DEF 14A 1 tm2037730-2_def14a.htm DEF 14A tm2037730-2_def14a - none - 11.5312721s
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.     )
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Preliminary Proxy Statement

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Definitive Proxy Statement

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Soliciting Material Pursuant to §240.14a-12
Zoetis Inc.
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Zoetis Inc.
10 Sylvan Way
Parsippany, NJ 07054
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NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS
WHEN
Thursday, May 20, 2021
9:00 a.m. Eastern Daylight Time
WHERE
Virtual meeting webcast at: www.virtualshareholdermeeting.com/ZTS2021
RECORD DATE
Close of Business on March 26, 2021
ITEMS OF BUSINESS
1.
Election of Class II Directors until the 2024 Annual Meeting of Shareholders for a three-year term as set forth in this proxy statement
2.
Advisory vote to approve the company’s executive compensation (Say on Pay)
3.
Ratify the appointment of KPMG LLP as the company’s independent registered public accounting firm for 2021
4.
Vote on a shareholder proposal regarding simple majority vote, if properly presented at the meeting
5.
Such other business as may properly come before the Annual Meeting of Shareholders
HOW TO VOTE
Shareholders on the Record Date are entitled to vote in the following ways:
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Call 1 (800) 690-6903
(toll free)
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Visit
www.proxyvote.com
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Return a properly
completed, signed and
dated proxy card
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Attend the Annual Meeting
of Shareholders webcast and
vote your shares
Sincerely yours,
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Heidi C Chen
Executive Vice President,
General Counsel and Corporate Secretary
April 6, 2021
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2021 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 20, 2021:
Zoetis Inc.’s Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2020 are available online at www.proxyvote.com. We are furnishing proxy materials to our shareholders primarily via “Notice and Access” delivery. On or about April 6, 2021, we mailed to our shareholders a notice of internet availability of proxy materials. This notice contains instructions on how to access our Proxy Statement and 2020 Annual Report and vote online.

TABLE OF CONTENTS
1
1
1
2
Summary Information About Our Director Nominees and Continuing Directors 3
4
4
5
12
13
19
23
ITEM 2 — ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION (SAY ON PAY) 23
24
47
48
58
59
ITEM 3 — RATIFICATION OF APPOINTMENT OF KPMG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2021 59
59
60
61
62
ITEM 4 — SHAREHOLDER PROPOSAL REGARDING SIMPLE MAJORITY VOTE 62
65
65
66
67
67
67
68
68
69
69
70
70
70
71
71
72
72
73
As used in this proxy statement, the terms “we”, “us”, “our”, the “company” or “Zoetis” refer to Zoetis Inc.
 
      ZOETIS 2021 PROXY STATEMENT

PROXY SUMMARY
This summary highlights certain information in this proxy statement. As it is only a summary, please review the complete Zoetis Inc. Proxy Statement and 2020 Annual Report before you vote.
2021 ANNUAL MEETING
Time and Date
Thursday, May 20, 2021, at 9:00 a.m. EDT
Place
Online virtual meeting at: www.virtualshareholdermeeting.com/ZTS2021
Record Date
Close of business on March 26, 2021
Voting
Shareholders on the record date are entitled to one vote per share on each matter to be voted upon at the Annual Meeting.
Admission
Shareholders on the record date will be able to attend the Annual Meeting webcast, vote their shares electronically and submit questions online during the meeting by logging in to the website listed above using their 16-digit control number. Shareholders and guests who do not provide a 16-digit control number will still be able to attend the Annual Meeting in a listen-only mode, but will be unable to vote or ask questions.
VOTING MATTERS AND BOARD RECOMMENDATIONS
Item of
Business
Our Board
Recommends
Reasons for
Recommendation
See Page
1.
Election of Class II Directors

FOR
The Board has concluded it is in the best interests of Zoetis and its shareholders for each of Mr. Khosla, Ms. Leatherberry, Dr. Reed and Dr. Rhodes to continue serving as a Zoetis director because each nominee possesses skills, experience, and background, as reflected in their biographies set forth on pages 6 to 11, that enhance the quality of the Zoetis Board.
4
2.
Advisory vote to approve executive compensation (Say on Pay)

FOR
The Board believes that our executive compensation program is designed to attract, incent and reward our leadership for increasing shareholder value and align the interests of leadership with those of our shareholders on an annual and long-term basis.
23
3.
Ratification of appointment of KPMG LLP as our independent registered public accounting firm for 2021

FOR
The Audit Committee and Board believe that the continued retention of KPMG as the company’s independent registered public accounting firm is in the best interests of the company and its shareholders.
59
4.
Shareholder proposal regarding simple majority vote
X
AGAINST
The Board does not believe it is in the best interests of the company’s shareholders at this time to implement the proposal’s request to eliminate all supermajority voting provisions included in our Charter and By-laws. The Board is committed to effective corporate governance and believes that our current practices and procedures protect and maximize long-term value for all our shareholders.
62
 
ZOETIS 2021 PROXY STATEMENT      1

PROXY SUMMARY
2020 BUSINESS HIGHLIGHTS
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Kristin Peck was appointed as the CEO of Zoetis effective January 1, 2020. Early in Ms. Peck’s tenure, Zoetis was presented with unexpected challenges resulting from the global COVID-19 pandemic and needed to quickly work to ensure colleague safety, reliable product supply and our ability to meet the evolving needs of our customers. At the beginning of the pandemic, the companion animal sector was impacted by reduced traffic to veterinary clinics during lockdowns, while the livestock sector experienced challenges due to spikes in COVID-19 cases in meat packing plants, lower demand for protein from the dine-out sectors and shifts in production capacities, creating increased uncertainty and reduced profitability for livestock producers. Throughout 2020 and despite these challenges, Zoetis maintained its focus on the five strategic priorities set at the beginning of the year: drive innovative growth, enhance customer experience, lead in digital and data analytics, cultivate a high-performing organization and champion a healthier, more sustainable future. Additionally, in 2020, we continued to execute on our overall investment plans to support future growth with investments in R&D, capital expenditures and business development activities.
Our colleagues responded to the challenges of the pandemic with agility and resilience, delivering another year of strong operating performance. In 2020, Zoetis was able to successfully launch new products and digital platforms, maintain on-time shipping and deliveries of our products, successfully integrate newly acquired businesses and provide flexible and high levels of customer service and support under rapidly changing circumstances around the globe. In addition, we formalized our plans for sustainability and making Zoetis a more diverse, equitable and inclusive organization. We also continued delivering on our value proposition: growing revenue in line with or faster than the market; growing our adjusted net income faster than revenue; targeting key investment opportunities for growth; and returning excess capital to our shareholders.
1
Operational revenue growth (a non-GAAP financial measure) is defined as revenue growth excluding the impact of foreign exchange. Page 49 of our 2020 Annual Report on Form 10-K, filed with the SEC on February 16, 2021, contains a reconciliation of this non-GAAP financial measure to reported results under GAAP for 2020.
2
Adjusted net income and adjusted diluted EPS (non-GAAP financial measures) are defined as reported net income attributable to Zoetis and reported diluted EPS, excluding purchase accounting adjustments, acquisition-related costs and certain significant items. Pages 51 to 54 of our 2020 Annual Report on Form 10-K, filed with the SEC on February 16, 2021, contain a reconciliation of these non-GAAP financial measures to reported results under GAAP for 2020.
 
2      ZOETIS 2021 PROXY STATEMENT

PROXY SUMMARY
SUMMARY INFORMATION ABOUT OUR DIRECTOR NOMINEES AND CONTINUING DIRECTORS
Additional information about our directors can be found under “Information About Directors” on pages 5 to 11.
Paul M.
Bisaro
Frank A.
D’Amelio
Sanjay
Khosla
Antoinette R.
Leatherberry
Michael B.
McCallister
Gregory
Norden
Louise M.
Parent
Kristin C.
Peck
Willie M.
Reed
Linda
Rhodes
Robert W.
Scully
Experience, Skills
Academia
Animal Health
Consumer Products
Global Businesses
Life Sciences
Manufacturing & Supply
Marketing & Sales
Mergers & Acquisitions
Other Public Company Board Member
Public Company CEO
Public Company CFO; or Finance and Accounting
Public Company GC; Compliance; or Corporate Governance
Digital and Technology
Research & Development
Demographic Background
Board Tenure
Full Years
5
8
7
<1
8
8
7
1
7
3
7
Age (as of April 6, 2021)
Years Old
60
63
69
59
68
63
70
49
66
71
71
Gender
Male
M
M
M
M
M
M
M
Female
F
F
F
F
LGBTQIA+ (optional reporting)
Identify as LGBTQIA+
Race* (optional reporting)
Black or African American
American Indian or Alaska Native
Asian
White
Native Hawaiian or Other Pacific Islander
Other
Did not wish to identify
Ethnicity* (optional reporting)
Hispanic or Latino
Not Hispanic or Latino
Did not wish to identify
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Director Nominee
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Continuing Director
*
Based on U.S. Census Bureau designations
Please note: Mr. William C. Steere, Jr. is not standing for re-election and will retire from the Board immediately following the 2021 Annual Meeting. Mr. Juan Ramón Alaix will also be retiring from the Board as of the date of the 2021 Annual Meeting.
 
ZOETIS 2021 PROXY STATEMENT      3

CORPORATE GOVERNANCE AT ZOETIS
ITEM 1
ELECTION OF DIRECTORS
Our Board of Directors currently consists of thirteen directors divided into three classes. The directors hold office for staggered terms of three years and until their successors are elected and qualified, or until their earlier death, resignation or removal. One of the three classes is elected each year to succeed the directors whose terms are expiring. Our Board believes this structure is appropriate for the company as it allows for the continuity and stability of our Board and encourages a long-term strategic focus beneficial to the company and its shareholders.
The directors in Class II, whose terms expire at the 2021 Annual Meeting of Shareholders, are Sanjay Khosla, Antoinette R. Leatherberry, Willie M. Reed, Linda Rhodes and William C. Steere, Jr. Each of Mr. Khosla, Ms. Leatherberry, Dr. Reed and Dr. Rhodes has been nominated by the Board of Directors, upon the recommendation of its Corporate Governance Committee, to stand for election for a term expiring at the 2024 Annual Meeting of Shareholders. Mr. Steere is not standing for re-election and will retire from the Board immediately following the 2021 Annual Meeting. Mr. Juan Ramón Alaix is also retiring from the Board as of the date of the 2021 Annual Meeting. Following these departures, the size of the Board will be reduced from 13 to 11 directors.
The Corporate Governance Committee considers a number of factors and principles in determining the slate of director nominees for election to the company’s Board, as discussed in the section titled “Director Nominations” below. The Corporate Governance Committee and the Board have evaluated each of Mr. Khosla, Ms. Leatherberry, Dr. Reed and Dr. Rhodes against the factors and principles Zoetis uses to select director nominees. Based on this evaluation, the Corporate Governance Committee and the Board have concluded that it is in the best interests of Zoetis and its shareholders for each of Mr. Khosla, Ms. Leatherberry, Dr. Reed and Dr. Rhodes to continue to serve as a director of Zoetis.
Our Board has appointed Heidi C. Chen as a proxy to vote your shares on your behalf. The proxy intends to vote for the election of Mr. Khosla, Ms. Leatherberry, Dr. Reed and Dr. Rhodes unless you indicate otherwise on your proxy card, voting instruction form or when you vote by telephone or online. Each candidate has consented to being named in this proxy statement and serving as a director if elected. However, if any nominee is not able to serve, the Board can either designate a substitute nominee to serve in his or her place as a director or reduce the size of the Board. If the Board nominates another individual, the person named as a proxy may vote for such substitute nominee.
In order to be elected, a nominee must receive more votes cast “For” than “Against” his or her election. Abstentions and broker non-votes will have no effect on the outcome of the vote. See “Corporate Governance Principles and Practices — Majority Voting Standard for Director Elections” for more information about our procedures if a nominee fails to receive a majority of the votes in an uncontested election.
Our Board of Directors recommends that you vote “For” the election of each of the Board’s nominees for election — Sanjay Khosla, Antoinette R. Leatherberry, Willie M. Reed and Linda Rhodes — to serve as directors of Zoetis until our 2024 Annual Meeting and until their successors are elected and qualified, or until their earlier death, resignation or removal. The Board believes that each of these four nominees has a strong track record of being a responsible steward of shareholders’ interests and of bringing extraordinarily valuable insight, perspective and expertise to the Board. In each individual’s biography set forth on pages 6 to 11, we highlight specific experience, qualifications and skills that led the Board to conclude that each individual should continue to serve as a director of Zoetis.
ITEM 1 RECOMMENDATION: OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF MR. KHOSLA, MS. LEATHERBERRY, DR. REED AND DR. RHODES AS DIRECTORS.
 
