PRE 14A
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
 
 
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VIATRIS INC.
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ViatrisTM 2023 Proxy Statement Annual Meeting of Shareholders


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A Joint Message from

Our Executive Chairman and Chief Executive Officer

 

 

                 

 

Dear Fellow Shareholders:

Several years ago, we identified an unmet need in the global healthcare industry and set out to fill it by building a true one-of-a-kind platform uniquely positioned to bridge the traditional divide between brands and generics. We sought to combine the best of both to address global healthcare needs more holistically and bring access to more patients worldwide. It has been a journey unlike any other, and after completing the foundational work necessary to successfully stand up our new Company, we have realized that vision. Today, Viatris is extremely solid, standing tall and squarely on the path to continue making a real difference in healthcare for many years to come. We have never been more confident in our future and our ability to serve the needs of patients worldwide.

Creating Our Strong Foundation

In achieving this strong foundation, we laid out a clear two-phased strategic plan. Phase 1 of our strategy started in 2020 with the creation of Viatris from the combination of Mylan and the Upjohn business. During this phase, we have been relentless in taking the necessary steps to reshape our Company, build for the future and increase our financial flexibility, which we believe has led us to be considered one of the strongest platforms in the pharmaceutical industry today. This has been predominantly achieved by our focus on:

 

   

De-leveraging our balance sheet, paying down approximately $6.1 billion in debt through the end of Q2 2023 and maintaining our investment grade credit rating.

 

 

   

Returning capital to shareholders in the form of dividends and share buybacks in the amount of approximately $1.5 billion through the end of Q2 2023.

 

 

   

Seamlessly integrating two diverse legacy organizations and working together to meet or exceed our target of $1 billion of synergies by the end of 2023.

 

 

   

Simplifying our operations so that we could focus on areas with the greatest potential for growth, patient impact and shareholder value.

 


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And finally, upon the closing of our recently announced transactions to divest substantially all of our Over-the-Counter business, our Women’s Healthcare business primarily related to oral and injectable contraceptives, our Active Pharmaceutical Ingredients business in India and commercialization rights in certain non-core markets that were acquired as part of the Upjohn transaction, coupled with the previous completion of our transaction to contribute our biosimilars portfolio to Biocon Biologics Limited, we will prioritize the use of the net proceeds for debt paydown to reach our deleveraging target of three times gross leverage in the first half of 2024*.

 

 

   

This will bring to conclusion all of our Phase 1 stated commitments. We believe these accomplishments are unparalleled in our sector.

 

Achieving Our Bold Vision — The Creation of a Next-Generation Hybrid Pharmaceutical Company

What Viatris is today is not just a brand company or a generics company or even a specialty company. Rather, we are a new kind of healthcare company - a Next-Generation Hybrid Pharmaceutical Company with a relentless focus on delivering access at scale that has been built for the future of healthcare.

Our strength is in our diversity and in our mission to empower people worldwide to live healthier at every stage of life. It is also in the power of the very definition of our name, Viatris, which in Latin means three paths. From the outset, our company’s three cornerstone pillars have been to provide Access, Leadership and Partnership. We were born with a focus on providing Access to high-quality, trusted medicines, regardless of geography or circumstance. Our reputation for industry Leadership and quality has been longstanding and recognized by all of our stakeholders, including governments around the world, when it comes to advancing and improving patient healthcare. Our commitment to Partnership runs deep as we have long collaborated with companies and organizations around the globe, leveraging our collective expertise to connect more people to more products and services.

By continuing to leverage these pillars and our large global network, we intend to bring more medicines to patients worldwide. Our focus will be on delivering and innovating across the full spectrum of healthcare in a way no other company has or can:

 

   

Our global generics business will continue to provide stable cash flows on which to build upon. We are committed to leveraging our unparalleled capabilities to bring access to a portfolio of high-value generics to the world, while working with agility and flexibility so that we can be opportunistic when and where necessary.

 

 

     

  *

The Company has not quantified future amounts to develop this target, which does not reflect Company guidance, but has stated its goal to manage notional gross debt and adjusted EBITDA over time in order to generally maintain or reach the target. See Appendix B — “Non-GAAP Financial Measures” for more information.

 


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We will continue to make significant investments in our pipeline, including complex generics and 505(b)(2)s, that will leverage our scientific expertise to address some of the world’s most enduring health challenges.

 

 

   

Finally, we will put further emphasis on moving up the value chain as we work to expand our branded and innovative portfolio and pipeline. This includes continuing to emphasize and grow our strategic licensing and partnerships as well as being open to potential mergers and acquisitions that could accelerate our efforts in this space.

 

Importantly, we expect the power of our hybrid business and its distinct complementary components to continue to generate strong cash flows, which has been and will continue to be the North Star for our long-term financial strength.

Transitioning Our Leadership — A Message from Our Executive Chairman

Speaking as Executive Chairman of Viatris for the final time, and as the original architect behind the creation of this unique and powerful global platform, I could not be more pleased with the success and stability of Viatris to date, which is due in large part to our thousands of colleagues past and present around the world who have consistently sacrificed and were the backbone to the completion of all the hard work necessary to get us to this point. We are exactly in the strong position that I envisioned for our Company when we began this journey long ago, including the final chapter to undertake a clear and orderly transition for the Company once it was ready and to provide opportunities for its future leaders to enhance the Company’s progress and growth moving forward.

With Viatris’ powerful foundation now securely in place, and with Scott now fully at the helm as our new CEO, I have never been more excited about, or more confident in, the future for our Company, our colleagues and all of our stakeholders, including our shareholders.

Setting Sail for the Future — A Message from Our CEO

Having the opportunity to serve on the Board of Viatris this year and now taking the helm as the CEO since April has been my tremendous honor. I have been extremely impressed by the vision and well-crafted strategic plan laid out for our future. And this is notwithstanding management’s ability to deliver 10 consecutive quarters of strong financial results through Q2 2023. I am proud of everything that has been accomplished to date and believe we have solidified our strong and unique place in the global healthcare landscape.


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While much has already been accomplished, I am continually looking for ways to do even more to deliver on our mission for our patients, for our customers, for our partners, for the communities we serve and for our shareholders. Many companies have similar aspirations, but few have the key elements to do so: a firm financial footing, a clear vision, a sound strategy, a strong culture, talented colleagues and a shared passion to make a difference. Viatris has all the above. As I take the torch that Robert and the Board have passed to me, I could not ask for a better foundation. I very much look forward to leading Viatris as we set sail for what we believe is a truly exciting future ahead.

We thank you for your continued support.

Sincerely,

 

Robert J. Coury   

Scott A. Smith

Executive Chairman of the Board   

Chief Executive Officer

 


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PRELIMINARY — SUBJECT TO COMPLETION

 

Notice of 2023 Annual Meeting

of Shareholders

 

Date and Time

Friday, December 15, 2023

[] a.m., Eastern Time

  

Location

Hilton Fort Lauderdale Marina

1881 SE 17th Street

Fort Lauderdale, FL 33316

Dear Viatris Shareholders:

You are cordially invited to attend the 2023 Annual Meeting of Shareholders (the “2023 Annual Meeting”) of Viatris Inc. (“Viatris” or the “Company”). The meeting will be held on Friday, December 15, 2023 at [] a.m. Eastern Time at the Hilton Fort Lauderdale Marina, 1881 SE 17th Street, Fort Lauderdale, FL 33316. At the meeting, holders of Viatris’ issued and outstanding common stock as of the close of business (5:00 p.m. Eastern Time) on October 19, 2023 (the “Record Date”) will be asked to consider and act upon the following items of business, which are more fully described in this Proxy Statement.

 

 

If you wish to attend the 2023 Annual Meeting (which is currently scheduled to be held in person), please so inform Viatris in writing by sending notice to the attention of Viatris’ Corporate Secretary at 1000 Mylan Blvd., Canonsburg, PA 15317 or by e-mail to corporatesecretary@viatris.com, in each case prior to 5:00 p.m. Eastern Time on December 14, 2023. See “Important Meeting Information” in this Notice and “How can I attend the 2023 Annual Meeting?” on page A-[] for more information.

 

 

Items of Business

 

 

 

  Page  

1.  Election of 11 director nominees to hold office until the 2024 annual meeting.

    15  

2.  Approval of, on a non-binding advisory basis, the 2022 compensation of the named executive officers of the Company.

    43  

3.  Ratification of the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023.

    75  

4.  Approval of amendment to our Amended and Restated Certificate of Incorporation to add a federal forum selection provision.

    78  

5.  Approval of amendment to our Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation.

    80  

6.  Transaction of any other business that properly comes before the meeting and any adjournments or postponements of the meeting.

       

Only shareholders of record as of the Record Date are entitled to receive notice of, participate in and to vote at the 2023 Annual Meeting and any postponements or adjournments thereof. On or about [], 2023, we mailed to Viatris shareholders as of the Record Date a Notice of Internet Availability of Proxy Materials (“Internet Notice”), which includes instructions on how to access our 2023 Proxy Statement and 2022 Annual Report on the Internet, and how to cast your vote. See ”Why did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?” on page A-1 for more information. If you received your proxy materials for the 2023 Annual Meeting by mail, the Proxy Statement, the 2022 Annual Report and proxy card were enclosed.

 

 

 

 

Please know that your vote is very important, and you are encouraged to vote promptly. Please carefully review the proxy materials for the 2023 Annual Meeting and follow the instructions below to cast your vote on all of the voting matters. Whether or not you expect to attend the 2023 Annual Meeting, we urge you to read the proxy statement and vote your shares as soon as possible using any of the following methods.

 

 
 

 

Voting Information

 

 
 

How to Vote

 

Please vote using one of the following advance voting methods. In all cases, you should have your Internet Notice, or if you requested to receive printed proxy materials, your proxy card or voting instruction form, in hand and follow the instructions.

 

 
  Shareholders of Record  
  (shares registered on the books of the Company via Equiniti Trust Company (formerly American Stock Transfer))  
  LOGO  

Via Internet

Visit https://www.proxyvotenow.com/vtrs

 
  LOGO  

By phone

Call 1.855.429.7917 or the telephone number on your proxy card

 
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By mail

Sign, date and return
your proxy card

 
  Beneficial Owners  
  (shares held through your bank or brokerage account)  
  LOGO  

Via Internet

Visit www.proxyvote.com

 
  LOGO  

By phone

Call 1.800.454.8683 or the telephone number on your voting instruction form

 
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By mail

Sign, date and return
your voting instruction form

 
 

All shareholders of record may vote in person at the 2023 Annual Meeting. Beneficial owners may vote in person at the 2023 Annual Meeting if they have a legal proxy, and follow the instructions described in the response to the question titled “How do I vote if I am a beneficial owner of shares of Viatris common stock and hold them in street name?” on page A-[]. See “Important Meeting Information” below on how to attend the 2023 Annual Meeting.

 

 
 


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Important Meeting Information

If you plan to attend the 2023 Annual Meeting in person, you must register in advance. See the question titled “How can I attend the 2023 Annual Meeting?” on page A-[] for information about the location, format and how to register to attend the meeting.

For important information concerning the 2023 Annual Meeting, voting and other matters, please refer to Appendix A – Questions and Answers, beginning on page A-1.

By Order of the Viatris Inc. Board of Directors,

Burt Park

Chief Governance Counsel and Corporate Secretary

[], 2023

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR

THE 2023 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 15, 2023.

The Notice of Annual Meeting, Proxy Statement and 2022 Annual Report are available at

www.proxydocs.com/VTRSV. Information on our website is

not considered part of this Proxy Statement.


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A Joint Message from Our Executive Chairman and Our Chief Executive Officer

  

Notice of 2023 Annual Meeting of Shareholders

  

The Breadth and Power of the Viatris Business Model

     1  

Executing on our Mission and Strategic Plan

     1  

Company Snapshot

     3  

Our Commitment to Good Corporate Governance

     6  

Building Sustainable Access to Medicine

     8  

Viatris’ Board of Directors

     12  

Item 1 – Election of Directors

     15  

How Our Board Governs and Is Governed

     24  

Board Refreshment and Succession Planning

     30  

Annual Board and Committee Self-Evaluations

     31  

Setting and Overseeing Strategy

     32  

Risk Oversight

     33  

How Our Directors Are Selected and Evaluated

     35  

Certain Relationships and Related Transactions

     36  

How Non-Employee Directors Are Compensated

     37  

Security Ownership

     39  

Security Ownership of Directors, Nominees, NEOs, and Executive Officers

     39  

Security Ownership of Certain Beneficial Owners

     40  

Executive Officers

     41  

Item 2 – Advisory Vote to Approve the 2022 Compensation of the Named Executive Officers of the Company

     43  

Compensation Discussion and Analysis

     44  

Named Executive Officers

     44  

Executive Summary

     45  

Executive Compensation Philosophy

     48  

2022 Performance-Based Compensation Program

     48  

Elements of 2022 Compensation

     49  

Compensation Governance and Policies

     52  

Executive Compensation Tables

     57  

2022 Summary Compensation Table

     57  

Estimated Payments in Connection with a Termination of Employment or Change in Control

     64  

CEO Pay Ratio

     67  

Pay Versus Performance

     68  

Item 3 – Ratification of the Selection of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2023

     75  

Principal Accounting Fees and Services

     76  

Audit Committee Pre-Approval Policy

     76  

Report of the Audit Committee of Viatris’ Board

     77  

Item 4 – Approval of Amendment to our Amended and Restated Certificate of Incorporation to Add a Federal Forum Selection Provision

     78  

Item 5 – Approval of Amendment to our Amended and Restated Certificate of Incorporation to Reflect New Delaware Law Provisions Regarding Officer Exculpation

     80  

Appendix A – Questions and Answers

     A-1  

Appendix B

     B-1  

Forward-Looking Statements

     B-1  

Non-GAAP Financial Measures

     B-3  

Appendix C – Certificate of Amendment of Amended and Restated Certificate of Incorporation of Viatris Inc. (with respect to Item 4)

     C-1  

Appendix D – Certificate of Amendment of Amended and Restated Certificate of Incorporation of Viatris Inc. (with respect to Item 5)

     D-1  

 

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The Breadth and Power of the Viatris Business Model

 

 

Executing on our Mission and Strategic Plan

Viatris Inc. (“Viatris” or the “Company”) is a new kind of healthcare company — a Next-Generation Hybrid Pharmaceutical Company with a relentless focus on delivering access at scale that has been built for the future of healthcare.

In addition to providing consistent, reliable access to quality medicines around the world, we continue to meet and exceed our stated strategic objectives as we further enhance what we believe is perhaps the strongest platform in the pharmaceutical industry. We have consistently delivered successful operational performance while delivering on our commitments despite multiple challenges posed by industry headwinds, market conditions, inflationary pressures and adverse foreign exchange rates, among others. Although Viatris, like all publicly traded companies, does not control the Company’s share price, given these successes, the strength of our platform, and our clear commitment to shareholder engagement and responsiveness to shareholder feedback, we believe that our stock remains significantly undervalued.

Upon the launch of Viatris in November 2020, we stated our intention to undertake the strategic steps necessary to further enhance our capability to provide access at scale and create value for our shareholders and other stakeholders. This intention culminated in the announcement of our two-phase strategic plan, which we believe best positions the Company for future growth. In addition to executing successfully against the priorities of our strategic plan, we took several other actions consistent with feedback from shareholders (including certain shareholder discussions prior to the closing of the transaction pursuant to which Mylan N.V. (“Mylan”) combined with Pfizer Inc.’s Upjohn business (the “Upjohn Business”) in a Reverse Morris Trust transaction to form Viatris on November 16, 2020 (the “Combination”)), including incorporating in Delaware, with its shareholder-centric model; declassifying our Board of Directors (the “Board”) starting at the 2023 annual meeting of shareholders (“2023 Annual Meeting”); continuing to refresh the Board with three new directors since launch; simplifying our executive compensation program, including by removing excise tax gross-ups and committing to no new employment agreements for named executive officers; announcing significant leadership transitions consistent with the execution of our strategic plan; simplifying the structure of the business through targeted divestitures; adopting a more conventional Board leadership structure following the 2023 Annual Meeting; and further enhancing our shareholder outreach.

Phase 1 Performance

Phase 1 of our strategic plan (2021-2023) involves, among other objectives, integrating the two legacy organizations from the Combination; generating $1 billion in cost synergies; deleveraging our balance sheet; paying down debt; and returning capital to shareholders. In 2022 and 2023, under the leadership of our Board and management, the Company continued to make significant progress against these objectives, including a global reshaping initiative designed to unlock trapped value and provide the financial flexibility to deliver on the Company’s vision.

 

 

Continued Operational Excellence.

 

     

Financial Performance. Our results in the first half of 2023 signaled what we believe will be the beginning of our growth journey. In the first 6 months of 2023, we generated approximately $7.65 billion of total revenues, $1.49 billion in U.S. GAAP net cash provided by operating activities, and $1.37 billion in free cash flow, and paid down approximately $727.0 million in debt.

 

     

Pipeline Productivity. Our internal development engine continues to deliver key pipeline milestones which we believe positions us well to continue our move up the value chain. See “Science and Regulatory Achievements” on page [].

 

     

Synergies. We remain on track to meet or exceed our target of $1 billion of synergies by the end of 2023.

 

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Returning Capital to Shareholders.

 

     

Dividends. We have paid cumulative dividends amounting to approximately $1.27 billion (approximately $399.0 million in 2021, $581.6 million in 2022, and $287.7 million in the first 6 months of 2023). In 2022, we increased the quarterly dividend to $0.12 per share.

 

     

Stock Repurchases. We repurchased approximately 21.2 million shares of common stock in the first half of 2023 at a cost of approximately $250 million, as a part of the previously announced $1 billion stock repurchase program.

 

 

Paying Down Debt.

 

     

We have repaid approximately $6.1 billion of debt since the beginning of 2021 and through June 30, 2023, including $727 million in the first half of 2023. We also announced our intention to prioritize use of net proceeds from divestitures for debt paydown to achieve a gross leverage target of 3.0 times in the first half of 2024.1

 

 

Unlocking Trapped Value.

 

     

Biocon Biologics Transaction. On November 29, 2022, Viatris completed a transaction (the “Biocon Biologics Transaction”) with Biocon Biologics Limited (“Biocon Biologics”) pursuant to which the Company contributed its biosimilars portfolio to Biocon Biologics and, under the terms of the agreement, received $3 billion in consideration in the form of a $2 billion cash payment, adjusted as set forth in the agreement, and approximately $1 billion of compulsory convertible preferred shares representing a stake of approximately 12.9% (on a fully diluted basis) in Biocon Biologics.

 

     

Divestitures. On October 1, 2023, the Company announced it had received a third-party offer that grants Viatris the right to divest substantially all of Viatris’ over-the-counter (“OTC”) business, and had entered into definitive agreements to divest its women’s healthcare business, its active pharmaceutical ingredient (“API”) business in India and commercialization rights in certain non-core markets that were acquired as part of the Combination.

Phase 2 Progress

Phase 2 of our strategic plan (2024 and beyond) focuses on our path to growth, including capital allocation strategies to further maximize shareholder value; executing on new organic opportunities; and inorganic business development, along with our Global Healthcare Gateway®. We believe we have already begun making significant progress on Phase 2 of the strategic plan, while continuing to deliver results under Phase 1.

