275 -0- *
Deborah L. V. Keller 6,200 -0- *
Myla P. Lai-Goldman 14,940 -0- *
Douglas A. Michels 40,608 -0- *
George L. Miller 25,376 72,725 *
David A. Montecalvo 5,246 31,216 *
Paolo Pucci 6,490 -0- *
Patrick J. Zenner 73,920 -0- *
All directors and executive officers as a group (19 persons) 451,274 743,095 1.6 %
*
Less than one percent of outstanding shares.

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GRAPHIC      STOCK OWNERSHIP

Based on a review of filings with the SEC, we have determined that the persons listed below hold more than 5% of the outstanding shares of our common stock as of March 6, 2020. Unless otherwise stated, each holder has sole voting and dispositive power over the shares listed.

Name and Address of Beneficial Owner
Shares
Percent of Class
BlackRock, Inc.
55 East 52nd Street
New York, NY 10022
8,158,920 (2) 11.0 %
The Vanguard Group, Inc.
100 Vanguard Boulevard
Malvern, PA 19355


7,499,113 (1) 10.1 %
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202
6,830,989 (3) 9.2 %
Franklin Resources, Inc.
One Franklin Parkway
San Mateo, CA 94403-1906


4,445,600 (4) 6.0 %
(1)
Includes sole voting power over 7,714,593 shares and sole dispositive power over all shares listed.
(2)
Includes sole voting power over 57,957 shares, shared voting power over 15,787 shares, shared dispositive power over 7,434,843 shares and shared dispositive power over 64,270 shares.
(3)
Includes sole voting power over 1,872,812 shares and sole dispositive power over all shares listed.
(4)
Franklin Advisers, Inc. ("FAS") and its affiliates have sole voting and dispositive power over all shares listed. FAS is an investment management subsidiary of Franklin Resources, Inc. ("FRI"). FRI treats FAS as having sole investment discretion and voting authority for all shares listed. Additionally, Charles B. Johnson and Rupert H. Johnson ("Principal FRI Shareholders") are each shareholder of more than 10% of FRI, but also do not claim investment or voting interests in the Company stock held by FRI. However, FRI believes that FAS and the Principal FRI Shareholders are a "group" for purposes of applicable securities law.

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DIRECTOR COMPENSATION     GRAPHIC

Director Compensation

2019 Non-Employee Director Compensation

Our Director compensation structure is reviewed annually by the Board in consultation with Pay Governance LLC ("Pay Governance"), our independent compensation consultant. After this review, the Board determined to increase certain compensation elements effective January 1, 2019. The primary changes were a $10,000 increase in the annual Board membership retainer, a $20,000 increase in the value of the Chair of the Board retainer and a $30,000 value increase in RSUs. The changes were the result of market adjustments to keep us competitive with members of our Business Segment Group (discussed in our Compensation Discussion and Analysis) and to account for the additional time needed as directors' roles have grown. This was the first increase to the fee paid to the Chair of the Board since separating the role from the CEO in 2015. Additionally, by increasing the annual RSU grant value more than the cash retainer (18.8% vs. 12.5%), we slightly increased the ratio of at-risk equity-based elements to fixed income. Lastly, the Chair's additional award, which had historically been subject to an annual election by the Chair to receive as cash or quarterly-vesting restricted shares, was revised to automatically be paid 50% in cash and 50% in an increase to the Chair's annual RSU award vesting annually. This change was made to codify the receipt of equity based on the historical split and to harmonize the equity awards that directors receive. The revised compensation structure is set forth below.

Compensation Item


Amount

Annual Retainers and Chair Fees

 

Board membership

$ 90,000

Chair of the Board

120,000*

Audit Committee Chair

20,000

Compensation Committee Chair

20,000

All Other Committee Chairs

10,000

RSUs

190,000
*
$60,000 of this value is delivered as an increase in the Chair's annual Board membership retainer cash and the remaining $60,000 is delivered as an increase in the Chair's RSU award subject to the same one-year vesting schedule applicable to the RSU award.

The following table shows the total 2019 compensation of our non-employee directors. Robert F. Friel was not appointed a Director until February 2020, and, therefore had no compensation or stock outstanding during 2019. His 2020 compensation and stock will be reported in next year's Annual Proxy Statement.


2019 Non-Employee Director Compensation

Name


Fees Earned or Paid
in Cash ($)


Stock Awards ($)
All Other
Compensation ($)


Total ($)

Mark A. Buthman

90,000 189,991 26,796 306,787

William F. Feehery

100,000 189,991 18,853 308,844

Thomas W. Hofmann

110,000 189,991 28,700 328,691

Paula A. Johnson

90,000 189,991 33,730 313,721

Deborah L. V. Keller

90,000 189,991 3,871 283,862

Myla P. Lai-Goldman

100,000 189,991 10,215 300,206

Douglas A. Michels

110,000 189,991 28,843 328,834

Paolo Pucci

100,000 189,991 4,081 294,072

John H. Weiland*

31,648 -0- 204,402 236,050

Patrick J. Zenner

150,000 249,963 44,328 444,291
*
Mr. Weiland did not stand for reelection at the 2019 Annual Meeting of Shareholders, and, therefore, his service as a member of the Board of Directors ended on May 6, 2019.

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GRAPHIC      DIRECTOR COMPENSATION

Fees Earned or Paid in Cash

The amounts in the "Fees Earned or Paid in Cash" column are retainers earned for serving on our Board, its committees and as committee chairs and Chair, as applicable. All annual retainers are paid quarterly. In 2019, we moved from paying in arrears to paying current, and, therefore, continuing directors received two payments in the first quarter—one related to the fourth quarter of 2018 and one for the current quarter. This change did not result in any increase in compensation earned overall with respect to 2019, and merely affected timing. For Mr. Zenner this amount includes his cash fees for serving as Chair of the Board. The amounts are not reduced to reflect elections to defer fees under the Director Deferred Compensation Plan. During 2019, Mr. Buthman deferred 100% of his fees, and no other deferred any of their fees.

Stock Awards

The amounts in the "Stock Awards" column reflect the grant date fair value of stock-settled RSU awards made in 2019 and the grant date fair value as determined under Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") Topic 718. In 2019, each continuing non-employee director was awarded 1,561 RSUs, with a grant date fair market value of $121.40 per share based on the closing price of our common stock on the award date, May 7, 2019. These awards had a grant date fair value of approximately $190,000. For a discussion on RSU grant date fair value, refer to Note 14 of the consolidated financial statements in our 2019 Annual Report.

RSUs are granted on the date of our Annual Meeting and fully vest on the date of the next Annual Meeting so long as a director remains on the Board as of that date. Generally, all unvested grants of equity forfeit upon termination. However, if a director retires during the calendar year that he or she reaches our mandatory retirement age, the award will vest on a monthly basis through retirement.

Stock-settled RSUs are distributed upon vesting, unless a director elects to defer the award under the Director Deferred Compensation Plan. In 2019, all directors elected to defer their RSU awards. All awards are distributed as shares of common stock, as described below. When dividends are paid on common stock, additional shares are credited to each director's deferred stock account as if those dividends were used to purchase additional shares.

For Mr. Zenner, this column also includes the 494 RSUs received out of the portion of his $60,000 Chair's annual retainer, that is payable in RSUs as described above. The RSUs, which had a grant date fair value of $121.40 per share, will vest 100% at the 2020 Annual Meeting assuming he remains in service as a director through that date. These RSUs are also earn dividend equivalents.

The table below shows the number of outstanding stock awards held by each director at year-end. No directors have any outstanding options. Mr. Friel was not appointed a director until 2020 and, therefore, had not outstanding stock awards on December 31, 2019.