4      ZOETIS 2021 PROXY STATEMENT

CORPORATE GOVERNANCE AT ZOETIS
INFORMATION ABOUT DIRECTORS
OUR DIRECTORS
The following table sets forth certain information regarding the director nominees and the directors of the company whose terms will continue after the 2021 Annual Meeting of Shareholders.
Name(1)
Age(2)
Position(s) with the Company
Term
Expires
Paul M. Bisaro* 60 Director 2022
Frank A. D’Amelio* 63 Director 2022
Sanjay Khosla* 69 Director 2021(3)
Antoinette Leatherberry* 59 Director 2021(3)
Michael B. McCallister* 68 Non-Executive Chairman of the Board and Director 2022
Gregory Norden* 63 Director 2023
Louise M. Parent* 70 Director 2023
Kristin C. Peck 49 Chief Executive Officer and Director 2023
Willie M. Reed* 66 Director 2021(3)
Linda Rhodes* 71 Director 2021(3)
Robert W. Scully* 71 Director 2023
*
Independent Director
(1)
Mr. William C. Steere, Jr. is not standing for re-election and will retire from the Board immediately following the 2021 Annual Meeting. Mr. Juan Ramón Alaix will also be retiring from the Board as of the date of the 2021 Annual Meeting.
(2)
As of April 6, 2021.
(3)
Nominee for re-election at the 2021 Annual Meeting for a term expiring in 2024.
 
ZOETIS 2021 PROXY STATEMENT      5

CORPORATE GOVERNANCE AT ZOETIS
OUR DIRECTOR NOMINEES
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SANJAY KHOSLA
Age 69
Director since June 2013
Specific qualifications:

International business and management experience, including as EVP and President, Developing Markets of Kraft Foods (now Mondelēz International)

Global operational experience, including in developing markets

Experience in animal health industry

Public company director experience
Former Executive Vice President and President, Developing Markets of Mondelēz International from 2007 to 2013. Mr. Khosla brings more than 35 years of international business experience from his career with food, beverage and consumer product leaders such as Mondelēz, Kraft, Fonterra and Unilever, where he managed various business units, particularly in developing markets. As President, Developing Markets of Kraft Foods (now Mondelēz International) from 2007 to 2013, Mr. Khosla transformed the $5 billion business into a $16 billion business, while significantly improving profitability. He also has animal health experience from his three-year tenure from 2004 to 2007 as Managing Director of Fonterra Brands and Food Service, a multinational dairy cooperative based in New Zealand. In addition to his service on the Zoetis Board, Mr. Khosla serves on a number of private company Boards and is currently a senior fellow and adjunct professor at the Kellogg School of Management, Northwestern University and a Senior Advisor for the Boston Consulting Group. Mr. Khosla is also CEO of Bunnik LLC, a management consulting firm. Mr. Khosla formerly served on the Boards of Iconix Brand Group, Inc. until 2018 and NIIT, Ltd. until 2017. He also has served as a director of Best Buy, Inc. Mr. Khosla holds a bachelor’s degree in electrical engineering from the Indian Institute of Technology in New Delhi. Mr. Khosla also completed the Advance Management Program at Harvard Business School. Mr. Khosla’s international business and management experience, along with his public company board experience, make him a valuable member of our Board.
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ANTOINETTE R. LEATHERBERRY
Age 59
Director since December 2020
Specific qualifications:

Extensive experience with complex technology transformations during her Deloitte career advising Fortune 500 companies

Strategic digital technology experience

Corporate governance expertise

Diversity and inclusion leadership
Former Principal at Deloitte. Ms. Leatherberry retired from Deloitte, an industry-leading consulting, audit, tax, and advisory services company, in 2020 after culminating a 30-year career of working with Fortune 500 companies on complex information technology transformations and operational issues. At Deloitte, she most recently served as Board Relations Leader for the Risk and Financial Advisory practice from 2017 to 2020. Prior to 2017, she served as Principal, Technology Strategy from 2004 to 2017. Ms. Leatherberry also served as President of the Deloitte Foundation from 2016 to 2020. She has authored numerous articles and publications on information technology and governance and was named to the National Association of Corporate Directors NACD Directorship 100 in 2019 and 2020. Ms. Leatherberry has been recognized in such publications as Consulting Magazine’s Top 25 Consultants and Black Enterprise’s Most Powerful Women in Business. She has also devoted much of her professional life to creating opportunities for women and people of color. At Deloitte, Ms. Leatherberry was the principal architect of The Board Leadership Forum and the NextGen CEO Academy, which helped place more than 70 Black leaders into executive level and board roles. She serves as Chair Emeritus of the Executive Leadership Council (ELC), a preeminent association of Black business leaders, which focuses on board and executive leadership development, philanthropy, skills, and talent development. In addition to her service on the Zoetis Board, Ms. Leatherberry serves on the Board of Directors of the American Family Insurance Mutual Holding Company, the Widener University Board of Trustees, and the Boston University Board of Trustees. She holds a bachelor’s
 
6      ZOETIS 2021 PROXY STATEMENT

CORPORATE GOVERNANCE AT ZOETIS
degree in Mechanical Engineering from Boston University and an MBA in Operations Management and Supervision from Northeastern University. She is currently pursuing a doctorate in higher education policy at Widener University. Ms. Leatherberry’s extensive experience with complex technology transformations, her strategic digital technology experience, and corporate governance expertise, along with her diversity and inclusion leadership, make her a valuable member of our Board.
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WILLIE M. REED
Age 66
Director since March 2014
Specific qualifications:

Thought leadership in the animal health community, including as Dean of the College of Veterinary Medicine at Purdue University

Doctorates in veterinary medicine and pathology

Expertise in infectious diseases, avian pathology, veterinary medicines, diagnostics and vaccines

Senior management experience
Dean of the College of Veterinary Medicine at Purdue University since 2007. Dr. Reed has more than 38 years of experience in animal health and veterinary medicine, gained during his tenure at Purdue University and Michigan State University, and as a Diplomate of the American College of Veterinary Pathologists and Charter Diplomate of the American College of Poultry Veterinarians. Dr. Reed has served as President of the Association of American Veterinary Medical Colleges, President of the American Association of Veterinary Laboratory Diagnosticians, President of the American Association of Avian Pathologists and Chair of the American Veterinary Medical Association Council on Research. He has served on a number of committees for the National Institutes of Health and the United States Department of Agriculture. Dr. Reed has a DVM from Tuskegee University and a Ph.D. in Veterinary Pathology from Purdue University. Dr. Reed’s expertise in veterinary medicines, diagnostics and vaccines and his thought leadership in the animal health community make him a valuable member of our Board.
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LINDA RHODES
Age 71
Director since August 2017
Specific qualifications:

Broad animal health industry experience, including as CEO of animal health start-up company and founder of animal health contract research organization

Experience in private veterinary practice

Doctorates in veterinary medicine and physiology

Public company director experience
Former Chief Scientific Officer and Chief Executive Officer of Aratana Therapeutics. Dr. Rhodes served as Chief Scientific Officer of Aratana Therapeutics from 2012 to 2016 and served as its Chief Executive Officer and Board member from 2011 to 2012. Dr. Rhodes has extensive experience as a research scientist, academic, veterinary practitioner and business leader, spanning 33 years across the animal health industry. She is a founder of AlcheraBio, LLC, a veterinary contract research organization (currently named Argenta), and held research positions with Merial, Merck and Company, and Sterling-Winthrop Drug Company. Dr. Rhodes also held several teaching positions and worked as a bovine veterinarian in private practice for many years. Dr. Rhodes served as a member of the Board of Directors of ImmuCell Corporation until 2017. She is currently an adjunct faculty member of the Graduate Program in Endocrinology and Animal Biosciences at Rutgers University in New Brunswick, New Jersey. She serves on the Scientific Advisory Board of the Found Animals Foundation and on the Board of Directors of the Alliance for Contraception in Cats and Dogs. Dr. Rhodes earned her VMD from the University of Pennsylvania and her Ph.D. in Physiology from Cornell University. Dr. Rhodes’ experience as a research scientist, academic, veterinary practitioner, entrepreneur and business leader, her public company board experience and her knowledge of the animal health business make her a valuable member of our Board.
 
ZOETIS 2021 PROXY STATEMENT      7

CORPORATE GOVERNANCE AT ZOETIS
REMAINING CURRENT DIRECTORS
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PAUL M. BISARO
Age 60
Director since May 2015
Specific qualifications:

Senior management experience, including as former CEO of Actavis plc (formerly Watson Pharmaceuticals) and Impax Laboratories, Inc.

Experience in global healthcare and pharmaceutical industries

Expertise in mergers and acquisitions

Public company director experience
Former Executive Chairman of Amneal Pharmaceuticals, Inc., a specialty pharmaceutical company, from May 2018 to August 2019. Amneal was formed by the merger of Amneal Pharmaceuticals LLC and Impax Laboratories, Inc., where Mr. Bisaro formerly served as President and Chief Executive Officer from March 2017 to May 2018. Mr. Bisaro was previously the Executive Chairman of the Board of Directors of Allergan plc (formerly Actavis plc) from July 2014 to October 2016. Until June 2014, Mr. Bisaro served as Board Chairman, President and Chief Executive Officer of Actavis (formerly Watson Pharmaceuticals). He was appointed President, Chief Executive Officer and a member of the Board of Watson in September 2007 and was later appointed Board Chairman in October 2013. Prior to Watson, Mr. Bisaro was President, Chief Operating Officer and member of the Board of Barr Pharmaceuticals, Inc. Mr. Bisaro served as Barr’s General Counsel from 1992 to 1999, and from 1997 to 1999 served in various additional capacities including Senior Vice President — Strategic Business Development. Prior to Barr, Mr. Bisaro was associated with the law firm Winston & Strawn and a predecessor firm, Bishop, Cook, Purcell and Reynolds from 1989 to 1992. In addition to his service on the Zoetis Board, Mr. Bisaro serves on the Board of TherapeuticsMD, Inc. He also serves on the Board of Visitors of The Catholic University of America’s Columbus School of Law. Mr. Bisaro previously served on the Boards of Allergan plc (and its predecessor companies) until 2018, Zimmer Biomet Holdings, Inc. until 2017 and Amneal Pharmaceuticals (and its predecessor Impax) until 2019. Mr. Bisaro holds an undergraduate degree in General Studies from the University of Michigan and a Juris Doctor from The Catholic University of America in Washington, D.C. Mr. Bisaro’s business, management and leadership experience, his understanding of the pharmaceutical industry, and his public company board experience make him a valuable member of our Board.
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FRANK A. D’AMELIO
Age 63
Director since July 2012
Specific qualifications:

Experience in finance and accounting and senior management, including as CFO of Pfizer

Expertise in mergers and acquisitions

Global business experience

Public company director experience
Chief Financial Officer and Executive Vice President, Global Supply of Pfizer, a global pharmaceutical company, since June 2020, and a member of Pfizer’s Senior Executive Leadership Team. Mr. D’Amelio previously served as Pfizer’s Executive Vice President, Business Operations and Global Supply and Chief Financial Officer from October 2018 until June 2020 and Executive Vice President, Business Operations and Chief Financial Officer from December 2010 to September 2018. He joined Pfizer in September 2007 and held various positions, including Senior Vice President and Chief Financial Officer. From November 2006 to August 2007, Mr. D’Amelio was the Senior Executive Vice President of Integration and Chief Administrative Officer at Alcatel-Lucent, S.A., a global telecommunications equipment company. Prior to the merger of Alcatel and Lucent Technologies in 2006, Mr. D’Amelio was the Chief Operating Officer of Lucent Technologies, with responsibility for leading business operations, including sales, the product groups, the services business, the supply chain, information technology operations, human resources and labor relations. In 2001, he was appointed Executive Vice President and Chief Financial Officer of Lucent and in 2004 was promoted to be Executive Vice President, Chief Administrative Officer and Chief Financial Officer and helped lead Lucent through one of the most challenging periods in
 
8      ZOETIS 2021 PROXY STATEMENT

CORPORATE GOVERNANCE AT ZOETIS
the telecom industry’s history and returned the company to profitability. In addition to his service on the Zoetis Board, Mr. D’Amelio is a member of the Board of Directors of Humana Inc. He also serves on the Board of the Independent College Fund of New Jersey, and formerly served as a member of the National Advisory Board of JPMorgan Chase & Co. Mr. D’Amelio earned his bachelor’s degree in Accounting from St. Peter’s College and his MBA in Finance from St. John’s University. Mr. D’Amelio’s senior management experience and finance expertise, along with his public company board experience, make him a valuable member of our Board.
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MICHAEL B. MCCALLISTER
Age 68
Director since January 2013
Board Chair since June 2013
Specific qualifications:

Senior management experience, including as former CEO of Humana

Accounting background

Board chair experience

Public company director experience
Former Chairman of the Board and CEO of Humana Inc. Mr. McCallister joined Humana, a health care company offering insurance products and health and welfare services, in 1974 and was its Chief Executive Officer from 2000 until his retirement in 2012. During his tenure as CEO, Humana gained a reputation as one of the industry’s leading people-focused innovative companies, leveraging products, processes and technology to help individuals take control of their own health. He also served as Chairman of the Board of Humana from 2010 to 2013. In addition to his service on the Zoetis Board, Mr. McCallister serves on the Boards of AT&T and Fifth Third Bank. Mr. McCallister served for many years on the Board of the Business Roundtable and was Chairman of its Health and Retirement Task Force. Mr. McCallister holds a bachelor’s degree in Accounting from Louisiana Tech University and an MBA from Pepperdine University. Mr. McCallister’s senior management experience in the healthcare industry, along with his public company board experience, make him a valuable member of our Board.
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GREGORY NORDEN
Age 63
Director since January 2013
Specific qualifications:

Corporate finance experience, including as former Chief Financial Officer of Wyeth

Experience in global healthcare and pharmaceutical industries

Accounting background, including as an audit manager at a major accounting firm

Public company director experience
Former Chief Financial Officer of Wyeth. Prior to his role as Chief Financial Officer of Wyeth, Mr. Norden held various senior positions with Wyeth Pharmaceuticals and American Home Products. Prior to his affiliation with Wyeth, Mr. Norden served as Audit Manager at Arthur Andersen & Co. In addition to his service on the Zoetis Board, Mr. Norden serves on the boards of NanoString Technologies, Praxis, and Royalty Pharma. Mr. Norden is a former director of Human Genome Sciences, Univision, where he served until 2020, and Welch Allyn. In addition, Mr. Norden is the Managing Director of G9 Capital Group LLC, which invests in early stage ventures and provides corporate finance advisory services. Mr. Norden’s background in finance and experience as a senior executive in the global healthcare and pharmaceutical industries, along with his public company board experience, make him a valuable member of our Board.
 
ZOETIS 2021 PROXY STATEMENT      9

CORPORATE GOVERNANCE AT ZOETIS
[MISSING IMAGE: ph_louisemparent-bw.jpg]
LOUISE M. PARENT
Age 70
Director since August 2013
Specific qualifications:

Legal, operations, senior management and global business experience as former General Counsel and executive of American Express

Experience in corporate governance, board matters, compliance and risk management

Global business experience

Public company director experience
Former Executive Vice President and General Counsel of American Express Company, a global services company that provides charge and credit card products and travel-related services, from 2003 to 2013. Since early 2014, Ms. Parent has served as Of Counsel at the law firm of Cleary Gottlieb Steen & Hamilton LLP. Ms. Parent brings deep experience in corporate governance and board matters, and in compliance and risk management, gained during her tenure with American Express, where she worked extensively with the Audit, Compensation, and Nomination and Governance committees in her role as General Counsel. Ms. Parent also served on the Operating Committee and global management team of American Express from 2003 through 2013, was a member of the Board of American Express Centurion Bank through 2013 and served on the Supervisory Board of Deutsche Bank AG from 2014 to 2018. In addition to her service on the Zoetis Board, Ms. Parent serves on the Board of Fidelity National Information Services Inc. Ms. Parent holds a bachelor’s degree from Smith College and a law degree from Georgetown University Law Center. Ms. Parent’s experience in corporate governance, compliance, risk management and global management, along with her public company board experience and financial literacy, make her a valuable member of our Board.
[MISSING IMAGE: ph_kristincpeck-bw.jpg]
KRISTIN C. PECK
Age 49
Director since October 2019
Specific qualifications:

Knowledge and leadership of our company as its current CEO

Experience in animal health and pharmaceutical industries

Senior management and global business experience

Public company director experience
Chief Executive Officer since January 2020 and a member of the Zoetis Board of Directors since October 2019. In this role, she leads the world’s leading animal health company, a Fortune 500 organization with $6.7 billion in annual revenue and 11,300 employees worldwide. Prior to becoming CEO, Ms. Peck was Executive Vice President and Group President, U.S. Operations, Business Development and Strategy at Zoetis from March 2018 to December 2019. Ms. Peck previously served as our Executive Vice President and President, U.S. Operations from May 2015 to February 2018 and Executive Vice President and Group President from October 2012 through April 2015. In these roles, Ms. Peck helped usher Zoetis through its Initial Public Offering in 2013 and has been a driving force of change in areas including Global Manufacturing and Supply, Global Poultry, Global Diagnostics, Corporate Development, and New Product Marketing and Global Market Research. Before joining Zoetis, Ms. Peck served as Executive Vice President, Worldwide Business Development and Innovation at Pfizer Inc. and as a member of Pfizer’s Executive Leadership Team. Prior to joining Pfizer, Ms. Peck held roles at The Boston Consulting Group (BCG) as well as in private equity and real estate finance at The Prudential Realty Group, The O’Connor Group and J.P. Morgan. Ms. Peck is a member of the Business Roundtable and serves on the Board of Catalyst. She also serves on the Advisory Board for the Deming Center for Quality, Productivity and Competitiveness at Columbia Business School. She previously served as a member of the Thomson Reuters’ Board of Directors from 2016 to 2020. As a recipient of the 2019 Feather in Her Cap Award, she has been recognized for her leadership and contributions to the animal health industry, and her work in mentoring women and helping them advance their careers in animal health. Ms. Peck holds a bachelor’s degree from Georgetown University and an MBA from Columbia Business School. Ms. Peck’s knowledge and leadership of our company as its current CEO, her animal health and pharmaceutical industry experience, along with her public company board experience, make her a valuable member of our Board.
 
10      ZOETIS 2021 PROXY STATEMENT

CORPORATE GOVERNANCE AT ZOETIS
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ROBERT W. SCULLY
Age 71
Director since June 2013
Specific qualifications:

Experience in financial services and global management, including as a member of the Office of the Chairman of Morgan Stanley

Public company experience in risk management, audit and financial reporting

Mergers and acquisitions expertise

Public company director experience
Former member of the Office of the Chairman of Morgan Stanley. Mr. Scully has nearly 35 years of experience in the financial services industry. He served as a member of the Office of the Chairman of Morgan Stanley from 2007 until his retirement in 2009, where he had previously been Co-President of the firm, Chairman of Global Capital Markets and Vice Chairman of Investment Banking. Prior to joining Morgan Stanley in 1996, he served as a Managing Director at Lehman Brothers and at Salomon Brothers Inc. In addition to his service on the Zoetis Board, Mr. Scully serves on the Boards of KKR & Co. Inc. and Chubb Limited. Previously, he served as a director of UBS Group AG, where he served until 2020, Bank of America Corporation, GMAC Financial Services and MSCI Inc., and as a Public Governor of FINRA, Inc., the Financial Industry Regulatory Authority. Mr. Scully holds a bachelor’s degree from Princeton University and an MBA from Harvard Business School, where he previously served on its Board of Dean’s Advisors. Mr. Scully’s global management experience, financial acumen, M&A expertise and investor insights, along with his public company board experience, make him a valuable member of our Board.
 
ZOETIS 2021 PROXY STATEMENT      11

CORPORATE GOVERNANCE AT ZOETIS
KEY CORPORATE GOVERNANCE FEATURES
Topic
Zoetis Key Corporate Governance Feature
Board Quality and Independence

Board consists of highly qualified, experienced and diverse directors with relevant expertise for overseeing our strategy, capital allocation, performance, succession planning and risk

All directors are independent other than our current CEO and former CEO
Independent Board Chair

Board Chair is an independent director and is elected by the Board annually
Board Committees

Four Board Committees — Audit, Human Resources, Corporate Governance, Quality and Innovation — are composed entirely of independent directors
Executive Sessions

Directors hold regularly scheduled executive sessions where directors can discuss matters without management presence

Independent Board Chair presides over all executive sessions of the Board
Board Oversight of Risk

Risk oversight by full Board and Committees, including oversight of the Enterprise Risk Management program, financial reporting and audit risk assessments
Proxy Access

Our shareholders have a proxy access right
Board Oversight of Management Succession

Board regularly reviews and discusses succession plans for CEO and other key executives
Board Self-Evaluation

Our Board conducts an annual evaluation of itself and each of its Committees
Accountability

In uncontested director elections, our directors are elected by a majority of votes cast

Each share of common stock is entitled to one vote

Code of Business Conduct and Ethics for Directors fosters culture of honesty and accountability

Anti-hedging and anti-pledging policies covering directors and employees

Claw-back policy covering incentive compensation paid to executives
Director Stock Ownership

Each non-employee director is required to hold Zoetis stock worth at least $500,000 (including share equivalent units), to be acquired within five years of joining our Board
Open Lines of Communication

Processes in place to facilitate communication with shareholders and other stakeholders

Board promotes open and frank discussions with management and there is ongoing communication between our Board (including the Board and Committee Chairs) and management

Our directors have access to all members of management and other employees and are authorized to hire outside advisors at the company’s expense
Board Refreshment

Led by the Corporate Governance Committee, the Board regularly reviews the Board’s composition
Director Orientation and Continuing Education

Comprehensive orientation for new directors

Continuing education consisting of in-house presentations, presentations by industry and subject matter experts, third-party director courses and site and customer visits
Board Diversity

Diverse board with female and racial/ethnic representation

Board considers diversity of skills, experience, race, ethnicity, gender, cultural background and thought among directors when evaluating director nominees

The Corporate Governance Committee considers, and asks search firms to include in candidate lists, diverse director candidates who meet applicable search criteria
Corporate Responsibility & Sustainability

The Board exercises ultimate oversight over the company’s sustainability strategy and program, and monitors the company’s overall sustainability progress

The Board’s Committees oversee the company’s sustainability practices, including animal welfare, human capital management, diversity, equity and inclusion, pay equity, compliance, environmental, health and safety and manufacturing quality matters, public policy issues and corporate governance

The company is committed to providing transparency on sustainability and in the fall of 2020 published its 2019 Environmental, Social and Governance (ESG) Review, the animal health industry’s first stand-alone disclosure of key performance indicators, based on the Sustainability Accounting Standards Board (SASB) and Taskforce on Climate-related Financial Disclosures (TCFD) sustainability frameworks
 
12      ZOETIS 2021 PROXY STATEMENT

CORPORATE GOVERNANCE AT ZOETIS
CORPORATE GOVERNANCE PRINCIPLES AND PRACTICES
DIRECTOR INDEPENDENCE
It is the policy of our company, and a requirement under New York Stock Exchange (“NYSE”) listing standards, that a majority of our Board consists of independent directors. To assist it in determining director independence, our Board has adopted categorical independence standards, referred to as our Director Qualification Standards, which meet the independence requirements of the NYSE. Our Director Qualification Standards can be found on our website at www.zoetis.com under About Us — Corporate Governance.
To be considered “independent” under our Director Qualification Standards, a director must be determined by our Board to have no material relationship with the company other than as a director. In addition, under our Director Qualification Standards, a director is not independent if the director is, or has been within the last three years, an employee of the company or an employee of any subsidiary of the company’s consolidated group for financial reporting.
From January 1, 2020 to December 7, 2020, our Board of Directors consisted of twelve directors: Juan Ramón Alaix, Paul M. Bisaro, Frank A. D’Amelio, Sanjay Khosla, Michael B. McCallister, Gregory Norden, Louise M. Parent, Kristin C. Peck, Willie M. Reed, Linda Rhodes, Robert W. Scully and William C. Steere, Jr. On December 8, 2020, the Board was expanded in size to thirteen directors and Antoinette (Tonie) R. Leatherberry was appointed to serve on our Board. Prior to her appointment, our Board determined that Ms. Leatherberry is independent under our Director Qualification Standards.
On February 10, 2021, our Board completed its annual review of director independence and affirmatively determined that Mr. Bisaro, Mr. D’Amelio, Mr. Khosla, Ms. Leatherberry, Mr. McCallister, Mr. Norden, Ms. Parent, Dr. Reed, Dr. Rhodes, Mr. Scully and Mr. Steere are independent under NYSE listing standards and our Director Qualification Standards. The only non-independent directors under NYSE listing standards and our Director Qualification Standards are Mr. Alaix, due to his recent employment as the company’s CEO and as an advisor during the CEO transition, and Ms. Peck, due to her current employment as the company’s CEO and prior service as a Zoetis executive officer.
BOARD LEADERSHIP STRUCTURE
Our Corporate Governance Principles, which can be found on our website at www.zoetis.com under About Us — Corporate Governance, provide the Board flexibility in determining its leadership structure. Currently, Kristin C. Peck serves as our CEO and Michael B. McCallister serves as Chairman of our Board. The Board believes that this leadership structure, which separates the CEO and the Board Chair roles, is optimal at this time because it allows Ms. Peck to focus on operating and managing our company, while Mr. McCallister can focus on the leadership of the Board. The Board Chair presides over all meetings of our shareholders and of the Board as a whole, including its executive sessions, and performs such other duties as may be designated in our By-laws or by the Board. The Board periodically evaluates our leadership structure and will determine whether continuing the separate roles of CEO and Board Chair is in the best interest of the company and its shareholders based on circumstances existing at the time.
DIRECTOR ATTENDANCE
During 2020, our Board met eight times. Each of our directors attended at least 75% of the meetings of the Board and Board Committees on which he or she served during 2020.
 