 

 

Financial Performance. As stated above, we believe our results in the first half of 2023 signal the beginning of our growth journey.

 

 

Capital Allocation Strategy. In November 2022, we announced our expectations regarding future capital allocation priorities, including with respect to returning cash to shareholders in the form of dividends and share repurchases and re-investing further into our business organically and inorganically.

 

 

Organic Opportunities and our Pipeline. Our pipeline continues to make progress in line with our high expectations, and we continue to undertake significant new product launches and submissions, including, among many others, the launch of Breyna, the generic version of Symbicort® in July 2023, and the U.S. Food and Drug Administration (“FDA”) acceptance of the New Drug Application filing for GA Depot 40 mg in August 2023. Our generic version of Symbicort® for people with chronic asthma and obstructive pulmonary disease was the first FDA-approved generic version of this complex drug-device combination product.

 

 

Inorganic Business Development and the Global Healthcare Gateway®. During the first quarter of 2023, the Company completed the acquisition of Oyster Point Pharma, Inc. (“Oyster Point”) and acquired the remaining equity shares of Famy Life Sciences Private Limited (“Famy Life Sciences”). With the combination of Viatris’ global commercial footprint, Research and Development (“R&D”) and regulatory capabilities and supply chain, along with Oyster Point’s deep knowledge of the ophthalmology space from a clinical, medical, regulatory and commercial perspective – including a commercial asset, Tyrvaya®, for the treatment of dry eye disease – and Famy Life Sciences’ Phase III-ready pipeline, the Company believes it has the foundation to create a leading global ophthalmology franchise, accelerating efforts to address the unmet needs of patients with ophthalmic disease and the eye care professionals who treat them.

 

 

Leadership Transitions. As a result of the substantial progress on and overall performance with respect to our stated Phase 1 commitments, which the Board believes positions the Company for future success, we announced that, effective

 

1 

The Company has not quantified future amounts to develop this target, which does not reflect Company guidance, but has stated its goal to manage notional gross debt and adjusted EBITDA over time in order to generally maintain or reach the target. See Appendix B – “Non-GAAP Financial Measures” for more information.

 

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April 1, 2023, Scott A. Smith would serve as Chief Executive Officer (“CEO”) of Viatris and take responsibility for the day-to-day management of the Company. The Board believes that Mr. Smith’s prior experience positions him well to lead the Company in its Phase 2 objectives.

Furthermore, in light of the Executive Chairman’s leadership and oversight in developing our comprehensive strategies for growth while streamlining the Company, the substantial success and progress on and overall performance with respect to the Company’s Phase 1 objectives, and in preparation for the Company’s move into Phase 2 of our strategic plan, the independent members of the Board believed it was an appropriate time to consider a transition to a more conventional Board leadership structure, which we had previously informed shareholders we would do at the appropriate time for the Company. The Board approached Robert J. Coury, and Mr. Coury agreed, to transition to a new role as Chairman Emeritus and Senior Strategic Advisor from the conclusion of the 2023 Annual Meeting through the end of 2025 (the same period that Mr. Coury previously committed to the Company under his Executive Employment Agreement when Viatris was created). As a result, Mr. Coury will not stand for re-election at the 2023 Annual Meeting and will cease to be a director and to serve as an officer and employee of the Company effective as of the conclusion of the 2023 Annual Meeting. The Board believes that this transition plan will enable the Board and management to continue to benefit from Mr. Coury’s extraordinary strategic vision and knowledge of the Company, management, the industry, and the complex global markets the Company operates in as it adopts this new Board leadership structure following the 2023 Annual Meeting. The Board also committed to selecting a new independent Chair of the Board whose tenure will begin following the 2023 Annual Meeting.

In addition, Rajiv Malik will retire from his executive role with the Company effective as of April 1, 2024. To support the transition of Mr. Malik’s substantial operating responsibilities given his significant tenure with the Company and primary responsibility for operation of the Company’s complex manufacturing and commercial platform for over 15 years, and to assist and support the Company’s new CEO, the Company requested and Mr. Malik agreed to consult with the Company on all operational matters. Mr. Malik has also agreed to remain a member of the Board.

Anthony Mauro, President, Developed Markets, will also depart from the Company effective as of April 1, 2024 as a result of an elimination of his position in connection with a realignment of the Company’s commercial function.

 

 

Company Snapshot

Our business and operating model is deliberately designed and implemented to deliver on our strategy to provide and sustain access to medicine at scale. We believe we have the commercial reach, portfolio, pipeline and global supply chain to stand apart from other companies in our industry. Unless otherwise noted, information is provided as of the date of filing and does not include the potential impact of announced but not completed divestitures.

 

 

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Headquartered in the U.S. with global centers in Pittsburgh, Shanghai and Hyderabad, India

 

  

 

~3,000 

 

 

colleagues in R&D,
regulatory, clinical

and medical fields

 

  

 

38,000+ 

 

 

colleagues across
almost
70

countries

 

 

 

 

 

2 

The number of patients served is an estimate calculated using internal sales data (global volume of doses sold in 2022 in all markets as aligned with IQVIA standard units), divided by estimated per patient usage, which is based on treatment dose, treatment duration, and treatment adherence as estimated by Viatris Medical Affairs based on approved label indication and instructions for use, current international guideline recommendations, and common usage in clinical practice. Patients using multiple Viatris medicines may be counted as multiple patients. Certain adjustments were applied in consideration of announced divestitures and to account for acceptable alternatives to the patient usage factors noted above, and rounded to the nearest hundred million. Estimates may be subject to reassessment.

 

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Companywide sustainability goals in the areas of Access and Global Health; Diversity, Equity and Inclusion (DEI); and the Environment.

 

 

 

 

~40 

 

 

manufacturing sites worldwide that produce complex dosage forms, injectables, oral solid

doses and active pharmaceutical ingredients

 

               

 

 11 

 

 

development centers executing multiple

technology platforms and therapeutic

areas as of June 30, 2023

 

 

 

 

 

250+ 

 

 

medicines on World Health Organization (WHO) Essential Medicines List. Our broad global portfolio includes products that help treat the top 10 leading causes of death globally, as determined by the WHO

 

               

 

>100 

 

 

countries in which our locally available medicines address more than half of the top 10 local causes of death

 

 

 

 

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Our GLOBAL HEALTHCARE GATEWAY® offers partners access to global infrastructure and expertise that connects people around the world to the high-quality medicines and health services they need.

Commercial Reach

80 billion doses sold across 165+ countries and territories

 

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Portfolio

With an exceptionally extensive and diverse portfolio, we have the ability to touch all of life’s moments, from birth to end of life, acute conditions to chronic diseases. We see across multiple therapeutic areas to the person at the center of their own unique health journey.

Our portfolio of products is diverse with capabilities that span multiple assets and includes:

 

 

Globally recognized iconic brands.

 

 

A broad range of generic medicines, which work in the same way and provide the same clinical benefits as their brand- name counterparts and may cost less. This portfolio spans both non-communicable and infectious diseases.

 

 

Our generic medicines also include a number of complex and branded generics, providing patients and the healthcare system important savings and medicine options which we believe are essential to making healthcare accessible.

Our products span more than 10 therapeutic areas, including cardiovascular, central nervous system and anesthesia, dermatology, diabetes and metabolism, eye care, gastroenterology, immunology, infectious disease, oncology, respiratory and allergy, and women’s healthcare.

We believe our product diversity combined with our global scale, local approach and deep understanding of our markets allows for better access to customers and patients, further delivering on our mission.

Pipeline

Our pipeline of medicines is deep and diverse and our broad, technical resources include 55 markets with in-country regulatory expertise. We intend to continue building on our strong existing access-driven base business with a focus on pipeline products with greater complexity to continue addressing unmet needs. We believe novel and complex products will be important to Viatris’ continuing work to meet unmet needs while also serving as catalysts for growth, building off the foundation of 2022 in which Viatris’ new product revenues3 were approximately $483 million.

We expect to expand further into development of more innovative products, including new chemical entities and improved versions of existing products, such as those filed through the FDA’s 505(b)(2) pathway. We believe we have a strong pipeline across eye care, complex injectables and novel products with several launches of products in these areas to date in 2023.

While we intend to maintain the breadth of our portfolio across therapeutic areas, we have identified three core, global therapeutic areas in particular to assess for novel opportunities – ophthalmology, gastrointestinal, and dermatology – that we believe particularly fit our internal capabilities while leveraging our global platform. We are further enhancing our commercial and scientific capabilities to support this future portfolio and plan to increase our R&D investment in addition to active business development through the Global Healthcare Gateway®.

One-of-a-Kind Global Supply Chain

We have a truly global and diverse supply network with local proximity. We hold strategic partnerships that complement and enhance our network capability and capacity, allowing us to have proximity to markets and flexibility to meet customer needs.

We hold:

 

 

Global sites that are qualified to supply globally and locally;

 

 

Regional manufacturing and packaging sites that enable the benefits of centralization, while allowing rapid regional supply;

 

 

Local manufacturing in markets that have unique in-country requirements (e.g., Greater China, Africa, etc.); and

 

3 

Refers to revenue from new products launched in 2022 and the carryover impact of new products, including business development, launched within the prior twelve months.

 

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“Last mile” distribution presence in more than 60 countries with approximately 190 distribution centers to ensure access to quality medicines – to the point the medicine arrives at our patients’ homes.

Continuing Our Momentum

Achieving success in our mission would not be possible without our hardworking, dedicated colleagues. As an employer of choice, our culture is performance-driven, highly engaging and inclusive. Ensuring the engagement of our more than 38,000 colleagues located in nearly 70 countries and investing in talent management, workplace health and safety, DEI, and organizational excellence, keeps Viatris at the forefront of growth and performance.

Since our formation, Viatris has consistently executed against its overall operational priorities. Our strong operational performance continues to reflect the diversified business we have deliberately built. We are not dependent on one market or one product, which enables us to deliver on our plan while continuing to address unforeseen challenges. We remain agile and opportunistic in how we manage the business with the goal of maximizing the strengths of each market and our portfolio as a whole.

The resilience of this business model continues to withstand a very complex and dynamic environment. We have successfully navigated the cycles of COVID-19, integrated the cultures of our two legacy companies and learned new ways of working in remote environments. Throughout it all, the strong performance of the business and execution of our underlying plan – focused on key products, key markets and consistent supply – gives us the confidence that our momentum will continue.

 

 

Our Commitment to Good Corporate Governance

Robust Shareholder Engagement

Our shareholder-centric model is rooted in the Board’s and management’s commitment to ongoing, robust dialogue to discuss and solicit shareholder feedback on key strategic, operational, financial, governance, and executive compensation topics, and to address other topics of importance to shareholders. Since October 2022, we contacted approximately 25 of our largest shareholders representing approximately 52% of our outstanding shares (based on June 30, 2023 share data), and met with each of these shareholders that expressed an interest in a meeting. In these meetings, various members of our management and, as appropriate or where requested, our Board, met with institutional investor executives, governance and stewardship team leads, and portfolio managers. Our leadership has also met with the analyst community, participated in two investor conferences, and held informal direct shareholder discussions throughout the year.

Shareholder Discussion Highlights

Our Long-Term Strategic Plan: We discussed our key strategic priorities by laying out a roadmap for our future and our capital allocation strategy, including with respect to returning cash to shareholders in the form of dividends and share repurchases and re-investing further into our business organically and inorganically with value-creating, financially accretive bolt-on and other transactions and divesting certain other businesses. Overall, we believe the feedback on our strategic priorities has been positive, and the Board reviewed and discussed areas for follow-up.

Executive Compensation: We were extremely pleased to have received 90.7% approval for our shareholder advisory vote regarding executive compensation at our 2022 annual meeting of shareholders (the “2022 Annual Meeting”), especially while transitioning legacy compensation arrangements predating the formation of Viatris and successfully retaining employees that the Board felt were critical to our success and integration efforts. We believe this vote result reflects clear shareholder support for these arrangements, our future commitments and our program overall. We also believe that this overwhelming support shows clear confidence in our Board’s thoughtful process and rationale for entering into these successful arrangements, which were major contributors to the Company’s success to date, including to the launch, integration, leadership, and operation of Viatris following the Combination, as well as to the development and execution of our two-phased strategic plan which has set the Company up for success. Furthermore, we also believe that this overwhelming support for our compensation program is consistent with the robustness of our compensation program as well as our responsiveness to feedback in the development of that compensation program going forward. Among other items of responsiveness to our discussions with shareholders, we increased the percentage of performance-based equity awards from 60% to 65%; eliminated legacy excise tax gross-ups; eliminated modified single-trigger severance arrangements; committed to no new fixed-term named executive officer employment agreements; discontinued tax equalization benefits; and committed to no longer provide strictly cash-based retention awards or supplemental retirement benefit agreements.

 

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Board Declassification and Refreshment: We noted that all directors will be elected annually beginning at the 2023 Annual Meeting. We also noted the Board’s refreshment efforts, which have included the appointment of three new directors (Ms. Finney and Messrs. Groothuis and Smith) since December 2022. Shareholders have been supportive of our refreshment efforts, and our Board continues to focus on refreshment and succession planning.

Leadership Transition: In light of the Executive Chairman’s leadership and oversight in developing our comprehensive strategies for growth while streamlining the Company, the substantial success and progress on and overall performance with respect to the Company’s Phase 1 objectives, and in preparation for the Company’s move into Phase 2 of our strategic plan, the independent members of the Board believed it was an appropriate time to consider a transition to a more conventional Board leadership structure, which we had previously informed shareholders we would do at the appropriate time for the Company. The Board approached Robert J. Coury, and Mr. Coury agreed, to transition to a new role as Chairman Emeritus and Senior Strategic Advisor from the conclusion of the 2023 Annual Meeting through the end of 2025 (the same period that Mr. Coury previously committed to the Company under his Executive Employment Agreement when Viatris was created). As a result, Mr. Coury will not stand for re-election at the 2023 Annual Meeting and will cease to be a director and to serve as an officer and employee of the Company effective as of the conclusion of the 2023 Annual Meeting. The Board believes that this transition plan will enable the Board and management to continue to benefit from Mr. Coury’s extraordinary strategic vision and knowledge of the Company, management, the industry, and the complex global markets the Company operates in as it adopts this new Board leadership structure following the 2023 Annual Meeting. The Board also committed to selecting a new independent Chair of the Board whose tenure will begin following the 2023 Annual Meeting.

Corporate Social Responsibility: We discussed our 2022 Sustainability Report with shareholders, including our goals related to access and global health, DEI, and the environment. Shareholders expressed support for our objectives in this area and the progress we have made. Feedback was discussed with the Board, and we will continue to update the Risk Oversight Committee and Board on our progress relative to our goals.

Board Structure and Oversight

Viatris’ Board is firmly committed to robust oversight and good corporate governance, which is reflected in the substantial progress on our Phase 1 commitments and our designation of an independent Chair whose tenure will begin effective following the 2023 Annual Meeting (and, prior to that, having designated a strong Lead Independent Director who provided and promoted effective, independent Board oversight when the Chair of the Board was not an independent Director) (see pages [] to []).

 

   

Viatris also has:

 

•  A Board committee structure that supports comprehensive review and oversight of corporate strategy; management and performance; enterprise, operational, and commercial risk management; culture and human capital management; global drug pricing and commercialization; environmental and corporate social responsibility (“CSR”) matters; information security; and global developments, among many other matters (see pages [] to []).

 

•  An active Board refreshment process that seeks to identify a diverse talent pool of qualified candidates for consideration and works to establish a pool of qualified candidates for this purpose (see page []). The Board has appointed three new directors (Ms. Finney and Messrs. Groothuis and Smith) since December 2022. The percentage of our nominees that are independent is higher than the current Board.

 

•  Board committees that include Audit, Compensation, Compliance, Executive, Finance, Governance and Nominating, and Risk Oversight.

 

•  Board members who have a wealth of diverse experience (see page []) and broad access to multiple levels of Company employees as well as external experts.

 

    

In addition, we believe that Viatris’ incorporation in Delaware further supports our shareholder-centric model. Our corporate governance structure includes, among other things:

 

 

a one-share, one-vote single common stock class structure;

 

 

beginning with the 2023 Annual Meeting, a declassified board and annual director elections;

 

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a majority voting standard for uncontested director elections, with a director resignation provision as well as a majority vote requirement for other items to be voted on by shareholders (including amendments to our certificate of incorporation and bylaws); and

 

 

proxy access for director nominations that gives eligible shareholders (those who have continuously held shares of our common stock for at least three years, among other requirements) the ability to nominate candidates for election to the Board that are included in our proxy materials.

For additional information regarding Board governance and oversight, please see pages [] to [].

Our Performance-Driven Compensation Program

The Board is committed to a transparent, performance-oriented, and shareholder-aligned executive compensation program. We link performance pay to important metrics that measure profitability, the health of our product pipeline, capital productivity, our ability to cover debt obligations, and relative share performance compared to our peers. The Viatris executive compensation program is highly performance-based and we believe is aligned with shareholders.

Our streamlined executive compensation program was developed to incentivize achievement of our strategic goals, support the short- and longer-term needs of the Company to meet those goals and help ensure long-term sustainability, meet the competition for executive talent, consider perspectives of shareholders relating to prior compensation programs, and focus on shareholder value creation.

Please see “2022 Performance-Based Compensation Program” on pages [] to [].

 

 

Building Sustainable Access to Medicine

Access at scale is essential to Viatris’ mission to empower people worldwide to live healthier at every stage of life, and we are proud to report that in 2022, our medicines served ~1 billion patients globally4. Managing key sustainability matters effectively is a fundamental component of our ability to achieve this impact.

As part of working to provide access to medicine throughout the globe, we are committed to advancing responsible and sustainable practices and operations. By partnering with stakeholders around the world, we seek to help to address some of society’s most pressing challenges, recognizing that our actions affect our stakeholders and the communities we serve.

The key areas we focus on are:

 

 

Championing patients’ access to quality medicines and supporting more resilient healthcare systems with our exceptionally extensive and diverse portfolio of medicines, a one-of-a-kind global supply chain designed to reach more people when and where they experience need, as well as the scientific expertise and deep understanding of markets globally;

 

 

Nurturing a safe, positive and productive work environment that fosters diversity and inclusion, integrity, dignity and mutual respect for our colleagues;

 

 

Upholding environmental stewardship by promoting environmentally sustainable operations to minimize our impact on the environment; and

 

 

Supporting healthy communities through health and disease awareness efforts that help empower patients, create more access to healthcare, and provide education and infrastructure support.

Our Approach

We believe that companies can be a force for good and help address some of the world’s most pressing challenges, while being relevant and trusted partners. We recognize that managing key corporate environmental and social responsibility matters, including inherent risks and opportunities, are part of good corporate governance, support long-term shareholder value creation and are fundamental to our overall mission.

 

4 

See footnote 2 for more information.

 

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Viatris’ Board oversees management’s efforts with respect to corporate environmental and social responsibility matters and programs through its Risk Oversight Committee. Viatris’ CSR function operates as a center of excellence within the Corporate Affairs leadership team and helps drive the strategic and operational development of corporate environmental and social responsibility matters across the Company.

The Head of Corporate Affairs reports directly to the CEO and, together with the Head of Corporate Social Responsibility, reports quarterly to the Risk Oversight Committee. In addition, on an annual basis the Risk Oversight Committee reviews progress with the Head of Corporate Affairs and Head of CSR on corporate environmental and social responsibility-related matters that have been discussed with the Board to confirm the Company is tracking its priorities in this area.

