DEF 14A 1 a2234920zdef14a.htm DEF 14A

Table of Contents

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.           )

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

o

 

Preliminary Proxy Statement

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material under §240.14a-12

 

Bristol-Myers Squibb Company

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

ý

 

No fee required.

o

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        
 
    (2)   Aggregate number of securities to which transaction applies:
        
 
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        
 
    (4)   Proposed maximum aggregate value of transaction:
        
 
    (5)   Total fee paid:
        
 

o

 

Fee paid previously with preliminary materials.

o

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:
        
 
    (2)   Form, Schedule or Registration Statement No.:
        
 
    (3)   Filing Party:
        
 
    (4)   Date Filed:
        
 

Table of Contents

GRAPHIC


 

GRAPHIC




PROXY STATEMENT



TABLE OF CONTENTS

 
  Page

PROXY STATEMENT SUMMARY

  3

ELECTION OF DIRECTORS

  9

Majority Vote Standard and Mandatory Resignation Policy

  9

Criteria for Board Membership

  9

Director Independence

  9

Director Succession Planning and Identification of Board Candidates

  10

2018 Director Nominees

  12

CORPORATE GOVERNANCE AND BOARD MATTERS

  17

Active Board Oversight of Our Governance

  17

Board Leadership Structure

  18

Board's Role in Strategic Planning and Risk Oversight

  19

Risk Assessment of Compensation Policies and Practices

  20

Annual Evaluation Process

  20

Meetings of our Board

  21

Annual Meeting of Shareholders

  21

Committees of our Board

  21

Codes of Conduct

  23

Related Party Transactions

  24

Disclosure Regarding Political Activities

  25

Global Corporate Citizenship & Sustainability

  26

Communications with our Board of Directors

  26

Compensation of Directors

  27

EXECUTIVE COMPENSATION

   

Compensation Discussion and Analysis

  31

Compensation and Management Development Committee Report

  53

Summary Compensation Table

  54

Grants of Plan-Based Awards

  55

Outstanding Equity Awards at Fiscal Year-End

  56

Option Exercises and Stock Vesting

  57

Present Value of Accumulated Pension Benefits

  60

Non-Qualified Deferred Compensation Plan

  60

Post-Termination Benefits

  61

Termination of Employment Obligations (Excluding Vested Benefits)

  66

Pay Ratio

  66

ITEMS TO BE VOTED UPON

   

Item 1—Election of Directors

  9

Item 2—Advisory Vote to Approve the Compensation of our Named Executive Officers

  67

Equity Compensation Plan Information

  67

Item 3—Ratification of the Appointment of Independent Registered Public Accounting Firm

  68

Audit and Non-Audit Fees

  68

Pre-Approval Policy for Services Provided by our Independent Registered Public Accounting Firm

  69

Audit Committee Report

  69

Item 4—Shareholder Proposal on Annual Report Disclosing How Risks Related to Public Concern Over Drug Pricing Strategies are Incorporated into Incentive Compensation Plans

  71

Item 5—Shareholder Proposal to Lower the Share Ownership Threshold to Call Special Shareholder Meetings

  73

VOTING SECURITIES AND PRINCIPAL HOLDERS

  75

Common Stock Ownership by Directors and Executive Officers

  75

Principal Holders of Voting Securities

  76

Section 16(a) Beneficial Ownership Reporting Compliance

  76

Policy on Hedging and Pledging

  76

OTHER MATTERS

  77

Advance Notice Procedures

  77

2019 Shareholder Proposals

  77

Compensation Committee Interlocks and Insider Participation

  77

Availability of Corporate Governance Documents

  77

FREQUENTLY ASKED QUESTIONS

  78

EXHIBIT A—Categorical Standards of Independence

  A-1

EXHIBIT B—Directions to our Lawrence Township Office

  B-1

Table of Contents


GRAPHIC

345 Park Avenue
New York, New York 10154-0037




NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS



            Notice is hereby given that the 2018 Annual Meeting of Shareholders will be held at Bristol-Myers Squibb Company, 3401 Princeton Pike, Lawrence Township, New Jersey, on Tuesday, May 1, 2018, at 10:00 a.m. for the following purposes as set forth in the accompanying Proxy Statement:

    to elect to the Board of Directors the 12 persons nominated by the Board, each for a term of one year;

    to conduct an advisory vote to approve the compensation of our Named Executive Officers;

    to ratify the appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for 2018;

    to consider two shareholder proposals, if presented at the meeting; and

    to transact such other business as may properly come before the meeting or any adjournments thereof.

            Holders of record of our common and preferred stock at the close of business on March 14, 2018 will be entitled to vote at the meeting.

  By Order of the Board of Directors
GRAPHIC

Katherine R. Kelly
Vice President, Associate General Counsel
and Corporate Secretary

Dated: March 22, 2018


YOUR VOTE IS IMPORTANT

Regardless of the number of shares you own, your vote is important. If you do not attend the Annual Meeting to vote in person, your vote will not be counted unless a proxy representing your shares is presented at the meeting. To ensure that your shares will be voted at the meeting, please vote in one of these ways:

    (1)
    GO TO WWW.PROXYVOTE.COM and vote via the Internet;

    (2)
    CALL THE TOLL-FREE TELEPHONE NUMBER (800) 690-6903 (this call is toll-free in the United States); or

    (3)
    MARK, SIGN, DATE AND PROMPTLY RETURN the enclosed proxy card in the postage-paid envelope.

If you do attend the Annual Meeting, you may revoke your proxy and vote by ballot.


Table of Contents


GRAPHIC

Dear fellow shareholders:

You are cordially invited to attend the Annual Meeting of Shareholders of Bristol-Myers Squibb Company on Tuesday, May 1, 2018, at 10:00 a.m. at our offices located in Lawrence Township, New Jersey. I hope that you will be able to attend.

During the meeting, we will cover a number of business items, including the election of directors, advisory vote to approve the compensation of our Named Executive Officers, ratification of the appointment of an independent registered public accounting firm, and consideration of two shareholder proposals.

We will also use the meeting as an opportunity to look back on the past year, highlighting everything from our strong financial and operational company performance to our regulatory and clinical advances to our progress against our Sustainability 2020 goals and the important work of the BMS Foundation. And, of course, we will talk about our unwavering focus on our patients and their families—the people at the center of everything we do.

Lastly, I would like to take this opportunity to thank Dr. Laurie Glimcher for her many years of dedicated service to the Bristol-Myers Squibb Board of Directors and our shareholders. We are extremely grateful to Dr. Glimcher for her contributions. Dr. Glimcher retired from the Board on July 21, 2017. I would also like to welcome Dr. Karen Vousden and Dr. José Baselga to the Board. Drs. Vousden and Baselga were elected to serve as members of our Board of Directors effective January 1, 2018 and March 1, 2018, respectively. Each brings to our company important experience and skills that will further strengthen and complement our Board.

Last year, over 87% of the outstanding shares were represented at the Annual Meeting. Whether or not you attend in person, I hope that your shares will be represented at the meeting. Your vote is very important.

I look forward to welcoming many of you to our 2018 Annual Meeting.


GRAPHIC

Giovanni Caforio, M.D.
Chairman of the Board and Chief Executive Officer

 

 

1


Table of Contents

GRAPHIC

To my fellow shareholders:

At Bristol-Myers Squibb, our Mission is "to discover, develop and deliver innovative medicines that help patients prevail over serious diseases." My fellow Directors and I believe in this Mission, and we strive to ensure from the boardroom that the company is well positioned to be successful in this important undertaking. Collectively, with the Board's oversight and appropriate guidance, in 2017 our management team worked to execute our strategy, focusing on commercial execution, advancing the pipeline, and managing expenses, while also increasing investment in our R&D pipeline. As a company, we are well-positioned to capitalize on multiple potential growth opportunities that support the creation of sustainable long-term value for our shareholders.

Since last year's Annual Meeting, Laurie H. Glimcher, M.D. has retired from our Board. The Board is extremely grateful to Dr. Glimcher for her contributions and many years of dedicated service to the Board and our shareholders. We also welcomed Karen H. Vousden, Ph.D. and José Baselga, M.D., Ph.D. to the Board on January 1, 2018 and March 1, 2018, respectively. Drs. Vousden and Baselga both bring to the Board extensive oncology expertise, each having more than 30 years of experience in oncology research and drug discovery and development.

Your Board remains committed to sound corporate governance and practices that ensure the Board is comprised of skilled, diverse and engaged members that effectively support the execution of the company's strategy, as well as openness to shareholder feedback. As evidence of this commitment, three key areas of focus in 2017 are worth highlighting:

Focus on Board evaluations, effectiveness and composition. We were pleased to discuss our robust Board evaluation process with shareholders, which has recently been enhanced as discussed on page 20. We believe that a robust board assessment process, which reviews and evaluates the performance and contributions of directors, improves the overall effectiveness of the Board. We are also very focused on Board composition and refreshment to ensure that your Board has the best mix of skill sets, proficiencies and perspectives to deal with the ever-changing business dynamics of the company and external environment. The election of five new independent directors over the past 13 months demonstrates our commitment to refreshment, balanced with the experience and company-specific knowledge of tenured directors. The Board is also committed to increasing diversity and inclusion, both at the Board level and across the company. In particular, the Committee on Directors and Corporate Governance revised its committee charter to formalize the Board's commitment to identifying and evaluating highly qualified women and under-represented ethnic group candidates as well as candidates with other diverse backgrounds, industry experience and other unique characteristics.

Board's role in execution of company strategy. My fellow Directors and I believe that we are able to effectively serve the governance needs of our organization only when there is strong strategic partnership between management and the Board—where the Board is informed, active and constructively engages management, without disruption to the day-to-day business operations of the company. Our Board meets regularly to discuss the strategic direction, enterprise risks and the issues and opportunities facing our company. As a group, we provide a diverse and valuable mix of experience and insights in key areas, including, among others, expertise in the healthcare industry, fields of medicine, science and technology, clinical research, executive and boardroom leadership, strategy and team effectiveness, international markets, investment management, and financial, capital markets and operating experience. Our Board will continue to provide critical insights to our company that will (i) focus on maximizing shareholder value and (ii) support the pursuit of our Mission "to discover, develop and deliver innovative medicines that help patients prevail over serious diseases."

Ongoing shareholder dialogue. Shareholder engagement remains a top priority. During 2017, we expanded our shareholder outreach, reaching out to over 50 of our top shareholders representing nearly 50% of our shares outstanding. We continued to engage with shareholders on a number of different topics, including board composition, tenure, board assessment, sustainability and risk oversight as well as executive compensation. We remain committed to this continued engagement with our shareholders because of the valuable insights we gain. Their input has enabled the Board to more thoroughly evaluate and improve our governance practices and disclosures in a variety of areas over the last few years, including for example, our board evaluation process, board composition and refreshment, and our executive compensation program.

As we look ahead, I can report that the Board will continue to advance its commitment to excellence in serving you, our shareholders. On behalf of the Board of Directors, I thank you for your continued support.

GRAPHIC    
Vicki L. Sato, Ph.D.
Lead Independent Director
Chair, Committee on Directors and Corporate Governance
   

2


Table of Contents


PROXY STATEMENT SUMMARY

 
   
   
   
    2018 Annual Meeting of Shareholders    
    Date:   Tuesday, May 1, 2018    
    Time:   10:00 a.m.    
    Place:   3401 Princeton Pike, Lawrence Township, New Jersey    
             
             
        For additional information about the Annual Meeting, see "Frequently Asked Questions" beginning on page 78.    

 

 
   
   
   
   
   
   
    Voting Matters                
   
Item
 
Proposal
  Board Vote
Recommendation
 
Required Vote
  Page
Number
   
    1   Election of Directors   FOR ALL   Majority of votes cast   9  
    2   Advisory vote to approve the compensation of our Named Executive Officers   FOR   Majority of shares voted   67    
    3   Ratification of the appointment of an independent registered public accounting firm   FOR   Majority of shares voted   68  
    4   Shareholder proposal on annual report disclosing how risks related to public concern over drug pricing strategies are incorporated into incentive compensation plans   AGAINST   Majority of shares voted   71    
    5   Shareholder proposal to lower the share ownership threshold to call special shareholder meetings   AGAINST   Majority of shares voted   73  
           

2017 Performance Highlights and Long-term Business Strategy

            We are a diversified specialty biopharmaceutical company, with a strategy uniquely designed to combine the resources, scale and capability of a pharmaceutical company with the speed and focus on innovation of the biotech industry. Our four strategic priorities are to drive business performance, continue to build a leading franchise in immuno-oncology, maintain a diversified portfolio both in immuno-oncology and other core therapeutic areas, and continue our disciplined approach to capital allocation, including establishing partnerships, collaborations and in-licensing or acquiring investigational compounds and innovative delivery systems as an essential component of successfully delivering transformational medicines to patients. Our commercial model has been evolving and revenues from our marketed product portfolio continue to grow which demonstrates strong execution of our strategy. In 2017, we met or exceeded our financial and operational goals in key areas. Looking ahead, we will continue to implement our biopharma strategy by driving the growth of key brands, executing product launches, investing in our diverse and innovative pipeline, aided by strategic business development, focusing on prioritized markets, increasing investments in our biologics manufacturing capabilities and maintaining a culture of continuous improvement with high integrity and ethics.

Key Financial and Operational Highlights for 2017

            2017 was a great year in which we built on the substantial growth and strong foundation put in place over the last few years. Management's continued execution of our strategic priorities in 2017 resulted in strong execution across the company, with increased revenues of 7%. Our GAAP earnings per share decreased by 77% primarily due to the impact of tax reform and our non-GAAP earnings per share increased by 6%. Our 2017 operating results were primarily driven by strong performance of prioritized brands, additional clinical and regulatory achievements, particularly in immuno-oncology, important business development activities that supplement our innovative pipeline, the evolution of our operating model, a disciplined approach to expense management, and a strong balance sheet.

 
   
   
   
   
   

 

     
Full Year
   

 

 

$ amounts in millions, except per share amounts

           

 

     
2017
 
2016
 
Change
   

 

 

Total Revenues

  $20,776   $19,427   7%  

 

 

GAAP Diluted EPS (1)

  0.61   2.65   (77)%    

 

 

Non-GAAP Diluted EPS (2)

  3.01   2.83   6%  
         

(1)   The decrease in GAAP EPS in 2017 was primarily due to an approximately $3B charge related to tax reform. After excluding the impact of tax reform and other specified items due to their significant and/or unusual nature, the increase in non-GAAP EPS in 2017 was primarily due to higher revenues. The exclusion of such specified items for 2017 is consistent with the company's current policies and procedures, as well as our past practices.
(2)   Our non-GAAP financial measures, including non-GAAP earnings and related EPS information, are adjusted to exclude specified items which represent certain costs, expenses, gains and losses and other items impacting the comparability of financial results. For a detailed listing of all specified items and further information, including reconciliations of non-GAAP financial measures, please refer to "—Non-GAAP Financial Measures" in our Annual Report on Form 10-K for the year ended December 31, 2017.

3


Table of Contents

Total Revenues of Prioritized Brands (Dollars in Millions)

GRAPHIC

 

GRAPHIC

 

GRAPHIC

 

GRAPHIC   GRAPHIC   GRAPHIC

 

GRAPHIC

 

GRAPHIC

 

GRAPHIC

 

GRAPHIC   GRAPHIC   GRAPHIC

Execution of our Strategy Continues to Create Sustainable Long-Term Value for Shareholders

            Our overall philosophy to create sustainable shareholder value is primarily focused on strong year-to-year financial and operational performance and on the development and advancement of our pipeline over the long-term. Our strong performance in 2017 continued to deliver on our strategy and positions us well for potential growth opportunities that will create sustainable long-term shareholder value, as evidenced by our 115% five-year total shareholder return (TSR). We also increased our dividend for the ninth year in a row.


Cumulative Indexed Total Shareholder Return    

GRAPHIC

4


Table of Contents


Director Nominees

            Our Committee on Directors and Corporate Governance maintains an active and engaged Board, whose diverse skill sets benefit from both the industry and company-specific knowledge of our longer-tenured directors, as well as the fresh perspectives brought by our newer directors. We continually review our Board's composition with a focus on refreshing necessary skill sets as our business strategy and industry dynamics evolve.