Outstanding Director Stock Awards at Year-End 2019

Board Member


Unvested Restricted
Stock Awards (#)


Vested Annual
Stock
Awards (#)



Unvested Annual Deferred
Stock and Stock-Settled RSU
(#)



Total Outstanding
Stock
Awards (#)



Mark A. Buthman

-0- 36,615 1,568 38,183

William F. Feehery

-0- 25,248 1,568 26,816

Thomas W. Hofmann

-0- 38,803 1,568 40,371

Paula A. Johnson

-0- 43,662 1,568 45,230

Deborah L. V. Keller

-0- 4,626 1,568 6,194

Myla P. Lai-Goldman

-0- 13,357 1,568 14,925

Douglas A. Michels

-0- 30,640 1,568 32,208

Paolo Pucci

-0- 4,915 1,568 6,483

John H. Weiland*

-0- 49,230 -0- 49,230

Patrick J. Zenner

248 60,215 1,568 62,031
*
Mr. Weiland's service ended May 6, 2019, and he received a distribution of 1,646 shares during 2019.

All Other Compensation

The amounts in the "All Other Compensation" column are Dividend Equivalent Units ("DEUs") credited to accounts under the Director Deferred Compensation Plan and $1,500 charitable donations made by Paula Johnson, which were matched by the Company's foundation. Additionally, for Mr. Weiland, this amount includes a retirement gift with a fair market value of $16,000

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DIRECTOR COMPENSATION     GRAPHIC

and a distribution under the Director Deferred Compensation Plan upon the end of his service of 1,646 shares with a per-share value of $121.40 and a total fair market value of $199,824.

Director Deferred Compensation Plan

All non-employee directors may participate in the Director Deferred Compensation Plan, which permits participants to defer all or a part of their annual cash compensation until their Board service terminates. Deferred fees may be credited to a "stock-unit" account that is deemed invested in our common stock or to an account that earns interest at the prime rate of our principal commercial bank. Stock-unit accounts are credited with DEUs based on the number of stock units credited on the dividend record date.

The value of a director's account balance is distributed on termination of Board service. The value of a director's stock-unit account is determined by multiplying the number of units credited to the account by the fair market value of our common stock on the termination date.

RSUs that a director elects to defer (and all shares of deferred stock) are distributed in shares of stock. Pre-2014 stock units may be distributed in cash in lieu of stock, if a director made an election in 2013. All post-2013 stock units are only distributable in stock. Partial shares are distributed in cash.

Directors may receive their distribution as a lump sum or in up to ten annual installments. Separate elections apply to amounts earned and vested before January 1, 2005 and amounts earned and vested after December 31, 2004, which solely applies to Mr. Zenner. If a director elects the installment option, the cash balance during the distribution period will earn interest at the prime rate of our principal commercial bank and deferred stock and stock-settled units will be credited with DEUs until paid.

The following table summarizes the amounts credited to each Director Deferred Compensation Plan account as of December 31, 2019: All values on the following table are determined by multiplying the number of stock units or shares of deferred stock, as applicable, by $150.33, the fair market value of a share of stock on December 31, 2019. A portion of the stock units reported below may relate to deferred compensation that has previously been reported in the "Fees Earned or Paid in Cash" column for the year the underlying compensation was earned by the director. Mr. Friel had no balance in the Director Deferred Compensation Plan on December 31, 2019.


Director Deferred Compensation Plan at Year-End 2019

Board Member


Cash-Settled Stock
Units Value ($)


Vested Stock—
Settled Unit and
Deferred Stock Value
($)




Unvested Deferred Stock
and RSU Value ($)


Total Account
Balance ($)


Mark A. Buthman

-0- 5,504,354 235,777 5,740,131

William F. Feehery

-0- 3,795,473 235,777 4,031,250

Thomas W. Hofmann

-0- 5,833,237 235,777 6,069,014

Paula A. Johnson

-0- 6,563,648 235,777 6,799,425

Deborah L. V. Keller

-0- 695,383 235,777 931,160

Myla P. Lai-Goldman

-0- 2,007,978 235,777 2,243,755

Douglas A. Michels

1,256,595 4,606,150 235,777 6,098,522

Paolo Pucci

-0- 738,836 235,777 974,614

John H. Weiland

2,187,884 7,400,694 -0- 9,588,578

Patrick J. Zenner

-0- 9,052,119 272,989 9,325,108
*
Mr. Weiland's service ended May 6, 2019, and he received a distribution equal to $199,824 during 2019.

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GRAPHIC      COMPENSATION COMMITTEE REPORT

Compensation Committee Report

Set forth below is the Compensation Discussion and Analysis, which outlines West's executive compensation programs and policies and how such policies are used to align executive compensation with business performance and shareholder return. This section describes our executive compensation programs for 2019, the compensation decisions made under those programs and the factors considered by the Committee in making those decisions.

In performing its governance function, the Compensation Committee has reviewed and discussed with Management the "Compensation Discussion and Analysis." Based on its review and discussion with Management, the Compensation Committee recommended to the Board, and the Board approved, the inclusion of the "Compensation Discussion and Analysis" in this Proxy Statement and in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

    Compensation Committee

 

 

Douglas A. Michels, Chair
Mark A. Buthman
William F. Feehery
Thomas W. Hofmann

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COMPENSATION DISCUSSION AND ANALYSIS     GRAPHIC

Compensation Discussion and Analysis

The 2019 Compensation Discussion and Analysis describes and provides disclosure about the objectives and policies underlying our executive compensation program. It details the compensation for each of our Named Executive Officers ("NEOs") and the factors considered by the Committee when making compensation decisions. The NEOs for 2019 are as follows:

    Eric M. Green, President and Chief Executive Officer;

    Bernard J. Birkett, Senior Vice President and Chief Financial Officer;

    George, L. Miller, Senior Vice President, General Counsel and Corporate Secretary;

    David A. Montecalvo, Senior Vice President and Chief Operations and Supply Chain Officer;

    Silji Abraham, Senior Vice President, Chief Digital and Transformation Officer;

    Karen A. Flynn, Former Senior Vice President and Chief Commercial Officer.(1)

(1)
Ms. Flynn retired on December 31, 2019

Executive Summary: 2019 Performance at a Glance

West's long-term business strategy includes growing and expanding our products and services to meet the unique needs of our customer groups, operating with excellence to drive efficient utilization of our global manufacturing footprint and building the capabilities of our team to address current and future business needs. This strategy drives our long-term financial construct to grow sales by six to eight percent annually, and achieve improved profitability year-over-year, in turn creating a sustainable business that will meet the needs of our customers, patients, shareholders, and employees. Our five-year TSR through December 31, 2019 was 207%.

Highlights of our 2019 performance include the following:

Our strategy to globalize our operations and address the unique needs of the distinct customer groups we serve with a market-led focus, has delivered another strong year of growth for the Company. Some of the trends we are seeing in the pharmaceutical and biotech industry are driving our business today, and will fuel our long-term growth strategy, including the following:

    Biotechnology has emerged as one of the most promising sources of therapies and products for patient care, leading to a rise in FDA-approved drugs derived from biologics.

    Research has demonstrated that in certain circumstances subcutaneous administration can be as effective as IV administration, while significantly reducing infusion-related reactions and administration time.

    Self-administration is driving key industry developments, most notably the rise of combination products that place easy-to-use delivery systems in the hands of individual patients.

    The regulatory landscape is evolving, particularly related to combination products. Both the FDA and the European Union have introduced updated guidance on how such products are reviewed and approved for sale, and the quality and regulatory documentation that is required.