Additionally, a multifunctional CSR Advisory Committee chaired by the Head of CSR and comprised of global leaders who meet monthly, monitors the external landscape and Company progress as well as supports the integration of corporate environmental and social responsibility activities across the organization. Additional monthly to quarterly structured forums, addressing areas of focus with regards to CSR and sustainability for specific key functions, complement the advisory committee.

Our Focus Areas

To learn about our sustainability work in depth, we encourage you to read our 2022 Sustainability Report5. The Sustainability Report sets forth Viatris’ work and efforts to further advance sustainable and responsible operations. It also discusses how we are progressing on our initial companywide sustainability goals in the areas of access and global health, DEI, and environment (climate, water, and waste). This includes that our Scope 1, 2 and 3 emission reduction targets have been validated and approved by the Science Based Targets initiative (“SBTi”).

The following highlights our systematic efforts and progress across key areas:

Access and Global Health

As noted above, access is fundamental to our mission. It is not an initiative; it is our business model, and it is personal. We are Access at Scale – all day, every day. It begins with our ability to sustainably deliver quality medicines to people, regardless of geography or circumstance. We are a company uniquely positioned to bridge the traditional divide between generics and brands, combining the best of both, to more holistically address healthcare needs globally.

 

Our exceptionally extensive and diverse portfolio helps address acute conditions to chronic diseases across multiple therapeutic areas. We are focused on striving to meet individual needs, whether with a generic medicine, a trusted brand, an improved version of an existing medicine, or a truly novel therapeutic solution.

 

We go beyond developing, manufacturing, and distributing quality medicines. With the needs of people at the center, we often work to help find solutions that support resilient healthcare systems. We have designed our global operations and supply chain to be a reliable and flexible partner for access across the world, constantly adapting to an ever-evolving landscape.

 

We pursue holistic approaches to prevention, diagnosis, treatment, and disease management. We work to build public health awareness, to support and implement research, to deliver access to health education, and to advocate for public policies that advance sustainable access at scale, globally.

 

We are keenly aware that no one can meet this high aspiration alone. Partnerships and collaborations are critical, as are policies and strong healthcare systems that allow for healthy competitive environments. The need is universal, and we work with an array of organizations, globally, regionally, locally, public and private to support sustainable access to quality medicines at consistent quality standards.

 
 

Our Portfolio and Reach in 2022:

•  Served ~1 billion patients globally6

•  Sold > 80 billion doses of medicine across > 165 countries and territories

•  Reached ~ 90% of low- and lower-middle- income countries

•  Had > 250 products on the WHO EML and 62 products on the WHO PreQ List

•  Provided products that treat the top 10 of the WHO’s leading causes of death globally

•  Locally available medicines addressed at least half of the top ten local causes of death, across all country income bands, in > 100 countries

 
 
 
 

 

5 

Please note that our website, Sustainability Report and their respective contents are not incorporated by reference into this Proxy Statement.

6 

See footnote 2 for more information.

 

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Through our Global Healthcare Gateway® – a platform that allows partners to access our many established strengths to reach patients they may not have the resources to reach on their own – we aim to connect more people with more products and services.

Our People

Viatris colleagues are passionate about our mission, and together we are building a performance-driven, highly engaging and inclusive culture where diverse perspectives drive access, innovation and our ability to make an impact in the world, and truly involves everyone at Viatris in different ways.

Viatris 2023 accolades include inclusion on 3BL’s 100 Best Corporate Citizens list, Forbes’ list of World’s Best Employers 2023, Newsweek’s America’s Greenest Companies 2024, TIME’s World’s Best Companies 2023 list and USA Today’s inaugural list of America’s Climate Leaders 2023. The Company has also been included on Forbes’ list of World’s Best Employers 2022, Fortune’s Change the World list, Newsweek’s America’s Most Responsible Companies 2022 list, a Great Place to Work® certification in India, Capital Magazine’s Best Employers in France list, and HR Asia’s Best Companies to Work for in Asia (Taiwan), among others.

Our colleagues are leading our mission and we continue to build our culture with a focus on colleague experience and engagement; learning and development; career progression; DEI; talent attraction and our deep commitment to the health, safety and wellbeing of our colleagues, their families and the communities we serve.

As a newer company, we have remained committed to building upon our foundations, harmonizing our processes and programs and initiating many firsts for Viatris. These have included conducting our first global employee Voice Survey with an 89% participation rate in 2022, defining our expectations for how we work together – and growing our initial Employee Resource Groups. The insights from our Voice Survey are guiding our efforts as we continually strive to create a work environment where people can learn, grow, feel appreciated and make an impact in the world.

We have expanded our professional development opportunities via internal and external resources, including programs focused on female leadership, management coaching and executive leadership. We completed Viatris’ first full cycle of talent review and succession planning. We further performed a broad talent assessment, focusing on establishing a baseline across the entire enterprise.

DEI is essential to our mission. We seek to understand and embrace what makes individuals and their circumstances unique and believe that recognition is fundamental to our success. Following the launch of our initial DEI goals, we have focused on identifying initial actions, building our strategy and setting in place the essential building blocks to advance DEI at Viatris. This includes a Focusing on Inclusion course, which is part of every employee’s learning curriculum.

Our ability to make a positive impact for patients worldwide relies on having a healthy and thriving workforce. The wellbeing of our colleagues is a priority, and we support colleagues through wellbeing programs across the world, taking into consideration local markets and needs. We also launched our global wellbeing strategy.

Most importantly, protecting the health and safety of our colleagues is essential at Viatris. We have a global Environmental, Health and Safety Management System, technical requirements, processes and systems that establish the foundation of this program. These elements apply to all locations and guide us in cultivating a culture of health and safety throughout our global workforce.

Environmental Stewardship

We are committed to minimizing our impact on the environment while safeguarding a reliable supply of medicine. Our commitment entails systematic and continuous work to identify opportunities to support our goals. We have a global integrated approach to managing our use of water, impact on and from climate change, energy efficiency, waste reduction and air emissions.

We have several ongoing environmental initiatives, including efficiency, renewable energy and water and waste management. We have made progress on our goals to reduce greenhouse gas emissions, conduct water risk assessments in areas of high or extremely high-water stress and increase the number of sites with zero waste sent to landfill.

As part of having our Scope 1, 2 and 3 emission reduction targets validated and approved by SBTi, SBTi classified Viatris’ scope 1 and 2 target ambition and has determined that it is in line with the 1.5°C trajectory. Further, we have concluded a climate scenario analysis, a key recommendation of the Task Force on Climate-Related Financial Disclosures. The analysis is global in scope and helps us to continue to understand the risk and uncertainties in different hypothetical scenarios.

 

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We remain engaged in promoting environmentally responsible manufacturing, including through the continued adoption of the AMR Industry Alliance’s Common Antibiotic Manufacturing Framework in our operations and in the external supply chain. Furthermore, we are leveraging our membership in the Pharmaceutical Supply Chains Initiative in external supplier sustainability engagement.

Community Engagement

We seek to foster healthy communities around the world by supporting education, health and disease awareness efforts that, in particular, promote empowering patients and creating access to care. We work via in-kind and monetary donations, volunteering our time and talents and engaging with partners to find solutions. Our work addresses common global themes and leverages our collective capabilities, while addressing unique local needs. In 2022 our work included supporting the continuing needs from the COVID-19 pandemic, extreme weather, and communities affected by the war in Ukraine.

During 2023, Viatris has continued our humanitarian support for emergency response to support victims of conflict, disasters and extreme weather in partnership with Direct Relief and the American Red Cross, to name just a few long-term partners. Furthermore, Viatris colleagues across the globe have done beach cleanups, community fundraisers, and participated in volunteer opportunities to raise money and awareness for patients living with disease.

We are committed to helping communities around the world where needs are great. As a global healthcare company, our priorities during the humanitarian crisis due to the war in Ukraine have been protecting the safety and wellbeing of our colleagues, supporting impacted communities and doing our best to ensure access to essential medicines. To support affected communities, we have been working with partners such as Direct Relief, UNAIDS and World Central Kitchen to respond to various needs, including supporting medical relief shipments and access to food in Ukraine for refugees fleeing the crisis.

Business partnerships, collaboration within and across sectors, memberships, and philanthropic collaborations help us serve patients, healthcare systems and communities worldwide.

 

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Viatris’ Board of Directors

Board Overview

The Board and the Governance and Nominating Committee believe that each of our Directors possesses the qualifications, experience, judgment, leadership, and business skills necessary to provide robust oversight of the Company in the complex and evolving healthcare environment in which we operate.

As discussed on pages [] and [] to [] and as set forth in our Corporate Governance Principles, the Board seeks to identify a diverse talent pool of qualified candidates for consideration as part of the Board’s refreshment and succession planning. The Board also seeks to combine the skills and experience of its long-standing Board members with fresh perspectives, insights, skills and experiences of new members. To help further these goals, the Board has adopted a Diversity and Inclusion Policy, which is available on our website at https://www.viatris.com/en/About-Us/Corporate-Governance. The policy formalizes the Board’s ongoing commitment to fostering a culture of inclusion and seeking, supporting, valuing and leveraging diversity in the Board’s composition, among other characteristics that the Board believes serve the best interests of the Company and our stakeholders. The Board has four women members, three of whom are nominated for re-election at the 2023 Annual Meeting, and three of our Board committees are chaired by women (Compensation; Finance; and Governance and Nominating), each of whom is nominated for re-election at the 2023 Annual Meeting. Our current Directors also include one individual that self-identifies as African American or Black, one individual that self-identifies as Asian, and two individuals who self-identify as White and Asian and are also included in the Two or More Races or Ethnicities category, in each case as such terms as defined in Nasdaq’s Board Diversity Matrix Instructions. The Board also continuously reviews and assesses its composition through, among other things, its annual board and committee self-evaluation process. For more information about the annual board and committee self-evaluation process, see “Annual Board and Committee Self-Evaluations” on page [].

The following chart highlights certain of our Director nominees’ key skills and experience. A summary of the importance of each key skill and experience is also noted. Our Board Diversity Matrix follows this key skills and experience chart. As discussed in “How Our Directors Are Selected and Evaluated” beginning on page [] of this Proxy Statement, our Director nominees’ key skills and experience and diversity are among the factors considered by the Governance and Nominating Committee in nominating director candidates. Ten (10) of 13 current directors are independent under the applicable NASDAQ listing rules while 9 of 11 nominees for director at the 2023 Annual Meeting are independent.

 

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Key Director Nominee Statistics

 

                         
    

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CEO and Public Company Management Experience

Directors who have experience in management at public companies provide valuable experience on managing interests held among diverse stakeholders, including, among others, employees, patients and shareholders

                           

9/11

Corporate Governance/CSR Experience

Directors with Corporate Governance/CSR experience are skilled in the successful operation of board oversight, cognizant of the impact that governance policies have on a public company and/or familiar with oversight of matters related to emerging social and environmental issues

                          10/11

Finance, Accounting and Capital Markets Experience

Directors with a strong understanding of finance and accounting are essential for the Board to oversee our global financial reporting, internal controls, and capital structure, among other matters

                            9/11

Global Business Experience

Viatris has operations and facilities around the world and, as such, benefits from directors who have experience working for companies with multinational reach and who provide insight on unique opportunities, challenges, and requirements associated with working across international markets

                       

11/11

Healthcare Industry Experience

Directors with experience in the healthcare industry provide valuable perspectives to our Board and management team regarding a broad range of issues and opportunities facing the Company, including industry conditions, product R&D, supply chain, customers, sustainable access to medicine, product quality and patient safety, and marketing

                              8/11

Human Capital Management Experience

Attracting, developing and retaining talent globally are crucial to all aspects of the Company’s business, success, and strategy. We continue to build an inclusive and diverse culture that inspires leadership and accountability and encourages innovation. Directors with experience in succession planning, executive and/or director compensation, company culture and/or employee engagement (among other relevant areas) help to ensure that the Company’s culture reflects our mission and values

                                7/11

Information Security Experience

Experience in information security, data privacy, cybersecurity, or use of technology to facilitate business operations

                                  6/11

Legal and Regulatory Oversight Experience

We operate in an industry that is closely scrutinized and highly regulated. Directors who have experience navigating challenges associated with this environment provide valuable insight to our Board and management team

                                     

4/11

Risk Oversight/Compliance Experience

Pharmaceutical companies face a variety of complex opportunities, risks and compliance challenges. Directors who have experience monitoring and creating plans to address risk provide important insights that assist our Board and management in ensuring the long-term sustainability of our business

                            9/11

Strategy and M&A Experience

Viatris’ directors are responsible for developing the Company’s successful differentiated strategy, both organically and through strategic and opportunistic acquisitions

                       

11/11

 

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Board Diversity

 

Independence*   Committees Chaired by Women   Age Distribution*   Diversity of Directors*
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*

Information provided in each graphic refers to director nominees. Note that the percentage of independent directors of nominees is greater than the current Board.

The following board diversity matrix presents the annual disclosure of information on our current Directors’ voluntary self-identified characteristics in accordance with applicable NASDAQ listing standards. As detailed in the below matrix, the Company currently has one Director who self-identifies as African American or Black, one Director who self-identifies as Asian and two directors who self-identify as White and Asian and are also included in the Two or More Races or Ethnicities categories. Our board diversity matrix as of October 24, 2022 can be found in the proxy statement for the 2022 Annual Meeting filed with the Securities and Exchange Commission (“SEC”) on October 28, 2022.

 

Board Diversity Matrix (As of [], 2023)  

Total Number of Directors

     13  
Gender:    Female      Male      Non-Binary      Did not
Disclose
Gender
 

Directors

     4        9        0        0  

Number of Directors who identify in Any of the Categories Below:

 

African American or Black

     0        1        0        0  

Alaskan Native or Native American

     0        0        0        0  

Asian

     2        1        0        0  

Hispanic or Latinx

     0        0        0        0  

Native Hawaiian or Pacific Islander

     0        0        0        0  

White

     4        7        0        0  

Two or More Races or Ethnicities

     2        0        0        0  

LGBTQ+

     0  

Did Not Disclose Demographic Background

     0  

 

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Item 1

Election of Directors

While Viatris’ Board currently consists of 13 Directors, the Board has reduced the size of the Board to 11 Directors, effective after the 2023 Annual Meeting. The first item for consideration at the 2023 Annual Meeting is the election of 11 Director nominees. The Board has, upon the recommendation of our Governance and Nominating Committee, nominated W. Don Cornwell, JoEllen Lyons Dillon, Elisha W. Finney, Leo Groothuis, Melina Higgins, James M. Kilts, Harry A. Korman, Rajiv Malik, Richard A. Mark, Mark W. Parrish, and Scott A. Smith (the “Nominees”) for re-election at our 2023 Annual Meeting. If re-elected, each Nominee will serve as a Director until our 2024 annual meeting of shareholders and until their successor is duly elected and qualified, or until their earlier death, resignation, removal or retirement.

The Board and the Governance and Nominating Committee have carefully evaluated the experience, structure, culture, diversity, operation, interactions, collaboration, and performance of the full Board; the talents, expertise, and contributions of individual Directors, including the Nominees; the Board’s leadership; the integration and evolution of the Company; the Board’s critical role in governance, risk oversight, and continuing to develop and lead the strategic direction of the Company; the Board’s ability to respond to the continued change and disruption in the healthcare industry; anticipated future opportunities and challenges facing the Company; and the Board’s ongoing commitment to ensuring shareholder value creation and long-term sustainability to the benefit of shareholders and other stakeholders. Based on these considerations, among others, Viatris’ Board recommends a vote “FOR” the election of each of the Nominees.

The Board’s general criteria for nomination to the Board are set forth in “How Our Directors Are Selected and Evaluated” beginning on page [].

Information about each Nominee’s specific experience, qualifications, attributes or skills that led the Board to conclude that he or she should be re-elected as a Director is set forth below on pages [] to []. Each Nominee is currently on Viatris’ Board and each has consented to act as a Director if elected at the 2023 Annual Meeting. Proxies cannot be voted for a greater number of persons than the number of nominees named in this Proxy Statement.

 

 

 

   Board Recommendation  

 

   
   
 

Viatris’ Board recommends a vote “FOR” the election of each Nominee.

 

 

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Directors Nominated for Election at the 2023 Annual Meeting

 

 

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Director since 2020

 

Age: 75*

 

Board Committees:

•  Audit

•  Risk Oversight

 

Independent Director

 

W. Don Cornwell

 

•  Vice Chair (2009), Founder, Chairman and Chief Executive Officer (1988 - 2009), Granite Broadcasting Corporation

•  Chief Operating Officer (“COO”), Corporate Finance Department (1980 - 1988), Vice President, Investment Banking (1976 - 1988); joined the company in 1971, Goldman, Sachs & Co.

 

Key Skills and Experience:

•  CEO and Public Company Management, Corporate Governance, Global Business, Finance, Accounting and Capital Markets, and Strategy and M&A Experience developed during his various executive roles, more specifically during his years at Goldman Sachs, where he engaged in public and private financing and advised on merger and acquisition transactions for publicly traded and privately owned companies, and further advanced through his founding and leadership of Granite Broadcasting

•  Human Capital Management and Information Security Experience gained while serving as the COO of the Corporate Finance Department of the Investment Banking Division of Goldman Sachs where he was responsible for the management of the department including building the operational infrastructure—information technology, document production, training and recruiting—while the department of over 150 investment banking professionals was experiencing significant staffing growth in response to a dramatic increase in the volume of transactions they were handling

•  Mr. Cornwell also brings Healthcare Industry and Legal and Regulatory Oversight Experience to the Board

 

Other Current Public Company Boards:

•  American International Group, Inc. (NYSE: AIG) (since 2011), Director and member of the Audit and Nominating and Corporate Governance Committees

 

Former Public Company Boards:

•  Natura & Co Holding S.A. (NYSE: NTCO) (2020 - 2023), Director and most recently member of the Corporate Governance Committee

•  Avon Products, Inc. (2002 - 2020 when acquired by Natura), Director

•  Pfizer Inc. (NYSE: PFE) (1997 - the closing of the Combination in 2020), Director and most recently Chair of the Regulatory and Compliance Committee and member of the Governance and Sustainability Committee

 

Other Organizations:

•  Board of Trustees, Big Brothers Big Sisters of New York City

•  Vice Chairman of the Board of Directors, Blue Meridian Partners, a partnership of philanthropists that invests in strategies to impact social problems confronting young people and families in poverty

        

*   The Board, on the recommendation of the Governance and Nominating Committee, has, in accordance with its Corporate Governance Principles, approved a waiver to the mandatory retirement age for Directors for Mr. Cornwell and determined that such waiver was in the best interests of the Company because of his continued extensive contributions to the Board and his knowledge and familiarity with the legacy Upjohn Business.

 

 

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Director since 2020

 

Age: 60

 

Board Committees:

• Audit

• Compliance

• Executive

• Governance and Nominating (Chair)

 

Independent Director

 

 

JoEllen Lyons Dillon

 

•  Executive Vice President, Strategic Developments and Capital Markets (2014-2017); Chief Legal Officer and Corporate Secretary, The ExOne Company (2013-2017). ExOne merged with Desktop Metal (NYSE: DM) in November 2021. ExOne was a global provider of three-dimensional (3D) printing machines and printed products, materials and other services to industrial customers creating products in metal on a worldwide basis.