 
   
   
   
   
   
   
   
        Name   Occupation   Independent   Committee
Memberships*
  Other
Public
Company
Boards
   
    GRAPHIC   Giovanni Caforio, M.D.
Chairman of the Board
Age: 53
Director Since: 2014



 
Chairman of the Board and Chief Executive Officer   No     0  
    GRAPHIC   Vicki L. Sato, Ph.D.
Lead Independent Director
Age: 69
Director Since: 2006
  Non-Executive Chairman of Denali Therapeutics, Inc.; retired Professor of Management Practice at the Harvard Business School   Yes   CDCG (c);
S&T
  3    
    GRAPHIC   Peter J. Arduini
Age: 53
Director Since: 2016


 
President and Chief Executive Officer of Integra LifeSciences Holdings Corporation   Yes   Audit;
CMDC

 
1  
    GRAPHIC   José Baselga, M.D., Ph.D.
Age: 58
Director Since: 2018**
  Physician-in-Chief at Memorial Sloan-Kettering Cancer Center and Professor of Medicine at Weill Cornell Medical College   Yes   S&T   1    
    GRAPHIC   Robert J. Bertolini
Age: 56
Director Since: 2017


 
Former President and Chief Financial Officer of Bausch & Lomb Incorporated   Yes   Audit (c);
CDCG

 
2  
    GRAPHIC   Matthew W. Emmens
Age: 66
Director Since: 2017
  Former Chairman, Chief Executive Officer of Shire PLC; former Chairman, President and Chief Executive Officer of Vertex Pharmaceuticals Incorporated   Yes   CMDC;
S&T
  0    
    GRAPHIC   Michael Grobstein
Age: 75
Director Since: 2007


 
Former Vice Chairman of Ernst & Young LLP   Yes   Audit;
CMDC (c)

 
0  
    GRAPHIC   Alan J. Lacy
Age: 64
Director Since: 2008
  Former Non-Executive Chairman of Dave & Buster's Entertainment, Inc.; former Vice Chairman and CEO of Sears Holdings Corporation   Yes   Audit;
CDCG
  0    
    GRAPHIC   Dinesh C. Paliwal
Age: 60
Director Since: 2013


 
President and Chief Executive Officer of Harman International, a wholly-owned subsidiary of Samsung Electronics Co., Ltd   Yes   CMDC;
CDCG

 
1  
    GRAPHIC   Theodore R. Samuels
Age: 63
Director Since: 2017
  Former President of the Capital Guardian Trust Company   Yes   Audit;
CDCG
  2    
    GRAPHIC   Gerald L. Storch
Age: 61
Director Since: 2012


 
Chief Executive Officer of Storch Advisors; former Non-Executive Chairman of Supervalu Inc.   Yes   Audit;
CMDC

 
0  
    GRAPHIC   Karen H. Vousden, Ph.D.
Age: 60
Director Since: 2018**
  Senior Group Leader at The Francis Crick Institute; Chief Scientist at Cancer Research UK   Yes   S&T (c)   0    
    *   Committee memberships listed as of the date of this Annual   Audit:   Audit Committee  
      Meeting   CDCG:   Committee on Directors and Corporate Governance  
    **   Dr. Vousden and Dr. Baselga were each elected to serve as a   CMDC:   Compensation and Management Development Committee  
      member of the Board of Directors effective January 1, 2018   S&T:   Science and Technology Committee  
      and March 1, 2018, respectively   (c):   Committee Chair  

5


Table of Contents

 

GRAPHIC

Board's Role in Strategic Planning

            The Board and Board Committees regularly meet to discuss the strategic direction and the issues and opportunities facing our company. Our Board frequently provides guidance to management on strategy and has been instrumental in determining our next steps as we have emerged as a diversified specialty biopharmaceutical company. As part of its ongoing review and focus on strategy, the Board annually holds an in-depth meeting with senior management dedicated to discussing and reviewing our long-term operating plans and overall corporate strategy, which also includes a discussion of key risks and opportunities as well as risk mitigation plans and activities.

Board Refreshment and Leadership Transition

            The Board continually reviews its composition with a focus on refreshing necessary skill sets as our business strategy and industry dynamics evolve. Five new independent directors have been added to the Board over the past 13 months, including Drs. Karen Vousden and José Baselga, our two newest directors who joined the Board in January 2018 and March 2018, respectively. These new independent directors bring fresh perspectives and important skills and experience that further strengthen and complement the Board.

            Following the 2017 Annual Meeting, Dr. Giovanni Caforio became Chairman of the Board, replacing Lamberto Andreotti. The Board determined that Dr. Caforio's deep institutional knowledge and industry experience uniquely position him to serve as Chairman. The Board recognizes the importance of a Lead Independent Director, and Dr. Sato was elected to serve in this position. The Lead Independent Director responsibilities can be found on page 18.

Corporate Governance Highlights

            We are committed to strong governance practices that protect the long-term interests of our shareholders and establish strong Board and management accountability. The "Corporate Governance and Board Matters" section beginning on page 17 describes our governance framework, which includes the following key governance best practices that we have adopted:

 
   

ü

  Annual election of Directors  

ü

  Proxy access shareholder right  
   

ü

  Majority voting standard for election of Directors  

ü

  Limit on number of public company directorships Board members may hold (4)    
   

ü

  Shareholder right to call a special meeting (25%)  

ü

  Emphasis on board refreshment and effectiveness  
   

ü

  No supermajority voting provisions for common shareholders  

ü

  Clawback and recoupment policies    
   

ü

  Proactive shareholder engagement  

ü

  Share ownership and retention policy  
   

ü

  Robust related party transaction policies and procedures  

ü

  Prohibition of speculative and hedging transactions by all employees and directors    
   

ü

  Semi-annual disclosure of political contributions  

ü

  No shareholder rights plan  
         

6


Table of Contents

Shareholder Engagement

            We continued to place a high priority on engagement with our shareholders in 2017, reaching out to over 50 of our top shareholders representing nearly 50% of our shares outstanding. As in previous years, we continued to engage with our investors on general corporate governance and related matters such as board composition, tenure, board assessment, sustainability and risk oversight as well as executive compensation. The feedback received was generally positive and was shared with the entire Board and members of senior management.

            We encourage our registered shareholders to use the space provided on the proxy card to let us know your thoughts about BMS or to bring a particular matter to our attention. If you hold your shares through an intermediary or received the proxy materials electronically, please feel free to write directly to us.

2017 Compensation Plan Structure

            Our compensation program design reflects our compensation philosophy and aligns well with our strategy, market practice and our shareholders' interests.

GRAPHIC

7


Table of Contents

Executive Compensation

            The Compensation and Management Development Committee firmly believes in pay-for-performance and has structured the executive compensation program to align our executives' interests with those of our shareholders.

                In line with our commitment to a highly performance-based compensation structure, approximately 90% of Dr. Caforio's target total compensation (and approximately 83% of the target total compensation for our other Named Executive Officers) is variable and at risk, based on the financial, operational, strategic and share price performance of the company.

              Additional detail on our executive compensation program is provided in the "Compensation Discussion and Analysis" beginning on page 31.

  2017 Target Total CEO Compensation

        GRAPHIC

8


Table of Contents

ITEM 1—ELECTION OF DIRECTORS

            Our Board of Directors has nominated 12 current directors, Peter J. Arduini, José Baselga, M.D., Ph.D., Robert J. Bertolini, Giovanni Caforio, M.D., Matthew W. Emmens, Michael Grobstein, Alan J. Lacy, Dinesh C. Paliwal, Theodore R. Samuels, Vicki L. Sato, Ph.D., Gerald L. Storch and Karen H. Vousden, Ph.D., to serve as directors of Bristol-Myers Squibb. The directors will hold office from election until the 2019 Annual Meeting.

Majority Vote Standard and Mandatory Resignation Policy

            A majority of the votes cast is required to elect directors. Any current director who does not receive a majority of votes cast must tender his or her resignation as a director within 10 business days after the certification of the shareholder vote. The Committee on Directors and Corporate Governance, without participation by any director tendering his or her resignation, will consider the resignation offer and recommend to the Board whether to accept it. The Board, without participation by any director tendering his or her resignation, will act on the Committee's recommendation at its next regularly scheduled meeting to be held within 60 days after the certification of the shareholder vote. We will promptly disclose the Board's decision and the reasons for that decision in a broadly disseminated press release that will also be furnished to the U.S. Securities and Exchange Commission (SEC) on Form 8-K. If any nominee is unable to serve, proxies will be voted in favor of the remainder of those nominated and may be voted for substitute nominees, unless our Board of Directors provides for a lesser number of directors.

Criteria for Board Membership

            As specified in our Corporate Governance Guidelines, members of our Board should be persons with broad experience in areas important to the operation and long-term success of our company. These include areas such as business, science, medicine, finance/accounting, law, business strategy, crisis management, corporate governance, education or government. Board members should possess qualities reflecting integrity, independence, leadership, good business judgment, wisdom, an inquiring mind, vision, a proven record of accomplishment and an ability to work well with others. The Corporate Governance Guidelines also express the Board's belief that its membership should continue to reflect a diversity of gender, race, ethnicity, age, sexual orientation and gender identity.

All Director Nominees Possess:

GRAPHIC

Director Orientation and Continuing Education

            Director education is an ongoing, year-round process, which begins when a director joins our Board. Upon joining our Board, new directors are provided with a comprehensive orientation to our company, including our business, strategy and governance. New directors participate in an orientation program with senior business and functional leaders from all areas of the company, during which there is discussion on strategic priorities and key risks and opportunities, and participate in site visits to one or more of our locations. On an ongoing basis, directors receive presentations on a variety of topics related to their work on the Board and within the biopharmaceutical industry, both from senior management and from experts outside of the company. We also encourage Directors to enroll in continuing education programs sponsored by third parties at our expense.

Director Independence

11 of our 12 director nominees are currently independent

            Our Corporate Governance Guidelines provide that a substantial majority of Board members be independent from management, and the Board has adopted independence standards that meet the listing standards of the New York Stock Exchange. Our Board has determined that each of our directors and each director nominee for election at this Annual Meeting is independent of Bristol-Myers Squibb and its management in that none currently have a direct or indirect material relationship with our company, except for Giovanni Caforio, M.D.

            Dr. Caforio is not an independent director because he is currently our Chief Executive Officer.

9


Table of Contents

Process for Determining Independence

            In accordance with our Corporate Governance Guidelines, our Board undertakes an annual review of director independence. In February 2018 and March 2018, the Board considered all commercial and charitable relationships of our independent directors and director nominees, including the following relationships, which were deemed immaterial under our categorical standards (see Exhibit A):

    Dr. Sato, Messrs. Arduini, Bertolini, Grobstein, Lacy and Samuels are directors of companies that received payment from the company for property or services in an aggregate amount that did not exceed the greater of $1 million or 2% of such other company's consolidated gross revenues. For each transaction, the Board determined that the director did not initiate or negotiate the transaction and that the transaction was entered into in the ordinary course of business.

    Drs. Baselga, Sato and Vousden, Messrs. Arduini, Grobstein and Lacy, or one of their immediate family members, are employed by, or serve as directors of, businesses or educational or medical institutions with which we engage in ordinary course business transactions. The directors did not initiate or negotiate any transaction with such institutions and the payments made did not exceed the greater of $1 million or 2% of such institutions' respective consolidated gross revenues.

    Dr. Sato, Messrs. Grobstein and Samuels are directors of charitable or non-profit organizations to which the Bristol-Myers Squibb Foundation made charitable contributions, which, in the aggregate, did not exceed the greater of $1 million or 2% of such organizations' respective consolidated gross revenues.

            The Board determined that none of these relationships impair the independence of these directors under the New York Stock Exchange's independence standards or otherwise.

Director Succession Planning and Identification of Board Candidates

Regular Assessment of our Board Composition

            The Committee on Directors and Corporate Governance regularly assesses the appropriate size and composition of our Board. This assessment incorporates the results of the Board's annual evaluation process, which was recently enhanced in 2017 as described more fully under "Annual Evaluation Process" beginning on page 20. The Committee also considers succession planning for its directors.

Identification and Selection of Director Nominees   Director Tenure

GRAPHIC

              In connection with the Board's ongoing director identification process, the Committee on Directors and Corporate Governance, in consultation with the Chairman, conducts an initial evaluation of prospective nominees against the established Board membership criteria discussed above. The Committee also reviews the skills of the current directors and compares them to the particular skills of potential candidates, keeping in mind the Board's commitment to maintain members of diverse experience and background. In particular, the Board is committed to identifying and evaluating highly qualified women and under-represented ethnic group candidates as well as candidates with other diverse backgrounds, industry experience and other unique characteristics. Candidates may come to the attention of the Committee on Directors and Corporate Governance through current Board members, third party search firms, management, shareholders or others. Search firms together with management and Directors develop a candidate profile that includes the relevant skills and experiences being sought at that time and incorporates the Board membership criteria. Prospective candidates are identified based on the profile. Additional information relevant to the qualifications of prospective nominees may be requested from third party search firms, other directors, management or other sources. After this initial evaluation, prospective nominees may be interviewed by telephone or in person by the members of the Committee on Directors and Corporate Governance, the Chairman, the Lead Independent Director and other directors, as applicable. After completing this evaluation and interview process, the Committee on Directors and Corporate Governance makes a recommendation to the full Board as to the persons who should be nominated by our Board, and the full Board determines the nominees after considering the recommendation and any additional information it may deem appropriate. Dr. Vousden, who was elected to serve on the Board, effective January 1, 2018, was identified as a potential candidate for election to our Board by one of our directors and vetted by a third party search firm retained by the Committee on Directors and Corporate Governance. Dr. Baselga, who was elected to serve on the Board, effective March 1, 2018, was identified by one of our directors and vetted by a third party search firm retained by the Committee on Directors and Corporate Governance.

10


Table of Contents

Shareholder Nominations for Director

            The Committee on Directors and Corporate Governance considers and evaluates shareholder recommendations of nominees for election to our Board of Directors in the same manner as other director nominees. Shareholder recommendations must be accompanied by disclosure, including written information about the recommended nominee's business experience and background with consent in writing signed by the recommended nominee that he or she is willing to be considered as a nominee and, if nominated and elected, he or she will serve as a director. Shareholders should send their written recommendations of nominees accompanied by the required documents to: Bristol-Myers Squibb Company, 345 Park Avenue, New York, New York 10154, Attention: Corporate Secretary, until July 1, 2018, after which, please address to Bristol-Myers Squibb Company, 430 East 29th Street—14th Floor, New York, New York 10016, Attention: Corporate Secretary.

Proxy Access Shareholder Right

            Following extensive engagement with our shareholders, our Board determined to adopt proxy access in 2016, permitting a shareholder or group of up to 20 shareholders holding 3% of our outstanding shares of common stock for at least three years to nominate a number of directors constituting the greater of two directors or 20% of the number of directors on our Board, as set forth in detail in our Bylaws. If you wish to propose any action pursuant to our proxy access bylaw provision, you must deliver a notice to BMS containing certain information set forth in our Bylaws, not less than 120 but not more than 150 days before the anniversary of the prior year's filing of the proxy materials. For our 2019 Annual Meeting, we must receive this notice between October 23, 2018 and November 22, 2018. Shareholders should send their notices to: Bristol-Myers Squibb Company, 345 Park Avenue, New York, New York 10154, Attention: Corporate Secretary, until July 1, 2018, after which please address to Bristol-Myers Squibb Company, 430 East 29th Street—14th Floor, New York, New York 10016, Attention: Corporate Secretary.

Importance of Balancing Board Refreshment with Continuity; Limited Waiver of Mandatory Retirement for Mr. Grobstein

            The Board believes it is important to balance refreshment with the need to retain directors who have developed, over a period of time, significant insight into the company and its operations and who continue to make valuable contributions to the company that benefit our shareholders. Over the last 13 months, five new independent directors joined the company's Board, representing refreshment of approximately 40% of the Board. Another director, Mr. Grobstein, turned 75 this year. We have a general mandatory retirement age policy for non-employee directors at the annual meeting following their 75th birthday, unless the Board makes an exception for a specific director for special circumstances. After extensive consideration and discussion of these specific facts and special circumstances, following input from several of our top shareholders, and upon the recommendation of our Committee on Directors and Corporate Governance, our Board determined that it is in the best interest of the company and its shareholders to waive the mandatory retirement age for Mr. Michael Grobstein for up to two years to maintain Board continuity during this period of transition. In reaching this determination, the Board also carefully considered Mr. Grobstein's extensive knowledge of the company and industry; his leadership as Compensation and Management Development Committee Chairman; his key role as a member and former Chair of our Audit Committee; his desire and ability to continue to guide and serve the company in executing its mission and strategy; the low average tenure of the Board (4.5 years compared to 8.2 for the S&P 500) and the recently enhanced, robust Board evaluation process, among other things.