Each year, we have seen growing interest and demand for our high-value product offerings, delivery device platforms and our contract-manufacturing services. Customers are also coming to West for our scientific expertise and insight into the regulatory landscape that governs our industry. This demand has translated into positive results for the business. In 2019, we reported:

    Full-year 2019 sales of $1.840 billion grew 7.1%; organic sales growth was 10.0%; sales from a recent acquisition contributed an additional 10 points of growth; currency translation reduced sales by 300 basis points.

    Full-year 2019 reported-diluted EPS of $3.21 increased 17%. Full-year 2019 adjusted-diluted EPS of $3.24 increased 15%.

    Full year 2019 gross profit margin was 32.9%, a 110-basis point increase from the prior year. Our Proprietary Products segment gross profit margin expanded by 150 basis points, and the Contract-Manufactured Products segment gross profit margin increased by 10 basis points.

    Full-year 2019 operating cash flow was $367.2 million, an increase of 27%. Capital expenditures were $126.4 million, compared to $104.7 million over the same period last year, and represented 6.9% of full-year 2019 net sales. Free cash flow (operating cash flow minus capital expenditures) was $240.8 million, an increase of over 30%.

The foregoing discussion is qualified by the information contained in the performance graph in our 2019 Annual Report, the "Financial Measures and Adjustments" section beginning on page 42 of this Proxy Statement and our non-U.S. GAAP reconciliation set forth in the Form 8-K filed February 13, 2020.

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GRAPHIC      COMPENSATION DISCUSSION AND ANALYSIS

GRAPHIC

(1)
Based on 2019 Consolidated Net Sales.

(2)
Please refer to our Forms 8-K reports dated February 13, 2020 and January 9, 2019 for the reconciliation of non-U.S. GAAP financial matters.

(3)
Source: NASDAQ IR Insight

2019 Committee Actions and Rationale

    Executive Compensation Actions & Results

    Reaffirmed West's compensation philosophy of pay-for-performance that aligns executives' incentive compensation with Company performance and stakeholder interests on both a short- and long-term basis, without promoting excessive risk  

 

 

Further refined the Company's AIP to drive stronger alignment with our business objectives; Assigned all Corporate Officers to the Corporate AIP pool to drive overall performance and alignment to our One West value

 

 

 

 

Reaffirmed continuation of the two-comparator group approach used for executive and director pay and pay-for-performance benchmarking

 

Governance and Compensation

Executive Compensation Philosophy

Our compensation philosophy is to provide competitive executive pay opportunities tied to our short-term and long-term success. This overriding pay-for-performance approach enables us to attract, motivate and retain the type of executive leadership that will help us achieve our strategic objectives and realize increased shareholder value. To achieve these goals, we have adopted the following program objectives:

    Reward achievement of both operating performance and strategic objectives

    Align the interests of West's leaders to those of our investors by varying compensation based on both short-term and long-term business results and delivering a large portion of the total pay opportunity in West stock

    Differentiate rewards based on performance against business objectives to drive a pay-for-performance culture, with a major portion of executive pay based on achievement of financial performance goals

    Promote a balanced incentive focus that does not encourage unnecessary or unreasonable risk-taking

    Be market-competitive to attract and retain highly qualified senior leaders needed to drive a global enterprise

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Best Practices that Support Our Executive Compensation Philosophy

The Compensation Committee oversees the governance, design and administration of our executive compensation programs and evaluates these programs against competitive practices, legal and regulatory developments and corporate governance trends.

We continue to incorporate leading design and governance practices into our compensation programs.

    What We Do

  What We Don't Do

   

Target Total Direct Compensation at the 50th percentile of our comparator group companies

Provide most of the compensation through performance-based incentives

Conduct realizable-pay-for-performance analyses of our CEO compensation and use tally sheets to provide additional information on the appropriateness and function of our executive pay

Incorporate in our CIC agreements a "double-trigger" feature requiring termination of employment to receive benefits

Require executive officers to meet West stock ownership guidelines and to take a portion of their annual incentive bonus in West shares until ownership guidelines are met

Cancellation or recovery of incentive compensation based on achievement of specified financial results that are the subject of a subsequent restatement or amounts determined to have been inappropriately received due to fraud, misconduct or gross negligence

Engage with an independent consultant to review compensation programs and decisions

     

No hedging, pledging or engaging in any derivatives trading with respect to our common stock

No repricing or exchange of awards without shareholder approval

No individual severance agreements for executive officers other than CEO

No tax gross-ups

No guaranteed incentive payouts

No accelerated vesting of equity awards for executive officers

No above-market returns on deferred compensation plans

   

Say-on-Pay

Each year, we hold a shareholder "Say-on-Pay" advisory vote to assess the support for the compensation of our NEOs as disclosed in our Proxy Statement. In 2019, our Say-on-Pay proposal received almost 98% support, consistent with each of the previous three years.

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GRAPHIC      COMPENSATION DISCUSSION AND ANALYSIS

Executive Compensation Program Design

The specific elements of West's executive compensation programs are:

    Element
  Objective
  Type
  Key Features
    Base Salary       Fair and competitive compensation to attract, retain and reward executive officers by providing a fixed level of cash compensation tied to experience, skills and capability relative to the market       Cash      

Annual cash compensation that is not at risk

Targeted at the 50th percentile of our compensation comparator groups, with variations based on experience, skills and other factors

Reviewed annually with adjustments considered based on level of pay relative to the market, individual and Company performance

   
    Short-Term Annual Incentive       Focuses executives on annual results by rewarding them for achieving key budgeted financial targets

Links executives' incentives with those of shareholders by promoting profitable growth

Helps retain executives by providing market-competitive compensation

      Cash      

Annual cash incentive based on achievement of key business metrics: Net Sales, EPS, OCF and Gross Profit

Annual award payouts may vary from 0% to 150% of the targeted award based on achievement

Threshold performance required to achieve payment is 85% of target performance goal

   
    Long-Term Incentive Compensation (100% Equity)       Aligns executives' interests with those of shareholders by linking compensation with long-term Company and stock price performance that benefits our employees and shareholders

Serves as both an incentive and retention vehicle for executives through multi-year PSUs and stock options

Promotes a balance of longer-term risk and reward, without encouraging unnecessary or unreasonable risk taking

      Annual PSU Grant (50% of long-term incentive compensation award fair market value ("FMV"))      

PSUs are settled three years from the grant date based on business results over a three-year performance period

PSUs (inclusive of DEUs) are paid in shares of Company common stock upon vesting

The number of shares (inclusive of accrued DEUs) that may be earned over the performance period is based on achievement against target of two equally weighted measures—Sales CAGR and ROIC—and can range from 0% to 200% of the target award

Threshold performance required to achieve payment is 70% for each target performance metric

   
                    Annual Nonqualified Stock Option Grant (50% of long-term incentive compensation award FMV)      

Annual awards vest in four equal annual installments and expire 10 years from the grant date

Option exercise prices must be equal to (or exceed) the closing price on the grant date

DEUs are not provided on options

   
                    Time-Vesting Restricted Stock Units and Retention Options      

Typically, only used to attract talented executives who are foregoing compensation from prior employer

Provides a retention tool for new executives, provides an immediate ownership stake in the Company and alignment with shareholders through an incentive to increase the stock value

   

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COMPENSATION DISCUSSION AND ANALYSIS     GRAPHIC

    Element
  Objective
  Type
  Key Features
    Retirement       Attracts and retains executives by providing a level of retirement income and retirement savings in a tax-efficient manner       Retirement Plan      

Provides retirement income for eligible participants based on years of service and earnings up to U.S. Internal Revenue Code ("Code") limits

Provides a defined-benefit plan to pre-2017 hires that transitioned to a cash-balance plan formula in 2007, which was frozen in December 2018

Replaced with a non-elective defined contribution amount to our 401(k) Plan in January 2019

   
                    Supplemental Executive Retirement Plan, "SERP"      

Previously provided retirement income, on a nonqualified basis, in excess of Code limits on the same basis as the Retirement Plan

Eligibility was frozen for the SERP in 2017 and benefit accrual ceased in 2018

   
                    401(k) Plan      

Qualified 401(k) plan that provides participants the opportunity to defer taxation on a portion of their income, up to Code limits, and receive a match of 100% on the first 3% and 50% on the next 2% and, in some cases, a non-elective Company contribution

   
                    Employee Deferred Compensation Plan      

Extends, on a nonqualified basis, the 401(k) plan deferrals in excess of Code limits on the same terms and permits deferral of AIP and PSU awards

Executives may elect to defer up to 100% of their annual cash compensation

   
    Other Compensation       Perquisites and Other Benefits              

Rarely provided except in exceptional circumstances due to unique situations

   

Pay Mix

The chart below illustrates the percentage weighting of each compensation element that comprises the 2019 target TDC for the CEO and the average for the other NEOs.