•  Partner (2002 - 2011), Reed Smith LLP, a law firm

•  Partner (1997 - 2002), Buchanan Ingersoll & Rooney PC, a law firm (joined the firm in 1988)

 

Key Skills and Experience:

•  Public Company Management, Corporate Governance, Finance, Accounting and Capital Markets, Global Business, Human Capital Management, Information Security, Legal and Regulatory Oversight, Risk Oversight/Compliance, and Strategy and M&A Experience gained during her almost 25-year legal career in corporate mergers and acquisitions and securities, where she represented both public and private companies in a variety of complex matters, and further developed while at ExOne, where she was responsible for capital markets development, corporate strategic planning, human resources including oversight of DEI, global compliance, investor relations, and international business development within Europe and Asia, through which she became a thought leader in the areas of corporate governance, legal and regulatory oversight, capital markets and M&A and is regularly invited to speak at major conferences, including, among others, the 2023 Stanford Directors’ College, on such topics

•  Completing a certification “Board Governance: Navigating Emerging Technologies and Future Frontiers” at Cornell University

 

Former Public Company Boards:

•  World Wrestling Entertainment, Inc. (NYSE: WWE) (2022 - 2023), Director

•  Mylan (2014 - the closing of the Combination in 2020), Director, most recently Chair of the Compensation and Governance and Nominating Committees and member of the Audit, Compliance and Executive Committees

 

 

 

 

 

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Director since 2022

 

Age: 62

 

Board Committees:

• Audit*

• Finance

 

Independent Director

 

 

Elisha W. Finney

 

•  Executive Vice President (2012 - 2017), Chief Financial Officer (April 1999 - May 2017), Senior Vice President (2005 - 2012), Vice President of Finance (1999 - 2005), joined the company in 1988, Varian Medical Systems, Inc.

 

Key Skills and Experience:

•  Public Company Management, Corporate Governance, Healthcare Industry, Human Capital Management, Finance, Accounting and Capital Markets, Information Security, and Risk Oversight/Compliance Experience gained during her time at Varian Medical Systems, where she oversaw corporate accounting, corporate communications and investor relations, internal audit, risk management, tax and treasury, and corporate information systems and helped the company grow to be a world-leading manufacturer of medical devices and software for treating cancer and other medical conditions

•  Ms. Finney also brings Global Business and Strategy and M&A Experience to the Board

 

Other Current Public Company Boards:

•  Mettler-Toledo International Inc. (NYSE: MTD) (since 2017), Director and Chair of the Audit Committee

•  NanoString Technologies, Inc. (NASDAQ: NSTG) (since 2017), Director and Chair of the Audit Committee

•  ICU Medical, Inc. (NASDAQ: ICUI) (since 2016), Director, Chair of the Nominating and Governance Committee, and member of the Audit Committee

 

Former Public Company Boards:

•  iRobot Corporation (NASDAQ: IRBT) (2017 - 2021), Director and member of the Audit and Compensation and Talent Committees

•  Cutera, Inc. (NASDAQ: CUTR) (2017 - 2019), Director, Chair of the Audit Committee, and member of the Enterprise Risk Committee

•  Altera Corporation (2011 - 2015 when acquired by Intel Corporation), Director and Chair of the Audit Committee

•  Thoratec Corporation (2007 - 2013), Director and Chair of the Audit Committee

        

*   The Board has, in accordance with its Corporate Governance Principles, approved Ms. Finney’s concurrent service on the Audit Committee and the audit committees of more than two other public companies and determined that such service does not impair her ability to effectively serve on the Audit Committee

 

 

 

 

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Director since 2023

 

Age: 51

 

Board Committees:

N/A

 

Independent Director

  

Leo Groothuis

 

•  General Counsel (2022 - present), HAL Investments, the Dutch investment subsidiary of HAL Holding N.V., a public international investment company listed on the Amsterdam stock exchange, which is focused on increasing shareholder value

•  Partner (2006 - 2022), NautaDutilh, a law firm (joined the firm in October 1996)

 

Key Skills and Experience:

•  Corporate Governance, Global Business, Legal and Regulatory Oversight, Risk Oversight/Compliance, and Strategy and M&A Experience acquired during his legal career at NautaDutilh, where he had been a trusted C-suite and board advisor to some of the largest companies in both Europe and the U.S., which resulted in him being recognized as a top lawyer and thought leader in corporate governance, capital markets and M&A for the guidance he had provided to numerous multi-national private and public companies on significant complex strategic transactions

•  CSR Experience obtained through his active involvement in the development and execution of HAL Investments’ ESG strategy

 

Other Organizations:

•  Director, Stichting Continuiteit IHC and B.V. Finance Continuiteit IHC, Dutch foundations that together are the sole shareholders of Royal IHC, a private international shipbuilding company

 

 

 

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Director since 2020

 

Age: 56

 

Board Committees:

•  Compensation (Chair)

•  Executive

•  Finance (Chair)

•  Governance and Nominating

 

Independent Director

  

Melina Higgins

 

•  Held senior roles of increasing responsibility including Partner (2002 - 2010) and Managing Director (2001 - 2010) and served as a member of the Investment Committee of the Principal Investment Area, Head of the Americas for Private Debt and co-Chairperson of the Investment Advisory Committee for GS Mezzanine Partners funds, The Goldman Sachs Group, Inc. (NYSE: GS)

 

Key Skills and Experience:

•  Corporate Governance, Finance, Accounting and Capital Markets, Global Business, Risk Oversight/Compliance, and Strategy and M&A Experience obtained during her nearly 20 years at Goldman Sachs, where she built and led a successful investment business and became well-versed in portfolio management, assessing market risks and building businesses, especially during her time as a member of Goldman’s Investment Committee of the Principal Investment Area, one of the largest alternative asset managers in the world, where she oversaw and approved global private equity and private debt investments

 

Other Current Public Company Boards:

•  Genworth Financial Inc. (NYSE: GNW) (since 2013), non-executive Chair (since 2021) and member of the Audit and Management Development & Compensation Committees

 

Current Private Company Boards:

•  Director and non-executive chair of the Board (since 2016), Antares Midco Inc., a private company that provides financing solutions for middle market, private equity-backed transactions

 

Former Public Company Boards:

•  Mylan (2013 - the closing of the Combination in 2020), Director, most recently Chair of the Finance Committee, and member of the Audit, Compensation, and Executive Committees

•  NextGen Acquisition Corp. II (2021) (a special purpose acquisition company), Director, Chair of the Nominating and Corporate Governance Committee and member of the Audit and Compensation Committees

 

Other Organizations:

•  Member, Women’s Leadership Board of Harvard University’s John F. Kennedy School of Government

 

 

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Director since 2020

 

Age: 75*

 

Board Committees:

•  Compensation

•  Finance

 

Independent Director

 

James M. Kilts

 

•  Founding Partner (since 2006), Centerview Capital, a private equity firm

•  Special Advisor to the Board (since 2023), Co-Chief Executive Officer (2021 - 2023), Conyers Park III Acquisition Corp., (NASDAQ: CPAAU, CPAA, CPAAW) a special purpose acquisition company

•  Chairman and Chief Executive Officer (2001 - 2005 when it merged with The Procter & Gamble Company), President (2003 - 2005), The Gillette Company

•  President and Chief Executive Officer (1998 - 2000 when it was acquired by The Philip Morris Companies), Nabisco Group Holdings Corporation

 

Key Skills and Experience:

•  CEO and Public Company Management, Corporate Governance, Finance, Accounting and Capital Markets, Global Business, and Strategy and M&A Experience, acquired during his more than 40 years leading a range of multi-national companies and iconic brands, where he is credited with building domestic and international strategies to increase sales and successfully overseeing organizations through significant M&A activity resulting in him being sought out for his business expertise and advice, including in his current role as special advisor to the Board of Conyers Park III Acquisition Corp., where he is responsible for identifying and evaluating businesses for a potential business combination

•  Mr. Kilts also brings Healthcare Industry and Human Capital Management Experience to the Board

 

Other Current Public Company Boards:

•  Advantage Solutions Inc. (NASDAQ: ADV) (since 2020 when it combined with Conyers Park II Acquisition Corp.), non-executive Chairman and previously Lead Director

•  The Simply Good Foods Company (NASDAQ: SMPL) (since 2017), Chairman and member of the Nominating and Corporate Governance Committee

 

Former Public Company Boards:

•  Unifi Inc. (NYSE: UFI) (2016 - 2022), Director and most recently member of the Compensation Committee

•  Pfizer Inc. (NYSE: PFE) (2007 - the closing of the Combination in 2020), Director and most recently member of Compensation Committee

•  Conyers Park II Acquisition Corp. (2019 to 2020 when it combined with Advantage Solutions Inc.), Executive Chairman

•  MetLife, Inc. (NYSE: MET) (2005 - 2020), Director, most recently Chair of the Compensation Committee and member of the Governance and Corporate Responsibility Committee

•  The Procter & Gamble Company (NYSE: PG) (2005 - 2006), Director

•  Conyers Park Acquisition Corporation (2016 - 2017 when it merged with The Simply Good Foods Company), Chairman

•  Nielsen Holdings plc, (NYSE: NLSN) non-executive Director (2006 - 2017) and Chairman (2011 - 2013)

•  Nielsen Company B.V. (2009 - 2014), Chairman

•  MeadWestvaco Corporation (2006 - 2014), Director

        

*   The Board, on the recommendation of the Governance and Nominating Committee, has, in accordance with its Corporate Governance Principles, approved a waiver to the mandatory retirement age for Directors for Mr. Kilts and determined that such waiver was in the best interests of the Company because of his continued extensive contributions to the Board and his knowledge and familiarity with the legacy Upjohn Business.

 

 

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Director since 2020

 

Age: 66

 

Board Committees:

•  Compensation

•  Compliance

•  Governance and Nominating

•  Risk Oversight (Chair)

 

Independent Director

  

Harry A. Korman

 

•  Held senior executive roles of increasing responsibility, including Global Chief Operating Officer (2012 - 2014, after which he served as a consultant (2014 - 2015)), President, North America (2007 - 2012), President, Mylan Pharmaceuticals Inc. (2005 - 2009); joined in 1996 after the company’s acquisition of UDL Laboratories, Inc. (n/k/a Mylan Institutional Inc.), Mylan Inc.

 

Key Skills and Experience:

•  Public Company Management, Corporate Governance/CSR, Healthcare Industry, Risk Oversight/Compliance, Strategy and M&A, and Global Business Experience gained during his almost 20 years serving in leadership roles at Mylan, where he helped grow their generics business and ultimately had responsibility for all operations as Global Chief Operating Officer

•  Mr. Korman also brings Information Security Experience to the Board

 

Former Public Company Boards:

•  Mylan (2018 - the closing of the Combination in 2020), Director, most recently Chair of the Risk Oversight Committee and member of the Compliance, Governance and Nominating, and Science and Technology Committees

 

Other Organizations:

•  Past Director and Vice Chairman, Generic Pharmaceutical Association, now known as the Association for Accessible Medicines

•  Previous Director and Vice Chairman, HDMA Foundation, which serves the healthcare industry by providing research and education focused on healthcare supply issues

 

 

 

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Director since 2020

 

Age: 62

 

Board Committees:

N/A

 

Director and President*

  

 

Rajiv Malik

 

•  President (since the closing of the Combination in 2020), Viatris

•  President (2012 - the closing of the Combination in 2020), Executive Vice President and Chief Operating Officer (2009 - 2012), Head of Global Technical Operations (2007 - 2009); joined the company in 2007, Mylan

•  Chief Executive Officer (2005 - 2008), Matrix Laboratories Limited (now Mylan Laboratories Limited)

•  Head of Global Development and Registrations (2003 - 2005), Sandoz GmbH

•  Head of Global Regulatory Affairs and Head of Pharma Research (1999 - 2003), Ranbaxy

 

Key Skills and Experience:

•  Public Company Management, Finance, Accounting and Capital Markets, Healthcare Industry, Legal and Regulatory Oversight, Risk Oversight/Compliance, Strategy and M&A, and Global Business Experience acquired over his extensive career in the healthcare industry, including at Mylan where he was integral in helping to develop the strategies for the company’s acquisitions for over 10 years, as well as the execution and integration of those acquisitions, and was responsible for leading global commercial, scientific, operational, information technology and business development activities in more than 165 countries and territories, a portfolio of more than 7,500 products, a pipeline of approximately 1,200 products, and more than 40 manufacturing facilities around the world and further enhanced in his current role, where he is responsible for the day-to-day operations of the Company, overseeing the Company’s commercial business units, the Commercial Development, Medical, Information Technology and Quality functions, as well as R&D and Operations and where he has played a leading role in integrating the two legacy companies while stabilizing the business

•  Mr. Malik also brings Human Capital Management Experience, including oversight of DEI, to the Board

 

Current Private Company Boards:

•  Non-executive non-independent and Viatris nominee director (since 2022), Biocon Biologics Limited

 

Former Public Company Boards:

•  Mylan (2012 - the closing of the Combination in 2020), Director

        

*   Details regarding Mr. Malik’s retirement as President can be found on page [].

 

 

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LOGO

 

Director since 2020

 

Age: 70

 

Board Committees:

•  Audit (Chair)

•  Executive

•  Finance

•  Risk Oversight

 

Independent Director

  

Richard A. Mark, C.P.A.

 

•  Partner (2002 - 2015), Deloitte & Touche LLP

•  Audit Partner (1988 - 2002), Audit Manager (1981 - 1988), Senior Auditor (1977 - 1981), Arthur Andersen & Co.

 

Key Skills and Experience:

•  Public Company Management, Corporate Governance, Finance, Accounting and Capital Markets, Risk Oversight/Compliance, Strategy and M&A, and Global Business Experience gained over his extensive career auditing financial statements of public and private companies, consulting on financial issues with companies, and performing transaction diligence on behalf of financial and strategic buyers

•  Mr. Mark also brings Healthcare Industry and Information Security Experience to the Board

 

Other Current Public Company Boards:

•  Goldman Sachs BDC, Inc. (“GSBDC”) (NYSE: GSBD) (since 2020), Director, Chair of the Audit Committee and member of the Compliance, Governance and Nominating, and Contract Review Committees

 

Current Private Company Boards:

•  Goldman Sachs Private Credit Corp. (since 2022) and Goldman Sachs Middle Market Lending Corp. II (since 2020), Director, Chair of the Audit Committee and member of the Compliance, Governance and Nominating, and Contract Review Committees

 

Former Public Company Boards:

•  Mylan (2019 - the closing of the Combination in 2020), Director and most recently member of the Audit and Finance Committees

•  Katy Industries, Inc. (2015 - 2016), Chairman and member of the Audit Committee

 

Former Private Company Boards:

•  Goldman Sachs Middle Market Lending Corp. (2016 - 2020 when it merged with GSBDC), Director, most recently Chair of the Audit Committee and member of Compliance, Governance and Nominating, and Contract Review Committees

•  Northwestern Memorial Healthcare (2014 - 2015), Director and member of the Executive and Nominating and Governance Committees

•  Cadence Health (1993 - 2014 when acquired by Northwestern), Director

 

Other Organizations:

•  Director and Chair of the Finance Committee, Home Centered Care Institute, a not-for-profit corporation, which promotes access to home-based primary care for medically complex patients who are either homebound or home-limited

•  Former Director, Almost Home Kids, a not-for-profit corporation affiliated with Lurie Children’s Hospital of Chicago, a provider of transitional care to children with complicated health needs, training for their families, and respite care

 

 

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Director since 2020

 

Age: 68

 

Board Committees:

•  Audit

•  Compliance (Chair)

•  Executive

•  Governance and Nominating

 

Lead Independent Director and Vice Chairman

  

Mark W. Parrish

 

•  Executive Chairman (2018 - 2019), Chief Executive Officer (2008 - 2018), Executive Chairman (2008 - 2013), TridentUSA Health Services, a provider of mobile X-ray and laboratory services to the long-term care industry. In February 2019, TridentUSA filed for protection under Chapter 11 of the U.S. Bankruptcy Code and emerged from bankruptcy in September 2019

•  Held management roles of increasing responsibility (1993 - 2007) including Chief Executive Officer, Healthcare Supply Chain Services (2006 - 2007), Cardinal Health Inc. and its affiliates

 

Key Skills and Experience:

•  Public Company Management, Corporate Governance, Healthcare Industry, Finance, Accounting and Capital Markets, Risk Oversight/Compliance, and Strategy and M&A Experience obtained over his many years in leadership positions in the healthcare industry, where he gained extensive expertise in managing governmental oversight, as well as experience in business restructuring and mergers and acquisitions

•  Mr. Parrish also brings Human Capital Management, Global Business, and Information Security Experience to the Board

 

Other Current Public Company Boards:

•  Omnicell, Inc. (NASDAQ: OMCL) (since 2013), Director, Chair of the Audit Committee and member of the Compensation Committee

 

Current Private Company Boards:

•  Safecor Health, LLC (since 2022), a private limited liability company that provides unit dose drug packaging services to hospitals and long-term care facilities, Director

 

Former Public Company Boards:

•  Mylan (2009 - the closing of the Combination in 2020), most recently Lead Independent Director and Vice Chairman, Chair of the Compliance Committee and member of the Audit, Executive, Governance and Nominating, and Risk Oversight Committees

 

Former Private Company Boards:

•  Comprehensive Pharmacy Services (2019 - 2023), a private company that specializes in the outsourcing of hospital pharmacies, Director

•  Golden State Medical Supply (2014 - 2019 when it was acquired by Court Square), a private company that specializes in meeting unique labeling and sizing needs and pharmaceutical packaging, serialization and distribution, Director

•  Silvergate Pharmaceuticals (2013 - 2019), a private company that develops and commercializes pediatric medications, Director

 

Other Organizations:

•  President, International Federation of Pharmaceutical Wholesalers, an association of pharmaceutical wholesalers and pharmaceutical supply chain service companies

•  Senior Adviser, Frazier Healthcare Ventures, a healthcare-oriented growth equity firm

 

 

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Director since 2022

 

Age: 61

 

Board Committees:

N/A

 

Chief Executive Officer and Director

 

Scott A. Smith

 

•  Chief Executive Officer (since April 2023), Viatris

•  President (2018 - 2023), BioAtla, Inc. (NASDAQ: BCAB) (“BioAtla”), a global biotechnology company focused on the development of Conditionally Active Biologics antibody therapeutics

•  Served as an executive (2008 - 2018), rising up the ranks from SVP and Global Head of Immunology to President of Inflammation and Immunology and then, beginning in 2017, President and Chief Operating Officer, Celgene Corporation, a global biopharmaceutical company

 

Key Skills and Experience:

•  Public Company Management, Corporate Governance, Global Business, Healthcare Industry, Risk Oversight/Compliance, and Strategy and M&A Experience acquired during his more than 35 years in the healthcare industry, which has resulted in him possessing vast global commercial and pharmaceutical expertise and a proven ability to build, grow and manage large complex organizations utilizing his substantial experience in developing and executing regulatory, clinical, and business development strategies as displayed by time at BioAtla, where he built a clinical development structure that moved multiple assets from investigational new drug applications into late stage clinical development, drove the company’s long-term strategic operational plan and led all business development activities and, prior to that, his time at Celgene where he led the company’s oncology, inflammation and immunology franchise, commercial operations and clinical development

•  Mr. Smith also brings Finance, Accounting and Capital Markets and Human Capital Management Experience to the Board

 

Other Current Public Company Boards:

•  BioAtla (since 2020), Director

 

Former Public Company Boards*:

•  Apexigen, Inc. (2019 - 2023 when it was acquired by Pyxis Oncology, Inc.), Director and most recently member of the Compensation and Corporate Governance and Nominating Committees

•  Titan Pharmaceuticals, Inc. (NASDAQ: TTNP) (2017 - 2020), Director and Chair of the Compensation and Nominating and Governance Committees,

 

Former Private Company Boards:

•  Triumvira Immunologics, Inc. (2018 - 2023), Director and Chairman

•  Refuge Biotechnologies, Inc. (2018 - 2022), Director,

•  F-star Therapeutics, Inc. (2018 - 2020), Chairman and member of the Audit and Nominating and Corporate Governance Committees

        

*   The Board had, in accordance with its Corporate Governance Principles, previously approved Mr. Smith’s concurrent service as an executive officer of a public company and on more than one other public company board of directors and determined that it did not impair his ability to effectively serve on the Board

 

 

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Director Independence

Viatris’ Board has determined that Mr. Cornwell, Ms. Dillon, Ms. Finney, Mr. Groothuis, Ms. Higgins, Mr. Kilts, Mr. Korman, Mr. Mark, Mr. Parrish, and Ms. van der Meer Mohr are independent Directors under the applicable NASDAQ listing rules. In making these determinations, the Board considered, with respect to Mr. Cornwell’s independence, that Mr. Cornwell’s son was a partner of PJT Partners (“PJT”) until January 2023 when he became a member of its board of directors. PJT served as a financial advisor to Mylan in connection with the Combination and the Biocon Biologics Transaction. Mr. Cornwell’s son was not involved in PJT’s work related to either the Combination or the Biocon Biologics Transaction. With respect to Mr. Groothuis, the Board considered his prior service to Mylan and the Company at NautaDutilh, an international law firm, where he was a partner until May 2022. With respect to Mr. Korman’s independence, the Board considered (a) Mr. Korman’s past employment by Mylan Inc. from 1996 through July 2014 and his prior consulting services for Mylan Inc. from July 2014 to July 1, 2015 and (b) that Mr. Korman’s son had a paid internship with a Mylan subsidiary during the summer of 2019. With respect to Mr. Mark, the Board considered his prior service as a partner at Deloitte & Touche LLP, Viatris’ independent registered public accounting firm. The Board determined that any such past arrangements, transactions or relationships would not interfere with the exercise of independent judgment by Messrs. Cornwell, Groothuis, Korman or Mark in carrying out his respective responsibilities as a Director of Viatris.