11


Table of Contents

2018 Director Nominees

            The following biographies of our director nominees reflect their Board Committee membership and Chair positions as of the date of this year's Annual Meeting.

 
   
   

GRAPHIC
Director since 2014
Chairman and Chief Executive Officer of the Company

  GIOVANNI CAFORIO, M.D.

Dr. Caforio, age 53, has been our Chief Executive Officer since May 2015 and our Chairman since May 2017. He was our Chief Operating Officer from June 2014 to May 2015, and he served as Executive Vice President and Chief Commercial Officer from November 2013 to June 2014. From October 2011 to November 2013, he served as President, U.S. Dr. Caforio held the position of Senior Vice President, Global Commercialization and Immunology from May 2010 to October 2011. Prior to that, he served as Senior Vice President, Oncology, U.S. and Global Commercialization from March 2009 to May 2010. From January 2007 to March 2009 he served as Senior Vice President, U.S. Oncology and from May 2004 to January 2007, he served as Senior Vice President, European Marketing and Brand Commercialization. Dr. Caforio is a member of the Board of Trustees of Hun School of Princeton, Business Roundtable, CEO Roundtable on Cancer and the Pharmaceutical Research and Manufacturers of America.

Key Skills and Experience: With over 26 years of pharmaceutical industry experience, including more than 16 years at the company, Dr. Caforio has overseen the creation of a fully integrated worldwide commercial organization as part of our evolution into a diversified specialty biopharmaceutical company. A physician by training, Dr. Caforio has worked across many businesses within the company, in Europe and the U.S., and has a proven record of developing talented leaders with the diverse experiences and competencies needed for the continued success of the company.



 
 
 

GRAPHIC
Director since 2006
Lead Independent Director

BMS Committees:

Committee on Directors
and Corporate
Governance (Chair)

Science & Technology
Committee

Other Directorships:

Current:

Denali Therapeutics, Inc.

BorgWarner, Inc.

Syros Pharmaceuticals

Past 5 Years:

PerkinElmer Corporation

  VICKI L. SATO, PH.D.

Dr. Sato, age 69, serves as Chairman of the Board of Directors of Denali Therapeutics, Inc. She previously served as a professor of management practice at the Harvard Business School from July 2005 to June 2017. From July 2005 to October 2014 she served as professor of the practice of molecular and cell biology at Harvard University. In 2005, Dr. Sato retired as President of Vertex Pharmaceuticals Incorporated, a global biotechnology company, where she was responsible for research and development, business and corporate development, commercial operations, legal and finance. Dr. Sato also served as Chief Scientific Officer, Senior Vice President of Research and Development and Chair of the Scientific Advisory Board at Vertex before being named President in 2000. She serves as Chairman of VIR Biotechnology, Inc. and on the Board of Directors of the Peer Health Exchange, Inc. She serves as Co-Chair on the Task Force on Science and Engineering at Harvard University and Co-Chair on the Advisory Council of LifeSci NYC.

Key Skills and Experience: Dr. Sato's extensive and distinctive experience in business, academia and science over more than 31 years brings to the Board a valuable perspective on the biotech industry. Dr. Sato has a strong background in research and development positioning her well to serve as a member of our Science and Technology Committee. Her experience serving on the Boards of other healthcare companies and her knowledge and keen understanding of the issues facing public companies, and in particular, healthcare companies position her well to serve as our Lead Independent Director.



 
 

12


Table of Contents

 
   
   

GRAPHIC
Director since 2016

BMS Committees:

Audit Committee

Compensation and
Management Development
Committee

Other Directorships:

Current:

Integra LifeSciences
Holdings Corporation

  PETER J. ARDUINI

Mr. Arduini, age 53, has been President and Chief Executive Officer of Integra LifeSciences Holdings Corporation, a global medical technology company, since January 2012 and currently serves as a member of Integra's Board of Directors. He served as President and Chief Operating Officer of Integra from November 2010 to January 2012. Before joining Integra, Mr. Arduini was Corporate Vice President and President of Medication Delivery, Baxter Healthcare, from 2005 to 2010. Prior to joining Baxter, he worked for General Electric Healthcare, where he spent much of his 15 years in a variety of management roles for domestic and global businesses, culminating in leading the global functional imaging business. Mr. Arduini also serves on the Board of Directors of ADVAMED (the Advanced Medical Technology Association), the Board of Directors of MDIC (the Medical Device Innovation Consortium), and the Board of Directors of the National Italian American Foundation.

Mr. Arduini also serves on the Board of Trustees of Susquehanna University.

Key Skills and Experience: With over 25 years in the healthcare industry, Mr. Arduini brings to the Board extensive leadership, business and operational experience, particularly with respect to manufacturing and sales of medical technology and devices. In addition, his experience serving as a public company chief executive officer and former chief operational officer positions him well to serve as a member of our Audit Committee and our Compensation and Management Development Committee.




 
 
 

GRAPHIC
Director since 2018

BMS Committees:

Science & Technology
Committee

Other Directorships:

Current:

Varian Medical Systems

Past 5 Years:

Infinity Pharmaceuticals, Inc.

  JOSÉ BASELGA, M.D., PH.D.

Dr. Baselga, age 58, has served as Physician-in-Chief of Memorial Sloan-Kettering Cancer Center ("MSKCC") since January 2013. He has also served as Professor of Medicine at Weill Cornell Medical College and as Attending Physician, Department of Medicine and member, Human Oncology and Pathogenesis Program at MSKCC since January 2013. Previously, Dr. Baselga served as Chief of Division of Hematology & Oncology and Associate Director of the Massachusetts General Hospital Cancer Center and Professor of Medicine at Harvard Medical School from January 2010 to December 2012; and President of the American Association for Cancer Research from 2016 to 2017. He also served in various roles at Vall d'Hebron University Hospital in Barcelona, Spain, including as Founding Director, Vall d'Hebron Institute of Oncology from 2007 to 2012 and Director, Division of Medical Oncology, Hematology & Radiation Oncology and Founding Director and Chairman, Medical Oncology Service from 1996 to 2010.

Dr. Baselga also serves on the Board of Foghorn Therapeutics and Breast International Group. He is a co-founder of Tango Therapeutics. He previously served as a Director of Aura Biosciences, Inc. Dr. Baselga was a Director on the Board of Grail, Inc. until March 2018 and continues to serve as Chairman of its Scientific Advisory Board. Dr. Baselga also sits on the Advisory Boards of Aura Biosciences, Inc., Northern Biologics, Inc. (formerly, Mosaic Biomedicals), Robert H. Lurie Comprehensive Cancer Center at Northwestern University and Siteman Cancer Center, Washington University at St. Louis. He previously served on the Advisory Board of Juno Therapeutics Inc. until 2018.

Key Skills and Experience: Dr. Baselga is an internationally recognized physician scientist who brings over 30 years of oncology experience to the Board. His experience serving as Physician-in-Chief of a leading cancer hospital, as well as his comprehensive expertise as a physician and clinical researcher in the area of oncology drug discovery and development, position him well to serve as a member of our Science and Technology Committee.




 
 

13


Table of Contents

 
   
   

GRAPHIC
Director since 2017

BMS Committees:

Audit Committee (Chair)

Committee on Directors
and Corporate Governance

Other Directorships:

Current:

Charles River Laboratories
International, Inc.

Idorsia Ltd.

  ROBERT J. BERTOLINI

Mr. Bertolini, age 56, served as President and Chief Financial Officer of Bausch & Lomb Incorporated from February 2013 until August 2013 (until its acquisition by Valeant Pharmaceuticals). Previously, Mr. Bertolini served as Executive Vice President and Chief Financial Officer at Schering-Plough Corp. from November 2003 until November 2009 (through its merger with Merck & Co.) with responsibility for tax, accounting and financial asset management. Prior to joining Schering-Plough, Mr. Bertolini spent 20 years at PricewaterhouseCoopers LLP, ultimately leading its global pharmaceutical industry practice.

Key Skills and Experience: Mr. Bertolini brings to the Board extensive expertise in our industry, particularly in building world-class finance and information technology functions and in leading business development and strategy. In addition, as a former chief financial officer who also has over 20 years' experience at a major auditing firm, Mr. Bertolini has extensive knowledge and background related to accounting and financial reporting rules and regulations as well as the evaluation of financial results, internal controls and business processes and this positions him well to serve as Chair of our Audit Committee and a member of our Committee on Directors and Corporate Governance.



 
 
 

GRAPHIC
Director since 2017

BMS Committees:

Compensation and
Management Development
Committee

Science & Technology
Committee

Other Directorships:

Past 5 Years:

Vertex Pharmaceuticals
Incorporated

Shire PLC

  MATTHEW W. EMMENS

Mr. Emmens, age 66, served as Chief Executive Officer of Shire PLC from 2003 to 2008 and Chairman of the Board from 2008 to 2014. He also served as a Director of Vertex Pharmaceuticals Incorporated from 2004 to 2009, Chairman, President and Chief Executive Officer from 2009 to 2012 and Director from 2012 to 2013. Mr. Emmens served as President, Worldwide Pharmaceuticals of Merck KGaA from 1999 to 2003, as Chief Executive Officer, Commercial Operations of Astra Merck Inc. from 1992 to 1999 and in Sales, Marketing and Administration positions for Merck & Co, Inc. from 1974 to 1991.

Key Skills and Experience: With over 40 years in the biopharmaceutical industry, Mr. Emmens brings to the Board significant expertise in management, business development, business and operations, particularly with respect to strategy and team effectiveness. Mr. Emmens' strong leadership qualities and industry knowledge position him well to provide valuable insights to both management and his fellow Board members on issues facing our company and to serve as a member of our Compensation and Management Development Committee and a member of our Science and Technology Committee.



 
 

14


Table of Contents

 
   
   

GRAPHIC
Director since 2007

BMS Committees:

Audit Committee

Compensation and
Management Development
Committee (Chair)

Other Directorships:

Past 5 Years:

Given Imaging

Mead Johnson Nutrition
Company

  MICHAEL GROBSTEIN

Mr. Grobstein, age 75, is a retired Vice Chairman of Ernst & Young LLP, an independent registered public accounting firm. He worked with Ernst & Young from 1964 to 1998, and was admitted as a partner in 1975. Mr. Grobstein served as a Vice Chairman-International Operations from 1993 to 1998, as Vice Chairman-Planning, Marketing and Industry Services from 1987 to 1993, and Vice Chairman-Accounting and Auditing Services from 1984 to 1987. He serves on the Board of Trustees and Executive Committee and is the Treasurer of the Central Park Conservancy. He also serves on the Board of Directors of the Peer Health Exchange, Inc.

Key Skills and Experience: With over 30 years of experience at a major auditing firm, and 20 years as a director of public companies with global operations, Mr. Grobstein has extensive knowledge and background relating to accounting and financial reporting rules and regulations as well as the evaluation of financial results, internal controls and business processes. Mr. Grobstein's depth and breadth of financial expertise and his experience handling complex financial issues position him well to serve as Chair of our Compensation and Management Development Committee and a member of our Audit Committee.



 
 
 

GRAPHIC
Director since 2008

BMS Committees:

Audit Committee

Committee on Directors
and Corporate Governance

Other Directorships:

Past 5 Years:

Dave & Buster's
Entertainment, Inc.
(Non-Executive Chairman)

The Hillman Companies

  ALAN J. LACY

Mr. Lacy, age 64, served as the Non-Executive Chairman of Dave & Buster's Entertainment Inc. from 2014 to 2017. He served as the Chairman and Chief Executive Officer of Sears, Roebuck and Co. and the Vice Chairman and Chief Executive Officer of its successor, Sears Holdings Corporation, from 2000 to 2005. Mr. Lacy also served as Vice Chairman of Sears Holdings Corporation from 2005 to 2006. More recently, Mr. Lacy served as Senior Advisor to Oak Hill Capital Partners, L.P., a private equity investment firm, from 2007 to 2014. He is a Trustee of Fidelity Funds and the California Chapter of The Nature Conservancy. Mr. Lacy is a Director of the Center for Advanced Study in the Behavioral Sciences at Stanford University.

Key Skills and Experience: Mr. Lacy is a highly respected business leader with a proven record of accomplishment. He brings to the Board extensive business understanding and demonstrated management expertise having served in key leadership positions at Sears Holdings Corporation, including Chief Executive Officer. In addition, his experience as a senior financial officer of three large public companies provides him with a comprehensive understanding of the complex financial, legal and corporate governance issues facing large companies and positions him well to serve as a member of our Audit Committee and our Committee on Directors and Corporate Governance.



 
 

15


Table of Contents

 
   
   

GRAPHIC
Director since 2013

BMS Committees:

Committee on Directors
and Corporate Governance

Compensation and
Management Development
Committee

Other Directorships:

Current:

Raytheon Company

Past 5 Years:

Harman International
Industries, Inc.

ADT Corporation

Tyco International, Ltd.

  DINESH C. PALIWAL

Mr. Paliwal, age 60, has served as President and Chief Executive Officer of Harman International, the connected technologies company for automotive, consumer and enterprise markets, since 2007. Mr. Paliwal also served as Chairman of the Harman Board of Directors from July 2008 to March 2017 until its acquisition by Samsung Electronics Co., Ltd. Today Harman operates as a wholly-owned subsidiary of Samsung. Prior to joining Harman, Mr. Paliwal served as a member of the Group Executive Committee of ABB Ltd., a provider of industrial automation, power transmission systems and services, from January 2001 until June 2007. He also served as President of Global Markets and Technology of ABB Ltd. from January 2006 until June 2007, as Chairman and Chief Executive Officer of ABB North America from January 2004 until June 2007, and as President and Chief Executive Officer of ABB Automation Technologies Division from October 2002 to December 2005. Mr. Paliwal is a member of the CEO Business Roundtable.

He also serves on the Boards of Directors of the Business Advisory Council of Farmer School of Business, Miami University of Ohio and the U.S. India Business Council.

Key Skills and Experience: Mr. Paliwal brings to the Board extensive leadership, business and governance experience having served as a public company chief executive officer and a senior executive officer of various divisions of a multi-national corporation. His engineering and financial background, together with his worldwide experience, particularly in emerging markets, provide him with a heightened understanding of the complex issues which arise in the global marketplace. In addition, Mr. Paliwal's experience and his prior service on Boards of other public companies position him well to serve as a member of our Committee on Directors and Corporate Governance and our Compensation and Management Development Committee.




 
 
 

GRAPHIC
Director since 2017

BMS Committees:

Audit Committee

Committee on Directors
and Corporate Governance

Other Directorships:

Current:

Perrigo Company, PLC

Stamps.com

  THEODORE R. SAMUELS

Mr. Samuels, age 63, served with Capital Group Companies from 1981 to 2016. He was President of the Capital Guardian Trust Company from 2010 to 2016 and was the Capital Group representative for Focusing Capital on the Long Term from 2014 to 2015. Mr. Samuels was a portfolio manager from 1990 to 2016, and while at Capital Group served on numerous management and investment committees. He also served as a board member of Capital Group Foundation and as Chair of Capital Group Foundation Investment Committee and the Capital International (North America) Proxy Committee. Mr. Samuels served on the Capital Group Finance Committee from 2013-2016 and previously served on the Capital Group Board and the Capital Group Audit Committee. He also serves as Co-chair of Tuft's President's Council and the Harvard West Cost Council. Mr. Samuels is a Director of Children's Hospital Los Angeles, where he served as Co-chair of the Board of Trustees from 2012 to 2015 and is also a trustee of the Pasadena City College Foundation.

Key Skills and Experience: With over 35 years in the financial industry, Mr. Samuels brings to the Board extensive business and operational experience, particularly with respect to economics and investment decision-making. His experience and the investor perspective he brings to the Board position him well to serve as a member of our Audit Committee and our Committee on Directors and Corporate Governance.