ZOETIS 2021 PROXY STATEMENT      13

CORPORATE GOVERNANCE AT ZOETIS
BOARD COMMITTEE MEMBERSHIP
Our Board has a standing Audit Committee, Human Resources Committee, Corporate Governance Committee, and Quality and Innovation Committee. In 2020, we changed the name of our Compensation Committee to the Human Resources Committee to reflect the addition of additional human capital management responsibilities, including talent development, diversity and inclusion and employee engagement programs and policies.
The written charter of each of our standing Committees is available on our website at www.zoetis.com under About Us — Corporate Governance. Each committee has the authority to hire outside advisors at the company’s expense. All of the members of each of our Committees are independent under NYSE listing standards and our Director Qualification Standards, and the members of our Audit Committee and Human Resources Committee satisfy the additional NYSE and Securities Exchange Act of 1934 (in the case of the Audit Committee) independence requirements for members of audit and compensation committees. The following table lists the Chair and current members of each committee and the number of meetings held in 2020.
Committee
Name
Independent
Audit
Human
Resources
Corporate
Governance
Quality and
Innovation
Juan Ramón Alaix(1)
no
Paul M. Bisaro
yes
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
[MISSING IMAGE: tm2037730d2-icon_chairbw.gif]
Frank A. D’Amelio
yes
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
Sanjay Khosla
yes
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
Antoinette R. Leatherberry
yes
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
Michael B. McCallister
yes
[MISSING IMAGE: tm2037730d2-icon_chairbw.gif]
Gregory Norden
yes
[MISSING IMAGE: tm2037730d2-icon_chairbw.gif]
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
Louise M. Parent
yes
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
Kristin C. Peck
no
Willie M. Reed
yes
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
Linda Rhodes
yes
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
Robert W. Scully
yes
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
[MISSING IMAGE: tm2037730d2-icon_chairbw.gif]
William C. Steere, Jr.(2)
yes
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
[MISSING IMAGE: tm2037730d2-icon_memberbw.gif]
Number of Meetings in 2020
7
6
5
4
(1)
Mr. Juan Ramón Alaix will be retiring from the Board as of the date of the 2021 Annual Meeting.
(2)
Mr. William C. Steere, Jr. is not standing for re-election and will retire from the Board immediately following the 2021 Annual Meeting.
[MISSING IMAGE: tm2037730d2-icon_chairbw.jpg] Chair    [MISSING IMAGE: tm2037730d2-icon_memberbw.jpg] Member
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Human Resources Committee are Robert W. Scully (Chair), Paul M. Bisaro, Sanjay Khosla, Gregory Norden and Louise M. Parent. All of the current members are independent under NYSE listing standards (including the additional standards applicable to members of compensation committees) and our Director Qualification Standards. None of the current members is a former or current officer or employee of Zoetis or any of its subsidiaries. None of the current members has any relationship that is required to be disclosed under this caption under the rules of the SEC. During 2020, no executive officers of the company served on the compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on the company’s Human Resources Committee or Board.
 
14      ZOETIS 2021 PROXY STATEMENT

CORPORATE GOVERNANCE AT ZOETIS
PRIMARY RESPONSIBILITIES OF BOARD COMMITTEES
Board Committees
Responsibilities
AUDIT COMMITTEE
All Members Independent
All Members Financially Literate
Each of Mr. D’Amelio, Mr. Norden and Mr. Scully
qualifies as an “audit committee financial expert”

Oversees the integrity of our financial statements and system of internal controls

Sole authority and responsibility to select, determine the compensation of, evaluate and, when appropriate, replace our independent public accounting firm

Oversees the performance of our internal audit function

Reviews reports from management, legal counsel and third parties (including our independent public accounting firm) relating to the status of our compliance with laws, regulations and internal procedures
CORPORATE GOVERNANCE COMMITTEE
All Members Independent

Responsible for the company’s corporate governance practices, policies and procedures

Identifies and recommends candidates for election to our Board; recommends members and chairs of Board Committees

Advises on and recommends director compensation for approval by the Board

Administers our policies and procedures regarding related person transactions
HUMAN RESOURCES COMMITTEE
All Members Independent

Approves our overall compensation philosophy

Oversees our compensation and benefit programs, policies and practices and manages the related risks

Annually establishes the corporate goals and objectives relevant to the compensation of our CEO, reviews the goals established by our CEO for our other executive officers and evaluates their performance in light of these goals

Recommends CEO compensation to the Board and approves the compensation of our other executive officers

Oversees our programs and policies regarding talent development, colleague engagement and diversity, equity and inclusion

Administers our incentive and equity-based compensation plans
QUALITY AND INNOVATION COMMITTEE
All Members Independent

Evaluates our strategy, activities, results and investment in research and development and innovation

Oversees compliance with processes and internal controls relating to our manufacturing quality and environmental, health and safety (“EHS”) programs;

Reviews organizational structures and qualifications of key personnel in our supply chain, manufacturing quality and EHS functions
BOARD’S ROLE IN RISK OVERSIGHT
As one of its primary responsibilities, the Board of Directors as a whole and through its Committees oversees the company’s risk management, including our Enterprise Risk Management program. Management provides regular reports to the Board on the areas of material risk to the company, and the Board discusses with management the company’s major and emerging risks, including financial, operational, technology, privacy, data and physical security, disaster recovery, legal and regulatory risks. In addition, the Board regularly reviews the company’s strategy, finances, operations, legal and regulatory developments, research and development, manufacturing quality and competitive environment, as well as the risks related to these areas.
The Audit Committee oversees the management of risks related to financial reporting, regulatory compliance and the annual internal audit risk assessment, which identifies and prioritizes risks related to the company’s internal controls in order to develop internal audit plans for future fiscal years. The Human Resources Committee oversees the management of risks relating to our compensation plans and arrangements. The Corporate Governance Committee oversees risks associated with potential conflicts of interest and the management of risks associated with the independence of the Board, as well as the effectiveness of our Corporate Governance Principles and the Board’s compliance with our Code of Business Conduct and Ethics for Directors. The Quality and Innovation Committee oversees risks related to manufacturing quality and environmental, health and safety matters, as well as risks associated with our strategy and investments in research and development and external innovation. Each committee of the Board provides regular reports to the full Board regarding their areas of responsibility and oversight. We believe that our Board’s active role in risk oversight supports our efforts to manage areas of material risk to the company.
 
ZOETIS 2021 PROXY STATEMENT      15

CORPORATE GOVERNANCE AT ZOETIS
BOARD’S ROLE IN CEO AND MANAGEMENT SUCCESSION
Our Board is responsible for planning for succession to the position of CEO as well as other senior management positions. Our Board works together with the CEO to review annual assessments of senior management and other persons considered potential successors to certain senior management positions.
SUSTAINABILITY AND ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) OVERSIGHT
Sustainability and ESG issues are an important priority for the Board and Zoetis. Championing a Healthier, More Sustainable Future is one of Zoetis’ key strategic priorities and in 2020 we launched the Zoetis Sustainability Agenda and defined three key areas that build on our previous sustainability work: (i) care and collaborate through partnerships and support of colleagues and communities; (ii) innovate in animal health to help solve sustainability challenges faced by animals and people; and (iii) protect the planet by stewarding resources and minimizing the direct impact of the company’s operations. We hired our first Head of Sustainability, who is responsible for stewarding the company sustainability strategy and tracking accountability for its goals, partnerships and philanthropy. In 2020, we issued our first Environmental, Social and Governance Review aligned with the Sustainability Accounting Standards Board (“SASB”) Health Care — Biotechnology & Pharmaceutical industry standards and the Task Force on Climate-related Financial Disclosures (“TCFD”) recommendations to provide transparency to stakeholders on key sustainability metrics.
The Board exercises ultimate oversight over Zoetis’ sustainability program and strategy, and monitors the company’s sustainability progress on an ongoing basis through regular updates from the Head of Sustainability. The Board’s Committees oversee particular company sustainability practices, including animal welfare, human capital management, diversity, equity and inclusion, pay equity, compliance, environmental, health and safety and manufacturing quality matters, public policy issues and corporate governance.
Corporate Governance Committee. The Corporate Governance Committee takes a leadership role in shaping the company’s corporate governance principles and practices. It also maintains an informed status on corporate social responsibility and public policy issues. It receives regular updates on corporate governance practices and developments from the company’s General Counsel and other members of management.
Audit Committee. The Audit Committee oversees the integrity of the company’s financial statements and the adequacy of its internal controls. It also receives regular updates from the company’s Chief Compliance Officer on policies, systems and controls designed to promote ethical behavior and compliance with applicable legal and regulatory requirements.
Human Resources Committee. In 2020, our Compensation Committee was renamed the Human Resources Committee and its remit was expanded to include oversight responsibility for talent development, diversity and inclusion and employee engagement programs and policies at Zoetis. The Human Resources Committee also has responsibility for overseeing the administration of the company’s compensation and benefit programs, policies and practices, and evaluating any risks related to the company’s compensation policies and practices. The Human Resources Committee receives regular updates from the company’s Chief Human Resources Officer and the company’s new Chief Talent, Diversity, Equity and Inclusion Officer.
Quality and Innovation Committee. The Quality and Innovation Committee has responsibility for the company’s manufacturing quality and environmental, health and safety matters. It receives regular updates from the company’s President of Global Manufacturing and Supply.
MAJORITY VOTING STANDARD FOR DIRECTOR ELECTIONS
Our By-laws contain a majority voting standard for all uncontested director elections. Under this standard, a director is elected only if the votes cast “for” his or her election exceed the votes cast “against” his or her election. Our Corporate Governance Principles provide that every nominee for director is required to agree to tender his or her resignation if he or she fails to receive the required majority vote in an uncontested director election. Our Corporate Governance Committee will recommend, and our Board of Directors will determine, whether or not to accept such resignation. The Board will then publicly disclose its decision-making process and the reasons for its decision.
In the event of a contested election, the director nominees will be elected by the affirmative vote of a plurality of the votes cast. Under this standard, in a contested election the directors receiving the highest number of votes in favor of their election will be elected as directors.
 
16      ZOETIS 2021 PROXY STATEMENT

CORPORATE GOVERNANCE AT ZOETIS
BOARD SELF-EVALUATION
Our Board conducts an annual evaluation of itself and its Committees to assess its effectiveness and to identify opportunities for improvement. Our Board has successfully used this process to evaluate Board and committee effectiveness and identify opportunities to strengthen the Board, and believes that this process supports its continuous improvement.
[MISSING IMAGE: tm2037730d2-fc_boardevalpn.jpg]
DIRECTOR NOMINATIONS
The Corporate Governance Committee considers and recommends the annual slate of director nominees for approval by the full Board. When evaluating director candidates, the Corporate Governance Committee considers, among other factors: the candidate’s integrity; independence; leadership and ability to exercise sound judgment; animal health or veterinary expertise; public company executive or board experience; significant operations, manufacturing or research and development experience; as well as other areas relevant to the company’s global business and strategy. The Corporate Governance Committee is responsible for considering the appropriate size and needs of the Board, and may develop and recommend to the Board additional criteria for Board membership. The Board considers diversity of skills, experience, race, ethnicity, gender, cultural background and thought among directors when evaluating director nominees. Our Corporate Governance Committee also considers, and asks search firms to include in candidate lists, diverse director candidates who meet applicable search criteria.
The Corporate Governance Committee will consider director candidates recommended by shareholders. Recommendations should be sent to the Chair of the Corporate Governance Committee (in the manner described below) by November 18, 2021, to be considered for the 2022 annual meeting. The Corporate Governance Committee evaluates candidates recommended by shareholders under the same criteria it uses for other director candidates. Shareholders may also submit nominees for election at an annual or special meeting of shareholders by following the procedures set forth in our By-laws, which are summarized on page 73.
On December 8, 2020, Antoinette (Tonie) R. Leatherberry was appointed to serve on our Board upon the Corporate Governance Committee’s recommendation. As a result of the Board’s self-evaluation conducted earlier in 2020 and the Corporate Governance Committee’s annual review of the Board’s composition, the Board had agreed to commence a search for a director with digital and data experience. Ms. Leatherberry was brought to the attention of the Corporate Governance Committee by the third-party search firm assisting the Zoetis Board with its search for qualified director candidates.
BOARD REFRESHMENT
Board development and director succession is an integral part of the company’s long-term strategy. Our Board maintains a rigorous board refreshment process, spearheaded by the Corporate Governance Committee, focused on identifying and evaluating potential board candidates. Information about how we select our director nominees can be found in the section above titled “Director Nominations.”
 