Messrs. Coury, Malik, and Smith are not independent Directors under applicable NASDAQ listing rules.

Viatris’ Board had previously determined that Neil Dimick, who served on the Board until December 28, 2022, was independent under the applicable NASDAQ listing rules. Michael Goettler, who served on the Board until April 1, 2023, and Ian Read, who served on the Board until December 28, 2022, were not independent Directors under applicable NASDAQ listing rules.

 

 

How Our Board Governs and Is Governed

Viatris’ Board Structure

As set forth in our Amended and Restated Bylaws (the “Bylaws”), the Company has a majority vote standard for director elections in the event of an uncontested election and a plurality standard in the event of a contested election. The Bylaws also provide that if a nominee for Director who is an incumbent is not elected and no successor has been elected at such meeting, the Director shall promptly tender their irrevocable resignation to the Board, such resignation to be effective upon acceptance by the Board.

Commencing with the 2023 Annual Meeting and at all subsequent annual meetings of shareholders, the Board will be declassified and all Directors will be submitted for election at each annual meeting of shareholders. The parties to the Combination determined prior to closing that the Board would include, among others, certain persons designated by Pfizer (including W. Don Cornwell and James M. Kilts) and certain persons designated by Mylan (including JoEllen Lyons Dillon, Melina Higgins, Harry A. Korman, Rajiv Malik, Richard A. Mark and Mark W. Parrish.

The members of the Board collectively have expertise in developing and overseeing strategies in the context of a complex and rapidly changing environment, as well as a deep understanding of the management team and culture of the Company, our global platforms, the healthcare systems in which we operate, and the opportunities and challenges facing the Company around the world. Our Board members have key skills and experiences, including with respect to CEO and public company management experience; the optimization of shareholder value creation; corporate governance/CSR; finance, accounting and capital markets; global business experience; healthcare industry; human capital management, including but not limited to oversight of DEI; information security; legal and regulatory oversight; risk oversight/compliance; and strategy and M&A, among many other areas. We are confident that the collective experience and expertise of our Directors enables the Board to effectively guide and oversee the management team (“see Viatris’ Board of Directors — Board Overview”) and the strategy of the Company.

The Board has selected a leadership and management structure that it believes is best suited to meet the needs of the Company and our shareholders. The flexibility to make these decisions serves the interests of the Company and its shareholders, as the Board is best positioned to evaluate the optimal leadership structure for the Company based upon the

 

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respective talents of the individual Directors and the Company’s leadership team, strategic objectives, and challenges and opportunities over time.

Our Current Board Structure

The Board believes that its current leadership structure – which separates the CEO and Executive Chairman positions — has best served the interests of the Company and its shareholders, particularly during the initial strategic phase following formation of the Company, enabling our Executive Chairman to lead the Board and oversee the strategic direction of the Company in collaboration with executive management, and our CEO to run the Company on a day-to-day basis, leading the overall management of the Company and executing on the Company’s strategy.

The Board believes that this structure and the clear delineation of responsibilities has been particularly critical given our focus on execution and results for the new organization and management team, our reshaping initiatives and our two-phased strategic plan. The Board strongly believes that this disciplined structure, as described below, has played a vital role in the substantial progress on our Phase 1 objectives, as outlined in “Executing on our Mission and Strategic Plan” on page []. The Board also believes that the results attained with our current structure have positioned us for success in the future and allow us to transition to a more conventional structure.

Our Executive Chairman’s unique strategic vision, leadership abilities, and expertise were essential as he led and oversaw the development and successful implementation of a comprehensive strategy to simplify our complex global business and positioned us for future success. In addition, the Executive Chairman advises on important ongoing business matters and leads Company strategy on highly complex matters and other strategic initiatives, including significant M&A activity, management and development of senior executives, and engagement with shareholders and other key stakeholders. The Board firmly believes that the Executive Chairman has exceeded all of the Board’s expectations regarding these and other matters.

Our CEO is tasked with leading the daily management and performance of the business, which include, among other responsibilities, building and enhancing the Company’s commercial excellence and executing on its strategy to increase access to quality medicines and services through the Global Healthcare Gateway®. In February 2023, we announced that Scott A. Smith would serve as CEO of Viatris and take responsibility for the day-to-day management of the Company, effective April 1, 2023. The Board believes that Mr. Smith is well suited to lead the Company’s previously announced Phase 2 strategy and execution and brings experience that positions him to manage the global nature and complexity of a business that we believe is on a path to growth.

As noted, our current Board leadership structure was designed to meet the unique business needs of the Company and to build on the strengths of our Board. Because the Chairman of the Board currently is not an independent Director, the Corporate Governance Principles require the independent Directors to elect a Lead Independent Director who also serves as Vice Chairman and provides leadership for independent oversight of management and the Company. The Lead Independent Director is vested with significant responsibilities, as set forth below. Mr. Parrish is the Lead Independent Director and Vice Chairman of the Board, with key areas of experience (including, among others, public company management, corporate governance, healthcare industry, finance, accounting and capital markets, human capital management, global business, information security, risk oversight/compliance, and strategy and M&A experience) that help enhance the Board’s oversight of the management team and the Company.

 

The responsibilities of the Lead Independent Director are robust and include:

 

•  presiding over executive sessions of the independent Directors,

 

•  calling meetings of the independent Directors,

 

•  consulting with the Executive Chairman regarding Board meeting schedules, agendas, and information sent to the Board and separately approving those items, and

 

•  serving as a liaison between the Executive Chairman and independent Directors.

 

The Lead Independent Director, as Vice Chairman, also presides at all meetings of the Board at which the Executive Chairman is not present and serves on the Executive Committee. The Executive Chairman and the Lead Independent Director serve as point persons for shareholders wishing to communicate to the Board.

 

 

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The Board and independent Directors have elected, upon the recommendation of the Governance and Nominating Committee, the Executive Chairman and Lead Independent Director, respectively.

Our Structure following the 2023 Annual Meeting

In light of the Executive Chairman’s leadership and oversight in developing our comprehensive strategies for growth while streamlining the Company, the substantial success and progress on and overall performance with respect to the Company’s Phase 1 objectives, and in preparation for the Company’s move into Phase 2 of our strategic plan, the independent members of the Board believed it was an appropriate time to consider a transition to a more conventional Board leadership structure, which we had previously informed shareholders we would do at the appropriate time for the Company. The Board approached Mr. Coury, and Mr. Coury agreed, to transition to a new role as Chairman Emeritus and Senior Strategic Advisor from the conclusion of the 2023 Annual Meeting through the end of 2025 (the same period that Mr. Coury previously committed to the Company under his Executive Employment Agreement when Viatris was created). As a result, Mr. Coury will not stand for re-election at the 2023 Annual Meeting and will cease to be a director and to serve as an officer and employee of the Company effective as of the conclusion of the 2023 Annual Meeting. The Board believes that this transition plan will enable the Board and management to continue to benefit from Mr. Coury’s extraordinary strategic vision and knowledge of the Company, management, the industry, and the complex global markets the Company operates in as it adopts this new Board leadership structure following the 2023 Annual Meeting.

The Board also committed to selecting a new independent Chair of the Board whose tenure will begin following the 2023 Annual Meeting. As set forth in the Corporate Governance Principles, if the Chair of the Board is an independent Director, then the Chair’s duties shall also include the duties of the Lead Independent Director (to the extent not already part of the Chair’s duties). The Chair of the Board also serves on the Executive Committee and as that committee’s chair.

The Board believes that this new structure will continue to provide a clear delineation of responsibilities for each position and foster greater accountability of management, which remain critical given our enduring focus on execution and results, our reshaping initiatives and our two-phased strategic vision, and will allow the CEO to continue to focus on running the Company on a day-to-day basis while allowing the Chair of the Board to lead the Board in providing advice to, and independent oversight, of management. As set forth above, the independent Chair will also have significant authority for all Board matters and will serve on the Executive Committee.

The Board has also adopted the corporate governance policies and practices set forth below that promote a strong and effective Board that provides independent oversight.

Among the factors that demonstrate the Board’s commitment to good governance practices and enable it to provide highly effective oversight and direction are:

 

 

•  9 out of 11 Director nominees are independent, which is a higher percentage of independent directors than our current Board;

 

•  The appointment of an independent Chair of the Board effective following the 2023 Annual Meeting (and, prior to that, a Lead Independent Director who provided and promoted effective, independent Board oversight when the Chair of the Board was not an independent Director);

 

•  The Audit, Compensation, Compliance, Finance, Governance and Nominating, and Risk Oversight Committees are composed entirely of independent Directors (as defined in the applicable NASDAQ listing rules and applicable SEC rules), and Board approval of any appointment of members to the Audit, Compensation, Compliance, Governance and Nominating, and Risk Oversight Committees must include an affirmative vote by at least a majority of the independent Directors;

 

•  The Board operates pursuant to Corporate Governance Principles, which are reviewed by the Governance and Nominating Committee at least annually;

 

•  All Board committees operate pursuant to written charters and conduct annual self-assessments;

 

 

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•  The Risk Oversight Committee assists the Board in its oversight of management’s efforts with respect to the Company’s enterprise risk framework, infrastructure and controls, and corporate environmental and social responsibility matters. The Committee receives reports, including with respect to related risks, risk management, and relevant legislative, regulatory, and technical developments, from senior management on data security, cybersecurity, information security-related matters, corporate environmental and social responsibility matters, certain litigation-related topics and other topics on at least a quarterly basis. The Board and its other committees also have important roles in the oversight of risk as described in more detail in “Risk Oversight” beginning on page [];

 

•  The independent Directors on the Board and its committees receive extensive information and input from multiple layers of management and external advisors, engage in detailed discussion and analysis regarding matters brought before them (including in executive session), and actively engage in the development and approval of significant corporate strategies;

 

•  The Board and its committees have full access to officers and employees of the Company; and

 

•  The Board and its committees have the authority to select, retain, and supervise advisors as necessary to fulfill their mandates.

 

Meetings of Viatris’ Board

Viatris’ Board met nine times in 2022. In addition to meetings of the Board, Directors attended meetings of individual Board committees of which they were members, and each Director standing for re-election attended greater than 75% of the aggregate of Board meetings and meetings of the committees of which they were a member in 2022. From January 1, 2023 to [], 2023, the Board met six times: all Directors standing for re-election attended more than 75% of the aggregate of Board meetings and meetings of the committees of which they were a member in 2023 through such date.

Viatris’ Corporate Governance Principles require the independent Directors of the Board to meet in separate executive sessions periodically, and at least twice annually, during regularly scheduled meetings of the Board, without any non-independent Directors or members of management present. The independent Directors of the Board met eight times in executive session in 2022 and four times between January 1, 2023 and [], 2023, with Mr. Parrish presiding at those executive sessions

Pursuant to Viatris’ Corporate Governance Principles, Directors are expected to attend the annual meeting of shareholders of the Company, where practicable. Ten Directors at the time of the 2022 Annual Meeting attended such meeting in person.

Meetings of Viatris’ Board Committees

The committees of the Board include the Audit Committee, the Compensation Committee, the Compliance Committee, the Executive Committee, the Finance Committee, the Governance and Nominating Committee, and the Risk Oversight Committee. Each committee operates pursuant to a written charter, a current copy of which, along with our Amended and Restated Certificate of Incorporation, Bylaws, and Corporate Governance Principles, is available on Viatris’ website at https://www.viatris.com/en/About-Us/Corporate-Governance.

All members of the Audit, Compensation, Compliance, Finance, Governance and Nominating, and Risk Oversight Committees, are independent Directors, as defined in the applicable NASDAQ listing rules and applicable SEC rules. Board approval of any Director appointment to the Audit, Compensation, Compliance, Governance and Nominating, and Risk Oversight Committees must include at least a majority of the independent Directors. The Board has determined that Mr. Mark, the Chair of the Audit Committee, is an “audit committee financial expert”, as that term is defined in the rules of the SEC.

Information regarding each of the committees is provided on the following pages, and pages [] to [] provide additional discussion of committee responsibilities with respect to risk oversight.

 

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The table below provides the current membership (as of the date of this Proxy Statement) and meeting information for 2022 and 2023 (through [], 2023) for each Board committee held during each such period. In 2022, the committees (including the Science and Technology Committee, which was dissolved in February 2023) collectively held 32 meetings and in 2023, the committees (including the Science and Technology Committee, which was dissolved in February 2023) collectively held 38 meetings through [], 2023.

 

Director

  Audit   Compensation   Compliance   Executive   Finance  

Governance

and

Nominating

 

Risk

Oversight

W. Don Cornwell

             

Robert J. Coury(1)

        Chair      

JoEllen Lyons Dillon

            Chair  

Elisha W. Finney(2)

             

Leo Groothuis

             

Melina Higgins

    Chair       Chair    

James M. Kilts

             

Harry A. Korman(2)

              Chair

Rajiv Malik

             

Richard A. Mark(2)(3)

  Chair            

Mark W. Parrish

      Chair        

Scott A. Smith

             

Pauline van der Meer Mohr(4)

                     

Meetings during 2022

  9   5   4   1   4   5   4

Meetings during 2023

  7   6   3   8   4   7   3
(1)

As previously disclosed, Mr. Coury will cease to be a director and to serve as an officer and employee of the Company effective as of the conclusion of the 2023 Annual Meeting.

(2)

In February 2023, Richard Mark became Chair of the Audit Committee and joined the Executive Committee, Elisha Finney joined the Audit and Finance Committees and Harry A. Korman joined the Compensation Committee.

(3)

The Board has determined that Mr. Mark, the Chair of the Audit Committee, is an “audit committee financial expert”, as that term is defined in the rules of the SEC.

(4)

Ms. van der Meer Mohr is not nominated for election at the 2023 Annual Meeting.