 
 

16


Table of Contents

 
   
   

GRAPHIC
Director since 2012

BMS Committees:

Audit Committee

Compensation and
Management Development
Committee

Other Directorships:

Past 5 Years:

Hudson's Bay Company

Supervalu, Inc.
(Non-Executive Chairman)

  GERALD L. STORCH

Mr. Storch, age 61, has served as Chief Executive Officer of Storch Advisors since November 2017, a position he had also held from November 2013 to January 2015. He served as Chief Executive Officer of Hudson's Bay Company from January 2015 to November 2017, a leading owner and operator of department stores, including Saks Fifth Avenue, Lord & Taylor, Hudson's Bay Department Stores, Home Outfitters, Saks OFF 5th, Kaufhof, Inno and the e-commerce business Gilt. He also served as Chairman of Toys"R"Us, Inc. from February 2006 to November 2013 and Chief Executive Officer of Toys"R"Us from February 2006 to May 2013. Prior to joining Toys"R"Us, Mr. Storch served as Vice Chairman of Target Corporation. He joined Target in 1993 as Senior Vice President of Strategy and served in roles of increasing seniority over the next 12 years. Prior to joining Target, Mr. Storch was a partner at McKinsey & Company. He is a director of Fanatics, Inc.

Key Skills and Experience: A retail veteran with more than 20 years of experience, Mr. Storch provides the Board with valuable business, leadership and management insight, including expertise leading an organization with global operations, giving him a keen understanding of the issues facing a multi-national business. These qualities make him a valued member of our Audit Committee. Additionally, his prior service on the compensation committee of another public company positions him well to serve as a member of our Compensation and Management Development Committee.



 
 
 

GRAPHIC
Director since 2018

BMS Committees:

Science & Technology
Committee (Chair)

  KAREN H. VOUSDEN, Ph.D.

Dr. Vousden, age 60, has been a Senior Group Leader at the Francis Crick Institute in London since February 2017 and Chief Scientist of Cancer Research UK since July 2016. From 2002 to 2016 she served as the Director of the Cancer Research-UK (CRUK) Beatson Institute in Glasgow, prior to which she held leadership roles at the National Cancer Institute in Maryland from 1995 to 2002. She serves as a member of the Science Advisory Boards of Centro Nacional de Investigaciones Oncologicas, Grail, Inc., Ludwig Institute for Cancer Research, PMV Pharma, Raze Therapeutics and Swiss Institute for Experimental Cancer Research. Dr. Vousden is a Council member of the European Molecular Biology Organization. She is also a Fellow of the Royal Society.

Key Skills and Experience: With over 30 years of experience leading ground-breaking cancer research, Dr. Vousden brings to the Board important perspective and knowledge on a variety of healthcare related issues, including the inherent challenges facing our R&D organization in discovering and developing new medicines. Her strong background in research and development, expertise in oncology, experience with international healthcare systems and extensive experience in the medical field position her well to serve as Chair of our Science and Technology Committee.



 
 

CORPORATE GOVERNANCE AND BOARD MATTERS

Active Board Oversight of Our Governance

            Our business is managed under the direction of our Board of Directors pursuant to the Delaware General Corporation Law and our Bylaws. The Board has responsibility for establishing broad corporate policies and for the overall performance of our company. The Board keeps itself informed of company business through regular written reports and analyses and discussions with the Chief Executive Officer and other officers of Bristol-Myers Squibb; by reviewing materials provided to Board members by management and by outside advisors; and by participating in Board and Board Committee meetings.

17


Table of Contents

            The Committee on Directors and Corporate Governance continually reviews corporate governance issues and is responsible for identifying and recommending the adoption of corporate governance initiatives. In addition, our Compensation and Management Development Committee regularly reviews compensation issues and recommends adoption of policies and procedures that strengthen our compensation practices. The "Compensation Discussion and Analysis" beginning on page 31 discusses many of these policies and procedures.

            The Board of Directors has adopted Corporate Governance Guidelines that govern its operation and that of its Committees. Our Board annually reviews the Corporate Governance Guidelines and, from time to time, our Board revises them in response to changing regulatory requirements, evolving best practices and the concerns of our shareholders and other constituents. Our Corporate Governance Guidelines may be viewed on our website at www.bms.com/ourcompany/governance.

Board Leadership Structure

            The company's governance documents provide the Board with flexibility to select the appropriate leadership structure for the company. They establish well-defined responsibilities with respect to the Chairman and Lead Independent Director roles, including the requirement that the Board have a Lead Independent Director if the Chairman is not an independent director. This information is set forth in more detail on our website at www.bms.com/ourcompany/governance.

            Our Board has dedicated significant consideration to our leadership structure, particularly in connection with the election of Dr. Caforio as the Chairman of the Board at the 2017 Annual Meeting. As disclosed last year, the Board's analysis of our leadership structure took into account many factors, including the specific needs of the Board and the company, the strong role of our Lead Independent Director, our Corporate Governance Guidelines (including our governance practices that provide for independent oversight of management), the challenges specific to our company, and the best interests of our shareholders. After thoughtful and rigorous consideration, the Board determined that combining the Chairman and Chief Executive Officer positions and electing Dr. Caforio as the Chairman of the Board was in the best interest of the company and our shareholders. The Board continues to believe this is the best leadership for the company and its shareholders at this time. Specifically, our Board believes that to have Dr. Caforio serve in the combined role of Chairman and Chief Executive Officer confers distinct advantages at this time, including:

    having a Chairman who can draw on detailed institutional knowledge of the company and industry experience from serving as Chief Executive Officer, providing the Board with focused leadership, particularly in discussions about the company's strategy;

    a combined role ensures that the company presents its message and strategy to all stakeholders, including shareholders, employees and patients, with a unified voice; and

    the structure allows for efficient decision making and focused accountability.

            The Board recognizes the importance of appointing a strong Lead Independent Director to maintain a counterbalancing structure to ensure that the Board functions in an appropriately independent manner. The Lead Independent Director is selected annually by the independent directors. The independent directors have elected Dr. Vicki Sato to serve in that position.

            The Lead Independent Director's responsibilities include, among others:

   

ü

  Serving as liaison between the independent directors and the Chairman  

ü

  Approving the quality, quantity and timeliness of information sent to the Board  
   

ü

  Reviewing and approving meeting agendas and sufficiency of time  

ü

  Serving a key role in Board and Chief Executive Officer evaluations    
   

ü

  Calling meetings of the independent directors  

ü

  Responding directly to shareholder and stakeholder questions, as appropriate  
   

ü

  Presiding at all meetings of the independent directors and any Board meeting when the Chairman and the Chief Executive Officer are not present, including executive sessions of the independent directors  

ü

  Providing feedback from executive sessions of the independent directors to the Chief Executive Officer, other senior management and to the Chairman    
   

ü

  Communicating with major shareholders, as appropriate  

ü

  Recommending advisors and consultants  
         

18


Table of Contents

            The Board believes this structure provides an effective, high-functioning Board, as well as appropriate safeguards and oversight. Our Board will continue to evaluate its leadership structure in light of changing circumstances and will evaluate the Board's leadership structure on at least an annual basis and make changes at such times as it deems appropriate.

Board's Role in Strategic Planning and Risk Oversight

            Our Board meets regularly to discuss the strategic direction and the issues and opportunities facing our company in light of trends and developments in the biopharmaceutical industry and general business environment. Our Board has been instrumental in determining our next steps as we have emerged as a diversified specialty biopharmaceutical company.

            Furthermore, in setting our business strategy, the Board plays a critical role in the determination of the types and appropriate levels of risk undertaken by the company.

Constant focus on strategy:  Throughout the year, our Board provides guidance to management on strategy and helps to refine operating plans to implement the strategy.
Annual strategy deep-dive:  Each year, typically during the second quarter, the Board holds an extensive meeting with senior management dedicated to discussing and reviewing our long-term operating plans and overall corporate strategy. A discussion of key risks to the plans and strategy as well as risk mitigation plans and activities is led by our Chief Executive Officer as part of the meeting.
Dedicated to oversight of risk management:  As stated in our Corporate Governance Guidelines, our Board is responsible for risk oversight as part of its fiduciary duty of care to monitor business operations effectively.

            Our Board administers its strategic planning and risk oversight function as a whole and through its Board Committees. The following are examples of how our Board Committees are involved in this process:

    Audit Committee   Regularly reviews and discusses with management our process to assess and manage enterprise risks, including those related to market/environmental, strategic, financial, operational, legal, compliance, information security and reputation.    
 
    Compensation and
Management
Development
Committee
  Annually evaluates our incentive compensation programs to determine whether incentive pay encourages excessive or inappropriate risk-taking. In particular, the Committee evaluates the components of our executive compensation program that work to minimize excessive or inappropriate risk-taking, including, the use of different forms of long-term equity incentives, linking payout to each executive's demonstration of company Behaviors, placing caps on our incentive award payout opportunities, following equity grant practices that limit potential for timing awards and having stock ownership and retention requirements.    
 
    Committee on Directors
and Corporate
Governance
  Regularly considers and makes recommendations to the Board concerning the appropriate size, function and needs of the Board, determines the criteria for Board membership, provides oversight of our corporate governance affairs and reviews corporate governance practices and policies. Oversees the company's political activities and routinely considers matters relating to the company's responsibilities as a global corporate citizen pertaining to corporate social responsibility and corporate public policy and the impact on the company's employees and shareholders.    
 
    Science and
Technology Committee
  Regularly reviews our pipeline and potential business development opportunities to evaluate our progress in achieving our near-term and long-term strategic research and development goals and objectives and assures that we make well-informed choices in the investment of our research and development resources, among other things.    
 

19


Table of Contents

Risk Assessment of Compensation Policies and Practices

            The Compensation and Management Development Committee annually conducts a worldwide review of our material compensation policies and practices. Based on this review, we have concluded that our material compensation policies and practices are not reasonably likely to have a material adverse effect on the company. On a global basis, our compensation programs contain many design features that mitigate the likelihood of inducing excessive or inappropriate risk-taking behavior. These features include:

   

ü

  Balance of fixed and variable compensation, with variable compensation tied both to short-term objectives and the long-term value of our stock price  

ü

  Clawback and recoupment provisions and policies pertaining to annual incentive payouts and long-term incentive awards  
   

ü

  Multiple metrics in our incentive programs that balance top-line, bottom-line and pipeline performance  

ü

  Share ownership and retention guidelines applicable to our senior executives    
   

ü

  Caps in our incentive program payout formulas  

ü

  Equity award policies that limit risk by having fixed annual grant dates  
   

ü

  Reasonable goals and objectives in our incentive programs  

ü

  Prohibition of speculative and hedging transactions by all employees and directors    
   

ü

  Payouts modified based upon individual performance, inclusive of assessments against our BMS BioPharma Behaviors and the BMS Commitment  

ü

  All non-sales managers and executives worldwide participate in the same annual incentive program that pertains to our Named Executive Officers and that has been approved by the Compensation and Management Development Committee  
   

ü

  The Compensation and Management Development Committee's ability to exercise downward discretion in determining incentive program payouts  

ü

  Mandatory training on our Principles of Integrity: BMS Standards of Business Conduct and Ethics (the Principles of Integrity) and other policies that educate our employees on appropriate behaviors and the consequences of taking inappropriate actions    

Annual Evaluation Process

            Our Board recognizes the critical role Board and committee evaluations play in ensuring the effective functioning of our Board. It also believes in the importance of continuously improving the functioning of our Board and committees. Under the leadership and guidance of our Lead Independent Director, the Committee on Directors and Corporate Governance continuously assesses the Board evaluation process. In 2017, following discussions with and input from the full Board of Directors, the Committee enhanced the Board assessment process to include a written questionnaire. The formal 2017 Board and Committee evaluation processes were as follows:

    Board:  Directors completed a written questionnaire on an unattributed basis responding to questions about the Board and Committee structure and responsibilities, Board culture and dynamics, adequacy of information to the Board, Board skills and effectiveness, and Committee effectiveness. The robust feedback and comments from the directors were anonymously compiled and then were presented by the Chairman and the Lead Independent Director to the full Board for discussion and action. The 2017 Board evaluation was completed in March 2018.

    Committees:  Committee chairs selected a list of topics for their respective committees to evaluate and discuss, covering both substantive and process-oriented aspects of committee performance. The list of discussion topics for each committee was distributed to committee members in advance for consideration. Committee chairs led discussions in executive session of their respective committees. Committee chairs then reported to the full Board the results of their respective committee's evaluation and any follow-up actions. The 2017 Committee evaluations were completed in the beginning of 2018 and reported to the Board in March 2018.

            The formal annual Board and Committee evaluations are supplemented by regular informal one-on-one discussions between the Chairman and Chief Executive Officer and each director throughout the year. The Lead Independent Director actively conveys directors' feedback on an ongoing basis to our Chairman and Chief Executive Officer and has regular one-on-one discussions with the other members of the Board.

20


Table of Contents

Meetings of our Board

            Our Board meets on a regularly scheduled basis during the year to review significant developments affecting Bristol-Myers Squibb and to act on matters requiring Board approval. It also holds special meetings when important matters require Board action between scheduled meetings. Members of senior management regularly attend Board meetings to report on and discuss their areas of responsibility. In 2017, the Board met 12 times. The average aggregate attendance of directors at Board and committee meetings was over 96%. No director attended fewer than 75% of the aggregate number of Board and committee meetings during the period he or she served. In addition, our independent directors met 9 times during 2017 to discuss such topics as our independent directors determined, including the evaluation of the performance of our current Chief Executive Officer.

Annual Meeting of Shareholders

            Directors are strongly encouraged, but not required, to attend the Annual Meeting of Shareholders. All of the 2017 nominees for director attended our 2017 Annual Meeting of Shareholders except Theodore R. Samuels who had a long-standing previous commitment.

Committees of our Board

            Our Bylaws specifically provide for an Audit Committee, Compensation and Management Development Committee, and Committee on Directors and Corporate Governance, which are composed entirely of independent directors. Our Bylaws also authorize the establishment of additional committees of the Board and, under this authorization, our Board of Directors established the Science and Technology Committee. Our Board has appointed individuals from among its members to serve on these four standing committees and each committee operates under a written charter adopted by the Board, as amended from time to time. These charters are published on our website at http://bms.com/ourcompany/governance/Pages/board_committees_charters.aspx. Each of these Board Committees has the necessary resources and authority to discharge its responsibilities, including the authority to retain consultants or experts to advise the committee.

            The table below indicates the current members of our standing Board Committees and the number of meetings held in 2017:

 

 

Director
  Audit(1)    Committee on
Directors
and Corporate
Governance
 
  Compensation
and
Management
Development
 
  Science
and
Technology(2)
 
   

 

 

Peter J. Arduini

  X     X    

 

 

José Baselga, M.D., Ph.D.

              X    

 

 

Robert J. Bertolini(3)

  X   X      

 

 

Giovanni Caforio, M.D.

                   

 

 

Matthew W. Emmens

      X   X  

 

 

Michael Grobstein

  X       C        

 

 

Alan J. Lacy

  C   X      

 

 

Dinesh Paliwal

      X   X        

 

 

Theodore R. Samuels

  X   X      

 

 

Vicki L. Sato, Ph.D.

      C       C    

 

 

Gerald L. Storch

  X     X    

 

 

Karen H. Vousden, Ph.D.(4)

              X    

 

 

Number of 2017 Meetings

  6   4   6   9  

"C"
indicates Chair of the committee.
(1)
Our Board of Directors has determined, in its judgment, that all members of the Audit Committee are financially literate and that all members of the Audit Committee meet additional, heightened independence criteria applicable to directors serving on audit committees under the New York Stock Exchange listing standards. In addition, our Board has determined that Messrs. Arduini, Bertolini, Grobstein, Lacy, Samuels and Storch each qualify as an "audit committee financial expert" under the applicable SEC rules.
(2)
Dr. Thomas J. Lynch, Jr., our Executive Vice President and Chief Scientific Officer, is a member of the Science and Technology Committee but he is not a member of our Board.
(3)
Robert J. Bertolini will assume the role of Chair of the Audit Committee effective May 1, 2018.
(4)
Dr. Karen H. Vousden will assume the role of Chair of the Science and Technology Committee effective May 1, 2018.

21


Table of Contents

            The following descriptions reflect each standing Board Committee's membership and Chair effective as of May 1, 2018.

 
   
   
   
    Audit Committee
    Committee Chair:

Robert J. Bertolini

GRAPHIC

Additional Members:

Peter J. Arduini

Michael Grobstein

Alan J. Lacy

Theodore R. Samuels

Gerald L. Storch

  Key Responsibilities

Overseeing and monitoring the quality of our accounting and auditing practices, including, among others, reviewing and approving the internal audit charter, audit plan, audit budget and decisions regarding appointment and replacement of Chief Audit Officer

Appointing, compensating and providing oversight of the performance of our independent registered public accounting firm for the purpose of preparing or issuing audit reports and related work regarding our financial statements and the effectiveness of our internal control over financial reporting

Assisting the Board in fulfilling its responsibilities for general oversight of (i) compliance with legal and regulatory requirements, (ii) the performance of our internal audit function and (iii) enterprise risk assessment and risk management policies and guidelines

Reviewing our disclosure controls and procedures, periodic filings with the SEC, earnings releases and earnings guidance

Producing the required Audit Committee Report for inclusion in our Proxy Statement

Overseeing the implementation and effectiveness of our compliance and ethics program

Reviewing our information security and data protection program

 

 

 
   
   
   
    Committee on Directors and Corporate Governance
    Committee Chair:

Vicki L. Sato, Ph.D.