ZOETIS 2021 PROXY STATEMENT      17

CORPORATE GOVERNANCE AT ZOETIS
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Under our Corporate Governance Principles, our CEO is responsible for establishing effective communications with the company’s stakeholder groups, including shareholders, customers, employees, communities, suppliers, creditors, governments, corporate partners and other interested parties. While it is our policy that management speaks for the company, non-employee directors, including the Board Chair, may meet with stakeholders, but in most circumstances such meetings will be held with management present. We believe that regular engagement with our stakeholders helps to strengthen our relationships with stakeholders, as well as to better understand stakeholders’ views on our corporate governance and ESG practices.
Stakeholders and other interested parties may communicate with the following Board and committee Chairs at the following email addresses:
[MISSING IMAGE: tm2037730d2-fc_boardcommpn.jpg]
Stakeholders and other interested parties may also write to any of our outside directors, including the Board and committee Chairs, by directing the communication to the Corporate Secretary, Zoetis Inc., 10 Sylvan Way, Parsippany, NJ 07054.
Communications are distributed to the Board, or to any individual director as appropriate, depending on the facts and circumstances outlined in the communication, but exclude spam, junk mail and mass mailings, product inquiries, new product suggestions, job inquiries, surveys and business solicitations or advertisements. Material that is unduly hostile, threatening, illegal or similarly unsuitable will also be excluded. However, any communication that is excluded under our policy will be made available to any director upon his or her request.
ATTENDANCE OF DIRECTORS AT ANNUAL MEETING OF SHAREHOLDERS
We believe that it is important for directors to directly hear concerns expressed by stakeholders and other interested parties. It is our policy that all Board members are expected to attend the Annual Meeting of Shareholders. All Board members as of the date of the 2020 Annual Meeting of Shareholders were in attendance.
CODE OF ETHICS
All of our employees, including our CEO, Chief Financial Officer and Controller, are required to abide by our policies on business conduct to ensure that our business is conducted in a consistently legal and ethical manner. A copy of our Code of Conduct can be found on our website www.zoetis.com under About Us — Corporate Compliance. We have also adopted a separate Code of Business Conduct and Ethics for members of our Board of Directors, a copy of which can be found on our website www.zoetis.com under About Us — Corporate Governance. We will disclose any future amendments to, or waivers from, provisions of these Codes affecting our directors or executive officers on our website as required under applicable SEC and NYSE rules.
 
18      ZOETIS 2021 PROXY STATEMENT

CORPORATE GOVERNANCE AT ZOETIS
COMPENSATION OF DIRECTORS
2020 COMPENSATION OF DIRECTORS
Generally
We provide competitive compensation to our non-employee directors that enables us to attract and retain high quality directors, provides them with compensation at a level that is consistent with our compensation objectives, and encourages their ownership of our stock to further align their interests with those of our shareholders. A director who is also a full-time employee of the company receives no additional compensation for service as a member of our Board of Directors. Compensation for non-employee directors is reviewed at least biennially by the Corporate Governance Committee.
In 2020, our non-employee directors’ compensation consisted of:

an annual cash retainer of $100,000;

an additional cash retainer of $150,000 for the Chairman of the Board of Directors and an additional cash retainer of $25,000 for any committee chairperson; and

an equity retainer credited to each non-employee director upon his or her first election as such and annually thereafter with a value of $230,000 on the date of grant, based upon the closing price of shares of Zoetis common stock on that date.
The equity retainer is granted in the form of restricted stock units that vest on the third anniversary of the date of grant. Non-employee directors may defer the settlement of 100% of their restricted stock unit awards under the Zoetis Amended and Restated Non-Employee Director Deferred Compensation Plan. Deferred restricted stock unit awards are settled in stock upon the director’s separation from service.
[MISSING IMAGE: tm2037730d2-pc_directorpn.jpg]
In 2020, we granted equity retainers in the form of restricted stock units, valued at $230,000 in the aggregate for each non-employee director on the date of grant, as follows:

Each of Ms. Parent, Drs. Reed and Rhodes and Messrs. Bisaro, D’Amelio, Khosla, Norden, McCallister, Scully and Steere received 1,596 restricted stock units valued at $144.03 per share.

Ms. Leatherberry received 1,446 restricted stock units valued at $158.99 per share upon her appointment to the Board on December 8, 2020.
Each restricted stock unit earns dividend equivalents which are credited as additional restricted stock units. Each non-employee director has a right to receive the shares of Zoetis common stock underlying the restricted stock units on the
 
ZOETIS 2021 PROXY STATEMENT      19

CORPORATE GOVERNANCE AT ZOETIS
third anniversary of the date of grant of the restricted stock units (or in the case of dividend equivalents, on the third anniversary of the date of grant of the underlying restricted stock units), subject to the director’s continued service through such vesting date and subject to earlier vesting and settlement upon certain specific events.
Arrangements with Director Juan Ramón Alaix
Mr. Alaix retired as Chief Executive Officer of Zoetis effective December 31, 2019. In light of Mr. Alaix’ long tenure with the company, during which he oversaw the company’s transformation from a division of Pfizer Inc. into an independent company and the global leader in animal health, our Board of Directors determined that it would be in the best interest of the company and its shareholders for Mr. Alaix to remain with the company to support the leadership transition by providing advice, guidance and assistance to the new CEO during 2020. The company and Mr. Alaix entered into a letter agreement on October 2, 2019, setting forth the terms by which he provided these services during 2020, the terms of which are described below. Mr. Alaix did not receive any additional compensation during 2020 for his service as a member of our Board of Directors.
The letter agreement with Mr. Alaix provided for the following services and related compensation during 2020:

From January 1, 2020 through March 31, 2020, Mr. Alaix provided transition support as an employee, reporting directly to the Chairman of our Board of Directors. During this period, he continued to receive his annual salary at the same rate as that in effect during 2019 and participated in the company’s employee benefit plans on the same terms as other senior executives. Mr. Alaix was not eligible for an annual bonus or additional equity award grants as a result of his employment during 2020.

From April 1, 2020 through December 31, 2020, Mr. Alaix provided transition support as a consultant to the new CEO. In consideration for his consulting services, Mr. Alaix received a consulting stipend of $1,700,000, payable in nine equal monthly installments.

Any unvested equity awards that Mr. Alaix held during 2020 continued to vest during his service as an employee and as a consultant and thereafter to the same extent as if he had remained employed through the final vesting date, unless his services were terminated prior to December 31, 2020 for Cause (as defined under the Zoetis Executive Severance Plan) or voluntarily by Mr. Alaix (other than following a change in control of the company as defined under the Zoetis Executive Severance Plan).

If the company had terminated Mr. Alaix’ services without Cause prior to December 31, 2020, he would have remained entitled to all rights and benefits contemplated by the letter agreement.

Mr. Alaix was not entitled to any compensation or benefits under the Zoetis Executive Severance Plan or any other severance plan in connection with his retirement.
Under the letter agreement, Mr. Alaix has also agreed to perpetual nondisclosure and non-disparagement covenants and covenants concerning noncompetition and non-solicitation of customers, business relations, employees and other service providers of the company, each of which apply through December 31, 2021. In addition, Mr. Alaix’ consulting stipend and continued equity award vesting was subject to his execution of a release of claims in favor of the company.
 
20      ZOETIS 2021 PROXY STATEMENT

CORPORATE GOVERNANCE AT ZOETIS
The following table summarizes the total compensation earned in 2020 by each of our directors who served as a non-employee director during 2020 and by Mr. Alaix during 2020.
Name
Fees
Earned or
Paid in
Cash($)(1)
Stock
Awards
($)(2)(3)(4)
Option
Awards($)
Non-Equity
Incentive Plan
Compensation
($)
Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings($)
All Other
Compensation
($)
Total
($)
Juan Ramón Alaix (5) $ 2,204,681(6) $ 2,204,681
Paul M. Bisaro(7) $ 125,000 $ 230,000 $ 355,000
Frank A. D’Amelio(8) $ 100,000 $ 230,000 $ 330,000
Sanjay Khosla(8) $ 100,000 $ 230,000 $ 330,000
Antoinette R. Leatherberry(9)
$ 8,333 $ 230,000 $ 238,333
Michael B. McCallister(10) $ 275,000 $ 230,000 $ 505,000
Gregory Norden(11) $ 125,000 $ 230,000 $ 355,000
Louise M. Parent(8) $ 100,000 $ 230,000 $ 330,000
Willie M. Reed(8) $ 100,000 $ 230,000 $ 330,000
Linda Rhodes(8) $ 100,000 $ 230,000 $ 330,000
Robert W. Scully(12) $ 125,000 $ 230,000 $ 355,000
William C. Steere, Jr.(8) $ 100,000 $ 230,000 $ 330,000
(1)
Non-employee directors may defer the receipt of up to 100% of their annual cash retainer under the Zoetis Amended and Restated Non-Employee Director Deferred Compensation Plan (the “Director Deferral Plan”). Any deferrals under this plan are credited as phantom stock units in the Zoetis stock fund or an alternate investment fund, with each phantom unit representing one share of Zoetis common stock. Phantom units in the Zoetis stock fund receive dividend equivalent rights but do not receive voting rights. Deferrals will be settled in cash following the director’s separation from service. During 2020, one director, Mr. Steere, deferred all of his cash retainers into his account under the Director Deferral Plan.
(2)
The amounts in the Stock Awards column for all directors other than Mr. Alaix reflect the aggregate grant date value of restricted stock units granted to non-employee directors in 2020 calculated in accordance with FASB ASC Topic 718. The grant date fair value of each restricted stock unit granted to each non-employee director (other than Ms. Leatherberry) on February 11, 2020 was $144.03. The grant date fair value of each restricted stock unit granted to Ms. Leatherberry on December 8, 2020 was $158.99. Restricted stock units accrue dividend equivalents. Restricted stock units vest and are settled in shares of Zoetis common stock on the third anniversary of the date of grant, subject to the director’s continued service through such vesting date and subject to earlier vesting and settlement upon certain specified events. Dividend equivalents vest and are settled in shares of Zoetis common stock on the third anniversary of the date of grant of the underlying restricted stock units, subject to the director’s continued service through such vesting date and subject to earlier vesting and settlement upon certain specified events. As of December 31, 2020, the aggregate number of restricted stock units (including dividend equivalents) held by each current non-employee director was as follows: Mr. Bisaro, 7,032; Mr. D’Amelio, 7,032; Mr. Khosla, 7,032; Ms. Leatherberry, 1,446; Mr. McCallister, 7,032; Mr. Norden, 7,032; Ms. Parent, 7,032; Dr. Reed, 7,032; Dr. Rhodes, 7,032; Mr. Scully, 7,032; and Mr. Steere, 7,032.
(3)
Prior to 2015, each non-employee director was granted an equity retainer in the form of deferred stock units upon his or her election to the Board and annually thereafter. Deferred stock units vest fully on the date of grant, accrue dividend equivalents and are settled in Zoetis common stock only upon the director’s separation from service with the company. As of December 31, 2020, the aggregate number of deferred stock units (including dividend equivalents) held by each current non-employee director was as follows: Mr. D’Amelio, 9,656; Mr. Khosla, 9,656; Mr. McCallister, 10,438; Mr. Norden, 10,438; Ms. Parent, 9,656; Dr. Reed, 4,749; Mr. Scully, 9,656; and Mr. Steere, 10,438.
(4)
As of December 31, 2020, the aggregate number of restricted stock units (including dividend equivalents) held by Mr. Alaix was 65,271 and the aggregate number of performance award units held by Mr. Alaix was 47,883. The restricted stock units and performance award units were granted to Mr. Alaix during his service as Zoetis CEO pursuant to the Zoetis Inc. 2013 Equity and Incentive Plan, and accrue dividend equivalent units. The restricted stock units will vest and be settled in shares of Zoetis common stock on the third anniversary of the date of grant and dividend equivalents will vest and be settled in shares of Zoetis common stock on the third anniversary of the date of grant of the underlying restricted stock units, subject to earlier vesting and settlement upon certain specific events. Each performance award unit represents a contingent right to receive one share of Zoetis Inc. common stock. The performance award units are subject to three-year cliff vesting and are also subject to the satisfaction of applicable performance goals over a three-year performance period beginning January 1, 2019 and ending December 31, 2021. The number of shares paid under these performance award units, if any, ranges from 0% to 200% of the target number of shares (including accrued dividend equivalent units) and depends upon the extent to which the performance goal is achieved, as determined by the company’s Human Resources Committee after the end of the performance period.
(5)
As of December 31, 2020, the aggregate number of stock options held by Mr. Alaix was 243,262. These stock options (right to buy Zoetis Inc. common stock) were granted to Mr. Alaix during his service as Zoetis CEO pursuant to the Zoetis Inc. 2013 Equity and Incentive Plan. The options vest on the third anniversary of the date of grant and expire on the tenth anniversary of the date of grant.
 