GRAPHIC

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GRAPHIC      COMPENSATION DISCUSSION AND ANALYSIS

Factors Used in the Compensation Process

Compensation Committee

The Compensation Committee (or the "Committee" in this section of the Proxy Statement) reviews and approves the compensation elements and the compensation targets for each of our executive officers. The Committee also makes determinations with respect to the AIP as it relates to our executive officers, including the approval of annual performance goals and subsequent full-year achievement against those goals. It administers all elements of the Company's LTI plan, and approves the benefits offered to executive officers. Compensation decisions for the CEO are reviewed and approved by the full Board of Directors.

The Committee uses its judgment in making decisions about individual compensation elements and total compensation for our NEOs. This judgment is informed by competitive market data but primarily is focused on each NEO's performance against his or her individual performance objectives, as well as the Company's overall financial performance and the financial performance of the function or areas of operational responsibility for each NEO.

In making its decisions, and with guidance from our independent compensation consultant, Pay Governance, the Committee uses several resources and tools, including competitive market information, compensation trends within our comparator groups, where available, and realizable pay versus performance analysis.

The Committee also reviews "tally sheets" for each of our executive officers as one of the tools to help assess the alignment of NEO pay with our performance and compensation philosophy. The tally sheets include salary, equity and non-equity incentive compensation and the value of compensation that would be paid in various termination scenarios. The tally sheets help the Committee to understand the magnitude and interplay of the various components of our compensation programs.

Finally, the Committee evaluates the Company's compensation programs on an annual basis to ensure that our plans do not induce or encourage excessive risk-taking by participants.

Management

Our CEO and Chief Human Resources Officer annually review with the Committee the performance of each executive officer and recommend to the Committee annual merit salary adjustments and any changes in annual or long-term incentive opportunities or payouts for these officers, except for the CEO. The Committee considers Management's recommendations along with data and recommendations presented by Pay Governance.

The CHRO serves as the liaison between the Committee and Pay Governance, providing internal data on an as needed basis so that Pay Governance can produce comparative analyses for the Committee. In addition, the Company's Human Resources, Finance and Law Departments support the work of the Committee by providing information, answering questions and responding to various requests of Committee members as required.

Independent Compensation Consultant

The Committee has engaged Pay Governance as its independent consultant to assist the Committee in evaluating the executive compensation program. The consultant provides no services to us other than advice to the Committee on executive compensation matters (including CIC matters) and to our Nominating and Corporate Governance Committee on director compensation. In 2019, the Committee reaffirmed Pay Governance to be independent from the Company under the applicable NYSE and SEC regulations.

During 2019, Pay Governance performed the following tasks for the Committee:

    Provided competitive market data for the compensation of the executive officer group and provided input to the Committee regarding officer pay recommendations (including the CEO)

    Assessed incentive plan performance difficulty and provided related context regarding performance metric selection

    Updated the Committee on executive compensation trends and regulatory developments

    Prepared a realizable pay analysis for the CEO

    Assisted with the Company's review of our comparator groups

    Provided input on compensation program design and philosophy

    Monitored trends and analysis in executive and equity compensation

    Conducted a comprehensive broad-based review of our compensation practices

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COMPENSATION DISCUSSION AND ANALYSIS     GRAPHIC

External Benchmarking

In support of our compensation philosophy, we reference the median compensation values of two compensation comparator groups, which we refer to as the "Business Segment Group" and the "Broad Talent Market Group." Data from both the Business Segment Group (which generally is applicable to the CEO and CFO) and Broad Talent Market Group are used to determine competitive pay practices for our CEO and executive officers in a wholistic manner.

The Business Segment Group is composed of public companies with operational and customer characteristics like our own business operations. These companies initially are identified by Pay Governance and then approved by the Committee with input from Management based on the following criteria: (1) size (approximately one-half to two times our annual sales); (2) industry (healthcare equipment/supplies, industrial manufacturing and life sciences tools/services); and (3) operating structure such as:

    Global footprint with multi-plant manufacturing capabilities

    Similar raw materials and products (elastomers, plastics, metals), and similar intellectual property profile

    Similar customer characteristics (complex sales cycle, quality requirements, regulatory requirements)

The Broad Talent Market Group is a larger and broader sampling of size-appropriate companies that participate in the Willis Towers Watson annual executive compensation database. Unlike the Business Segment Group, the Committee does not select individual members of the Broad Talent Market Group. Companies within the Broad Talent Market Group have annual revenues between 500 million and four billion U.S. Dollars and operate in industries that are similar, but not identical to our own industry. Industries included are: Chemicals and Gases; Electrical and Scientific Equipment and Components; Medical Supplies and Equipment; and, Pharmaceutical and Biotechnology.

Given our size and business portfolio, it is challenging to identify a robust sample of appropriate market compensation peers that fit conventional criteria. Therefore, we believe that using a balance of business and talent market references that reflect companies with which we compete for business and capital, and more broadly, those with which we compete for talent, provides the Committee with decision-quality data and context, and reasonably represents our labor market for executive talent.

Below is a chart that lists each company included in the 2019 Business Segment Group and some key data the Committee considered in making the selection for inclusion. The sales data below are generally from 2019 public annual reports with respect to each company, with market capitalization data as of December 31, 2019. All amounts are in millions of U.S. Dollars.


Business Segment Group

Company
Industry
Sales
Market
Capitalization


AptarGroup, Inc. (ATR) Materials $ 2,765 $ 7,544
Catalent Inc. (CTLT) Pharmaceuticals $ 2,463 $ 7,758
CONMED Corporation (CNMD) Healthcare Equipment and Services $ 860 $ 2,440
The Cooper Companies, Inc. (COO) Healthcare Equipment and Services $ 2,533 $ 16,275
DENTSPLY SIRONA Inc. (XRAY) Healthcare Equipment and Services $ 3,986 $ 13,777
Edwards Lifesciences Corp (EW) Healthcare Equipment and Services $ 3,723 $ 40,289
Gerresheimer AG (GXI.DE) Pharmaceuticals, Biotechnology and Life Sciences $ 1,549 $ 2,348
Haemonetics Corporation (HAE) Healthcare Equipment and Services $ 904 $ 6,021
IDEXX Laboratories, Inc. (IDXX) Healthcare Equipment and Services $ 2,213 $ 23,560
Avanos Medical (AVNS) Healthcare Equipment and Services $ 687 $ 2,001
Integer Holdings Corp (ITGR) Healthcare Equipment and Services $ 1,215 $ 2,714
Invacare Corporation (IVC) Healthcare Equipment and Services $ 972 $ 183
ResMed Inc. (RMD) Healthcare Equipment and Services $ 2,340 $ 17,217
Steris Plc. (STE) Healthcare Equipment and Services $ 2,620 $ 12,258
Teleflex Inc (TFX) Healthcare Equipment and Services $ 2,448 $ 15,449
Varian Medical Systems (VAR) Healthcare Equipment and Services $ 2,919 $ 12,480
WEST Healthcare Equipment and Services