GRAPHIC

Additional Members:

Robert J. Bertolini

Alan J. Lacy

Dinesh C. Paliwal

Theodore R. Samuels

  Key Responsibilities

Providing oversight of our corporate governance affairs and reviewing corporate governance practices and policies, including annually reviewing the Corporate Governance Guidelines and recommending any changes to the Board

Identifying individuals qualified to become Board members and recommending that our Board select the director nominees for the next annual meeting of shareholders

Reviewing and recommending annually to our Board the compensation of non-employee directors

Considering questions of potential conflicts of interest involving directors and senior management and establishing, maintaining and overseeing related party transaction policies and procedures

Evaluating and making recommendations to the Board concerning director independence and defining specific categorical standards for director independence

Providing oversight of the company's political activities

Considering matters relating to the company's responsibilities as a global corporate citizen pertaining to corporate social responsibility and corporate public policy and the impact on the company's employees and shareholders

Overseeing the annual evaluation process of the Board and its Committees

 

22


Table of Contents

 
   
   
   
    Compensation and Management Development Committee
    Committee Chair:

Michael Grobstein

GRAPHIC

Additional Members:

Peter J. Arduini

Mathew W. Emmens

Dinesh C. Paliwal

Gerald L. Storch

  Key Responsibilities

Reviewing, approving and reporting to our Board on our major compensation and benefits plans, policies and programs

Reviewing corporate goals and objectives relevant to CEO compensation, evaluating the CEO's performance in light of those goals and objectives and recommending for approval by at least three-fourths of the independent directors of our Board the CEO's compensation based on this evaluation

Reviewing and evaluating the performance of senior management; approving the compensation of executive officers and certain senior management

Overseeing our management development programs, performance assessment of senior executives and succession planning

Reviewing and discussing with management the Compensation Discussion and Analysis and related disclosures required for inclusion in our Proxy Statement, recommending to the Board whether the Compensation Discussion and Analysis should be included in our Proxy Statement, and producing the Compensation and Management Development Committee Report required for inclusion in our Proxy Statement

Establishing and overseeing our compensation recoupment policies

Reviewing incentive compensation programs to determine whether incentive pay encourages inappropriate risk-taking

 

 

 
   
   
   
    Science and Technology Committee
    Committee Chair:

Karen H. Vousden, Ph.D.

GRAPHIC

Additional Members:

José Baselga, M.D., Ph.D.

Matthew W. Emmens

Thomas J. Lynch, Jr., M.D.

Vicki L. Sato, Ph.D.

  Key Responsibilities

Reviewing and advising our Board on the strategic direction of our research and development (R&D) programs and our progress in achieving near-term and long-term R&D objectives

Reviewing and advising our Board on our internal and external investments in science and technology

Identifying and discussing significant emerging trends and issues in science and technology and considering their potential impact on our company

Providing assistance to the Compensation and Management Development Committee in setting any pipeline performance metric under the company's incentive compensation programs and reviewing the performance results

 

            In addition, on February 22, 2017, the Board established a Securities Issuance Committee to determine and approve the terms and provisions of securities issued by the company. The members of the Securities Issuance Committee were Lamberto Andreotti, Giovanni Caforio and Alan J. Lacy. The Securities Issuance Committee met once during 2017.

Codes of Conduct

            The Principles of Integrity adopted by our Board of Directors set forth important company policies and procedures in conducting our business in a legal, ethical and responsible manner. These standards are applicable to all of our employees, including the Chief Executive Officer, the Chief Financial Officer and the Controller.

            In addition, the Audit Committee has adopted the Code of Ethics for Senior Financial Officers that supplements the Principles of Integrity by providing more specific requirements and guidance on certain topics. The Code of Ethics for Senior Financial Officers applies to the Chief Executive Officer, the Chief Financial Officer, the Controller, the Treasurer and the heads of major operating units.

23


Table of Contents

            Our Board has also adopted the Code of Business Conduct and Ethics for Directors that applies to all directors and sets forth guidance with respect to recognizing and handling areas of ethical issues.

            The Principles of Integrity, the Code of Ethics for Senior Financial Officers and the Code of Business Conduct and Ethics for Directors are available on our website at www.bms.com/ourcompany/governance. We will post any substantive amendments to, or waivers from, applicable provisions of our Principles, our Code of Ethics for Senior Financial Officers, and our Code of Business Conduct and Ethics for Directors on our website at www.bms.com/ourcompany/governance within two days following the date of such amendment or waiver.

            Employees are required to report any conduct they believe in good faith to be an actual or apparent violation of our Codes of Conduct. In addition, as required under the Sarbanes-Oxley Act of 2002, the Audit Committee has established procedures to receive, retain and treat complaints received regarding accounting, internal accounting controls, or auditing matters and the confidential, anonymous submission by company employees of concerns regarding questionable accounting or auditing matters.

Related Party Transactions

            The Board has adopted a written policy and procedures for the review and approval of transactions involving the company and related parties, such as directors, executive officers and their immediate family members. The policy covers any transaction or series of transactions (an "interested transaction") in which the amount involved exceeds $120,000, the company is a participant, and a related party has a direct or indirect material interest (other than solely as a result of being a director or less than 10% beneficial owner of another entity). All interested transactions are subject to approval or ratification in accordance with the following procedures:

    Management will be responsible for determining whether a transaction is an interested transaction requiring review under this policy, in which case the transaction will be disclosed to the Committee on Directors and Corporate Governance (the "Governance Committee").

    The Governance Committee will review the relevant facts and circumstances, including, among other things, whether the interested transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or ordinary circumstances and the related party's interest in the transaction.

    If it is impractical or undesirable to wait until a Governance Committee meeting to complete an interested transaction, the Chair of the Governance Committee, in consultation with the General Counsel, may review and approve the transaction, which approval must be ratified by the Governance Committee at its next meeting.

    In the event the company becomes aware of an interested transaction that has not been approved, the Governance Committee will evaluate all options available to the company, including ratification, revision or termination of such transaction and take such course of action as the Governance Committee deems appropriate under the circumstances.

    No director will participate in any discussion or approval of the interested transaction for which he or she is a related party, except that the director will provide all material information concerning the interested transaction to the Governance Committee.

    If an interested transaction is ongoing, the Governance Committee may establish guidelines for management to follow in its ongoing dealings with the related party and will review and assess such ongoing relationships on at least an annual basis.

    Certain types of interested transactions are deemed to be pre-approved or ratified by the Governance Committee, as applicable, even if the amount involved will exceed $120,000, including the employment of executive officers, director compensation, certain transactions with other companies or charitable contributions, transactions where all shareholders receive proportional benefits, transactions involving competitive bids, regulated transactions and certain banking-related services.

24


Table of Contents

            BlackRock, Inc. (BlackRock), Wellington Management Group, LLP (Wellington) and The Vanguard Group (Vanguard) are each considered a "Related Party" under our related party transaction policy because they each beneficially own more than 5% of our outstanding common stock. The Governance Committee ratified and approved the following related party transactions in accordance with our policy and Bylaws:

    Certain of our retirement plans use BlackRock and its affiliates to provide investment management services. In connection with these services, we paid BlackRock approximately $1.2 million in fees during 2017.

    Certain of our retirement plans use Wellington and its affiliates to provide investment management services. In connection with these services, we paid Wellington approximately $1.3 million in fees during 2017.

    Vanguard acts as an investment manager with respect to certain investment options under our savings and thrift plans. Participants in the plans pay Vanguard's investment management fees if they invest in investment options managed by Vanguard; neither the plans themselves nor the company pays fees directly to Vanguard. In connection with these services, Vanguard received approximately $445,000 in fees during 2017.

            The Governance Committee ratified the above relationships on the basis that these entities' ownership of our stock plays no role in the business relationship between us and them, and that the engagement of each entity was on terms no more favorable to them than terms that would be available to unaffiliated third parties under the same or similar circumstances.

            Dr. Baselga was elected to the Board effective March 1, 2018. He has served as Physician-in-Chief of Memorial Sloan-Kettering Cancer Center (MSKCC) since January 2013. The company has made both business and charitable payments to MSKCC for many years, including for research studies and grants led by principal investigators affiliated with the hospital. The company paid MSKCC approximately $7.6 million in 2017, which accounted for less than 2% of MSKCC's revenues for the 2017 fiscal year.

            Dr. Lynch retired from the Board on March 15, 2017 and currently serves as our Chief Scientific Officer. Before this, he served as the Chairman and Chief Executive Officer of the Massachusetts General Physicians Organization (MGPO) and a member of the Board of Directors of Massachusetts General Hospital (MGH) from September 2015 until March 2017. The MGPO and MGH comprise the operating structure of the General Hospital Corporation, which is the largest part of the parent corporation, Partners HealthCare, a not-for-profit healthcare system. The company has made both business and charitable payments to MGH for many years, including for research studies and grants led by principal investigators affiliated with the hospital. The company paid MGH approximately $305,755 in 2017, which accounted for less than 2% of Partners HealthCare's revenues for the fiscal year ended September 30, 2017.

            Dr. Glimcher retired from the Board on July 21, 2017. Before this, she was appointed President and CEO of Dana-Farber Cancer Institute ("Dana-Farber") on October 1, 2016. The company has made both business and charitable payments to Dana-Farber for several years and entered into multiple research collaborations with Dana-Farber as recently as February 2016. The company paid Dana-Farber approximately $9.6 million in 2017, which accounted for less than 2% of Dana-Farber's revenues for the 2017 fiscal year.

            The Governance Committee ratified the above relationships on the basis that Drs. Baselga, Lynch and Glimcher did not initiate or negotiate any of the arrangements the company has with their affiliated organizations, all of the business dealings were entered into in the ordinary course of business prior to Drs. Baselga, Lynch or Glimcher assuming the stated roles at the respective organizations and the engagement of such companies by BMS were on terms no more favorable to them than terms that would be available to unaffiliated third parties under the same or similar circumstances.

Disclosure Regarding Political Activities

            We provide semi-annual disclosure on our website of all political contributions to political committees, parties or candidates on both state and federal levels that are made by our employee political action committee, as well as

25


Table of Contents

annual disclosure of the portion of our dues or other payments made to trade associations to which we give $50,000 or more that can be attributed to lobbying expenditures.

Global Corporate Citizenship & Sustainability

            Patients are at the center of everything we do, and our work is focused on the development of innovative medicines that deliver value to patients and the broader society. To do so in a sustainable manner requires continued investment in research and development that seeks to uncover transformative approaches to treating serious diseases. At the same time, we aim to broaden access to medicines by collaborating with various facets of healthcare systems globally to build capacity to care for patients, including creative approaches to address affordability. Over the past 20 years, Bristol-Myers Squibb has embraced its responsibility to grow in a manner that respects the environment, encourages social progress and contributes to long-term economic viability that supports our employees and communities. Our Sustainability 2020 goals are:

    Accelerate innovation to develop transformative medicines—By 2020, enable Speed to Patients by optimizing development timelines such as R&D processes, regulatory review and data packaging. The goal also focuses on improving clinical trial patient diversity and satisfaction.

    Enhance patient access to medicines—Use existing approaches such as tiered pricing, voluntary licensing, reimbursement support, patient assistance programs and our Bristol-Myers Squibb Foundation partnerships to provide greater access to our medicines in global markets. For example, all marketed products will have access plans.

    Be the employer of choice and the champion of safety—Empower and engage our people by improving safe behaviors and building a more globally diverse and inclusive workforce; being a recognized employer of choice. For example, by 2020, establish a new safety culture survey and improve results.

    Drive supply chain leadership on quality and integrity—Ensure reliable supply, engaging with our critical suppliers and assessing those in high-risk countries for conformance with labor and integrity standards. As an example, all critical manufacturing suppliers will be assessed for risk and risk mitigation performance, with results incorporated in sourcing decisions.

    Innovate to support a green, healthy planet—Continue to improve our environmental footprint with greenhouse gas and water reduction goals and integrate green design and reduce waste throughout our product portfolio. Among Bristol-Myers Squibb's Sustainability 2020 Goal targets is to reduce water use and greenhouse gas emissions by 5 percent (absolute) or more from the 2015 baseline.

            We remain actively engaged with our shareholders and other key stakeholders on our environmental, social and governance performance relative to our financial results. Our Board remains actively engaged on these issues with direct oversight by our Committee on Directors and Corporate Governance. For more information and to provide feedback, please see the company's website at https://www.bms.com/about-us/sustainability.html under "Sustainability."

Communications with our Board of Directors

            Our Board has created a process for anyone to communicate directly with our Board, any committee of the Board, the non-management directors of the Board collectively or any individual director, including our Chairman and Lead Independent Director. Any interested party wishing to contact our Board may do so in writing by sending a letter c/o Corporate Secretary, Bristol-Myers Squibb Company, 345 Park Avenue, New York, New York 10154, until July 1, 2018, after which, please address to Bristol-Myers Squibb Company, 430 East 29th Street—14th Floor, New York, New York 10016, Attention: Corporate Secretary.

            Any matter relating to our financial statements, accounting practices or internal controls should be addressed to the Chair of the Audit Committee. All other matters should be addressed to the Chair of the Governance Committee.

26


Table of Contents

            Our Corporate Secretary or her designee reviews all correspondence and forwards to the addressee all correspondence determined to be appropriate for delivery. Our Corporate Secretary periodically forwards to the Governance Committee a summary of all correspondence received. Directors may at any time review a log of the correspondence we receive that is addressed to members of the Board as well as copies of any such correspondence. Our process for handling communications to our Board has been approved by the independent directors.

Compensation of Directors

Director Compensation Program

            We aim to provide a competitive compensation program to attract and retain high quality directors. The Committee on Directors and Corporate Governance annually reviews our directors' compensation practices, including a review of the director compensation programs at our executive compensation peer group. Furthermore, for 2017 we again engaged an outside consultant, Frederic W. Cook & Co., Inc. (FWC), to review market data and competitive information on director compensation. FWC recommended that our executive compensation peer group should be the primary source for determining director compensation.

            Based on this analysis, the Committee determined to make no changes to the director compensation program for service as a director in 2017. The Committee also determined, in light of the fact that our director compensation program has been unchanged since 2016, and was between the 25th percentile and median of our peer group, among other reasons, to increase the annual equity award for service as a director for 2018 by $15,000. The Committee submitted its recommendations for director compensation to the full Board for approval. Our employee directors do not receive any additional compensation for serving as directors.

            The Committee believes the total compensation package for directors we offered in 2017 was reasonable, and appropriately aligned the interests of directors with our shareholders by ensuring directors have a proprietary stake in our company.

The Components of our Director Compensation Program

            In 2017, non-management directors who served for the entirety of 2017 received:

 
  Component
  Value of Award
   
    Annual Retainer   $100,000  
    Annual Equity Award   Deferred Share Units valued at $170,000    
    Committee Chair Retainer   $25,000  
    Committee Member (not Chair) Retainer – Audit, Compensation and Management Development, and Science and Technology Committees   $15,000    
    Committee Member (not Chair) Retainer – Committee on Directors and Corporate Governance   $7,500  
       

Annual Equity Award

            On February 1, 2017, all non-management directors serving on the Board at that time received an annual award of deferred share units valued at $170,000 under the 1987 Deferred Compensation Plan for Non-Employee Directors. These deferred share units are non-forfeitable at grant and are settleable solely in shares of company common stock. A new member of the Board who is eligible to participate in the Plan receives, on the date the Director joins the Board, a pro-rata number of deferred share units based on the number of share units payable to participants as of the prior February 1.

27


Table of Contents

Compensation of our Lead Independent Director

            Our Lead Independent Director receives an additional retainer of $35,000. Our Board has determined to award this retainer in light of the increased duties and responsibilities demanded by this role, which duties and responsibilities are described in further detail on page 18.

Compensation of our Former Non-Executive Chairman

            During the first few months of 2017, Lamberto Andreotti served as our Non-Executive Chairman. He had significantly greater responsibilities than other directors, including chairing the Office of the Chairman, meeting on a regular basis with the Chief Executive Officer on the most critical strategic issues and transactions, serving as a liaison between the Chief Executive Officer and the independent directors, and frequently discussing the strategy and direction of the company with senior management.