 

   

AUDIT COMMITTEE

 

Members

Mr. Mark (Chair)

Mr. Cornwell

Ms. Dillon

Ms. Finney

Mr. Parrish

 

   

 

 

  

The Audit Committee’s key oversight responsibilities include, but are not limited to:

 

•  Integrity of the Company’s financial statements and its accounting and financial reporting processes

 

•  Effectiveness of the Company’s internal control over financial reporting

 

•  Qualifications, independence, and performance of the independent registered public accounting firm

 

•  Services to be performed by, and fees payable to, the independent registered public accounting firm

 

•  Internal Audit group

 

•  Company processes and procedures related to risk assessment and risk management of financial and disclosure control-related, as well as SEC reporting-related, matters

 

•  Related party transactions

 

•  Company compliance with applicable legal and regulatory requirements (including U.S. federal securities laws) regarding the preceding matters

 

•  Review of any critical audit matters identified by the independent registered public accounting firm in connection with its audit of the Company’s annual financial statements

 

     

 

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COMPENSATION COMMITTEE

 

Members

Ms. Higgins (Chair)

Mr. Kilts

Mr. Korman

Ms. van der Meer Mohr

 

 

   

 

 

The Compensation Committee’s key oversight responsibilities include, but are not limited to:

 

•  Executive Chairman, CEO, and senior management compensation, including the corporate goals and objectives relevant to such compensation

 

•  Board and committee compensation

 

•  Equity compensation plans in which Directors and/or executives participate

 

•  Compensation and benefits-related disclosures in annual reports and proxy statements

 

•  Reviewing the relationship between compensation policies and practices and the Company’s risk management with respect to compensation-related matters

 

•  From time to time reviewing reports from management regarding pay equity, human capital management and succession planning

 

 

   

COMPLIANCE COMMITTEE

 

Members

Mr. Parrish (Chair)

Ms. Dillon

Mr. Korman

Ms. van der Meer Mohr

 

 

   

 

The Compliance Committee’s key oversight responsibilities include, but are not limited to:

 

•  Chief Compliance Officer’s implementation of the Company’s corporate compliance program

 

•  Making recommendations to the Board and/or management with respect to Viatris’ corporate compliance program, the Code of Business Conduct and Ethics, and significant related global policies, such as anti-corruption and fair competition policies

 

•  Reviewing significant global compliance-related policies implementing the Company’s Code of Business Conduct and Ethics, or related to the operations of the Company’s business and its mode or methods of doing business, including, for example, policies relating to pricing and/or commercialization of Company products and services

 

•  Reviewing metrics used by management or requested by the Committee to provide insight into the status and efficacy of the corporate compliance program, including the Company’s global compliance systems and organization

 

•  Reviewing reports of significant actual and alleged violations of the Code of Business Conduct and Ethics, corporate policies and procedures, and applicable laws and regulations

 

•  Reviewing checks and balances implemented by the Company designed to support and promote compliance with approved corporate policies, legal rules, and regulations

 

•  Overseeing the Company’s policies and procedures for corporate political and lobbying expenditures

 

 

   

EXECUTIVE COMMITTEE

 

Members

Mr. Coury (Chair)

Ms. Dillon

Ms. Higgins

Mr. Mark

Mr. Parrish

 

 

 

   

 

  

The Executive Committee’s key oversight responsibilities include, but are not limited to:

 

•  Assisting the Board in fulfilling its fiduciary responsibilities by exercising those powers of the Board not otherwise limited by a resolution of the Board or by law

 

•  Strategic planning and additional oversight of strategy implementation

 

 

   

 

FINANCE

COMMITTEE

 

Members

Ms. Higgins (Chair)

Ms. Finney

Mr. Kilts

Mr. Mark

 

 

   

 

The Finance Committee’s key oversight responsibilities include, but are not limited to:

 

•  Material mergers, acquisitions, and combinations with other companies

 

•  Swaps and other derivatives transactions

 

•  Establishment of credit facilities

 

•  Potential financings with commercial lenders

 

•  Issuance and repurchase of the Company’s debt, equity, hybrid or other securities

 

•  Capital structure, including dividend payments

 

 

   

 

 

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GOVERNANCE AND

NOMINATING

COMMITTEE

 

Members

Ms. Dillon (Chair)

Ms. Higgins

Mr. Korman

Mr. Parrish

 

 

   

 

The Governance and Nominating Committee’s key oversight responsibilities include, but are not limited to:

 

•  Corporate governance matters

 

•  The nomination or re-nomination of Director candidates

 

•  The Board’s review and consideration of shareholder recommendations for, and nominations of, Director candidates

 

•  The annual self-evaluation of the Board and its committees

 

•  Director orientation and continuing education programs

 

•  Evaluating Board composition with respect to director independence, skills, experience, expertise, diversity, and other factors

 

•  Reviewing succession planning matters

 

 

   

 

 

   

 

RISK OVERSIGHT

COMMITTEE

 

Members

Mr. Korman (Chair)

Mr. Cornwell

Mr. Mark

Ms. van der Meer Mohr

 

   

 

The Risk Oversight Committee’s key oversight responsibilities include, but are not limited to:

 

•  Reviewing the enterprise risk framework, infrastructure, and controls implemented by management to help identify, assess, manage and monitor material risks

 

•  Reviewing management’s exercise of its responsibility to identify, assess and manage material risks not allocated to the Board or another committee, including, for example, data security programs and cybersecurity and information technology

 

•  Management’s efforts with respect to corporate environmental and social responsibility matters

 

•  Meeting with the Chairs of the other committees at least two times a year to discuss enterprise risk and related matters

 

 

   

 

 

 

Board Refreshment and Succession Planning

Viatris’ Board, with the support of the Governance and Nominating Committee, seeks to identify a diverse talent pool of qualified candidates for consideration as part of the Board’s refreshment and succession planning. The Board also seeks to combine the skills and experience of its long-standing Board members with fresh perspectives, insights, skills, and experiences of new members in support of its belief that it is important for Directors to represent diverse viewpoints and, further, that the personal backgrounds and qualifications of the Directors, considered as a group, should provide a composite mix of experience, knowledge and abilities. The Board is committed to fostering a culture of integrity, inclusion, dignity and mutual respect.

Viatris’ Board and Governance and Nominating Committee evaluate Board composition with respect to, among other matters, director independence, skills, experience, expertise, diversity, and other factors to ensure that the Board remains well-qualified to provide effective oversight of the Company and management. The Board and the Governance and Nominating Committee consider Viatris’ strategy, performance, operations, relevant industry and market conditions, and current and anticipated needs in terms of particular areas of experience and expertise (e.g., risk oversight, industry, science), among many other factors, to inform these refreshment practices and decisions. As we continue to evaluate Board composition, we also work to establish a pool of qualified potential candidates to support our continued refreshment efforts. We would like to recognize the valuable contributions of Ms. van der Meer Mohr who is retiring from the Board effective December 15, 2023 and has not been nominated for re-election at the 2023 Annual Meeting.

In 2022, Viatris’ Board adopted a Diversity and Inclusion Policy, which formalizes the Board’s ongoing commitment to fostering a culture of inclusion and seeking, supporting, valuing and leveraging diversity in the Board’s composition, including a mix of nationalities, ethnicities, races, ages, and/or genders and seeking a diverse talent pool of Director candidates when considering the Board’s refreshment and succession planning. The Board, in seeking candidates, reviews the principles of the policy and also asks its supporting search firms to provide candidates consistent with those principles. The Board and Governance and Nominating Committee consider this policy and diversity matters generally during their self-evaluations and when nominating directors for election to the Board, and the Board considers the policy effective in making sure these matters are appropriately considered.

 

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As part of the Board’s ongoing focus on board refreshment, since 2021 a third-party search firm has assisted with identifying potential new director candidates, including gender and racially/ethnically diverse candidates. After initial screenings and outreach, as well as additional guidance from the Governance and Nominating Committee, committee members and selected other Directors interviewed potential Director candidates identified by the third-party search firm as well as additional potential Director candidates recommended by Viatris Directors. Based on this process, the Board, on the recommendation of the Governance and Nominating Committee, appointed Ms. Finney and Mr. Smith to the Board in December 2022 to fill the two vacancies resulting from the retirements of Mr. Dimick and Mr. Read and appointed Mr. Groothuis to the Board in May 2023 to fill the vacancy resulting from Mr. Goettler ceasing to serve on the Board. We will continue to work to establish a pool of qualified potential candidates to support our Board refreshment efforts.

In addition, in May 2023 we announced that Mr. Coury had agreed with the independent members of the Board to transition to a new role as Chairman Emeritus and Senior Strategic Advisor from the conclusion of the 2023 Annual Meeting through the end of 2025 (the same period that Mr. Coury previously committed to the Company under his Executive Employment Agreement when Viatris was created). As a result of Mr. Coury’s agreement to serve in this advisory role, the independent members of the Board and Mr. Coury agreed that Mr. Coury will not stand for re-election at the 2023 Annual Meeting and will cease to be a director and to serve as an officer and employee of the Company effective as of the conclusion of the 2023 Annual Meeting. The Board also announced that it would select a new independent Chair of the Board whose tenure will begin following the 2023 Annual Meeting.

Reflecting the critical importance of senior leadership to the success of the Company and its overall business strategy, our Corporate Governance Principles also provide that the Board will work with senior management to ensure that effective plans are in place for management succession. The Board’s goal is to have a long-term and continuous program as well as to have contingency plans in place for emergencies such as departure, death, or disability. The Board discusses succession planning regularly at scheduled meetings, including in executive session, as appropriate. These succession planning activities have been and may continue to be supported by independent third-party consultants.

The Board prioritizes reviewing and discussing the succession plans for the CEO and each of his direct reports. Management succession planning continues to be among the Board’s top priorities and is included in the annual goals for executive management. In connection with our management succession planning, in February 2023, we appointed Scott A. Smith as CEO to lead our Phase 2 strategy and execution.

In addition, Mr. Malik will retire from his executive role with the Company and Mr. Mauro will depart from the Company, in each case, effective as of April 1, 2024. Mr. Malik has agreed to remain a member of the Board.

 

 

Annual Board and Committee Self-Evaluations

The Governance and Nominating Committee is responsible for overseeing the annual self-evaluation of the Board and its committees and, as part of those self-evaluations, engages an outside facilitator to lead the process. To date, the annual self-evaluations have alternated between using one-on-one interviews by the outside facilitator with each Director (with the outside facilitator then reporting out to the full Board) and a full Board discussion led by the outside facilitator. The self-evaluation process is designed to facilitate ongoing, systematic examination of the Board’s and committees’ effectiveness and accountability, and to identify opportunities for improving operations and procedures. In addition, the self-evaluations are intended to collect the perspectives of each Director, and are guided by use of a questionnaire, prepared by the outside facilitator, reviewed and approved by the Governance and Nominating Committee and distributed to Directors in advance, which includes typical questions used to evaluate a board and its committees with appropriate tailoring for the Company. The questionnaire covers, among other topics: Board and committee composition and organization, including responsibilities and oversight assigned to each committee; diversity of the Board’s membership; Board and committee leadership and management; Board responsibilities and oversight with respect to topics including, among others, strategic matters, succession planning, risk oversight, CSR and human capital management and DEI; Board and committee culture, administration and materials/resources; and Board, committee and Director performance.

Following its discussion with the outside facilitator, the Board discusses potential action items and evolves its processes where appropriate.

 

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Setting and Overseeing Strategy

We walk through the development and progress on our two-phase strategic plan, as developed under the leadership and oversight of our Executive Chairman and Board in “Executing on our Mission and Strategic Plan” on pages [] through []. The Board actively discusses, determines and oversees the Company’s strategies intended to unlock value for the Company and its shareholders and ensure the durability, sustainability, and stability of the business. We believe the Board has demonstrated over time the consistency and natural progression of its strategy, resulting in stable and durable cash flows despite evolving, challenging, and often unpredictable market conditions.

Under the leadership of the Board along with management, we laid out a clear and deliberate strategy to build a highly diversified company with multiple capabilities spanning numerous geographies and therapeutic areas. We established a two-phased roadmap that detailed and emphasized our strategic priorities to deliver value to our shareholders. In Phase 1 of our strategy (2020-2023), we continue to focus on integration, execution and optimizing synergies to build a foundation for Phase 2 (2024 and beyond).

The Board’s strategic review culminated in the announcement in November 2022 of our key strategic priorities by laying out a roadmap for our future and our capital allocation strategy, including with respect to returning cash to shareholders in the form of dividends and share repurchases and re-investing further into our business organically and inorganically with value-creating, financially accretive bolt-on and other transactions.

We also announced additional steps the Company was undertaking that were consistent with these priorities. First, we announced two ophthalmology transactions that we expect will add to both our top and bottom line in the future. Furthermore, we identified the following businesses for divestiture that the Company no longer considered core to its future strategy: OTC; API (while retaining some selective development API capabilities); women’s healthcare, primarily related to our oral and injectable contraceptives (this does not include all of our women’s healthcare related products; as an example, our Xulane® product in the U.S. is excluded); and select geographic markets that were part of the Combination that are smaller in nature and in which we had no established infrastructure prior to or following the Combination. On October 1, 2023, the Company announced it had received a third-party offer that grants Viatris the right to divest substantially all of its OTC business, and had entered into definitive agreements to divest its women’s healthcare business, its API business in India and commercialization rights in certain non-core markets that were acquired as part of the Combination.

As we move forward, the Board is committed to overseeing continuing efforts to further unlock the value of our unique global platform and return capital to shareholders and to maintaining an ongoing dialogue with shareholders regarding a broad range of topics, including, among others, our differentiated strategy and business model; the Global Healthcare Gateway®; delevering strategies; governance; compensation; promoting sustainability; and further enhancing our efforts to advance our corporate environmental and social responsibility performance.

 

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Committed

to Delivering

Significant

Shareholder

Value

  

LOGO

Unique global

platform

Unparalleled global reach

and global network with

sustainable, diverse, and

differentiated portfolio

  

LOGO

Performance-

driven culture

Focused on commercial

execution, operational

excellence, financial

discipline, and corporate

social responsibility

  

LOGO

Global

Healthcare

Gateway®

innovative global

infrastructure

offers partners ready

access to expanded

markets as well as our

organic development to

fuel future growth

  

LOGO

Execution

roadmap to

optimize total

shareholder

return

Right internal conditions

to maximize value

creation with clear

execution plan and

disciplined capital

deployment

 

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Risk Oversight

Viatris operates in a complex and rapidly changing environment that involves many potential risks. In addition to general market, industry, R&D, supply chain, political, financial, and economic risks, the Company faces potential risks related to, among others, executing on and implementing our strategic objectives, including completed or potential acquisitions and divestitures; information technology and cybersecurity; data privacy; financial controls and reporting; manufacturing and quality; legal, regulatory and compliance requirements and developments; the global nature of our operations; human capital management; environmental and social responsibility; and product portfolio and commercialization, among others. As a company committed to operating ethically and with integrity, we proactively seek to manage and, where possible, mitigate risks to help ensure compliance with applicable rules and regulations, maintain integrity and continuity in our operations and business, including in support of achieving strategic priorities, long-term financial and operational performance, and protect our assets (financial, intellectual property, and information, among others). Risk management is an enterprise-wide objective subject to oversight by the Board and its committees.

It is the responsibility of Viatris’ management and employees to identify material risks to our business and to implement and administer robust risk management and mitigation processes and programs, while also maintaining reasonable flexibility in how we operate. Our internal audit function periodically completes a comprehensive enterprise risk assessment to identify key and emerging risks, and reviews and refreshes this analysis quarterly with management. For each key or emerging risk identified, we have a process in place to establish ownership of monitoring the risk and evaluate risk mitigation opportunities. Our internal risk management team consists of senior leaders across multiple disciplines, including internal audit, information technology, information security, compliance, corporate environmental and social responsibility matters, environmental health and safety, security, finance, legal, quality and product safety, and the team meets quarterly to review and discuss risks and trends, which vary across the short-, medium- and long-term. To further embed risk management and compliance into our culture, Viatris has a robust global corporate compliance program, implements comprehensive policies and procedures, trains employees on how to implement and comply with them, and maintains an extensive program of oversight and audit to help ensure compliance and appropriate enterprise risk management.

Our risk oversight framework also aligns with our disclosure controls and procedures. For example, the Company’s Disclosure Committee reviews the Company’s quarterly and annual financial statements and related disclosures. The Disclosure Committee consists of senior management including our President, Chief Financial Officer (the “CFO”), Global General Counsel, Corporate Controller, Head of Corporate Affairs, Head of Capital Markets, and Deputy Global General Counsel, all of whom participate in the risk assessment practices described above. The CEO and CFO then receive a report from the Disclosure Committee before the financial statements are reviewed with the Audit Committee, approved, and filed with the SEC.

The Board directly, or through its committees, oversees the implementation of risk management and mitigation processes. The Board and its committees rigorously review with management the risk management program and discuss risk assessment matters at least quarterly, as well as during the Board’s annual budget review and approval process. Each of our committees has full access to officers and employees of the Company, and our Board and committees also meet without members of management present. The Board and committee Chairs periodically discuss the allocation of specific risk oversight matters between the various Board committees and the Board believes that its current risk oversight structure, as outlined below, assigns particular risk oversight matters to the Board committees that have the appropriate expertise to manage them. The Board also has the authority to form special strategic committees if it believes that it would be advisable to oversee significant strategic or other corporate actions, including the risks related thereto. All committees also have access to outside advisors in their sole discretion and periodically receive external updates concerning oversight of risks related to the Company and management’s efforts to manage risk. The Compliance Committee is responsible for appointing and replacing the Company’s Chief Compliance Officer, who is responsible for, among other things, the day-to-day management and implementation of the Company’s Corporate Compliance Program and who reports to the Compliance Committee and the CEO. In addition to meeting with the Company’s internal risk committee of senior management, which meets at least quarterly, the Chief Compliance Officer meets at least quarterly with the Audit Committee, Compliance Committee and Risk Oversight Committee.

The Board also has approved a Code of Business Conduct and Ethics, Code of Ethics for Chief Executive Officer, Chief Financial Officer and Corporate Controller, and other related policies to help manage and mitigate risk globally.

 

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Our Lead Independent Director is chair of the Compliance Committee and also meets at least twice a year with the Risk Oversight Committee and other committee chairs to discuss risk-related matters. While the full Board has retained responsibility for overseeing strategic risks to the business overall, it has delegated oversight of specific risks to its committees as outlined below.

Board Committees’ Role in Risk Oversight

 

 

The Audit Committee focuses on risks relating to financial and disclosure controls, SEC reporting matters, and oversight of Viatris’ internal audit function and independent registered public accounting firm. The Committee oversees, among other matters, the Company’s processes and procedures relating to risk assessment and risk management relating to financial, disclosure, and SEC reporting-related matters, and reviews with management the quality and adequacy of the Company’s internal control over financial reporting and the Company’s disclosure controls and procedures, including their effectiveness. Viatris’ internal audit function reports to and meets with the Committee at least quarterly to discuss potential risk or control issues, and the Committee regularly discusses the performance of the internal audit function, and the adequacy of resources available to this function. The Committee also meets quarterly with Viatris’ independent registered public accounting firm in executive session.

 

 

The Compensation Committee focuses on the design and administration of compensation-related plans and programs, and considers whether and how such plans and programs balance risk-taking and rewards, and align with shareholder interests. The Committee receives reports, on at least a quarterly basis, from management and outside advisors regarding compensation-related matters, and considers risk management in determining compensation structure. The Committee also reviews reports from management regarding pay equity and human capital management.

 

 

The Compliance Committee is responsible for overseeing the Chief Compliance Officer’s implementation of Viatris’ Corporate Compliance Program. The Chief Compliance Officer reports to the Committee and the CEO, and the Committee is responsible for appointing and, as applicable, replacing, this individual. The Committee discusses the Chief Compliance Officer’s performance, responsibilities, plans and resources with the CEO. The Committee also makes recommendations to the Board with respect to the Corporate Compliance Program, the Code of Business Conduct and Ethics, and significant related global policies, and is responsible for reviewing reports of significant actual or alleged violations of the Code of Business Conduct and Ethics, corporate policies and procedures, and applicable laws and regulations. The Committee also discusses reports regarding non-financial compliance risk and risks associated with privacy; antitrust and competition; anti-corruption; and third-party risks. In addition, the Committee reviews significant global compliance-related policies, including policies related to pricing and/or commercialization of Company products and services.

 

 

The Finance Committee is responsible for reviewing and, as appropriate, providing recommendations to the Board with respect to significant strategies and policies of the Company relating to its capital structure and deployment and/or allocation of capital, material financial matters and transactions, and the risks related to such activities.

 

 

The Governance and Nominating Committee is responsible for identifying, assisting in recruiting, and nominating qualified individuals to become members of the Board, recommending committee assignments, overseeing the Board’s annual evaluation of the independence of Directors, and evaluating and assisting the Board in considering potential risks related to corporate governance. The Committee is also responsible for overseeing the annual self-evaluation of the Board and its committees and Director orientation and continuing education programs.

 

 

The Risk Oversight Committee assists the Board in its oversight of Viatris’ enterprise risk management framework. The Committee reviews the enterprise risk framework, infrastructure, and controls implemented by management to help identify, assess, manage, and monitor the Company’s material risks; reviews management’s exercise of its responsibility to identify, assess, and manage material risks not allocated to the Board or another committee, including, for example, data security programs and cybersecurity and information technology; oversees management’s activities with respect to corporate environmental and social responsibility matters; and reviews the Company’s efforts to foster a culture of risk-adjusted decision-making without constraining reasonable risk-taking and innovation. Management reviews the Company’s enterprise risk management program with the Committee each quarter and discusses the short-, medium- and long-term matters of focus from a risk management perspective and actions being taken to mitigate risk. The Committee also meets with the Chairs of the other committees at least two times a year to discuss enterprise risk and related matters.