ZOETIS 2021 PROXY STATEMENT      21

CORPORATE GOVERNANCE AT ZOETIS
(6)
Represents (a) for providing CEO transition support as an employee from January 1, 2020 to March 31, 2020, cash payments of $300,000 in respect of Mr. Alaix’ base salary; and pursuant to the Zoetis Savings Plan and Zoetis Supplemental Savings Plan matching contributions and profit sharing of $195,537; and group life insurance payments of $9,144, and (b) for transition support as a consultant to the Chief Executive Officer and Board from April 1, 2020 through December 31, 2020, $1.7 million in consulting fees.
(7)
Represents (a) a cash retainer of $100,000 for service to the Board as a non-employee director during 2020, (b) a cash retainer of $25,000 for service as Chair of the Quality and Innovation Committee during 2020 and (c) an equity retainer of 1,596 restricted stock units granted on February 11, 2020 with a grant date fair value of $230,000.
(8)
Represents (a) a cash retainer of $100,000 for service to the Board as a non-employee director during 2020 and (b) an equity retainer of 1,596 restricted stock units granted on February 11, 2020 with a grant date fair value of $230,000.
(9)
Represents (a) a prorated cash retainer of $8,333 for service to the Board as a non-employee director beginning on December 8, 2020 through the remainder of 2020 and (b) an equity retainer of 1,446 restricted stock units granted on December 8, 2020 with a grant date fair value of $230,000.
(10)
Represents (a) a cash retainer of $100,000 for service to the Board as a non-employee director during 2020, (b) a cash retainer of $150,000 for service as Chair of the Board during 2020, (c) a cash retainer of $25,000 for service as Chair of the Corporate Governance Committee during 2020 and (d) an equity retainer of 1,596 restricted stock units granted on February 11, 2020 with a grant date fair value of $230,000.
(11)
Represents (a) a cash retainer of $100,000 for service to the Board as a non-employee director during 2020, (b) a cash retainer of $25,000 for service as Chair of the Audit Committee during 2020 and (c) an equity retainer of 1,596 restricted stock units granted on February 11, 2020 with a grant date fair value of $230,000.
(12)
Represents (a) a cash retainer of $100,000 for service to the Board as a non-employee director during 2020, (b) a cash retainer of $25,000 for service as Chair of the Human Resources Committee during 2020 and (c) an equity retainer of 1,596 restricted stock units granted on February 11, 2020 with a grant date fair value of $230,000.
DIRECTOR SHARE OWNERSHIP GUIDELINES
We have share ownership guidelines applicable to non-employee directors, requiring directors to hold Zoetis shares with a value of at least five times their annual cash retainer (currently $500,000). For purposes of satisfying these requirements, (a) a director’s holdings of the company’s stock include, in addition to shares held outright, units granted to the director as compensation for Board service and shares or units held under a deferral or similar plan, and (b) each such unit has the same value as a share of the company’s common stock. Each non-employee director has five years from the date of (a) his or her first election as a director, or (b) if later, an increase in the amount of company stock required to be held, to achieve the share ownership requirement.
 
22      ZOETIS 2021 PROXY STATEMENT

EXECUTIVE COMPENSATION
ITEM 2
ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION (SAY ON PAY)
We are seeking your vote, on an advisory basis, on the compensation of our named executive officers as described in the Compensation Discussion and Analysis and the Executive Compensation Tables and accompanying narrative disclosure, as provided on pages 24 to 57 of this proxy statement. While the vote is not binding on the Board, the Human Resources Committee will consider the outcome of the vote when making future executive compensation decisions.
For background, Section 14A of the Securities Exchange Act of 1934 (the “Exchange Act”) requires a shareholder advisory vote on the frequency of shareholder votes on executive compensation. We conducted this advisory vote on frequency most recently at our 2020 Annual Meeting of Shareholders, and our shareholders voted for, and our company will, continue to hold an annual advisory vote on executive compensation.
Our Board of Directors believes that our executive compensation program incentivizes and rewards our leadership for increasing shareholder value and aligns the interests of our management with those of our shareholders on an annual and long-term basis.
ITEM 2 RECOMMENDATION: OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF OUR EXECUTIVE COMPENSATION.
 
ZOETIS 2021 PROXY STATEMENT      23

EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE SUMMARY
In this Compensation Discussion and Analysis (“CD&A”) we describe our executive compensation philosophy and programs and the compensation decisions made by the Human Resources Committee (formerly the “Compensation Committee”) of the Board of Directors of Zoetis Inc. (the “Committee”) or the full Board of Directors regarding the 2020 compensation of our named executive officers (“NEOs”).
Zoetis’ executive compensation program is designed to attract, incent and reward our leadership for increasing shareholder value and align the interests of leadership with those of our shareholders on an annual and long-term basis.
Our NEOs for 2020, whose compensation is discussed in this CD&A and shown in the Executive Compensation Tables below, are:
NEO
Title
Kristin C. Peck
Chief Executive Officer (“CEO”)
Glenn C. David
Executive Vice President and Chief Financial Officer (“CFO”)
Catherine A. Knupp
Executive Vice President and President of Research and Development
Roman Trawicki
Executive Vice President and President of Global Manufacturing and Supply
Wafaa Mamilli
Executive Vice President and Chief Information and Digital Officer
2020 BUSINESS HIGHLIGHTS
Kristin Peck was appointed as the CEO of Zoetis effective January 1, 2020. Early in Ms. Peck’s tenure, Zoetis was presented with unexpected challenges resulting from the global COVID-19 pandemic and needed to quickly work to ensure colleague safety, reliable product supply and our ability to meet the evolving needs of our customers. At the beginning of the pandemic, the companion animal sector was impacted by reduced traffic to veterinary clinics during lockdowns, while the livestock sector experienced challenges due to spikes in COVID-19 cases in meat packing plants, lower demand for protein from dine-out sectors and shifts in production capacities, creating increased uncertainty and reduced profitability for livestock producers. Throughout 2020 and despite these challenges, Zoetis maintained its focus on the five strategic priorities set at the beginning of the year: drive innovative growth, enhance customer experience, lead in digital and data analytics, cultivate a high-performing organization and champion a healthier, more sustainable future. Additionally, in 2020, we continued to execute on our overall investment plans to support future growth with investments in Research and Development (“R&D”), capital expenditures and business development activities.
Our colleagues responded to the challenges of the pandemic with agility and resilience, delivering another year of strong operating performance. In 2020, Zoetis was able to successfully launch new products and digital platforms, maintain on-time shipping and deliveries of our products, successfully integrate newly acquired businesses and provide flexible and high levels of customer service and support under rapidly changing circumstances around the globe. In addition, we formalized our plans for sustainability and making Zoetis a more diverse, equitable and inclusive organization. We also continued delivering on our value proposition: growing revenue in line with or faster than the market; growing our adjusted net income faster than revenue; targeting key investment opportunities for growth; and returning excess capital to our shareholders.
 
24      ZOETIS 2021 PROXY STATEMENT

EXECUTIVE COMPENSATION
Our 2020 financial performance as compared to 2019 is illustrated in the chart below.
[MISSING IMAGE: tm2037730d2-bc_financialpn.jpg]

Financial Highlights. In 2020, we delivered operational revenue growth and increased profitability as highlighted below.
(For more information please review the company’s Annual Report on Form 10-K for fiscal year 2020 and this proxy statement.)
o
Revenue. For full year 2020, reported revenue was $6,675 million, an increase of 7% from 2019 and our operational3 revenue growth was 9% in 2020.
o
Net Income. Reported net income for 2020 was $1,638 million and adjusted net income4 for 2020 was $1,844 million. Excluding the impact of foreign exchange, our operational adjusted net income growth was 10% in 2020. In line with our value proposition, we grew adjusted net income faster than revenue on an operational basis.
o
Earnings Per Share (“EPS”). Reported diluted EPS for 2020 was $3.42 per diluted share, compared to $3.11 per diluted share reported in 2019. Adjusted diluted EPS4 for 2020 was $3.85 per diluted share, compared to the $3.64 per diluted share in 2019.

Driving Innovative Growth. Through our commitment to continuous innovation, we showed our unique strengths across the continuum of animal care — from prediction and prevention to detection and treatment of disease. During the pandemic, we kept major R&D programs and regulatory reviews on track and furthered our research advancements in areas like monoclonal antibodies for osteoarthritis pain in cats and dogs and vector vaccines for poultry. We stayed the course on critical projects for the future and achieved key milestones for our major products in 2020.

Enhancing the Customer Experience. In 2020, we connected with our customers in more virtual ways and we were able to maintain high-quality, on-time delivery of products to our customers throughout the COVID-19 pandemic. Our field force colleagues continued to engage with customers and address their needs utilizing digital technology, from remote diagnostic product installations to virtual customer trainings and technical consultations. In addition, our field force and marketing teams used advanced analytics to identify customer needs and deliver more personalized service. We also strengthened our engagement with pet owners, by increasing our investment in direct-to-consumer advertising and the availability of our products through on-line channels for major brands like Apoquel®, our anti-itch treatment for dogs, and Simparica®, a parasiticide for fleas and ticks in dogs.
3
Operational revenue growth (a non-GAAP financial measure) is defined as revenue growth excluding the impact of foreign exchange. Page 49 of our 2020 Annual Report on Form 10-K, filed with the SEC on February 16, 2021, contains a reconciliation of this non-GAAP financial measure to reported results under GAAP for 2020.
4
Adjusted net income and adjusted diluted EPS (non-GAAP financial measures) are defined as reported net income attributable to Zoetis and reported diluted EPS, excluding purchase accounting adjustments, acquisition-related costs and certain significant items. Pages 51 to 54 of our 2020 Annual Report on Form 10-K, filed with the SEC on February 16, 2021, contain a reconciliation of these non-GAAP financial measures to reported results under GAAP for 2020.
 
ZOETIS 2021 PROXY STATEMENT      25

EXECUTIVE COMPENSATION

Leading in Digital and Data Analytics. We made great strides in 2020 in digital and data, including through enhanced e-commerce platforms, new data analytics capabilities, and improved diagnostic connectivity which enabled more veterinary clinics to “talk” with our growing set of Zoetis diagnostic analyzers, and with our acquisition of Performance Livestock Analytics in April 2020, we enhanced our ability to offer data analytics on the farm, empowering our cattle customers to analyze trends in feed efficiencies, evaluate costs and performance, and maintain health protocols for each animal.

Cultivating a High-Performing Organization. While all of our colleagues around the world needed to work differently in 2020 due to the pandemic, colleague engagement across Zoetis was at an all-time high (89% engagement rate as measured by our 2020 Colleague Engagement Surveys), with our colleagues recognizing the actions Zoetis has taken to protect colleague safety and help ensure their well-being. We also accelerated our diversity, equity and inclusion (“DE&I”) strategy by advancing a number of initiatives, including the rollout of DE&I education to all colleagues around the globe and establishing our longer-term aspirations to make Zoetis a more diverse, equitable and inclusive organization:
o
We aspire to increase the representation of people of color in the U.S. from 21% to 25% of our total U.S. colleague population by the end of 2025, and specifically increase representation of Black colleagues from 4% to 5% of our U.S. population and representation of Latinx colleagues from 5% to 6% of our U.S. population in that same timeframe.
o
We also aspire to increase the percentage of women among our management ranks around the world by increasing the percentage of women at the level of director and above globally from 32% to 40% by the end of 2025.