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GRAPHIC      COMPENSATION DISCUSSION AND ANALYSIS

Executive Officer Stock Ownership Guidelines

Within five years of appointment, Officers are expected to acquire shares of West common stock with a value equal to the following:

    CEO     Other NEOs  
    6 times base salary       2 times base salary    

In 2019, the Committee reviewed and updated the ownership guidelines to further clarify and align to market practice. The Committee reviewed peer group guidelines and consulted with Pay Governance to identify market practice. The following illustrates the type of equity holdings that count towards stock ownership requirements:

    What Counts

  What Does Not Count

   

100% of West shares owned personally or by members of the immediate family sharing the same household

100% of vested shares of West stock held in a qualified or non-qualified deferred compensation plan

60% of unvested RSUs

Unrestricted bonus stock, not a part of matching contributions but subject to matching contribution holding requirements

     

Unvested stock options and PSUs

Unexercised, vested stock options

Restricted bonus stock subject to matching contribution holding requirements

   

Until individual share ownership goals are met, executives will receive 25% of their annual bonus in West stock. If after five years the required share ownership has still not been met, the officer must retain 100% of net shares resulting from any equity award vesting or stock option exercise and will have 50% of their annual bonus paid in stock.

As of December 31, 2019, Mr. Green and Mr. Miller have met their holding requirements. Mr. Birkett, Mr. Montecalvo, and Mr. Abraham have not; however, all are within their 5-year attainment period. Mr. Montecalvo has until 2021 to meet the guidelines, and Mr. Birkett and Mr. Abraham each have until 2023.

Impact of Business Results on our 2019 Incentive Plans

We have designed our compensation programs to align the pay of our senior executives with both short-term and long-term financial results and the performance of our stock. As such, the majority of pay for our CEO and other NEOs is performance-based and is impacted by our financial results and stock price performance. During 2019, 16% of Mr. Green's Total Direct Compensation was variable based on short-term business performance and 68% was based on long-term goals. For our other executives, approximately 22% of their TDC was variable based on short-term business performance and 44% was based on long-term goals.

Above target achievement of financial metrics for 2019, resulted in a payout greater than 100% for our short-term incentive plan, while below target results from the first two years of our long-term incentive plan generated a payout below 100%.

Our AIP paid out at 123.8% of target for the Corporate plan due to above target achievement in all three metrics, driven primarily by a 11.2% overachievement of the Operating Cash Flow target, and 7.2% overachievement of the EPS target.

Our LTI plan is equally based on achieving sales CAGR and ROIC targets. The payout for the 2017-19 performance period was 82.61% as both targets fell short of the target. The sales CAGR for this period achieved 84.9% of the 8.10% target resulting in a 74.8% payout factor, which is weighted 50% (contributing 37.40% to the payout), and our ROIC for this period achieved 94.3% of the target of 13.4% resulting in a 90.42% payout factor, which is also weighted 50% (contributing 45.21% to the payout).

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COMPENSATION DISCUSSION AND ANALYSIS     GRAPHIC

Incentive Compensation: Important Facts about our Incentive Targets

As in previous years, the Committee evaluates and decides upon the appropriate financial measures to be considered in determining compensation payouts using the following principles:

    Alignment with our growth strategy, supporting profitable growth while generating significant cash from operations; and driving long-term value creation for our customers, employees, investors and shareholders

    Provide a clear line of sight to the stated goals of the Company, so that the targets are clearly understood and can be affected by the performance of our executives and employees

    Attainable targets, but with a sufficient degree of "stretch" to support growth

    Consistent with market practice

    Currency neutral on sales in order to measure the underlying results of the business and help to ensure business leaders are making decisions that drive long-term sustainable growth rather than addressing short-term currency fluctuations or items impacting comparability

    We make limited adjustments to metrics. At times, adjustments may need to be made when calculating results for awards such as for changes in financial accounting reporting regulations, unexpected changes in costs and other financial implications associated with corporate transactions

We continually test the robustness of our incentive targets and performance payout curves. The setting of our performance payout curves considers the following:

    Performance levels necessary to achieve our long-term goals and deliver superior shareholder returns

    The difficulty of achieving various levels of performance based on historical and anticipated future results

    Metrics, program designs and results at companies in our Business Segment Group

    Performance relative to our Business Segment Group and anticipated industry trends

The Committee annually reviews the target setting process to ensure adherence to our principles. This analysis is aided by a retrospective review of our performance compared to that of our competitors and is performed annually by the Board's independent compensation consultant, Pay Governance.

For 2019, we measured the following key financial metrics:

  Plan Financial Metric Rationale
      Earnings per Share   A comprehensive measure of income and provides an emphasis on profitable growth while focusing managers on expense control  
      Consolidated Net Sales   Provides a clear line-of-sight target for all members of our executive officer team as we strive to create value by growing our sales  
  AIP   Operating Cash Flow   Provides a focus on generating cash in the short term to fund operations, research and capital projects and focuses managers on cash generation  
      Consolidated Gross Profit   Provides focus on targeting efforts on higher value product growth and improving operating efficiencies in our production facilities  
 
LTI

Sales Compounded Annual Growth Rate Provides an objective measure of net sales growth
  Return on Invested Capital Drives efficient and disciplined deployment of capital

Note: All metrics are measured at actual foreign currency exchange ("FX") rates except for Consolidated Net Sales, which is measured at budget FX rates to remove the impact of currency fluctuations and allow for a year-to-year comparison.

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GRAPHIC      COMPENSATION DISCUSSION AND ANALYSIS

Our Annual Incentive Compensation

Target Setting

At the beginning of each year, the Committee and the Board review and approve West's annual business objectives and set the metrics and weightings for the annual incentive program to reflect current business priorities. These objectives translate to targets for West and for each business unit for purposes of determining the target funding of the AIP. Performance against business objectives determines the actual total funding pool for the year, which can vary from 0% to 150% of total target incentives for all executives.

Our reported results may be adjusted when comparing to AIP targets for unusual events outside the control of Management including changes in accounting standards, tax regulations and currency devaluations. We may also exclude certain transactions such as material acquisition or disposition costs including restructuring charges particularly if these items were not included in the performance target. All adjustments are reviewed with and approved by the Committee. For 2019, the adjustments made were:

    Net sales are reflected at budgeted foreign currency exchange rates rather than actual

    Impact due to pension and 401(k) plan reclassification

    Exclusion of:

    Restructuring charges net of sale of building, which impacts EPS and Cash Flow

    Tax law changes and one-time tax recovery

    Argentina currency devaluation

    Share repurchases

    Pension settlement charge

    Impact on Net Sales and EPS due to the acquisition of our South Korean distributor

Target Awards

The target annual incentive awards for our NEOs are set as a percentage of base salary. Target awards are reviewed annually to ensure alignment with our compensation philosophy of targeting each compensation element and TDC at the market median. Variances from this goal are based on an evaluation of competitive market data, internal equity considerations and individual performance. Our payout curve is structured to reflect our philosophy that Management should be rewarded for meeting or exceeding goals and payouts should diminish or are withheld when targets are missed.