            From January 1, 2017 to May 2, 2017 when he retired from the Board, in addition to the regular Board retainer and annual equity award, Mr. Andreotti received a pro-rated portion of a Non-Executive Chairman retainer of $200,000, of which 50% was paid in cash and 50% in shares of the company's common stock. Bristol-Myers Squibb also provided Mr. Andreotti with office space, supplies and administrative support for company-related work.

Share Retention Requirements

            We significantly increased the share retention requirements for non-management directors in 2016. All non-management directors are required to acquire a minimum of shares and/or units of company stock valued at not less than five times their annual cash retainer within five years of joining the Board and to maintain this ownership level throughout their service as a director. We require that at least 25% of the annual retainer be deferred and credited to a deferred compensation account, the value of which is determined by the value of our common stock, until a non-management director has attained our share retention requirements.

Deferral Program

            A non-management director may elect to defer payment of all or part of the cash compensation received as a director under our company's 1987 Deferred Compensation Plan for Non-Employee Directors. The election to defer is made in the year preceding the calendar year in which the compensation is earned. Deferred funds for compensation received in connection with service as a Director in 2017 were credited to one or more of the following funds: a United States total bond index, a short term fund, a total market index fund or a fund based on the return on our common stock. Deferred portions are payable in a lump sum or in a maximum of ten annual installments. Payments under the Plan begin when a participant ceases to be a director or at a future date previously specified by the director.

Charitable Contribution Programs

            Each director who joined the Board prior to December 2009 participates in our Directors' Charitable Contribution Program. Upon the death of a director, we will donate up to an aggregate of $500,000 to up to five qualifying charitable organizations designated by the director. Individual directors derive no financial or tax benefit from this program since the tax benefit of all charitable deductions relating to the contributions accrues solely to us. In December 2009, the Board eliminated the Charitable Contributions Program for all new directors.

            In addition, each director was able to participate in our company wide matching gift program in 2017. We matched dollar for dollar a director's contribution to qualified charitable and educational organizations up to $30,000. This benefit was also available to all company employees. In 2017, each of the following non-employee directors participated in our matching gift programs as indicated in the Director Compensation Table below: Dr. Sato and Messrs. Andreotti, Arduini, Bertolini, Emmens, Grobstein, Lacy and Samuels.

28


Table of Contents

Director Compensation Table

            The following table sets forth information regarding the compensation earned by our non-employee directors in 2017.

 
 
Name
  Fees
Earned or Paid
in Cash(1)
  Stock
Awards(2)
  Option
Awards(3)
  All Other
Compensation(4)
  Total    

 

 

 

                                 

 

 

L. Andreotti(5)(6)

  $ 67,583   $ 203,791   $ 0   $ 30,000   $ 301,374  

 

 

P. J. Arduini

  $ 124,973   $ 170,000   $ 0   $ 16,250   $ 311,223    

 

 

R. J. Bertolini

  $ 100,792   $ 160,218   $ 0   $ 15,500   $ 276,510  

 

 

M. W. Emmens

  $ 105,779   $ 160,218   $ 0   $ 30,000   $ 295,997    

 

 

L. H. Glimcher, M.D.(7)

  $ 64,063   $ 170,000   $ 0   $ 0   $ 234,063  

 

 

M. Grobstein

  $ 140,000   $ 170,000   $ 0   $ 30,000   $ 340,000    

 

 

A. J. Lacy

  $ 132,500   $ 170,000   $ 0   $ 30,000   $ 332,500  

 

 

T. J. Lynch, Jr., M.D.(8)

  $ 25,181   $ 170,000   $ 0   $ 0   $ 195,181    

 

 

D. C. Paliwal

  $ 122,541   $ 170,000   $ 0   $ 0   $ 292,541  

 

 

T. R. Samuels

  $ 100,792   $ 160,218   $ 0   $ 30,000   $ 291,010    

 

 

V. L. Sato, Ph.D.

  $ 169,959   $ 170,000   $ 0   $ 25,000   $ 364,959  

 

 

G. L. Storch

  $ 130,000   $ 170,000   $ 0   $ 0   $ 300,000    

 

 

T. D. West, Jr.(9)

  $ 54,464   $ 170,000   $ 0   $ 0   $ 224,464    

(1)
Includes the annual retainer, committee chair retainers, committee membership retainers and Lead Independent Director retainer, as applicable. All or a portion of the cash compensation may be deferred until retirement or a date specified by the director, at the election of the director. The directors listed in the below table deferred the following amounts in 2017, which amounts are included in the figures above.
 
 
Name
  Dollar
Amount
Deferred
  Percentage of
Deferred
Amount
Allocated
to U.S. Total
Bond Index
  Percentage of
Deferred
Amount
Allocated
to Short
Term Fund
  Percentage of
Deferred
Amount
Allocated to
Total Market
Index Fund
  Percentage of
Deferred
Amount
Allocated
to Deferred
Share Units
  Number of
Deferred
Share Units
Acquired
   

 

 

P. J. Arduini

  $ 124,973   0 % 0 % 0 % 100 % 2,129  

 

 

R. J. Bertolini

  $ 100,792     0 %   0 %   0 %   100 %   1,695    

 

 

M. W. Emmens

  $ 105,779   0 % 0 % 0 % 100 % 1,777  

 

 

L. H. Glimcher, M.D.

  $ 64,063     50 %   50 %   0 %   0 %   0    

 

 

M. Grobstein

  $ 70,000   0 % 0 % 0 % 100 % 1,196  

 

 

A. J. Lacy

  $ 132,500     0 %   0 %   0 %   100 %   2,264    

 

 

T. J. Lynch, Jr., M.D.

  $ 6,295   0 % 0 % 0 % 100 % 116  

 

 

D. C. Paliwal

  $ 122,541     0 %   0 %   0 %   100 %   2,094    

 

 

T. R. Samuels

  $ 50,396   0 % 0 % 0 % 100 % 847  

 

 

G. L. Storch

  $ 130,000     0 %   0 %   0 %   100 %   2,221    
(2)
Represents aggregate grant date fair value under FASB ASC Topic 718 of deferred share unit and common stock awards granted during 2017. On February 1, 2017, each of the non-management directors then serving as a director received a grant of 3,448.975 deferred share units valued at $170,000 based on the fair market value on the day of grant of $49.29. On February 21, 2017, in connection with their appointment to the Board, Messrs. Bertolini, Emmens, and Samuels received a pro-rated grant of 2,924.754 deferred share units valued at $160,218 based on the fair market value on the day of grant of $54.78. The aggregate number of deferred share units held by each of these directors as of December 31, 2017 is set forth below. In some cases, these figures include deferred share units acquired through elective deferrals of cash compensation.

29


Table of Contents

 
 
Name
  # of Deferred
Share Units
   

 

 

L. Andreotti(5)

  0  

 

 

P. J. Arduini

    9,407    

 

 

R. J. Bertolini

  4,693  

 

 

M. W. Emmens

    4,775    

 

 

L. H. Glimcher, M.D.

  64,019  

 

 

M. Grobstein

    69,260    

 

 

A. J. Lacy

  58,700  

 

 

T. J. Lynch, Jr., M.D.

    0    

 

 

D. C. Paliwal

  16,967  

 

 

T. R. Samuels

    3,838    

 

 

V. L. Sato, Ph.D.

  56,479  

 

 

G. L. Storch

    38,359    

 

 

T. D. West, Jr.

  51,519  
(3)
There have been no stock options granted to directors since 2006 and no non-employee Director had stock options outstanding as of December 31, 2017
(4)
Amounts include company matches of charitable contributions under our matching gift program.
(5)
In addition to the standard Board compensation that all non-management directors received, Mr. Andreotti received a pro-rated portion of an annual Non-Executive Chairman retainer of $200,000 paid quarterly, of which 50% was paid in cash and 50% was paid in shares of company stock. Shares of company stock were paid out as follows based on the fair market value of the company's common stock on the award date:
 
 
Award Date
  Value   Fair Market
Value
  Shares of Common
Stock Acquired
   
    3/31/2016   $ 25,000   $ 54.38   459  
    6/30/2016   $ 8,791   $ 55.72     157    
(6)
Lamberto Andreotti retired from the Board of Directors effective May 2, 2017.
(7)
Laurie H. Glimcher, M.D. retired from the Board of Directors effective July 21, 2017.
(8)
Thomas J. Lynch, Jr., M.D. retired from the Board of Directors effective March 15, 2017.
(9)
Togo D. West, Jr. retired from the Board of Directors effective May 2, 2017.

30


Table of Contents


COMPENSATION DISCUSSION AND ANALYSIS

             This Compensation Discussion and Analysis (CD&A) is intended to explain how our compensation program is designed and how it operates for our Named Executive Officers (NEOs). The below table includes a list of our 2017 NEOs.

  Name
  Principal Position
 
  Giovanni Caforio, M.D.   Chairman & Chief Executive Officer
  Charles Bancroft   Chief Financial Officer and EVP, Global Business Operations
  Thomas J. Lynch, Jr., M.D.   EVP and Chief Scientific Officer
  Sandra Leung   EVP and General Counsel
  Murdo Gordon   EVP and Chief Commercial Officer


EXECUTIVE SUMMARY

A.    Introduction

            Overview. Bristol-Myers Squibb Company continues to recognize that aligning pay to the achievement of both our short-term and long-term goals, engagement of our employees, the achievement of our mission and the delivery of value to our shareholders is a cornerstone of our compensation philosophy and program structure. In 2017, we met or exceeded our financial and operational goals in key areas, including continued growth across our core prioritized brands, additional clinical and regulatory achievements, the evolution of our operating model and maintaining a disciplined approach to capital allocation, with an emphasis on business development, dividends and share repurchase.

GRAPHIC   Received strong shareholder support for executive compensation with 96% in favor of our 2017     "Say on Pay" vote

GRAPHIC

 

Maintained strong execution across the company in 2017
    §   We achieved significant growth across our prioritized brands, led by our two largest brands, Opdivo and Eliquis, which had sales growth of 31% and 46%, respectively
    §   Eliquis became the number one novel oral anticoagulant in total prescriptions in the U.S. and in several countries around the world
    §   Continued delivery of transformational medicines, with two trials stopped early for overall survival and label expansion in three new indications for Opdivo
    §   Maintained a disciplined approach to expense management throughout 2017
    §   Advanced early pipeline across immuno-oncology, fibrosis, and immunoscience

GRAPHIC

 

Continued to advance our long-term business strategy, focusing on key priorities
    §   Strong foundation for growth in 2018 and beyond
    §   Eliquis poised for significant growth
    §   Multiple $1B+ potential growth opportunities for Opdivo, including in lung, renal, hepatocellular and gastric cancers
    §   Innovative diversified portfolio both in immuno-oncology and other core therapeutic areas
    §   Disciplined approach to capital allocation—returning capital to shareholders in dividends, which increased for the ninth year in a row, and share repurchases; with business development core to our strategy
    §   We continued executing on our operating model evolution; focusing commercial and R&D resources on prioritized brands

GRAPHIC

 

Key 2017 performance highlights
    §   Total revenues increased by 7%
    §   GAAP EPS decreased by 77% primarily due to an approximately $3B charge related to tax reform; and non-GAAP EPS increased by 6%
    §   Our commitment to strong commercial and operational execution as well as continued investment in R&D supports the right framework for delivering value to shareholders over the long-term, as indicated by our 115% five-year TSR, which out-performed both our peer group and the S&P's 500 Index

31


Table of Contents

GRAPHIC

            Our Compensation & Management Development Committee's (the "Committee") ongoing review of our business strategy and our extensive shareholder engagement efforts have allowed our executive compensation program to maintain close alignment with our strategic focus and the perspectives of our shareholders. This executive summary includes an overview of the key components of our executive compensation program and recent changes that continue to support our company's evolution to a diversified specialty biopharmaceutical company.

B.    Expanded Shareholder Engagement

            In 2017, we expanded our shareholder outreach, reaching out to over 50 of our top shareholders, representing nearly 50% of our shares outstanding. We continued to engage with our investors on our executive compensation program, including disclosure trends and feedback on the structural changes to the compensation program that became effective in 2016, as well as other corporate governance topics covering, among other things, board composition, tenure, board assessment, sustainability and risk oversight.

            The feedback received from shareholders was generally positive and was brought to the Committee and Board for discussion. We are committed to ongoing shareholder engagement and consideration of feedback as we continually evaluate our executive compensation program.

32


Table of Contents

C.    2017 Executive Compensation Program at a Glance

            Our compensation program design reflects our compensation philosophy and aligns well with our strategy, market practice and our shareholders' interests.

GRAPHIC

D.    Our Company Performance in 2017 and Advancement of our Long-term Business Strategy

            As a diversified specialty biopharmaceutical company, our strategy is to combine the resources, scale and capability of a pharmaceutical company with the speed and focus on innovation of the biotech industry. Our four strategic priorities are to drive business performance, continue to build a leading franchise in immuno-oncology, maintain a diversified portfolio both in immuno-oncology and other core therapeutic areas, and continue our disciplined approach to capital allocation, including establishing partnerships, collaborations and in-licensing or acquiring investigational compounds and innovative delivery systems as an essential component of successfully delivering transformational medicines to patients.

            Building on this strategic foundation, our management's execution of our strategic priorities resulted in continued profitable growth in 2017 driven by strong performance of our prioritized brands as shown below, a disciplined approach to capital allocation and expense management, additional clinical and regulatory achievements, particularly in immuno-oncology, important business development activities that supplement our innovative pipeline, the continued evolution of our operating model, and a strong balance sheet. Looking ahead, we will continue to implement our biopharma strategy by driving the growth of key brands, executing product launches, investing in our diverse and innovative pipeline, aided by strategic business development, focusing on prioritized markets, increasing investments in our biologics manufacturing capabilities and maintaining a culture of continuous improvement with high integrity and ethics. For a discussion of our Board's involvement in the strategic planning process, please see "Board's Role in Strategic Planning and Risk Oversight" beginning on page 19.

33


Table of Contents

Total Revenues of Prioritized Brands (Dollars in Millions)

GRAPHIC

 

GRAPHIC

 

GRAPHIC

 

GRAPHIC   GRAPHIC   GRAPHIC

 

GRAPHIC

 

GRAPHIC

 

GRAPHIC

 

GRAPHIC   GRAPHIC   GRAPHIC

GRAPHIC

§     Management's execution of our strategic priorities in 2017 resulted in increased revenues of 7%.

§     We achieved strong execution across marketed portfolio demonstrated by total sales growth of prioritized brands of 27%.

§     We continued to build off our success with Opdivo, receiving additional approvals and other regulatory milestones and strong commercial execution in 2017, continuing to hold strong market share and reaching $4.9B in annualized sales in 2017, having only been on the market for three years.

§     Outside of immuno-oncology, our cardiovascular product Eliquis grew by 46% to reach approximately $4.9B in global net sales, and became the number one novel oral anticoagulant in total prescriptions in the U.S. and in several countries around the world.

§     In addition, Orencia and Sprycel reached approximately $2.5B and $2.0B in net sales, respectively.

§     We continued to advance a diversified pipeline of innovative medicines, including next-generation immuno-oncology assets as well as assets in fibrosis, heart failure and immunoscience, which have the potential to be first-in-class or best-in-class.

§     We executed important business development transactions both divesting non-core assets and supplementing our innovative pipeline, in particular our acquisition of IFM Therapeutics and licensing of Ono's EP4 programs, which broadens the company's immuno-oncology pipeline, and over 45 collaboration and license agreements, including with companies such as Halozyme, which provides the potential for new delivery mechanisms of our immuno-oncology medicines to patients, and Foundational Medicines and Qiagen, which enhance our capabilities in translational medicine.

34


Table of Contents


E.    2017 Pay Decisions Align with Company Performance and Ongoing Evolution

Key Considerations

            Each year, when evaluating company and senior management performance and making its compensation decisions, the Committee considers our compensation philosophy and program structure, which underscores competitive compensation and pay for performance, striking the appropriate balance between (i) directly aligning executives' compensation with the fulfillment of our Mission and the delivery of shareholder value, (ii) making a substantial portion of our executives' compensation variable and at risk based on operational, financial, strategic and share price performance and (iii) attracting, retaining and engaging executives who are capable of leading our business in a highly competitive, complex, and dynamic business environment.