Championing a Healthier, More Sustainable Future. We are committed to advancing the health of animals and supporting the people who care for them. Reporting our progress in key sustainability areas goes hand-in-hand with sharing our business results, and in 2020 we issued our first Environmental, Social and Governance (“ESG”) Review aligned with the Sustainability Accounting Standards Board (“SASB”) Health Care — Biotechnology & Pharmaceutical industry standards and the Task Force on Climate-related Financial Disclosures (“TCFD”) recommendations. We launched the Zoetis Sustainability Agenda in 2020 and defined three key areas that build on our previous sustainability work:
o
Care and collaborate through partnerships and support of colleagues and communities;
o
Innovate in animal health to help solve sustainability challenges faced by animals and people; and
o
Protect the planet by stewarding resources and minimizing the direct impact of the company’s operations.

Business Development. We invested in growth opportunities that create shareholder value in the short and long term through:
o
Our acquisition of Performance Livestock Analytics, which uses cloud-based technology to automate on-farm data collection and provides powerful analytics to help feedlots make better financial, nutrition and animal health decisions for their operations;
o
Our acquisition of Fish Vet Group, a strategic addition to our aquaculture business, which develops and commercializes fish vaccines and offers services in vaccination and diagnostics;
o
Our acquisition of Virtual Recall, an innovative business that helps veterinary practices improve their service offering and communication with pet owners;
o
Our acquisition of Ethos Labs, a veterinary reference lab business dedicated to serving leading specialty animal hospitals, the greater veterinary community and researchers; and
o
Our launch of Pumpkin Insurance Services, a new pet insurance business which combines comprehensive pet insurance with the option for preventive care.

Dividends and Capital Allocation. We remained committed to reallocating excess capital to shareholders throughout the year and paid $380 million in dividends. We also bought back approximately $250 million Zoetis shares in the first quarter of 2020 before we temporarily suspended our share repurchase program in light of the COVID-19 pandemic. In January 2021, we resumed share repurchases under our share repurchase program. Additionally, in December 2020, our Board of Directors declared a first quarter 2021 dividend of $0.25 per share, a 25% increase over the quarterly dividend rate we paid in 2020 of $0.20 per share, demonstrating our commitment to capital returns for shareholders.
 
26      ZOETIS 2021 PROXY STATEMENT

EXECUTIVE COMPENSATION
2020 COMPENSATION HIGHLIGHTS
Our financial and other performance achievements were directly and indirectly reflected in the outcomes of our incentives. Annual Incentive Plan (“AIP”) payouts for NEOs ranged from 116.0% to 118.7% of target. Performance-vesting restricted stock units (“performance award units”) for the 2018-2020 performance period vested at 200% of target, reflecting relative total shareholder return (“Relative TSR”) performance at the 94th percentile of the S&P 500 Group.
Key updates made by the Committee included the following:

Committee Charter. In October 2020, the Zoetis Board of Directors expanded the Committee’s Charter to include human capital management responsibilities, including oversight of the company’s talent development, DE&I activities and colleague engagement initiatives, programs and policies. To reflect the inclusion of these additional responsibilities, the name of the committee was changed from “Compensation Committee” to “Human Resources Committee”.

Compensation Peer Group. The Committee annually reviews the company’s compensation peer group to provide a robust number of peer companies and a good balance of companies across the pharmaceutical, biotechnology, life sciences, and healthcare equipment industries that are similar in size and scope to Zoetis. As part of this annual review, Celgene Corporation, Mylan N.V. and Perrigo Company plc, were removed, and the following five companies were added: Becton, Dickinson and Company, Gilead Sciences, Inc., IDEXX Laboratories, Inc., Intuitive Surgical, Inc. and Thermo Fisher Scientific Inc. The revised peer group will be used by the Committee in making 2021 compensation decisions.

DE&I Objectives. In support of Zoetis’ DE&I strategy, the 2021 Zoetis Executive Team objectives, including the objectives of the NEOs, approved by the Committee in February 2021 include performance measures to drive progress towards our DE&I aspirations as described in the Cultivating a High-Performing Organization section of the 2020 Business Highlights.
CEO COMPENSATION: AT A GLANCE
Ms. Peck’s target total direct compensation in 2020 was comprised of a base salary, a target annual incentive compensation opportunity and a target long-term incentive compensation opportunity.
Base Salary and Annual Incentive
Ms. Peck’s 2020 base salary was $1,100,000 and her target annual incentive opportunity was 120% of her base salary, providing for an annual target total cash compensation of $2,420,000.
On February 9, 2021, the Committee recommended, and on February 10, 2021, the Board of Directors approved, an annual incentive payment for 2020 of $1,531,200 (116% of the annual incentive target) for Ms. Peck based on Zoetis’ 2020 financial results and her individual performance.
Long-Term Incentive
On February 11, 2020, Ms. Peck received a long-term equity incentive grant with a total grant date fair value of $7,580,000 consisting of 50% performance award units, 25% Restricted Stock Units (“RSUs”) and 25% stock options. Each of these awards (17,426 performance award units, 13,156 RSUs and 55,866 stock options) is subject to three-year cliff vesting and vests 100% on the third anniversary of the date of grant, generally subject to Ms. Peck’s continued employment through the vesting date and, in the case of performance award units, the company’s results against its three-year Relative TSR goals.
 
ZOETIS 2021 PROXY STATEMENT      27

EXECUTIVE COMPENSATION
Target Total Direct Compensation (“TTDC”)
The chart below shows the TTDC for Ms. Peck for 2020:
[MISSING IMAGE: tm2037730d2-bc_ttdcompenpn.jpg]
CEO Pay Ratio
Item 402(u) of the SEC’s Regulation S-K (the “SEC Regulation”), which was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, requires disclosure of the ratio of the annual total compensation of our CEO to our median employee’s annual total compensation. The ratio disclosed below is a reasonable estimate calculated in a manner consistent with the SEC Regulation.
To identify our median employee, we chose “annual base pay” as our globally consistent definition of pay. We calculated annual base pay using a methodology that reasonably reflects the annual compensation of employees, which included reasonable estimates of hours worked for hourly workers and annualized base pay for newly hired employees. We chose not to exclude any employees and used a valid statistical sampling approach to estimate the global median base pay of our workforce. Then we selected an individual whose base pay as of October 12, 2020, was at or near that value.
For 2020, our median employee’s annual total compensation (determined in a manner consistent with that of Ms. Peck in the Summary Compensation Table) was $74,623. Ms. Peck’s total annual compensation for the year ended December 31, 2020, as disclosed in the Summary Compensation Table, was $10,374,312. Therefore, the ratio of Ms. Peck’s pay to our median employee’s pay was 139 to 1.
 
28      ZOETIS 2021 PROXY STATEMENT

EXECUTIVE COMPENSATION
OUR COMPENSATION PROGRAM
COMPENSATION PHILOSOPHY
Our compensation philosophy, which is set by the Committee, is summarized below:
Compensation Philosophy
Objectives
Pay for Performance
Foster a pay for performance culture by tying a large portion of our executives’ pay to performance against pre-established annual company financial and operational metrics, as well as pre-established annual individual goals for each executive
Align Management Interests with Shareholders
Align the interests of management with results delivered to our shareholders through the use of long-term incentive programs that are designed to reward executives for increasing the value of our shareholders’ investment
Pay Mix
Provide competitive compensation opportunities over the short term (base salary and annual incentives) and long term (equity-based long-term incentive awards) which are intended to retain our experienced management team, enable us to attract new qualified executives when needed and remain externally aligned with the compensation practices of our peer group, with the majority of pay at-risk and tied to long-term performance
BASIC PRINCIPLES OF OUR EXECUTIVE COMPENSATION PROGRAM
Key principles and elements of our executive compensation program are summarized below. We believe these practices promote good governance and serve the interests of our shareholders.
WHAT WE DO:
Emphasize pay for performance — our executive compensation program emphasizes variable pay over fixed pay, with more than three-quarters of our executives’ target compensation tied to our financial results and stock performance.
Maintain a three-year cliff vesting schedule for equity-based long-term incentive awards.
Require executives to comply with market-competitive stock ownership guidelines.
Require executives to hold net shares upon the exercise of stock options or vesting of stock until they achieve the relevant stock ownership guideline.
Maintain a policy prohibiting traditional perquisites of employment (as determined by our Board of Directors) for our employees, including our NEOs.
Maintain anti-hedging and anti-pledging policies applicable to our directors and employees, including our NEOs.
Maintain a claw-back policy that allows us to recover incentive payments based on financial results that are subsequently restated or in response to certain inappropriate actions on the part of our executives. Additionally, for our senior leaders, a non-competition provision is included for equity-based incentive awards.
Provide for “double trigger” equity award vesting and severance benefits following a change in control.
Provide severance benefits through an Executive Severance Plan, consisting of cash equal to a multiple of base salary and target annual incentive, as well as continued health and welfare benefits, as described in the Executive Severance Plan.
Use an independent compensation consultant when designing and evaluating our executive compensation policies and programs.
Conduct an annual risk assessment to ensure that the company’s pay programs and practices do not create risks that are likely to have a material adverse impact on the company.
WHAT WE DON’T DO:
Maintain employment agreements with our executives, including our NEOs (other than agreements that are required or customary for executives outside of the U.S., and short-term agreements for specific purposes).
Allow repricing of stock options without shareholder approval.
Provide tax “gross ups” to any of our executives, including our NEOs (except with respect to certain international assignment or relocation expenses, consistent with our policies and available on the same basis to all eligible employees).
Provide for “single trigger” equity award vesting or other “single trigger” payments or benefits upon a change in control.
 
ZOETIS 2021 PROXY STATEMENT      29

EXECUTIVE COMPENSATION
ELEMENTS OF 2020 COMPENSATION
Element
Description and Purpose
Comments
Cash Compensation
Base Salary

Fixed cash compensation that reflects fulfillment of day-to-day responsibilities, skills and experience.

Addresses employee cash-flow needs and retention objectives.

Reviewed annually in light of changes in market practice, performance and individual responsibility.
Annual Incentive Plan
(“AIP”)

Annual cash incentive that rewards achievement of our financial and strategic/operational goals, as well as the individual performance of the NEO and, along with base salary, provides a market-competitive annual cash compensation opportunity.

For 2020, the AIP pool was funded based on Zoetis’ performance against revenue, adjusted diluted EPS and free cash flow goals.

Amount of payout is based on the extent of achievement of company and individual goals set and approved by the Committee in the first quarter of each year.

The Committee may exercise discretion in considering performance results in the context of other strategic and operational objectives.
Long-Term Incentives
Performance Award Units

Equity awards that give the recipient the right to receive shares of Zoetis stock on a specified future date, subject to vesting and the company’s performance against its three-year Relative TSR goals.

Align NEO and shareholder interests, as the value NEOs realize from their performance award units depends on the value of the shareholders’ investment relative to other similar investment opportunities over the same time period.

In 2020, the target number of performance award units represented 50% of each NEO’s long-term incentive opportunity based on the grant date fair value of the awards.

Three-year cliff vesting: units earned based on the company’s TSR results over the three-year performance period relative to the TSR results of the S&P 500 Group (as described below under “Long-Term Incentives”) vest 100% on the third anniversary of the date of grant, subject to the NEO’s continued employment through such date (with vesting on certain earlier terminations, such as retirement, death, restructuring, change in control, etc., that are generally aligned with market practice).

Paid out in shares of our company common stock upon vesting, with the payout ranging from 0% to 200% of target (including dividend equivalents), depending on the extent to which the pre-determined performance goals have been achieved.

Dividend equivalents are accrued over the vesting period and paid when and if the performance award units vest (subject to the same vesting conditions as the underlying performance award units).
 
30      ZOETIS 2021 PROXY STATEMENT

EXECUTIVE COMPENSATION
Element
Description and Purpose
Comments
Long-Term Incentives (Continued)
Stock Options

Equity awards that provide value based on growth in our stock price.

Intended to focus NEOs on increasing the company’s stock price.

Reward NEOs for increases in the stock price over a period of up to ten years.

In 2020, stock options represented 25% of each NEO’s long-term incentive opportunity based on the grant date fair value of the awards.

Exercise price equals 100% of the stock price on the date of grant.

Ten-year term.