The formula to determine each NEO's AIP total potential payment is as follows:

GRAPHIC

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COMPENSATION DISCUSSION AND ANALYSIS     GRAPHIC

The payout factor is a pre-established multiplier that corresponds, on a sliding scale, to the achievement percentage of the AIP target objective so that if actual performance is less than target, the multiplier decreases on a sliding scale based on the achievement percentage and is based on the following chart:

Achievement %

Payout factor

<85% 0
85% 50.0 %
95% 83.3 %
100% 100.0 %
105% 116.7 %
110% 133.3 %
³115% 150.0 %

Achievement that falls between any two achievement percentages is straight-line interpolated. The Committee has discretion to positively or negatively adjust payouts to account for exceptional circumstances.

The Committee reviews the AIP scoring, adjustments made thereto and approves the AIP funding level.

Earned incentives paid in 2020 with respect to 2019 results for each metric for our NEOs, all of whom participate in the Corporate metrics AIP, are shown below:

Plan

Metric


Weight


Target


Performance



% Target
Achieved




%
Payout




Earned
Incentive


Corporate   Consolidated Revenue     20.0 % $ 1,805.8   $ 1,860.2     103.0 %   110.0 %   123.8 %
    EPS     60.0 % $ 2.89   $ 3.10     107.2 %   124.0 %      
    Operating Cash Flow     20.0 % $ 332.2   $ 369.5     111.2 %   137.3 %      

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Financial Measures and Adjustments

EPS growth for AIP purposes differs from the EPS reported in our Earnings Release under U.S. GAAP and is best explained by reconciling the results used for calculating AIP payments to U.S. GAAP and the Earnings Release. A reconciliation of the financial measures used for the AIP to our Earnings Release financials allows for a meaningful comparison. The following table contains unaudited reconciliations of 2019 U.S. GAAP Consolidated Net Sales, OCF and Reported-diluted EPS to Adjusted Net Sales, Adjusted OCF, and Adjusted-diluted EPS for AIP purposes relating to the 2019 AIP Performance Metrics and Achievement Table above. There were no other adjustments.

2019 Consolidated Performance

Reported-diluted EPS(1)   $ 3.21  

Restructuring and related charges

    0.04  

Gain on restructuring-related sale of assets

    (0.02 )

Tax recovery

    (0.04 )

Pension settlement

    0.04  

Argentina currency devaluation

    0.01  
Adjusted-diluted EPS per Earnings Release   $ 3.24  

Tax Benefit Stock Compensation(2)

    (0.14 )
Adjusted-diluted EPS for AIP purposes   $ 3.10  
Operating Cash Flow (in millions)   $ 367.2  

Restructuring & related charges

    2.3  
Adjusted OCF for AIP purposes   $ 369.5  
Consolidated Net Sales (in millions)   $ 1,839.9  

Foreign-exchange impact vs. budget

    23.2  

Impact of South Korea acquisition

    (3.3 )
Adjusted Net Sales for AIP purposes   $ 1,859.8  
(1)
A full discussion of components of adjusted-diluted EPS is found in our fourth-quarter and full-year 2019 earnings press release filed on Form 8-K with the SEC on February 13, 2020.

(2)
This item was not included in the budgeted EPS target and are deducted for purposes of comparing actual results to our performance targets for the AIP.

Our Long-Term Equity Incentive Compensation

Target Setting

The targets for West's PSUs are set at the beginning of each three-year performance period, considering West's financial guidance and the annual budget as approved by the Board. At the end of the three-year period, the score is calculated based on results against the predetermined targets equally weighted. We use CAGR and ROIC as our performance measures for determining PSU payouts. Each metric is weighted equally because we believe sales CAGR and ROIC are equally important in creating shareholder value over the long-term.

The metrics, goals and weightings for the performance period 2019-21 are:

2019—21 PSU Performance Period Targets

Metric


Threshold
Target
Maximum

CAGR

4.90 % 7.00 % 10.50 %

ROIC

9.45 % 13.5 % 20.25 %

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Target Awards

LTI compensation opportunities for our executives, including the NEOs, are entirely equity-based. Each NEO's annual target award is split into two equal amounts, which are then used to determine the number of stock options and PSUs awarded to the executive. The value of each stock option is determined under the Black-Scholes valuation method. The value of each PSU is determined by our stock price at the grant date. The actual or realized value of these awards in future years will vary from this target amount based on share price, ROIC and Sales CAGR performance over time. Please refer to Note 14 of our Annual Report on Form 10-K for a complete discussion of our stock-based compensation.

The use of stock options is intended to align our executives' longer-term interests with those of our shareholders because options deliver value to the executive only when and to the extent that share price exceeds the exercise price of the option. Therefore, options provide a strong performance-based link between shareholder value and executive pay.

PSUs entitle the recipient to receive common shares based on achievement of three-year sales CAGR and ROIC targets, which, if achieved, will have resulted in strong returns for our shareholders.

The value of each NEO's long-term grant is determined by the Committee based on its review of peer-group market data, the executive's role and responsibilities, his or her impact on our results, advancement potential, retention considerations and, in principle, is targeted to the market median.

Performance Share Units

The number of shares earned under the PSUs is based on achievement of sales CAGR and ROIC targets. Each PSU award agreement contains a target payout for the recipient. The number of shares an executive earns at the end of a performance period is calculated by multiplying the target number of PSUs awarded at the beginning of the period times the applicable "payout factor" for each performance metric by the weighting for that performance metric.

GRAPHIC

Performance
Achievement
(% of Target)



Payout factor
<70 % 0
70 % 50 %
85 % 75 %
100 % 100 %
110 % 120 %
125 % 150 %
³150 % 200 %

The Committee approves the determination of actual achievement relative to pre-established targets and the number of PSUs is adjusted up or down from 0% to 200% based on the approved actual achievement. The Committee reserves the right to negatively or positively adjust payouts under exceptional circumstances.

Equity Award Grant Practices

Under the Committee's equity-based awards policy and procedures, equity awards to NEOs normally are made once per year. The Company's policy on equity grants contains rules on determining (1) the grant date of equity awards (at least two business days following the release of our annual results for the preceding fiscal year) and (2) the exercise price of stock options granted by the Committee (which must be at least equal to the closing price of our stock on the grant date).

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2019 Compensation Decisions

In the first quarter of each year, the Committee meets to determine CEO and Executive Officers' pay decisions for base salary, AIP and LTI award grants reflecting both prior year performance and appropriate positioning versus the representative peer group(s).

Our compensation strategy supports West's business imperatives. It is designed to ensure:

    That executives balance short-term objectives against long-term priorities

    Alignment with shareholder interests

    The Company can attract and retain the leadership needed to deliver strong results

2019 Compensation Decisions for our CEO

The Chair of the Committee works directly with the Committee's Compensation Consultant to provide a decision-making framework for use by the Committee in determining incentive plan payouts and setting target compensation opportunities for the CEO. This framework considers, among other things:

    Assessment of the CEO's performance against objectives in the prior year, both qualitative and quantitative

    Progress against strategic objectives

    West's total performance over a multi-year period

    Competitive benchmark analysis, and other relevant information

Mr. Green's overall compensation decisions were made in the context of the Company's financial performance relative to the approved goals, his continued progression as CEO and the peer group market data.