            For 2017, after reviewing all details of our financial and operational performance, our share price performance, and the individual performance of our executives, our Committee determined that the compensation of our executives under the program design continues to be appropriate.

The Committee looked at how all the elements of our compensation program design work together, noting the balance inherent in the 2016 re-design between short-term and long-term compensation and performance; top-line and bottom-line results; absolute and relative factors; and internal and market-based performance metrics. In evaluating 2017 performance, the Committee determined that the compensation of our executives appropriately reflects:

    our financial and operational performance,
    the advancement of the pipeline in 2017,
    evolution of our operating model, and
    the Committee's holistic assessment of the individual performance of our executives.

We believe that our core strategy will continue to create sustainable long-term value for shareholders, as evidenced by our 115% five-year total shareholder return that exceeds our peer group TSR over the same time period.

Other Key Factors Considered

As noted, our compensation program is guided by our compensation philosophy and principles and this is illustrated through the following elements of our program:

    Balance of incentives created by the 2016 compensation re-design, which places greater emphasis on long-term performance.

    Long-term equity incentive program significantly aligns executive compensation with shareholder value over the relevant period:

      o
      Long-term compensation emphasized in our overall executive pay mix (i.e., over 60% for our NEOs);

      o
      34% of the 2017 PSU grant is tied to 3-year TSR vs. our peer group; and

      o
      MSUs are also highly leveraged relative to changes in our share price.

    Robust share ownership and retention guidelines further the alignment of management and shareholders.

F.    2017 Annual Incentive Program Results & Incentive Plan Target Setting Considerations

Annual Incentive Program Results

            Annual awards are determined based on a Company Performance Factor, which is calculated based on pre-defined financial and pipeline goals, and an Individual Performance Factor, which is calculated based on individual achievements against pre-defined strategic and operational goals. When determining the individual component of our annual incentive awards, the Committee considers each executive's contributions to the company's strategic achievements and financial and operational performance. In addition, the Committee considers how each executive demonstrates the Company's Behaviors, including among others, accountability, and his or her contributions to our company's culture of innovation, business integrity, ethics and compliance.

Target Setting Considerations

            At the beginning of each year, the Committee undertakes an incentive target setting process to establish targets that it believes will motivate our executives appropriately to deliver the performance that drives shareholder value creation in both the short and longer term.

35


Table of Contents

            Taking into consideration, among other things, budget, operational priorities, long-term strategic plans, historical performance, product pipeline and other external factors, as well as the evolution of our business and product portfolio in the context of our transition to a diversified specialty biopharmaceutical company, the Committee set 2017 incentive targets in consideration of anticipated performance, in line with guidance provided to the market in early 2017 and in line with pipeline expectations. Later in the year, after the Committee set the targets, we met, or exceeded financial and operational goals in certain key areas, including growth of both revenues and non-GAAP earnings, earlier-than-expected regulatory approvals, important business development activities, and disciplined expense management, resulting in a revision of guidance to the market for the year.

            Further detail on annual target setting considerations for each of our NEOs is included beginning on page 41, under "Financial and Pipeline Metric Target Setting Considerations".


Year over Year Comparison of Financial and Pipeline Achievements for Company Performance Factor

        2016         2017    

Performance Measure

      Target       Actual      

% of
Target


    Target       Actual      

% of
Target


Non-GAAP Diluted Earnings Per Share, Net of Share Repurchase(1)(2)

     
$

2.35
     
$

2.83
     

120.4

%
   
$

2.76
     
$

2.94
     

106.5

%

 

                                                               

Total Revenues, Net of Foreign Exchange ($=MM)(2)

     
$

17,596
     
$

19,494
     

110.8

%
   
$

19,991
     
$

20,683
     

103.5

%

 

                                                               

Pipeline Score

     

3
     

2
     

66.7

%
   

3
     

3.5
     

116.7

%


(1)
Consistent with the company's current policies and procedures, and shareholder feedback, the impact of share repurchases has been excluded from both target and achieved results.
(2)
Consistent with the company's past practice, non-GAAP diluted earnings per share, net of share repurchases and total revenues, net of foreign exchange, were each adjusted $0.03 and $65 million, respectively, due to an unanticipated favorable budget variance for Sprycel performance in Europe. The Committee determined that it was appropriate to exclude the impact of the unanticipated favorable budget variance because this event favorably impacted performance in an amount that was not determinable when the target was set in the first quarter of 2017.

            The Individual Performance Factors applied to our NEOs for 2017 ranged between 115% and 135%. Disclosure of our NEOs individual performance goals and achievements are detailed below beginning on page 42, under "2017 Individual Performance Assessment". Further detail on annual incentive awards for each of our NEOs is included on page 44, under "2017 Annual Incentive Awards".

Our Compensation Governance Reflects Market Best Practices

            We maintain a number of compensation governance best practices which support our overarching compensation philosophy and are fully aligned with our compensation principles, as discussed in the following section. Our compensation practices also align with input we have received from shareholders.

    What We Do:       What We Don't Do:    
 
   

ü

  100% performance-based annual and long-term incentives       LOGO   Generally no perquisites to our Named Executive Officers    
 
   

ü

  Caps on the payouts under our annual and long-term incentive award programs       LOGO   Prohibition on speculative and hedging transactions    
 
   

ü

  Robust share ownership and share retention guidelines       LOGO   No employment contracts with our Named Executive Officers    
 
   

ü

  Robust recoupment and clawback policies       LOGO   Prohibition on re-pricing or backdating of equity awards    
 
   

ü

  Proactive shareholder engagement       LOGO   No guaranteed incentives with our Named Executive Officers    
 
   

ü

  "Double-trigger" change-in-control agreements       LOGO   No tax gross-ups    
 

36


Table of Contents


Executive Compensation Philosophy and Principles

Our executive compensation philosophy focuses on two core elements:

LOGO

            Based on this philosophy, our compensation program is designed with the following principles in mind:

    ü
    to pay our employees equitably based on the work they do, the capabilities and experience they possess, and the performance and behaviors they demonstrate (including passion, innovation, speed and accountability);

    ü
    to promote a non-discriminatory and inclusive work environment that enables us to benefit from and to use as a competitive advantage the diversity of thought that comes with a diverse and inclusive workforce;

    ü
    to motivate our executives and all our employees to deliver high performance with the highest integrity; and

    ü
    to implement best practices in compensation governance, including risk management and promotion of effective corporate policies.

Benchmarking Analysis and Peer Group

Benchmarking Approach

            In general, our executive compensation program seeks to provide total direct compensation at the median of our primary peer group (as defined below) when targeted levels of performance are achieved. In any given year, however, we may target total direct compensation for a particular executive above or below the median of our primary peer group due to multiple factors, including competencies, qualifications, experience, responsibilities, contribution, individual performance, role criticality and/or potential. We may also target total direct compensation above the median of our primary peer group to attract and retain talent within the competitive biopharmaceutical industry marketplace. We define total direct compensation as base salary plus target annual incentive award plus the fair value of annual long-term equity incentive awards on the date of grant.

            Paying at competitive levels when targeted levels of performance are achieved allows us to attract and retain the talent we need to continue driving performance, while enabling us to maintain a competitive cost base with respect to compensation expense.

Benchmarking Process

            The Committee's independent compensation consultant annually conducts a review of the compensation for our Named Executive Officers, including compensation information compiled from publicly filed disclosures of our primary and extended peer groups. Pay levels of our peers are used as a reference point, among other factors, when determining individual pay decisions (i.e., base salary levels, the size of salary adjustments, if any, target annual incentive levels and long-term equity incentive award size).

37


Table of Contents

2017 Peer Groups

            We regularly monitor the composition of our peer groups and make changes when appropriate. Our peer groups in 2017 remained unchanged and consisted of the following companies:

 
 
  Primary Peer Group
  Extended Peer Group(1)
   
    AbbVie Inc.   Gilead Sciences Inc.       AstraZeneca PLC  
    Amgen Inc.   Johnson & Johnson       GlaxoSmithKline PLC    
    Biogen Inc.   Merck & Co.       Roche Holding AG  
    Celgene Corporation   Pfizer, Inc.       Novartis AG    
    Eli Lilly and Company         Sanofi  
         

(1)     Our extended peer group includes the primary peer group plus these five companies based outside the U.S.

            Primary Peer Group: The Committee believes the companies included in our 2017 primary peer group are appropriate given the unique nature of the biopharmaceutical industry. These companies represent our primary competitors for executive talent and operate in a similarly complex regulatory and research driven environment.

            In determining our primary peer group, we believe emphasis should be placed on whether a company competes directly with us for the specialized talent necessary to further drive our success as a diversified specialty biopharmaceutical company. We also consider company size in determining our peer group. The companies in our primary peer group all had annual revenues of at least $9 billion. BMS was slightly below the 25th percentile in revenue and between the 25th percentile and the median in market capitalization amongst our primary peer group.

            Extended Peer Group: We also review an extended peer group, which is comprised of the nine companies in our primary peer group plus five companies based outside the U.S. This extended peer group serves as an additional reference point for compensation practices, including understanding of the competitive pay environment as it relates to the global nature of both our business and the competition for talent.

2017 Target Compensation Benchmarks

            Target compensation for Dr. Caforio was at approximately the median of Chief Executive Officers within our current proxy peer group. The Committee believes Dr. Caforio's compensation package positions him appropriately among his peers when taking multiple factors into consideration. On average, our other Named Executive Officers were also at approximately the median of our current proxy peer group, with variation by position.

Components of Our 2017 Compensation Program

  Core components of our 2017 executive compensation program:

          §
          Base Salary

          §
          Annual Incentive Award

          §
          Long-Term Equity Incentives, comprised of:
            Performance Share Units
            Market Share Units

38


Table of Contents

            The Committee believes this structure aligns with a continued commitment to emphasizing variable, or "at risk," compensation for our Named Executive Officers. The following charts provide an overview of the 2017 executive compensation components for the CEO and other NEOs, and highlights the percentage of target compensation that is variable and at risk.

GRAPHIC

            This target mix supports the core elements of our executive compensation philosophy by emphasizing long-term, stock based incentives while providing competitive annual cash components, aligning our executive compensation program with our business strategy.

            The following sections discuss the primary components of our executive compensation program and provide detail on how specific pay decisions were made for each NEO in 2017. See "Compensation of our New Chief Scientific Officer" beginning on page 48 for a discussion on Dr. Thomas Lynch, Jr.'s compensation.

Base Salary

            Base salaries are used to help us attract talent in a highly competitive labor market. The salaries of our executives are primarily established on the basis of the specialized qualifications, experience and criticality of the individual executive and/or his or her role and the pay levels of comparable positions within our primary peer group. Salary increases for our executives are determined based on both the performance of an individual and the size of our annual increase budget in a given year, which is based in part on an assessment of market movement related to salary budgets for our peer companies and broader general industry trends. Therefore, we typically set our annual salary increase budgets based on the median of such forecasts. There may be adjustments to salary from time to time to recognize, among other things, when an executive assumes significant increases in responsibility and/or is promoted, and to reflect competitive pay based on market data for individual executive roles.

            In 2017, in accordance with our company wide merit review process, employees, including the Named Executive Officers, were eligible for a merit increase provided their performance fully met or exceeded expectations on both Results and Behaviors. Employees rated below the fully-performing level typically receive either a reduced merit increase or no salary increase depending on the extent to which they were rated below the fully-performing level. Effective April 1, 2017, Dr. Caforio received an increase of 3.2%, Mr. Bancroft received an increase of 3%; and Ms. Leung received an increase of 3%. Mr. Gordon received a 5% salary increase effective April 1, 2017 and a subsequent 5% salary increase effective April 20, 2017, to bring him closer to the median target pay compared to his peers and reflective of his role expansion and increased responsibilities.

Annual Incentive Program

            Our annual incentive program is designed to reward performance that supports our business strategy as a diversified specialty biopharmaceutical company and our Mission to help patients prevail over serious diseases. The annual plan aligns with our business strategy and Mission by sharpening management's focus on key financial and pipeline goals, as well as by rewarding individual performance (both Results and Behaviors), consistent with our pay-for-performance philosophy.

            Each NEO's target annual incentive is expressed as a percentage of base salary. Annual incentive awards for each NEO are determined by evaluating both company performance (as measured by the Company Performance Factor) and individual performance (as measured by the Individual Performance Factor). The maximum incentive opportunity for each NEO is 200% of target.

39


Table of Contents

            The Company Performance Factor can range from 0% to 152%, based on financial achievements and pipeline results, and the Individual Performance Factor can range from 0% to 165%, based on individual performance (both Results and Behaviors), subject to a 200% of target maximum payout. The graphic below illustrates the calculation used to determine annual incentive plan awards.

Annual Incentive Award Calculation for Named Executive Officers

GRAPHIC

Performance Metrics Underlying the Company Performance Factor

            Our 2017 incentive plan design has the following corporate-wide measures, which apply to all employees eligible to participate in the annual incentive plan, including our Named Executive Officers:

 
 
      2017 Metric and Weighting
  What It Is
  Why It's Important
   

 

 

Earnings Per Share (EPS)
(50%)


 

Non-GAAP Diluted EPS
(Net Income divided by outstanding shares of common stock)


 

A critical measure of annual profitability aligning our employees' interests with those of our shareholders

 


 

 

Total Revenues
(25%)

 

Total Revenues, net of foreign exchange
(Total revenues minus reserves for returns, discounts, rebates and other adjustments)

 

A measure of topline growth that creates a foundation of long-term sustainable growth and competitive superiority

 

 

 

 

Pipeline
(25%)


 

• Near-Term Value
(Submissions and approvals)
• Long-Term Growth Potential



 

Increases BMS-wide focus on delivery of our late-stage pipeline and continued development of a robust pipeline through both internal efforts and business development

 

 

            Our pipeline metric highlights the importance of pipeline delivery to the near-term and long-term success of the company. This metric measures the sustainability and output of our R&D pipeline portfolio and is comprised of goals in two categories, Near-Term Value and Long-Term Growth Potential with a Qualitative Overlay:

 
 
  Metric
  What It Is
  Why It's Important
   

 

 

Near-Term Value (50%)

 

Regulatory submissions and approvals for new medicines and new indications and formulations of key marketed products in the U.S., EU, China and Japan

 

Recognizes delivery of the late-stage pipeline, which drives near-term value

 


 

 

Long-Term Growth Potential (50%)

 

• Development Candidates
• First in Human
• Registrational Study Starts

 

Recognizes the progression and successes of the R&D pipeline at various stages of development, including internally and externally-sourced compounds

 

 

 

 

Qualitative Overlay

 

Reflects management's, the Science & Technology Committee's (S&T) and the Committee's holistic evaluation of our pipeline performance, including such considerations as the performance of high value assets and the integration of acquired assets, among other factors.

 

         

40


Table of Contents

Financial and Pipeline Metric Target Setting Considerations

            At the beginning of each year, the Committee undertakes an incentive target setting process to establish targets that it believes will motivate our executives appropriately to deliver the high performance that drives shareholder value creation in both the short and longer term.

            Financial and strategic performance targets are:

    Predefined;
    Stretch goals that aligned with earnings guidance;
    Tied to the key financial objectives of the company; and
    Aligned with industry benchmarks on speed of commercial launch and expected market adoption.

            Pipeline performance targets are:

    Set in collaboration with the Science and Technology Committee (the "S&T Committee");
    Aligned with the company's strategic plan and key value drivers;
    Aligned with industry benchmarks on typical clinical study duration and regulatory approval timelines;
    Separated into two performance categories, "Near-Term Value" and "Long-Term Growth Potential" subject to a qualitative overlay; and
    Reflective of annual milestones that link short-term outcomes to long-term strategic R&D priorities (milestones for higher value assets are emphasized in goal setting to provide a framework that assesses not only quantity, but also quality and impact of milestones).

            The S&T Committee also identifies those highest value assets and the integration of acquired assets, among other factors, the importance of which will inform the application of a qualitative overlay.

            In establishing targets and goals each year, the Committee considers budget, operational priorities, long-term strategic plans, historical performance, product pipeline and external factors, including external expectations, competitive developments, and the regulatory environment, among other things.

            The Committee set 2017 incentive targets in consideration of anticipated performance, in line with guidance provided to the market in early 2017 and in line with commercial and pipeline expectations. Later in the year, after the Committee set the targets, we met, or exceeded financial and operational goals in certain key areas, including growth of both revenues and non-GAAP earnings, earlier-than-expected regulatory approvals, important business development activities, and disciplined expense management, resulting in a revision of guidance to the market for the year.