Three-year cliff vesting: vests 100% on the third anniversary of the date of grant, subject to the NEO’s continued employment through such date (with vesting on certain earlier terminations, such as retirement, death, restructuring, change in control, etc., that are generally aligned with market practice).
Restricted Stock Units (“RSUs”)

Equity awards that give the recipient the right to receive shares of Zoetis stock on a specified future date, subject to vesting.

Align NEO and shareholder interests, as NEOs will realize a higher value from RSUs from an increasing stock price.

In 2020, RSUs represented 25% of each NEO’s long-term incentive opportunity based on the grant date fair value of the awards.

Three-year cliff vesting: vests 100% on the third anniversary of the date of grant, subject to the NEO’s continued employment through such date (with vesting on certain earlier terminations, such as retirement, death, restructuring, change in control, etc., that are generally aligned with market practice).

Paid out in shares of our company common stock upon vesting.

Dividend equivalents are accrued over the vesting period and paid when and if the RSUs vest (subject to the same vesting conditions as the underlying RSUs).
Retirement
U.S. Savings Plan
(“Savings Plan”)

A tax-qualified 401(k)/profit sharing plan that allows U.S. participants to defer a portion of their compensation, up to U.S. Internal Revenue Code (“IRC”) and other limitations, and receive a company matching contribution.

A discretionary profit sharing contribution of up to 8% of an employee’s pay, within IRC limitations and based on company performance.

We provide a matching contribution of 100% on the first 5% of an employee’s pay contributed to the Savings Plan, up to IRC limitations.

For 2020, we made a profit sharing contribution of 4% of pay (within IRC limitations) to all eligible U.S. employees.
Supplemental Savings
Plan

A non-qualified deferred compensation plan that makes up for amounts that would otherwise have been contributed to the Savings Plan (by the employee or as matching or profit sharing contributions by the company) but could not be contributed due to IRC limitations.

Also allows NEOs and certain other executives to defer up to an additional 60% of the amount of their AIP payment that is over the IRC 401(a)(17) limit and that is not matched by the company.

Matching and profit sharing contributions are notionally credited as company stock.
 
ZOETIS 2021 PROXY STATEMENT      31

EXECUTIVE COMPENSATION
Element
Description and Purpose
Comments
Retirement (Continued)
Equity Deferral Plan

The Zoetis Equity Deferral Plan allows the most senior leaders of the company (11 U.S. employees, including the NEOs) to defer the receipt of our company’s common stock upon vesting of RSUs and performance award units.

Participation in this plan is voluntary.

Participants may elect to defer up to 100% of the company common stock to be received upon vesting, or a lesser amount in 25% increments.

Participants may elect to receive their deferred shares upon termination of employment in a lump sum or in annual installments (special provisions provide for situations such as death or disability, or to comply with IRC regulations, as described more fully in the Zoetis Equity Deferral Plan).

In general, election decisions must be made by the end of the year before the RSUs are granted, and by the end of the second year of a three-year performance period for performance award units.
Severance
Executive Severance
Plan

Severance benefits provided to NEOs and certain other executives (currently 12 employees, including the NEOs) upon an involuntary termination of employment without cause (whether before or after a change in control), or upon a “good reason” termination of employment upon or within 24 months following a change in control.

Facilitates recruitment and retention of NEOs and certain other executives by providing income security in the event of involuntary job loss.

Provides the CEO with:
o
1.5 times base salary and target annual incentive upon an involuntary termination of employment without cause (unrelated to a change in control).
o
2.5 times base salary and target annual incentive upon an involuntary termination of employment without cause or a “good reason” termination following a change in control.

Provides other executives, including the NEOs other than the CEO with:
o
1 times base salary and target annual incentive upon an involuntary termination of employment without cause (unrelated to a change in control).
o
2 times base salary and target annual incentive upon an involuntary termination of employment without cause or a “good reason” termination following a change in control.
SAY ON PAY CONSIDERATION AND SHAREHOLDER OUTREACH
At our 2020 Annual Shareholders Meeting, we held a shareholder advisory vote on the compensation of our NEOs in 2019 (“say on pay”). Our shareholders overwhelmingly approved the compensation of our NEOs, with 93.8% of the votes cast in favor of our say on pay resolution. We believe that the outcome of our say on pay vote signals our shareholders’ support of our compensation approach, specifically our efforts to retain and motivate our NEOs and to align pay with performance and the long-term interests of our shareholders. We value feedback from our shareholders, and throughout 2020 we continued to actively engage our shareholders through virtual participation in numerous investor meetings.
The Committee reviewed and considered these voting results and our shareholder engagement activities, among other factors described in this CD&A, in evaluating the company’s executive compensation program.
 
32      ZOETIS 2021 PROXY STATEMENT

EXECUTIVE COMPENSATION
THE COMMITTEE’S PROCESS
Pursuant to its Charter, the Committee is responsible for, among other duties:

Reviewing and approving the company’s overall compensation philosophy;

Overseeing the administration of related compensation and benefit programs, policies and practices;

Reviewing and approving the company’s peer companies and data sources for purposes of evaluating the company’s compensation competitiveness;

Establishing the appropriate competitive positioning of the levels and mix of compensation elements;

Evaluating the performance of the CEO against performance goals and objectives approved by the Board of Directors in the first quarter of the year;

Approving the performance goals, evaluating the performance of each executive against individual performance goals established in the first quarter of the year and approving the compensation of the company’s executive officers; and

Overseeing the company’s programs and policies regarding talent development, colleague engagement and diversity, equity and inclusion.
At the beginning of each year, the Committee meets and approves strategic, financial and operational objectives for the CEO, the other NEOs and the other members of the Zoetis Executive Team (“ZET”) for the upcoming year, and evaluates the performance of the CEO, the other NEOs and the other ZET members for the previous year.
The CEO does not play any role in the Committee’s determination of her own compensation. For the other NEOs and ZET members, the CEO presents the Committee with recommendations for each element of compensation. The CEO bases these recommendations upon her assessment of each individual’s performance, the performance of the relevant functions overseen by the individual, benchmark information and retention risk. The Committee then reviews the CEO’s recommendations, makes appropriate adjustments and approves compensation changes at its discretion.
ROLE OF THE COMPENSATION CONSULTANT
The Committee retained Willis Towers Watson to serve as its executive compensation consultant for 2020. While Willis Towers Watson may make recommendations on the form and amount of compensation, the Committee continues to make all decisions regarding the compensation of our NEOs, subject to the review (and approval in the case of the CEO) of the other independent directors. In 2020, Willis Towers Watson served the Committee in a variety of activities, including:

Reviewing and advising the Committee on evolving trends in executive compensation and as to materials presented by management to the Committee;

Attending all 2020 Committee meetings and communicating with the Committee Chair between meetings as necessary;

Providing the Committee with advice, pay for performance analytics and benchmarking norms related to the compensation of the CEO, the other NEOs and the other ZET members;

Reviewing our compensation peer group and recommending changes;

Reviewing our annual incentive and long-term incentive plan design;

Reviewing recommendations for stock ownership guidelines for our executives;

Reviewing and assessing our incentive and other compensation programs to ensure they do not create undue risk for the company; and

Reviewing this CD&A and related Executive Compensation Tables.
 
ZOETIS 2021 PROXY STATEMENT      33

EXECUTIVE COMPENSATION
PEER GROUP AND COMPENSATION BENCHMARKING
Each year, the Committee conducts a review of Zoetis’ compensation peer group of publicly-traded companies that is used for purposes of benchmarking pay levels and pay practices for our CEO, our other NEOs and the other ZET members, to determine if any changes are necessary or appropriate. Our peer group selection looks beyond our animal health competitors to a broader list of companies in the pharmaceutical, biotechnology, life sciences and healthcare equipment industries. Additionally, companies with similar sales and market capitalization, as well as similarities to Zoetis in the nature of their businesses, and the availability of relevant comparative compensation data, are also considered.
The compensation peer group used in the determination of 2020 executive compensation was comprised of the 14 peer companies listed in the table below:
Agilent Technologies, Inc.
Illumina, Inc.
Alexion Pharmaceuticals, Inc.
IQVIA Holdings Inc.
Baxter International Inc.
Mettler-Toledo International Inc.
Biogen Inc.
Mylan N.V.**
Boston Scientific Corporation
Perrigo Company plc
Celgene Corporation*
Stryker Corporation
Elanco Animal Health Incorporated
Zimmer Biomet Holdings, Inc.
*
In November 2019, Celgene Corporation was acquired by Bristol-Myers Squibb Company.
**
In November 2020, Mylan N.V. merged with the Upjohn division of Pfizer Inc., to form Viatris Inc.
Zoetis ranked in the 41st percentile in revenue and 84th percentile in total market capitalization among the companies in the above peer group.
In determining the elements of 2020 compensation for our NEOs, we used the following benchmarks:

Proxy statement data for the peer group as disclosed in each company’s prior year CD&A and Executive Compensation Tables.

Willis Towers Watson’s executive compensation survey data from our peer companies and, to ensure robust data for benchmarking purposes, from similarly sized companies in life sciences and other industries.
While the Committee does not set a specific compensation level relative to the peer group or survey data, this information is considered by the Committee as it applies its judgment to compensation decisions.
As a result of the Committee’s 2020 annual compensation peer group review and due to changes in the market capitalization of the companies above relative to Zoetis’ market capitalization, the Committee revised the company’s compensation peer group for 2021, in order to maintain a robust number of peer companies and a good balance of companies of similar size and scope across the various industries in which Zoetis competes for talent. The Committee decided to remove three companies (Celgene Corporation, Mylan N.V. and Perrigo Company plc) and add five companies (Becton, Dickinson and Company, Gilead Sciences, Inc., IDEXX Laboratories, Inc., Intuitive Surgical, Inc. and Thermo Fisher Scientific Inc.), bringing the number of peer companies to 16. The revised peer group will be used by the Committee in making 2021 compensation decisions.
The Committee will continue to review our compensation peer group on an annual basis and will make any adjustments that are deemed to be appropriate for purposes of benchmarking pay levels and pay practices for our CEO, our other NEOs, and the other ZET members.
ROLE OF MANAGEMENT IN COMPENSATION DECISIONS
Our CEO and Chief Human Resources Officer provide the Committee with preliminary recommendations for compensation of the NEOs and other members of the ZET other than themselves. The Committee, with the advice of its independent compensation consultant, approves the compensation for the NEOs (other than the CEO) and the other members of the ZET, and recommends the compensation of the CEO to our full Board of Directors for approval by its non-executive members.
 
34      ZOETIS 2021 PROXY STATEMENT

EXECUTIVE COMPENSATION
2020 COMPENSATION PROGRAM AND DECISIONS
COMPENSATION STRUCTURE
The compensation structure for our executives, including our NEOs, reflects our overall compensation philosophy of emphasizing pay for performance and aligning the interests of our executive officers and our shareholders, and is designed to emphasize incentive compensation over fixed compensation and equity compensation over cash compensation. For all our NEOs, long-term incentive compensation is entirely equity-based and makes up the largest portion of their pay mix. In 2020, 89% of the Target Total Direct Compensation (“TTDC”) of Ms. Peck was incentive-based pay, either subject to achievement of performance goals or with value directly tied to the price of our common stock. For each of our NEOs other than Ms. Peck, on average 75% of TTDC was incentive-based pay.
The table and charts below show the mix of TTDC for our NEOs for 2020. The TTDC for our NEOs reflects their base salaries and target annual incentive opportunities as of the end of the year. The numbers in this table differ from those shown in the 2020 Summary Compensation Table (provided later in this proxy statement) in that the Summary Compensation Table reflects actual base salary and annual incentives earned during 2020 (rather than target amounts), and this table does not include all compensation information required to be presented in the Summary Compensation Table under the rules of the SEC.
2020 NEO Compensation Structure*
Pay Mix
NEO
Base
Salary
Target
Annual Cash
Incentive
Long-Term
Equity
Incentive
Target Total
Direct
Compensation
Base
Salary
Target
Annual
Incentive
Long-
Term
Incentive
Kristin C. Peck
$ 1,100,000 $ 1,320,000 $ 7,580,000 $ 10,000,000 11% 13% 76%
Glenn C. David
$ 725,000 $ 580,000 $ 2,550,000 $ 3,855,000 19% 15% 66%
Catherine A. Knupp
$ 710,000 $ 568,000 $ 1,800,000 $ 3,078,000 23% 18% 58%
Roman Trawicki
$ 675,000 $ 540,000 $ 1,300,000 $ 2,515,000 27% 21% 52%
Wafaa Mamilli
$ 600,000 $ 480,000 $ 800,000 $ 1,880,000 32% 26% 43%
*
Amounts in this table are as of December 31, 2020.