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    President and Chief Executive Officer: Eric M. Green
In role since April 2015

 
    2019 Performance Highlights

Continued the transformation of the Company to operate as a market-led organization, and spearheaded the globalization and optimization of the Company's operations

Delivered full-year 2019 reported net sales of $1.840 billion, representing growth of 7.1% over the prior year and organic sales growth of 10.0%; and full-year 2019 adjusted-diluted EPS of $3.24, compared to $2.81 in the prior year

Expanded operating cash flow to $367.2 million, representing a 27% increase over 2018 operating cash flow of $288.6 million

Delivered four new product launches and expanded service capabilities to address unmet customer needs

Directed capital investments to deliver additional capacity at current sites to support high-value products in greater demand to drive future growth

Drove geographic expansion in emerging markets with critical acquisitions in South Korea, and the fortification of our strategic partnership with Daikyo Seiko Ltd. (increase to 49% ownership stake)

Invested in senior leader, middle management and high-potential team member trainings to build capabilities and support the growth of the enterprise

   
    2019 Compensation Decisions

Base Salary: The Committee approved an increase in salary from $885,000 to $945,000 (6.8% increase) based upon business performance, targeted market-pay positioning, and the external market data on competitive pay levels provided by Pay Governance

AIP Target Opportunity: 105%, flat from 2017, representing target opportunity of $992,250, which was found to be market-competitive

2019 AIP Payout (paid in February 2020): $1,228,406 representing 123.8% of target. The payout level considered significant progress in the implementation of West's enterprise strategic plan, positive financial performance, and his leadership in the continuing optimization of West's manufacturing facilities footprint. In addition, the Board noted significant personal leadership of the CEO in attracting new executive talent into the Company, developing next generation leaders, and for setting the standards for workplace diversity and inclusion.

LTI Award for 2019–21 Performance Period: $4,200,000 grant date fair value, split 50% stock options and 50% PSUs to align to the market median and drive greater retention value

For 2019, at target, 83% of Mr. Green's pay was at risk and subject to attainment of specific performance goals. With these changes, Mr. Green's annual TDC opportunity increased 15.5%, from $5,314,250 in 2018 to $6,137,250 in 2019, resulting in parity with the market median of the peer group.

   

2019 NEO Compensation Decisions

The Committee also approved the compensation recommendations put forward by the CEO for the following NEOs, noting overall performance against business objectives in the year, both qualitative and quantitative. The compensation level of each NEO was reviewed based on the representative peer group and the external survey data. Based on the Committee's targeted pay positioning, the evaluation of each NEO's performance, and the external market data on competitive pay levels provided by Pay Governance, the Committee made the following decisions.

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    Senior Vice President and Chief Financial Officer: Bernard J. Birkett
Hired June 21, 2018

 
    2019 Performance Highlights

Led strong financial management of business that led to full-year 2019 operating cash flow of $367.2 million, an increase of 27%; strategic investments in capital to drive future growth; and free cash flow of $240.8 million, an increase of over 30%

Developed strong working relationships with the investor community; delivered West business overview presentations at key investor conferences; and hosted investor roadshows at strategic West sites, to provide insight into West's business

Served as key liaison to external auditor, PwC, and to the Audit and Finance Committees ensuring strong working relationships

Co-led effort to increase West's stake in Daikyo Seiko Ltd. from 25% to 49%

Brought new talent to the Finance Team to broaden, deepen and strengthen capabilities and expertise

Educated broad employee base around the business' financial results to boost business acumen and drive disciplined financial management across the enterprise

   
    2019 Compensation Decisions

Base Salary: 3.1% increase, raising base to $567,000 from $550,000

AIP Target Opportunity: 70% of base salary, flat from 2018, representing target opportunity of $396,900

2019 AIP Payout (paid in February 2020): $491,362, representing 123.8% of target

LTI Award for 2019–21 Performance Period: $750,000 grant date fair value, split 50% stock options and 50% PSUs in recognition of full year contribution and as per Mr. Birkett's offer letter.

For 2019, at target, 67% of Mr. Birkett's pay was at risk and subject to attainment of specific performance goals.

   


    Senior Vice President, General Counsel and Corporate Secretary: George L. Miller
In role since November 2015

 
    2019 Performance Highlights

Managed contract negotiations on key business deals: increased ownership to 49% of Daikyo Seiko Ltd. and acquisition of South Korean distributor, GIS Korea

Oversaw Enterprise Risk Management Program, aligning Company's crisis management and business continuity plans, and establishing a new team to oversee the program in its entirety

Drove Corporate Responsibility (CR) Program, establishing new goals to align with U.N. Global Compact and U.N. Sustainable Development Goals. CR Program recognized with several industry awards including Investor Business Daily (Best ESG Companies) & Newsweek (Most Responsible Companies), and earning better scores from ratings services, such as Institutional Shareholder Services

Achieved significant improvements in team member safety, establishing the Company's first Safety Week and driving safety culture with broad employee engagement initiatives

Managed the Company's Intellectual Property strategy, adding new attorneys to the team, and securing more than 150 patents in 2019

   
    2019 Compensation Decisions

Base Salary: 2.8% increase, raising base to $440,000 from $428,000

AIP Target Opportunity: 65% of base salary, flat from 2018, representing a target opportunity of $286,000

2019 AIP Payout (paid in February 2020): $354,068 representing 123.8% of target

LTI Award for the 2019–21 Performance Period: $600,000 grant date fair value award—flat from 2018 and split 50% stock options and 50% PSUs. Starting with 2019 LTI awards, the Committee defined "qualifying retirement" for Mr. Miller, as earning five years of service. Qualifying retirement for LTI awards permits recipients, including Mr. Miller, to continue to vest and stock options will retain the original expiration date provided he remains employed through October 1 of the year of grant. This revised definition does not apply to his LTI awards made prior to 2019. This decision was made in consideration for Mr. Miller's overall experience including his pre-West service and significant contributions to West.

For 2019, at target, 67% of Mr. Miller's pay was at risk and subject to attainment of specific performance goals.

   

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    Senior Vice President and Chief Operations and Supply Chain Officer: David A. Montecalvo
In role since September 2016

 
    2019 Performance Highlights

Delivered Global Operations and Supply Chain plan which saw significant improvements in safety for team members (15% improvement); continuous improvement in quality and service metrics for customers; and exceeded cost reduction objectives

Delivered 2019 consolidated gross margin expansion of 110 basis points.

Achieved Contract Manufactured-Products market unit gross margin of 14.8% and developed a plan to continue further margin expansion for this market unit in 2020

Successful implementation of site consolidation plan from 28 plants to 25 at 2019 year-end

Initiated the modernization of the Company's manufacturing practices across the enterprise to incorporate more automation and digital technologies, which will fuel future growth

Executed a company-wide Lean Training Program that led to significant savings and is driving more collaborative, consistent and efficient working practices across the enterprise

   
    2019 Compensation Decisions

Base Salary: 4.9% increase, raising base to $425,000 from $405,000

AIP Target Opportunity: 65% of base salary, flat from 2018, representing a target opportunity of $276,250

2019 AIP Payout (paid in February 2020): $341,998 representing 123.8% of target

LTI Award for the 2019–21 Performance Period: $400,000 grant date fair value award—flat from 2017 and split 50% stock options and 50% PSUs

For 2019, at target, 65% of Mr. Montecalvo's pay was at risk and subject to attainment of specific performance goals.

   


    Senior Vice President, Chief Digital and Transformation Officer: Silji Abraham
Hired February 26, 2018

 
    2019 Performance Highlights

Executed West's digital transformation across three key pillars: external experience, internal experience and the digitization of our products

Improved the external experience for customers with improvements to our e-commerce and knowledge center offerings, leading to a 22% increase in traffic to our website

Upgrading all of West's internal systems to drive more consistent and effective management of business—achieving cost savings while delivering an enhanced internal experience for our team members

Partnered with Research & Development and Operations to add digital tools and capabilities to improve business performance of products and manufacturing processes to better serve customers

Opened West's first Digital Technology Center in Bangalore to undertake digitization across internal and external experiences and product platforms in a sustainable manner, hired more than 200 people to staff the new site

Enhanced enterprise cybersecurity infrastructure and programming to better manage risk

   
    2019 Compensation Decisions

Base Salary: $410,000

AIP Target Opportunity: 65% of base salary, prorated based on Mr. Abraham's period of employment in 2018

2019 AIP Payout (paid in February 2020): $340,388 representing 123.8% of target when accounting for proration and adjusted 115% to reflect performance during the year. The adjustment reflects Mr. Abraham's success in quickly developing and executing a strategy for the digitization of West during his short tenure and significantly reducing the function's operating expense

LTI Award for the 2019–21 Performance Period: $400,000, split 50% stock options and 50% PSUs as provided to other recently hired officers and required to off-set loss of equity from previous employer

For 2019, at target, 62% of Mr. Abraham's pay was at risk and subject to attainment of specific performance goals.