2017 Company Performance Factor Achievements

            The table below shows the performance and resulting payout percentage of the performance measures used for our 2017 annual incentive plan:

 
 
  Performance Measure
  Target
  Actual
  % of
Target

  Resulting
Payout
Percentage

   

 

 

Non-GAAP Diluted Earnings Per Share, Net of Share Repurchase(1)(2)

  $ 2.76   $ 2.94   106.5%   119.00%  

 

 

Total Revenues, Net of Foreign Exchange ($=MM)(2)

  $ 19,991   $ 20,683   103.5%   134.11%    

 

 

Pipeline Score

  3   3.5   116.7%   113.04%  

 

 

Total

          108.3%   121.29%    
 

(1)
Consistent with the company's current policies and procedures, and shareholder feedback, the impact of share repurchases has been excluded from both target and achieved results.
(2)
Consistent with the company's past practice, non-GAAP diluted earnings per share, net of share repurchases and total revenues, net of foreign exchange, were each adjusted $0.03 and $65 million, respectively, due to an unanticipated favorable budget variance for Sprycel performance in Europe. The Committee determined that it was appropriate to exclude the impact of the unanticipated favorable budget variance because this event favorably impacted performance in an amount that was not determinable when the target was set in the first quarter of 2017.

            For the pipeline metric, after the performance period is complete, the S&T Committee reviews our performance in the categories identified above, including a qualitative assessment of results, and determines a

41


Table of Contents

performance score using a scale of one to five, with three being target. For 2017, the S&T Committee recommended, and the Committee approved, a pipeline score of 3.5 based on the following results:

GRAPHIC

Individual Performance Factor

            Our executive compensation program is designed to reward executives for financial, operational, strategic, share price and individual performance while demonstrating high ethical standards. We believe this structure appropriately incentivizes our executives to focus on our long-term business strategy, to achieve our Mission to help patients prevail over serious diseases, and to attain sustained long-term value creation for our shareholders.

GRAPHIC

When determining individual award levels, the Committee considers (i) individual performance against strategic, financial and operational objectives that support our long-term business strategy and shareholder value creation ("Results") and (ii) an executive's demonstration of the behaviors defined in the Bristol-Myers Squibb Commitment and our BMS Behaviors ("Behaviors") identified in the box to the right. Also embedded in this determination is the ongoing assessment of enterprise risk, including reputational risk stemming from the dynamic external environment. In particular, we evaluate how each of our executives demonstrate our Company Behaviors in the execution of their day-to-day decisions. This evaluation is one input into the determination of payouts under both the annual incentive and long-term equity incentive programs. Therefore, given the direct link between Behaviors that impact payout and our executive compensation program's emphasis on sustainable long-term value, we minimize and appropriately reduce the possibility that our executive officers will make excessively or inappropriately risky decisions that could maximize short-term results at the expense of sustainable long-term value creation for our shareholders.

2017 Individual Performance Assessment

            When determining the individual component of the annual incentive awards, the Committee considered each executive's contributions to our company's strategic achievements and financial and operational performance as well as his or her demonstration of Company Behaviors. The Committee evaluated our NEO's performance against clear and pre-defined objectives established at the beginning of the year and tied to the company's key strategic objectives.

42


Table of Contents

            For the CEO, the Committee evaluated the following in determining his individual performance modifier:


2017 CEO PERFORMANCE EVALUATION

STRATEGIC OBJECTIVE
  EVALUATION
Drive performance of the business: Achieve budgeted financial targets established at the beginning of the year, including revenues, non-GAAP EPS, gross margin and operating margin, and increase competitiveness as a diversified Specialty BioPharma company, including ensuring supply chain reliability, achieving predefined customer service metrics for all products and accelerating strategic plan deliverables. Execute on-time completion of 2017 deliverables against company transformation plan.  

Exceeded target for revenues, operating margin and non-GAAP EPS, as a result of strong commercial execution; narrowly missed gross margin target due to product mix.

Met or exceeded all customer service metrics with 99% customer service satisfaction for all products.

Met target for supply chain reliability and manufacturing capacity despite setbacks at manufacturing sites impacted by hurricanes in Puerto Rico.

Significant progress on transformation deliverables, exceeding savings goal with significant re-allocation of resources to R&D in 2018; plan remains on track.

Enhance the value of the portfolio and diversify for long-term growth: Maximize portfolio value of brands/assets, accelerate key inline growth drivers and maximize near-term value and long-term growth potential goals, including achieving budgeted revenues targets for core products, key product approvals, regulatory submissions, regulatory study starts, and other key pipeline milestones.

 

Exceeded revenue targets for Opdivo, Yervoy, Eliquis and Sprycel and achieved double-digit sales growth for prioritized brands compared to 2016.

Exceeded or met U.S. new patient share objectives, including Opdivo in second-line lung cancer.

Additional indications approved for Opdivo, including in Japan for second-line head & neck cancer and gastric cancer; in the U.S. for adjuvant melanoma (due to early stoppage of Checkmate 238 due to relapse free survival advantage of Opdivo compared to Yervoy), metastatic colorectal cancer and second-line liver and bladder cancers (bringing total U.S. indications to a record 14 in under three years); and for Europe, including second line bladder and head & neck cancer.

Orencia approved for psoriatic arthritis in the U.S. and EU; and for juvenile idiopathic arthritis in the U.S.

Early stoppage of Checkmate 214 for renal cell carcinoma due to overall survival advantage of Opdivo compared to Sunitinib.

15 registrational studies initiated and other high value pipeline milestones met or exceeded.

Key business development transactions executed, including over 45 strategic partnerships and collaborations that supplement our innovative pipeline.

Evolve our culture and execute our People Strategy: Embed our strategy to engage, empower and enrich employees (the "People Strategy") and accelerate the evolution of our culture, including continuing to deepen employee engagement and cultivate great managers, delivering measureable improvements in key areas of focus, including, among others, diversity and inclusion, and continuing to set a firm "tone at the top" on a culture of business integrity, ethics and compliance, among others.

 

Launched comprehensive approach to deepen engagement of global leadership team and cultivate great managers.

Continued to reinforce integrity and ethics across all key employee communications.

Progress made on diversity and inclusion initiatives with representation of women globally and underrepresented ethnic groups in the U.S.; inclusion index scores remain high for annual employee engagement survey.

Robust management development plans in place and being executed in support of succession planning for critical positions.

Individual Performance Modifier Based on CMDC Evaluation:    135%

            In addition, the Committee noted the following with respect to each of our other NEOs:

            For Mr. Bancroft, the Committee considered: (i) his significant leadership in the achievement of strong operational results: Total Revenues increased by 7% and non-GAAP EPS increased by 6%—with the 77% decrease in GAAP EPS primarily due to an approximately $3B charge related to tax reform; and maintaining a strong balance sheet; (ii) his continued leadership in driving the evolution of our operating model while ensuring a balanced approach to capital allocation, returning capital to shareholders in dividends and share repurchases; and (iii) his oversight and

43


Table of Contents

leadership in executing business development transactions, with a focus on supplementing our innovative pipeline, as well as divesting non-core assets. This enabled the company to enter into over 45 collaboration and license agreements, with notable transactions such as our acquisition of IFM Therapeutics and the agreement with Halozyme, which provides the potential for new delivery mechanisms of our immuno-oncology medicines to patients.

            For Dr. Lynch, the Committee considered: (i) the immediate positive impact Dr. Lynch has had on the R&D organization with his appointment as Chief Scientific Officer in March 2017; (ii) the significant advancement of the pipeline, including both clinical and regulatory achievements (including high value milestones that were not expected until 2018), notably 31 regulatory submissions and approvals, 36 pipeline projects meeting transition milestones, and the achievement of FDA approvals for Opdivo for the treatment of Bladder Cancer, MSI-High Colorectal Cancer, Liver Cancer, Gastric Cancer, and Adjuvant Melanoma; (iii) his leadership in driving the evolution of our operating model within the R&D organization, including the recruitment of diverse talent to key R&D Leadership roles; and (iv) his strong partnership with our commercial and global manufacturing organizations, which has resulted in increasingly seamless transitions and faster development for our products.

            For Ms. Leung, the Committee considered: (i) her role in providing consistently sound legal advice to senior management and the Board of Directors; (ii) her successful management of multiple, significant legal issues across all teams and functions, including among others, successful execution of robust commercial defense, intellectual property and patent strategies; (iii) her role in supporting multiple business development transactions, including innovative partnerships and worldwide licensing agreements; (iv) her contributions and performance as a trusted and respected senior leader who provides valuable strategic advice and whose impact spans across all teams and functions; and (v) her strong advocacy and sponsorship of diversity and inclusion both internally and externally.

            For Mr. Gordon, the Committee considered: (i) his leadership role in our strong commercial execution, specifically Opdivo reaching $4.9B in annualized sales in 2017, Eliquis' strong performance growing by 46% to reach approximately $4.9B in global net sales—achieving the status as the number one novel oral anticoagulant in total prescriptions in the U.S. and in several countries around the world, as well as significant growth across other prioritized brands, including Orencia and Sprycel, reaching approximately $2.5B and $2.0B in net sales, respectively; (ii) his leadership in strong international launches of prioritized brands; (iii) his leadership in the transformation of the global commercial function, including building new capabilities in market access; and (iv) his direct sponsorship of one of our innovative people and business resource groups, specifically focused on the development and advancement of women.

2017 Annual Incentive Awards

            The actual annual incentive awards paid to our Named Executive Officers are shown in the table below and can also be found in the Summary Compensation Table under the Non-Equity Incentive Plan Compensation column:

 
   
   
   
   
   
 
  Executive
  Target Incentive
Award

  Applying Company
Performance
Factor(1)

  Actual
Payout(2)

   

 

 

Giovanni Caforio, M.D.

  $ 2,381,250   $ 2,888,218   $ 3,899,094  

 

 

Charles Bancroft

  $ 1,196,753   $ 1,451,542   $ 1,887,005    

 

 

Thomas J. Lynch, Jr., M.D.

  $ 999,960   $ 1,212,851   $ 1,576,706  

 

 

Sandra Leung

  $ 947,437   $ 1,149,146   $ 1,493,890    

 

 

Murdo Gordon

  $ 847,024   $ 1,027,355   $ 1,181,458  

(1)
Adjusted to reflect Company Performance Factor (financial and pipeline performance) earned at 121.29%.
(2)
Adjusted to reflect individual performance.

            As set forth in the table above, the Company Performance Factor of 121.29% was applied to each Named Executive Officer's target incentive award. Then, an individual performance payout factor was applied to determine the actual payout. The Committee can approve an Individual Performance Factor up to 165% of the adjusted incentive, subject to 200% of target maximum payout. Based on the performance highlighted the Committee approved Individual Performance Factors ranging between 115% and 135% for our Named Executive Officers.

Long-Term Incentive Program

            Like our annual incentive plan, our long-term equity incentive program is designed to reward performance that supports our strategic objectives and creates value for our shareholders. A significant percentage of our Named

44


Table of Contents

Executive Officers' compensation is in the form of equity that vests over several years, which is designed to closely tie the interests of our Named Executives Officers' to the interests of our shareholders. Our long-term equity incentive program also is designed to promote retention through multi-year vesting.

            In 2017, we continued to offer two long-term award vehicles, each of which served a different purpose:

    Performance Share Unit Awards:  rewards the achievement of key financial goals and the value created for shareholders as measured by relative TSR over a three-year period ending in the first quarter of the applicable year.

    Market Share Unit Awards:   rewards the creation of incremental shareholder value over a long-term period.

            We believe our long-term equity incentive program serves the best interests of our shareholders by focusing the efforts of our executives on key drivers of both short and long-term success and on shareholder value. Key aspects of the long-term equity incentive program include:

    100% of executives' long-term equity incentive awards are performance-based;

    The design of our long-term equity incentive program applies to all our executives, not just our most senior, thus promoting organizational alignment with our recruitment and business strategy; and

    Our long-term equity incentive program serves as a retention lever, through vesting and payout over several years.

2017 Equity Incentive Program Summary

 
   
   
   
   
        Performance Share Units   Market Share Units  
    Proportion of Annual Grant   60%   40%    
 
    Metrics & Weighting   Non-GAAP Operating Margin: 33%
Total Revenues (ex-fx): 33%
3-Year Relative TSR: 34%
  Share Price Performance    
 
    Min / Max Payout
(% of Target Units)
  0% / 200%   0% / 200%*    
 
    Vesting   3-year, cliff vesting   4-year, ratable vesting    

    * The number of shares earned from Market Share Units (MSUs) can increase or decrease, in proportion to the change in our share price over the one-, two-, three and four-year performance periods. The minimum share price achievement required to earn any shares from MSUs is 60% of the grant date stock price. Accordingly, if 60% is not achieved, zero shares will vest. Both vehicles are designed to be performance-based within the meaning of the applicable Section 162(m) provision of the Internal Revenue Code.

Our Long-term Incentive Program Design Promotes the Creation of Sustainable Long-term Value for Shareholders

            Our overall philosophy to create sustainable shareholder value is primarily focused on strong year-to-year financial and operational performance and on the development and advancement of our pipeline over the long-term. Additionally, as noted, our long-term equity incentive program is tied directly to our stock price performance to closely align the interest of our executives with the interests of our shareholders. Namely, 100% of our executives' long-term equity incentive awards are performance based, which results in a significant portion of their total compensation being tied to our stock price performance and the creation of value for our shareholders.


Cumulative Indexed Total Shareholder Return    

GRAPHIC

45


Table of Contents

2017 Performance Share Unit Awards

            Following extensive engagement with shareholders and an in-depth review of our compensation program in the context of our strategic goals and current product portfolio, the Committee made a number of changes to the PSU program that became effective in 2016, with the first three-year performance cycle under the new design scheduled to be paid, if earned, in 2019. These changes include:

Lengthening of the performance period of financial measures from one year to three years;

Incorporating the three-year relative TSR as a core performance measure rather than a modifier; and

Introducing a new mix of financial performance measures that create stronger alignment with our strategic goals and reduce the overlap of performance metrics in our annual and long-term incentive programs. Specifically, the performance measures for PSU awards are cumulative total revenues (ex-fx), cumulative non-GAAP operating margin, and relative TSR expressed as a percentile rank relative to our peer group. TSR performance must be at median for target shares to be earned.

  GRAPHIC

            The structure of our 2017 financial metrics and three-year relative TSR modifier in our PSU program are detailed below.

 
   
   
   
   
   
   
   
   

 

 

2017-2019 PSU Payout Schedule


 

 

 

  2017-2019 Cumulative
Operating Margin (33%)
 
 
2017-2019 Cumulative
Total Revenues (ex-fx) (33%)
 
  3-Year
Relative TSR (34%)
 
   

 

 

 

  Achievement   Payout   Achievement   Payout   TSR Percentile   Payout    

 

 

Maximum

  115%   200%   110%   200%   80%ile   200%  

 

 

Target

  100%   100%   100%   100%   50%ile   100%    

 

 

Threshold

  85%   50%   90%   50%   35%ile   50%  

 

 

Below Threshold

  <85%   0%   <90%   0%   <35%ile   0%    

Market Share Unit Awards

            MSUs comprise 40% of our executives' target long-term equity incentives. Each grant of MSUs vests 25% on each of the first four anniversaries of the grant date and the number of shares received by an executive upon payout is increased or decreased depending on the performance of our stock price during the one-, two-, three- and four-year performance periods.

            Upon vesting, a payout factor is applied to the target number of MSUs vesting on a given date to determine the total number of units paid out. If our stock price increases during the performance period, both the number of units and value of shares that vest increases. If our stock price declines during the performance period, both the number of units and value of shares that are eligible to vest will be reduced. The payout factor is a ratio of the ten-day average closing price on the measurement date divided by the ten-day average closing price on the grant date. Beginning with our 2013 annual MSU award grant, the measurement date is the February 28 immediately preceding the vesting date. The minimum payout performance factor that must be achieved to earn any payout is 60% and the maximum payout factor is 200%. If our stock price performance is below 60%, then the portion of the award scheduled to vest will be

46


Table of Contents

forfeited. The following chart shows the performance periods for the MSU awards granted to our executives in March 2017:

GRAPHIC

Performance Results

            The following table summarizes the payout factors relating to the tranches that vested in the first half of 2017 for MSU awards outstanding at that time:

 
   
   
   
   
   
   

Grant Date
 

Vesting Date
  # of Years in
Performance
Period
 
Payout Factor
   
    March 10, 2013   March 10, 2017   4   149.03%