 

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The Board’s Role in Oversight of Corporate Environmental and Social Responsibility Matters

Viatris’ Board oversees management’s efforts with respect to corporate environmental and social responsibility matters through its Risk Oversight Committee. The CSR function operates as a center of excellence within the Viatris Corporate Affairs leadership team. The Head of CSR drives the strategic and operational development of CSR across the Company together with key partners. The Head of Corporate Affairs and the Head of CSR communicate quarterly with the Board on corporate environmental and social responsibility matters through the Risk Oversight Committee, and on an annual basis, the Risk Oversight Committee reviews progress with the Head of Corporate Affairs and Head of CSR on corporate environmental and social responsibility-related matters that have been discussed with the Board to confirm the Company is tracking its priorities in this area.

The Board’s and its Committees’ Role in Cybersecurity Oversight

The Company maintains an information security program, as overseen by a committee of senior leadership, to monitor and mitigate cybersecurity risks. This program is managed by the Company’s Chief Information Security Officer & Head of Global Security under the direction of the Company’s Chief Compliance Officer and is designed to identify, protect, detect and respond to cybersecurity risks, and includes policies, procedures, cybersecurity awareness communications, testing, and training for employees (including mandatory training programs for system users), system monitoring, risk reduction, vulnerability and patch management, and a robust incident response and reporting program. Based upon these activities, we have not identified any material security breaches over the last three years.

The Risk Oversight Committee receives reports from senior management on data security, cybersecurity and information security-related matters on at least a quarterly basis, including with respect to related risks, risk management, and relevant legislative, regulatory, and technical developments. On a biannual basis, the Risk Oversight Committee and chairs of each other Committee of the Board receive an information security update from the Company’s Chief Information Security Officer & Head of Global Security and the Chief Information Officer. The full Board receives a report on the respective quarterly discussions with senior management from the chair of the Risk Oversight Committee each quarter.

Board Education and Director Orientation

The Governance and Nominating Committee is responsible for overseeing and reviewing quarterly Director continuing education programs, including educational seminars, presentations, conferences and other programs or opportunities presented by external and internal resources, on matters that may relate to, among other topics: compensation, compliance, governance, board process, risk oversight, audit and accounting, regulatory and other current issues. Past trainings have included the Stanford Graduate School of Business Directors’ Consortium and Deloitte & Touche’s Board Symposium, among others. Directors also may elect to attend additional third-party educational events. The Company reimburses Directors for costs associated with any related seminars and conferences, including travel expenses.

The Governance and Nominating Committee is also responsible for overseeing and annually reviewing the Company’s Director orientation program. The program is designed to familiarize new Directors with, among other matters, the Company’s business, operations, financial reporting, risk management and executive officers. In addition, new Directors receive extensive onboarding materials which address topics including the Company’s strategy, policies, director roles and responsibilities, corporate governance policies and procedures, and leadership structure.

 

 

How Our Directors Are Selected and Evaluated

Consideration of Director Nominees

For purposes of identifying individuals qualified to become members of the Board, and consistent with the Company’s Corporate Governance Principles, the Governance and Nominating Committee considers the following general criteria, among others, in nominating director candidates. These criteria reflect the traits, abilities, and experience that the Board considers in determining candidates for election:

 

 

highest ethical character and shares the values of the Company

 

 

personal and/or professional reputations that are consistent with the image and reputation of the Company

 

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relevant expertise and experience and ability to offer advice and guidance to the CEO and senior management based on that expertise and experience

 

 

sound business judgment

 

 

diverse perspectives and personal backgrounds reflecting a mix of nationalities, ethnicities, races, ages and/or genders

In addition to the criteria set forth above, and any others the Governance and Nominating Committee or Viatris’ Board may consider, a majority of the members of the Board must be “independent”, as that term may be defined from time to time by the applicable NASDAQ listing standards, including that an independent Director must be free of any relationships which, in the opinion of the Board, would interfere with the exercise of such Director’s independent judgment in carrying out the responsibilities of a Director.

As needed, the Governance and Nominating Committee may identify new potential Director nominees by, among other means, requesting current Directors, executive officers, and external advisors to notify it if they become aware of persons meeting the criteria described above who would be suitable candidates for service on Viatris’ Board. The Committee also may, as needed, engage one or more firms that specialize in identifying director candidates. The Governance and Nominating Committee also may consider candidates recommended by shareholders in accordance with the procedures outlined in the question titled, “How do I recommend a candidate for nomination to Viatris’ Board?” on page A-[•]. The Committee’s evaluation process does not vary based on whether a candidate is recommended by a shareholder.

As appropriate, the Governance and Nominating Committee will review publicly available information regarding a potential candidate, request information from the candidate, review the candidate’s experience and qualifications, including in light of any other candidates the Governance and Nominating Committee might be considering, and conduct, together with other members of Viatris’ Board, one or more interviews with the candidate. Governance and Nominating Committee members or their designees also may contact one or more references provided by the candidate or may contact other members of the business community or persons who have first-hand knowledge of the candidate’s talents and experience. With respect to Board composition, the Board considers characteristics such as expertise, experience, knowledge, abilities and diversity (including nationality, ethnicity, race, age, gender, education and professional background), among others.

 

 

Certain Relationships and Related Transactions

Based on a review of any transactions between Viatris and its Directors, Director nominees and executive officers, their immediate family members, and their affiliated entities, Viatris has determined that since the beginning of 2022, it was or is to be a participant in the following transactions in which the amount involved exceeds $120,000 and in which any of Viatris’ Directors, Director nominees, executive officers, or greater than five percent shareholders, or any of their immediate family members, had or will have a direct or indirect material interest:

Since approximately 1995, The Coury Firm LLC (together with its predecessors, “TCF”) and, in the past, other affiliated entities of TCF, has been serving as the broker of record in connection with several of Mylan’s and, since the closing of the Combination, Viatris’ employee benefit programs. TCF is in the business of providing strategic corporate benefits advice and services, among others. TCF provides certain services to Viatris and its subsidiaries pursuant to a contract between Mylan Inc., a subsidiary of Viatris, and TCF. The principals of TCF are brothers and a son of Robert J. Coury, Executive Chairman, and TCF is beneficially owned by brothers and trusts on behalf of brothers and children of Mr. Coury. Commencing on September 1, 2020, the parties extended their agreement through December 31, 2023 on substantially the same terms as their prior arrangement, which included a fixed base fee of $37,500 per month to be paid by Mylan to TCF, corresponding to the term of agreements negotiated with certain benefit plan carriers and capping payments over that time period. However, where required by law, TCF will continue to receive commissions directly from certain other benefit plan carriers, and in 2022 and through September 21, 2023, received payments totaling approximately $185,000 in commissions for these services directly from the insurance carriers (including payments for 2021 business paid in 2022). Commencing on September 1, 2023, the parties further extended this agreement through December 31, 2026 on substantially the same terms.

 

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Angela Campbell, Mr. Campbell’s spouse and herself a related person of Viatris, held roles of increasing responsibility at Mylan Inc. since June 2007 and most recently served as Head of Operations Strategic Initiatives until her departure effective December 31, 2022. Ms. Campbell earned approximately $360,000 in compensation from Viatris in 2022 (consisting of base salary, an annual short-term incentive bonus, amounts realized from the exercise or vesting of long-term incentive awards and miscellaneous other benefits) and in 2023 received an annual short-term cash incentive bonus of approximately $93,000 related to work performed in 2022, payment of approximately $21,000 for previously accrued but unused vacation days, and standard Company severance payments of approximately $166,000. Upon her departure, all of her unvested equity awards were forfeited.

Mr. Malik is an executive officer of the Company and was party to an employment agreement with Mylan Inc., which contained standard indemnification provisions, and is currently party to a standard indemnification agreement with the Company. The Company has made payments to counsel to Mr. Malik of approximately $860,000 from January 1, 2022 through September 14, 2023 for services provided to Mr. Malik in connection with certain previously disclosed drug pricing matters. The Company anticipates making additional payments of approximately $50,000 in 2023 for ongoing services to be provided to Mr. Malik in connection with such matters. Viatris anticipates additional payment, repayment or advancement of these and other expenses during the pendency of these matters and anticipates that it will make payments for any such claims.

Viatris has a written related party transactions policy that establishes guidelines for reviewing and approving, as appropriate, transactions involving any Director, nominee for Director, “officer” (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (“Section 16 Officer”), person known by the Company to be the beneficial owner of more than 5% of any class of the Company’s voting securities, or person known by the Company to be an immediate family member of any such person in which (1) the amount involved will or may be expected to exceed $100,000; (2) Viatris or an affiliate of Viatris is or will be a participant; and (3) any related party has or will have a direct or indirect material interest. The Board also annually reviews certain relationships and related party transactions as part of its assessment of each Director’s independence.

 

 

How Non-Employee Directors Are Compensated

Non-Employee Director Compensation for 2022

The following table sets forth information concerning the compensation earned by Viatris’ non-employee directors (each a “Non-Employee Director” and, together, the “Non-Employee Directors”) for 2022. Directors who are (Messrs. Coury, Smith, and Malik) or were (Mr. Goettler) employees of Viatris during their Board service receive no compensation for such Board service. Mr. Groothuis did not receive compensation for Board service in 2022 as he was appointed to the Board on May 19, 2023. A discussion of the elements of Non-Employee Director compensation follows the table.

 

Name

   Fees Earned
or Paid in
Cash
($)
     RSUs
($)
(3)
     All Other
Compensation
($)
(4)
     Total
($)
 

W. Don Cornwell

     150,000        200,002        20,000             370,002  

JoEllen Lyons Dillon

     200,000        200,002        —             400,002  

Neil Dimick(1)

     200,000        200,002        —             400,002  

Elisha W. Finney(1)

                   —              

Melina Higgins

     225,000        200,002        20,000             445,002  

James Kilts

     150,000        200,002        20,000             370,002  

Harry A. Korman

     175,000        200,002        —             375,002  

Richard Mark

     150,000        200,002        15,000             365,002  

Mark W. Parrish

     250,000        200,002        —             450,002  

Ian Read(1)

     175,000        200,002        —             375,002  

Scott A. Smith(1)

                   —              

Pauline van der Meer Mohr(2)

     150,000        200,002        —             350,002  

 

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(1)

On December 29, 2022 Messrs. Dimick and Read retired from the Board and Ms. Finney and Mr. Smith were appointed to the Board. Ms. Finney and Mr. Smith did not receive compensation for their Board service in 2022 because their service did not begin until December 29, 2022. Mr. Smith was appointed CEO effective April 1, 2023.

(2)

Fees earned by Ms. van der Meer Mohr were paid in Euros. Such amounts were converted into Euros using the monthly conversion rate in effect when each payment was made.

(3)

Represents the grant date fair value of the specific award granted to the Non-Employee Director. Restricted stock unit (“RSU”) awards granted in 2022 vested on March 4, 2023. For information regarding assumptions used in determining the amounts reflected in the table above, please refer to Note 14 to the Company’s Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (“Form 10-K”). The number of unvested RSUs held by each of the Non-Employee Directors, as of December 31, 2022, were as follows: Mr. Cornwell; 20,313, Ms. Dillon, 20,313; Mr. Dimick, 0; Ms. Finney, 0; Ms. Higgins, 20,313; Mr. Kilts, 20,313; Mr. Korman, 20,313; Mr. Mark, 20,313; Mr. Parrish, 20,313; Mr. Read, 0; Mr. Smith, 0; and Ms. van der Meer Mohr, 20,313. Amounts include all accrued and unvested whole share dividend equivalent units (“DEUs”) that vest only to the extent and at the same time the underlying award on which they are issued vest. The aggregate number of shares subject to stock options held by the Non-Employee Directors, as of December 31, 2022, were as follows: Ms. Dillon, 24,780; Mr. Dimick, 24,780; Ms. Higgins, 31,403; Mr. Korman, 26,504; Mr. Mark, 12,260; Mr. Parrish, 24,780; and Ms. van der Meer Mohr, 13,949.

(4)

The amounts represent charitable contributions made in 2022 under our matching gift program.

In addition to the above, as previously disclosed, legacy Mylan directors were eligible to receive tax-equalization payments for incremental tax liabilities, if any, incurred as a result of attendance at Mylan Board meetings held outside the U.S. prior to the Combination. In 2022, these legacy Mylan directors received a one-time payment for such tax-equalization benefit with respect to years prior to the Combination (2015 to 2020). Messrs. Dimick, Korman, Mark and Parrish received $99,049, $94,245, $79,431, and $173,339, respectively, and Mses. Dillon and Higgins received $362,700 and $300,533, respectively. This benefit has now been finalized and concluded.

Viatris’ compensation philosophy for Non-Employee Directors is designed to attract and retain Directors with the experience necessary to represent the Company and oversee executive management. On an annual basis, the Compensation Committee considers market data for our Compensation Peer Group (see pages [] to []), and input received from the Compensation Committee’s independent consultant regarding market practices for Non-Employee Director compensation. Any changes to Non-Employee Director compensation are approved by the Compensation Committee and the independent Directors.

Non-Employee Director Compensation Structure for 2023

In March 2023, the Compensation Committee and the independent Directors approved the following Non-Employee Director compensation structure effective as of January 2023, unchanged from 2022:

 

Element of Compensation

   Amount  

Board Member Retainer

   $ 150,000  

Committee Chair Fee

     $25,000  

Executive Committee Member Fee

     $25,000  

Lead Independent Director Compensation

     $50,000  

Annual Equity Grant Value (RSUs)

   $ 200,000  

Non-Employee Directors are also eligible to receive matching charitable contributions under the Company’s Director Matching Gift Program. Under this program, to the extent Non-Employee Directors choose to make charitable contributions to qualifying charitable organizations, the Company matches those contributions dollar-for-dollar up to an annual limit of $20,000 per person per calendar year.

Non-Employee Director Share Ownership Requirements

Effective January 1, 2021, the Board adopted revised share ownership requirements for Non-Employee Directors, requiring each to hold common stock valued at five times the amount of their annual cash retainer, excluding any cash retainer paid for committee service. Each Non-Employee Director has five years from their start date to attain compliance. These requirements further demonstrate alignment of Viatris Directors’ interests with shareholders’ interests for the duration of their Board service. Common stock actually owned by the Non-Employee Director as well as restricted shares and unvested RSUs (including corresponding DEUs) count toward compliance with these requirements.

 

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Security Ownership

 

 

Security Ownership of Directors, Nominees, NEOs, and Executive Officers

The following table sets forth information regarding the beneficial ownership of common stock of Viatris Inc. as of [•], 2023 by (i) each Viatris Director and Director nominee, (ii) each NEO, and (iii) all Directors and executive officers of Viatris Inc. as a group (based on [•] shares of common stock of Viatris Inc. outstanding as of such date). For purposes of this table, and in accordance with the rules of the SEC, shares are considered “beneficially owned” if the person, directly or indirectly, has sole or shared voting or investment power over such shares. A person also is considered to beneficially own shares that he or she has the right to acquire within 60 days of [•], 2023. To Viatris’ knowledge, the persons in the following table have sole voting and investment power, either directly or through one or more entities controlled by such person, with respect to all the shares shown as beneficially owned by them, unless otherwise indicated in the footnotes below. The address for each beneficial owner listed in the table below is c/o Viatris Inc., 1000 Mylan Boulevard, Canonsburg, PA, 15317. As noted above, each Non-Employee Director has five years from their start date to attain compliance with our Stock Ownership Guidelines. In addition, each of our covered employees has five years to achieve minimum ownership requirements, as discussed in more detail in the Compensation Discussion & Analysis section of this document.

 

Name of Beneficial Owner

  Amount and
Nature of
Beneficial
Ownership
    Options
Exercisable and
Restricted
Shares Vesting
within 60 days
         Percent     
of Class
 

W. Don Cornwell

    42,510             *  

Robert J. Coury(1)

    632,447 (2)      4,517,462 (3)      *  

JoEllen Lyons Dillon

    59,877 (4)      24,780       *  

Elisha W. Finney

                *  

Michael Goettler(5)

    321,653             *  

Leo Groothuis

                *  

Melina Higgins

    157,381 (6)      24,780       *  

James M. Kilts

    98,590             *  

Harry A. Korman

    70,951       26,504       *  

Rajiv Malik

    1,111,815 (7)      408,292       *  

Richard A. Mark

    53,478       12,260       *  

Anthony Mauro

    345,904 (8)      181,908       *  

Sanjeev Narula

    73,877             *  

Mark W. Parrish

    102,563       24,780       *  

Scott A. Smith

                *  

Pauline van der Meer Mohr(9)

    40,245       13,949       *  

All directors and executive officers as a group (19 persons)(10)

    3,082,660       5,380,488       *  

 

*

Less than 1%.

(1)

As previously disclosed, Mr. Coury will cease to be a director and to serve as an officer and employee of the Company effective as of the conclusion of the 2023 Annual Meeting.

(2)

Reflects the prior disposition of 542,068 shares in a transaction exempt from Section 16 of the Exchange Act.

(3)

Includes shares vesting in connection with Mr. Coury’s transition to Chairman Emeritus and Senior Strategic Advisor.

(4)

Includes 18 shares held by Ms. Dillon’s spouse.

(5)

Mr. Goettler ceased to serve as the Company’s CEO and ceased to serve on the Board effective as of April 1, 2023.

(6)

Includes 74,000 shares held by Ms. Higgins’ spouse.

(7)

Includes 460,319 shares held in an irrevocable trust for the benefit of Mr. Malik’s spouse and children.

(8)

Includes 5,574 shares held in Mr. Mauro’s 401(k) account.

(9)

Ms. van der Meer Mohr is not nominated for election at the 2023 Annual Meeting.

(10)

Includes the 15 individuals other than Mr. Goettler set forth above as well as Messrs. Campbell, Cuneo, Ni, and Roman.

 

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Security Ownership of Certain Beneficial Owners

The following table lists the names and addresses of shareholders known to management to own beneficially more than five percent of the shares of common stock of Viatris as of [], 2023 (based on [] shares of common stock of Viatris Inc. outstanding as of such date):

 

Name and Address of Beneficial Owner

  

Amount and

Nature of Beneficial

Ownership

        Percent     
of Class

The Vanguard Group,

100 Vanguard Blvd., Malvern, PA 19355

       149,318,666 (1)         [ ]%

BlackRock, Inc.,

55 East 52nd Street, New York, NY 10055

       93,214,306 (2)         [ ]%

State Street Corporation

State Street Financial Center, One Lincoln Street, Boston, MA 02111

       61,903,672 (3)         [ ]%

 

(1)

Based on the Schedule 13G/A filed by The Vanguard Group with the SEC on February 9, 2023, The Vanguard Group has sole voting power over 0 shares of common stock, shared voting power over 1,715,541 shares of common stock, sole dispositive power over 144,160,776 shares of common stock and shared dispositive power over 5,157,890 shares of common stock.

(2)

Based on the Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 31, 2023, BlackRock, Inc. has sole voting power over 84,252,775 shares of common stock, shared voting power over 0 shares of common stock, sole dispositive power over 93,214,306 shares of common stock and shared dispositive power over 0 shares of common stock.

(3)

Based on the Schedule 13G filed by State Street Corporation with the SEC on February 7, 2023, State Street Corporation has sole voting power over 0 shares of common stock, shared voting power over 55,918,143 shares of common stock, sole dispositive power over 0 shares of common stock and shared dispositive power over 61,896,570 shares of common stock.