   

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    Former Senior Vice President and Chief Commercial Officer: Karen A. Flynn
In role since February 2016; Retired December 2019

 
    2019 Performance Highlights

In December 2019, Ms. Flynn announced her retirement from West effective as of December 31, 2019 after more than 26 years with West. Having led the business through an extraordinary period of growth, she stepped down at a time when the organization is strong and poised for the future. As a result of her retirement, we appointed two internal candidates to lead two distinct components of the Commercial organization: Commercial Products & Emerging Markets and Global Market Units & Commercial Solutions. This new organizational structure will allow more focus and enable us to continue to grow our business in the future.

Prior to her announced retirement, Ms. Flynn delivered on full-year 2019 net sales growth of 6.9% for the Proprietary Products Business Unit and helped to generate double-digit organic sales growth of High Value Products and full-year 2019 net sales growth of 7.9% for our Contract-Manufactured Products Segment. This performance was taken into consideration while setting her 2019 compensation.

   
    2019 Compensation Decisions

Base Salary: 2.0% increase, raising base to $505,000 from $495,000

AIP Target Opportunity: 70% of base salary, flat from 2017, representing target opportunity of $353,500

2019 AIP Payout (paid in February 2020): $437,633 representing 123.8% of target

LTI Award for 2019–21 Performance Period: $700,000 grant date fair value, flat from 2016 and split 50% stock options and 50% PSUs

For 2019, at target, 68% of Ms. Flynn's pay was at risk and subject to attainment of specific performance goals.

Given Ms. Flynn's qualifying retirement from West and per the terms of our retirement plan, Ms. Flynn maintains the full vesting terms of all previous vested awards and unvested awards continue to vest as per the terms of the award agreement.

   

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Other Compensation Practices

Post-Employment Compensation Arrangements

During 2019, NEOs hired on or before January 1, 2017 (Mr. Green, Ms. Flynn, Mr. Miller and Mr. Montecalvo) participated in our defined benefit retirement plan and all NEOs were eligible to participate in our defined contribution retirement plan for all employees. In addition to the standard benefits available to all eligible employees, we maintain nonqualified retirement plans in which these executives participate in the same capacity as eligible salaried employees.

All tax-qualified defined benefit plans have a maximum compensation limit and a maximum annual benefit, which limits the benefit to participants whose compensation exceeds these limits. The nonqualified retirement plans offered by the Company provide benefits to key salaried employees, including each NEO, using the same benefit formulas as the tax-qualified plans but without regard to the compensation limits and maximum benefit accruals for tax-qualified plans.

We also provide our NEOs with benefits upon termination in various circumstances, as described under "Estimated Payments Following Termination" and "Payments on Termination in Connection with a Change-in-Control" sections below.

We believe that our existing arrangements help executives remain focused on our business in the event of a threat or occurrence of a change in control and encourage them to act in the best interests of the shareholders in assessing and implementing a transaction. With regard to Mr. Green's severance arrangement, we believe severance pay is necessary to attract and retain a quality CEO candidate and that the benefits of securing a release of claims, cooperation and non-disparagement provision from Mr. Green upon an involuntary termination are significant.

The Company's CIC agreements do not include excise tax gross-ups and single-triggers where benefits would be paid without a termination of employment. Additionally, our CIC agreements include a cutback in payments and benefits if the NEO would be in a more favorable after-tax position and provide that no benefits are payable upon a voluntary resignation that is not due to "good reason."

Mr. Green has a separate employment agreement that contains many provisions similar to those contained in the form of Change in Control Agreement for other officers, but also includes other terms and conditions that resulted from negotiations relating to compensation and termination.

The terms and conditions of all these agreements are described in more detail in the Compensation Tables section of this Proxy Statement.

Personal Benefits

The benefits provided to our NEOs are generally the same as or consistent with those provided to our other salaried employees. However, upon hire, Mr. Birkett, an Irish citizen, was provided tax planning and preparation reimbursement up to $15,000 per year (not subject to gross-up). This was due to a unique challenge regarding his change from an expatriate package at his prior employer to a local hire at West as well as complications due to the relocation of a non-U.S. citizen.

Retention Cash

Occasionally, the Committee pays signing and retention bonuses in cash. These bonuses may have repayment obligations. The primary purpose of these payments is to replace equity or cash payments a new officer will forfeit from his/her former employer upon joining West.

Realizable Pay Analysis

The Committee works with Pay Governance to review pay granted and realizable by the CEO in the context of West's performance. Realizable pay is calculated using actual bonuses earned, end of period stock values and in-the-money value of stock options granted during the year. It takes a retrospective look at pay versus performance. The analysis showed that there was a high correlation between the realizable pay earned by our CEO and the Company's performance as measured by total shareholder return, sales CAGR, ROIC and similar financial metrics compared to other members in our Business Segment Group. The Committee determined this analysis is consistent with its pay-for-performance philosophy and that our incentive plans are operating as intended.

Risk Considerations in Our Compensation Programs

The Committee, in consultation with our internal auditor and our independent compensation consultant, has reviewed our compensation policies and practices for our officers and employees and concluded that any risks arising from these policies and

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programs are not reasonably likely to have a material adverse effect on the Company. The Committee believes that the mix and design of the elements of our compensation program are appropriate and encourage executive officers and key employees to strive to achieve goals that benefit the Company and our shareholders over the long term.

Our compensation policies and procedures are applied uniformly to all eligible participants. By targeting both company-wide and business-unit performance goals in our annual bonus plans and long-term compensation, we believe we have allocated our compensation between base salary and short- and long-term target opportunities in a way that does not encourage excessive risk-taking by our employees.

Policy on Hedging and Pledging

We prohibit directors, officers and employees from engaging in hedging or monetization transactions, such as zero-cost collars and forward sale contracts, which would allow them to continue to own our common stock, but without the full risks and rewards of ownership. We also prohibit directors, NEOs and other senior employees from engaging in pledging, short sales or other short-position transactions in our common stock.

Impact of Tax and Accounting Treatment

The Committee selects compensation vehicles that will, in its view, create the best link between pay and performance. Generally, the accounting and tax treatments of executive compensation has not been a significant factor in the Committee's decisions regarding the amounts or types of compensation paid. Our programs have been designed to maximize deductibility under applicable tax law unless it conflicts with our compensatory goals. The Committee also considers the impact of changes to accounting regulations and tax law, such as the Tax Cut and Jobs Act of 2017, when reviewing elements of compensation, including equity and other performance-based awards.

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COMPENSATION TABLES     GRAPHIC

Compensation Tables

The following tables, narrative and footnotes discuss the compensation of the NEOs during 2019.

2019 Summary Compensation Table

Name and Principal Position

Year

Salary ($)

Bonus(1) ($)

Stock
Awards ($)




Option
Awards ($)


Non-Equity
Incentive Plan
Compensation ($)








Change in Pension
Value & Nonqualified
Deferred
Compensation
Earnings(2) ($)







All Other
Compensation


Total
Eric M. Green   2019   935,769     2,100,020     2,100,017