 

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Executive Officers

The following table sets forth the names, ages, and positions of Viatris’ executive officers as of [], 2023:

 

Scott A. Smith

     61      Chief Executive Officer (principal executive officer)

Rajiv Malik

     62      President

Sanjeev Narula

     63      Chief Financial Officer (principal financial officer)

Paul Campbell

     57      Chief Accounting Officer and Corporate Controller (principal accounting officer)

Brian Roman

     53      Global General Counsel

Andrew Cuneo

     47      President, JANZ and Emerging Markets

Anthony Mauro

     50      President, Developed Markets

Xiangyang (Sean) Ni

     55      President, Greater China

Robert J. Coury

     62      Executive Chairman
    

 

 

    

 

Scott A. Smith. Mr. Smith has served as Viatris’ CEO since April 1, 2023. His responsibilities include leading the daily management and the overall performance of the Company and executing on the strategies developed in collaboration with the Executive Chairman and the Board, among other responsibilities. Additional details regarding Mr. Smith’s background and experience can be found under the heading “Viatris’ Board of Directors” on page [].

Rajiv Malik. Mr. Malik has served as Viatris’ President since the closing of the Combination on November 16, 2020. His responsibilities include the day-to-day operations of the Company, overseeing the Company’s commercial business units, the Medical, Information Technology and Quality functions, and R&D and Operations. Details regarding Mr. Malik’s retirement as President can be found on page [] and additional details regarding Mr. Malik’s background and experience can be found under the heading “Viatris’ Board of Directors” on page [].

Sanjeev Narula. Mr. Narula has served as Viatris’ Chief Financial Officer since the closing of the Combination on November 16, 2020. His responsibilities include oversight of the global Finance Department, which includes corporate controllership, financial planning and analysis, internal audit, Global Integrated Services, and tax and Treasury functions, among others. Prior to the Combination, Mr. Narula served as Chief Financial Officer of Pfizer’s Upjohn division beginning in January 2019, with responsibility for oversight of finance, procurement and business technology for all functions of the business. From January 2014 to January 2019, Mr. Narula served as Vice President, Finance for Pfizer’s Essential Health Business, with responsibility for finance, business development, financial planning and analysis, and the operating plan process and forecasting. Mr. Narula also held several other financial leadership positions during his 16 years at Pfizer and Upjohn, including as the finance lead for the Primary Care Business Unit. Prior to joining Pfizer, Mr. Narula held financial and operational leadership roles at American Express and Xerox.

Paul Campbell. Mr. Campbell has served as Viatris’ Chief Accounting Officer and Corporate Controller since the closing of the Combination on November 16, 2020. He is responsible for oversight of the day-to-day operations of the accounting and finance functions of the Company, including planning, implementing, and managing the Company’s finance and accounting activities. Prior to the closing of the Combination, Mr. Campbell was Mylan’s Chief Accounting Officer, Senior Vice President and Controller. Before his appointment as Chief Accounting Officer in November 2015, Mr. Campbell served as Mylan’s Senior Vice President and Controller beginning in May 2015, with responsibility for overseeing the company’s accounting and financial operations and reporting, and he previously held roles of increasing responsibility at Mylan since 2002.

Brian Roman. Mr. Roman has served as Viatris’ Global General Counsel since the closing of the Combination on November 16, 2020. His responsibilities include oversight of the Company’s global legal organization, including securities, global contracts, labor and employment, global regulatory, business development, litigation, and intellectual property, among other areas. From July 2017 until the closing of the Combination, Mr. Roman was Mylan’s Global General Counsel, with similar responsibilities. Prior to 2017, Mr. Roman served as Mylan’s Chief Administrative Officer from January 2016 until June 2017, with responsibility for oversight of the Human Relations, Compliance, Facilities, Security, Information Security, and Privacy functions. He served as Mylan’s Senior Vice President and Chief Compliance Officer from April 2010 until December 2015 and Vice President and General Counsel, North America from October 2005 until April 2010.

 

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Andrew Cuneo. Mr. Cuneo has served as President, JANZ since the closing of the Combination on November 16, 2020, and as President, JANZ and Emerging Markets since November 2022. His responsibilities include oversight of the day-to-day operations in those segments. From April 2017 until the closing of the Combination, Mr. Cuneo was Mylan’s President — Rest of World, with responsibility for executing on commercial objectives in more than 120 countries, including developed and emerging markets. Mr. Cuneo joined Mylan in February 2009 and served as Head of Global Business Development until April 2017. Previously, Mr. Cuneo served as Director of Merrill Lynch’s Global Healthcare Investment Banking Group.

Anthony Mauro. Mr. Mauro has served as President, Developed Markets since the closing of the Combination on November 16, 2020. His responsibilities include oversight of the commercial functions in more than 35 countries in North America and Europe, including sales and marketing strategies in those regions. From January 2016 until the closing of the Combination, Mr. Mauro served as Chief Commercial Officer of Mylan, with responsibility for overseeing Mylan’s commercial businesses around the world. Prior to 2016, Mr. Mauro served as Mylan’s President, North America beginning January 1, 2012. He served as President of Mylan Pharmaceuticals Inc. from 2009 through February 2013. Mr. Mauro previously served as Chief Operating Officer of Mylan Pharmaceuticals ULC in Canada, Vice President of North America Strategic Development, and Vice President of North America Sales. Details on Mr. Mauro’s separation from the Company can be found on page [].

Xiangyang (Sean) Ni. Mr. Ni has served as President, Greater China since the closing of the Combination on November 16, 2020. His responsibilities include oversight of the day-to-day operations in the region and overseeing the development and execution of the Company’s strategy in Greater China. From March 2019 until the closing of the Combination, Mr. Ni served as Senior Vice President of Global Strategy, Business Development, and Commercial Development at Pfizer’s Upjohn division, with responsibility for corporate strategy, business development, global marketing, pricing and channel management, commercial operations, and commercial excellence. He was Head of Established Brands, Global Product and Portfolio Strategy with AstraZeneca from July 2017 until February 2019, with responsibility for the global established brands portfolio based in the U.S. Prior to that, he was Vice President of Alliances and Business Development for AstraZeneca China from April 2014 until July 2017 and Executive Director, Strategic Planning and Business Development from February 2013 to April 2014.

Robert J. Coury. Mr. Coury has served as Viatris’ Executive Chairman since the closing of the Combination on November 16, 2020. Mr. Coury leads the Board, has overseen with the Board the development of our comprehensive strategy to simplify our complex global business and in collaboration with executive management, advises the management team on important ongoing business matters, including as they execute on the Company’s strategy to drive value creation, and leads Company strategy on highly complex matters and other strategic initiatives, while also ensuring robust board engagement with shareholders and other key stakeholders, among other responsibilities. As previously disclosed, Mr. Coury will cease to serve as an officer and employee of the Company effective as of the conclusion of the 2023 Annual Meeting. Additional details regarding this transition can be found on page [•].

Messrs. Coury, Smith, and Malik are also members of the Viatris Board. As previously disclosed, Mr. Coury will cease to be a director of the Company effective as of the conclusion of the 2023 Annual Meeting.

Pursuant to our Bylaws, officers hold office until their successors are chosen and qualify in their stead or until their earlier death, resignation or removal.

 

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Item 2

Advisory Vote to Approve the 2022 Compensation of the Named Executive Officers of the Company

As required by Section 14A of the Exchange Act, Viatris’ shareholders have the opportunity to vote to approve, on a non-binding, advisory basis, the 2022 compensation of our NEOs as disclosed in this Proxy Statement in accordance with SEC rules, which we also have referred to herein as the “Say-on-Pay vote”.

As detailed in the Compensation Discussion and Analysis section of the Proxy Statement, which begins on page [•], our NEO compensation program is designed to incentivize the continued development of our durable business and shareholder value creation over the short- and long-term, while providing a competitive level of compensation to attract, retain, and motivate our talented NEOs. Our program also aligns compensation with performance and shareholder and other stakeholder interests. The Board urges you to consider the factors discussed in the Compensation Discussion and Analysis section when deciding how to vote on this Item 2.

Given the leadership, dedication, and performance of our NEOs, their proven ability to capitalize on opportunities and manage challenging market conditions, and the strong alignment between pay and performance in our compensation program, the Board recommends that shareholders vote “FOR” the following resolution at the 2023 Annual Meeting:

RESOLVED, that Viatris shareholders approve, on an advisory basis, the 2022 compensation of the Company’s named executive officers, as disclosed on pages [•] to [•] of Viatris’ Proxy Statement for the 2023 Annual Meeting of Shareholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation and other tables and narrative discussion.”

Although advisory and not binding, the Compensation Committee and the Board will take into account the outcome of this vote when considering future compensation arrangements for Viatris’ NEOs as they deem appropriate. We currently provide shareholders with a Say-on-Pay vote on an annual basis and expect that the next such vote will occur at the 2024 annual meeting of shareholders.

 

     Board Recommendation         

     
 

 

Viatris’ Board recommends a vote “FOR”

the approval, on an advisory basis,

of the 2022 compensation of the NEOs.

 

 

 

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Compensation Discussion and Analysis

This Compensation Discussion and Analysis (“CD&A”) describes the compensation, which continues to be closely linked to the Company’s performance objectives, of our Named Executive Officers (“NEOs”) for 2022.

 

 

Named Executive Officers

 

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Michael Goettler

Former Chief Executive Officer(1)

 

 

 

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Rajiv Malik

President        

 

 

 

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Sanjeev Narula

Chief Financial Officer  

 

 

 

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Anthony Mauro

President, Developed Markets  

 

 

 

 

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Robert J. Coury

Executive Chairman 

 

 

 

(1) 

Mr. Goettler ceased to serve as the Company’s CEO effective as of April 1, 2023.

 

Table of Contents

 

 

Named Executive Officers

 

  

 

 

 

44

 

 

Executive Summary

 

     45  

Executive Compensation Philosophy

 

     48  

2022 Performance-Based Compensation Program

 

     48  

2022 Total Target Compensation

     48  

Considerations for Setting 2022 Incentive Performance Goals

     48  

2022 Peer Group

     49  

Elements of 2022 Compensation

 

     49  

Base Salaries

     49  

2022 Annual Incentive Compensation Program

     49  

2022 Long-Term Incentive Compensation Programs

     51  

Compensation Governance and Policies

 

     52  

Governance and Other Considerations Impacting Viatris Compensation Decisions

     52  

Commitment to Responsible, Shareholder-Aligned Compensation Governance Practices

     53  

Limited Perquisites

     53  

401(k) Restoration Plan

     54  

2022 Share Ownership Requirements

     54  

Clawback Policy

     54  

Anti-Hedging and Anti-Pledging Policy

     55  

Consideration of Risk in Company Compensation Policies

     55  

Role of the Compensation Committee

     56  

Tax Deduction Cap on Executive Compensation

     56  

Compensation Committee Report

     56  

Compensation Committee Interlocks and Insider Participation

     56  

Executive Compensation Tables

 

     57  

Estimated Payments In Connection with a Termination of Employment or Change in Control

 

     64  

CEO Pay Ratio

 

    

 

67

 

 

 

Pay Versus Performance

 

    

 

68

 

 

 

 

 

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Executive Summary

Although Viatris, like all publicly traded companies, does not control the Company’s share price, given the successes in our two-phased strategic plan (as outlined on pages []-[] “Executing on Our Mission and Strategic Plan”), the strength of our platform, and our clear commitment to shareholder engagement and responsiveness to shareholder feedback, we believe that our stock remains significantly undervalued. Despite facing challenges posed by industry headwinds, market conditions, inflationary pressures and adverse foreign exchange rates, we have consistently delivered successful, strong operational performance while delivering on our commitments.

We were extremely pleased to have received 90.7% approval for our shareholder advisory vote regarding executive compensation at our 2022 Annual Meeting, especially while transitioning legacy compensation arrangements predating the formation of Viatris and successfully retaining employees that the Board felt were critical to our success and integration efforts. We believe this vote result reflects clear shareholder support for these arrangements, our future commitments and our program overall. We also believe that this overwhelming support shows clear confidence in our Board’s thoughtful process and rationale for entering into these successful arrangements, which were major contributors to the Company’s success to date, including to the launch, integration, leadership, and operation of Viatris following the Combination, as well as to the development and execution of our two-phased strategic plan which has set the Company up for success. Furthermore, we also believe that this overwhelming support for our compensation program is consistent with the robustness of our compensation program as well as our responsiveness to feedback in the development of that compensation program going forward. Among other items of responsiveness to our discussions with shareholders, we increased the percentage of performance-based equity awards from 60% to 65%; eliminated legacy excise tax gross-ups; eliminated modified single-trigger severance arrangements; committed to no new fixed-term NEO employment agreements; discontinued tax equalization benefits; and committed to no longer provide strictly cash-based retention awards or supplemental retirement benefit agreements.

Our compensation program is designed to reward executives for the clear progress they have made against our strategic goals, while also aligning with shareholder interests. As explained in more detail below, 71% of NEO total target compensation for fiscal year 2022 was delivered as long-term equity. Furthermore, our long-term performance-based restricted stock units (“PRSUs”) are subject to a total shareholder return (“TSR”) performance modifier assessed over a three-year time frame relative to the S&P 500 Pharmaceutical Index. Our first long-term PRSUs (awarded in 2021) will be vesting in 2024. Based on our current relative TSR performance as of September 30, 2023, any PRSU payouts would be automatically reduced by 30%.

Our Performance-Based Compensation Program Supports Growth Strategy

To support our long-term growth strategy focused on delivering value to shareholders, approximately 71% of NEO total target compensation for fiscal year 2022 was delivered in the form of long-term equity and approximately 63% of NEO total target compensation was subject to performance conditions. Our incentive program design incorporates measurable performance metrics that support our strategy of creating a highly diversified company with multiple capabilities spanning numerous geographies and therapeutic areas.

 

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Leadership Transitions

CEO Transition

As a result of the substantial progress on and overall performance with respect to our stated Phase 1 commitments, which the Board believes positions the Company for future success, on April 1, 2023, we appointed Mr. Smith to the CEO role. The Board believes that Mr. Smith is best suited to lead the Company forward and brings experience that matches the global nature and complexity of our business and expected path to growth. The compensation package offered to Mr. Smith also reflected shareholder perspectives and was limited to regular target annual compensation, without off-cycle bonuses, grants or incentives: base salary of $1.4 million, an annual target bonus opportunity equal to 150% of base salary (pro-rated for 2023), and eligibility for an annual long-term incentive award with a target of 700% of base salary (800% for 2023).

 

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Executive Chairman Transition

In light of the Executive Chairman’s leadership and oversight in developing our comprehensive strategies for growth while streamlining the Company, the substantial success and progress on and overall performance with respect to the Company’s Phase 1 objectives, and in preparation for the Company’s move into Phase 2 of our strategic plan, the independent members of the Board believed it was an appropriate time to consider a transition to a more conventional Board leadership structure, which we had previously informed shareholders we would do at the appropriate time for the Company. The Board approached Robert J. Coury, and Mr. Coury agreed, to transition to a new role as Chairman Emeritus and Senior Strategic Advisor from the conclusion of the 2023 Annual Meeting through the end of 2025 (the same period that Mr. Coury previously committed to the Company under his Executive Employment Agreement when Viatris was created). As a result, Mr. Coury will not stand for re-election at the 2023 Annual Meeting and will cease to be a director and to serve as an officer and employee of the Company effective as of the conclusion of the 2023 Annual Meeting. The Board believes that this transition plan will enable the Board and management to continue to benefit from Mr. Coury’s extraordinary strategic vision and knowledge of the Company, management, the industry, and the complex global markets the Company operates in as it adopts this new Board leadership structure following the 2023 Annual Meeting. The Board also committed to selecting a new independent Chair of the Board whose tenure will begin following the 2023 Annual Meeting.

In connection with this transition, Mr. Coury will be treated as separating from employment for Good Reason for severance benefit purposes (as defined in, and pursuant to, his Executive Employment Agreement). The Company will also honor the existing compensation rights set forth in that agreement for 2024 and 2025 through an annual consulting fee of $15 million, paid in monthly installments. The Board believes and anticipates that the value of the compensation is commensurate with the value and benefits to be received by the Company from Mr. Coury’s advisory services.

Other Executive Transitions

Rajiv Malik, President, has informed the Company of his intention to retire from his executive role with the Company effective as of April 1, 2024. To support the transition of Mr. Malik’s substantial operating responsibilities given his significant tenure with the Company and primary responsibility for operation of the Company’s complex manufacturing and commercial platform for over 15 years, and to assist and support the Company’s new Chief Executive Officer, the Board requested and Mr. Malik agreed to consult with the Company on operational matters. Mr. Malik has also agreed to remain a member of the Board of Directors. Mr. Malik’s currently outstanding equity awards will continue vesting during his service (or earlier upon certain qualifying terminations of Board or consulting service). Mr. Malik was not granted any additional awards or other compensation for his consulting services.

Anthony Mauro, President, Developed Markets, will depart from the Company effective as of April 1, 2024 as a result of an elimination of his position in connection with a realignment of the Company’s commercial function. Mr. Mauro will be eligible to receive severance benefits equal to two times his base salary and target bonus, subject to a release of claims and other customary conditions. Unvested equity awards that Mr. Mauro holds as of his separation will be forfeited, unless otherwise provided in the applicable award agreements.

Conclusion of Certain Legacy Compensation Incentives

Last year’s 90.7% approval for our shareholder advisory vote regarding executive compensation at our 2022 Annual Meeting has already taken into consideration certain legacy retention payments relating to Transition and Succession Agreements with Mylan Inc. for Messrs. Malik and Mauro, both of whom have played extremely instrumental roles in our success to date. We recently announced that both Messrs. Malik and Mauro will depart the Company effective as of April 1, 2024. As we previously disclosed in our 2021 and 2022 proxy statements, the Summary Compensation Table for 2022 reflects the conclusion of these legacy retention payments, which had been implemented in connection with the launch of Viatris. The agreements were designed to incentivize Messrs. Malik and Mauro to remain with Viatris in light of their importance to the launch, integration, leadership, and operation of Viatris, as well as to the development and execution of our two-phased strategic plan to set the Company up for future success, and because of their existing Transition and Succession Agreement severance rights. These arrangements were successful, as Messrs. Malik and Mauro remained with Viatris for this critical transition period. No further retention awards were issued to Messrs. Malik or Mauro. As we disclosed previously, we do not intend to enter into similar cash-based compensation agreements going forward.

Selected Highlights and Recent Developments

Viatris’ management continues to execute on the strategic priorities previously outlined to shareholders and led the Company in achieving several notable accomplishments in 2022. We believe these accomplishments, along with the substantial progress we have made on Phase 1 and Phase 2 of our strategic plan, as outlined on pages []-[] “Executing on Our Mission and Strategic Plan,” highlight the strength of our execution.

 

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Financial and Operational Performance

In 2022, Viatris delivered another four quarters of consistent, solid operational performance across all segments. The Company:

 

 

Reported total revenues of $16.26 billion; U.S. GAAP net earnings of $2.08 billion; adjusted EBITDA of $5.78 billion; U.S. GAAP net cash provided by operating activities of $2.95 billion; and free cash flow of $2.55 billion.

 

 

Captured an additional approximately $250 million (approximately $750 million since the beginning of 2021) in synergies due to integration efforts.

 

 

Paid down approximately $3.3 billion of debt, exceeding the 2022 target of approximately $2 billion.

 

 

Exited substantially all transition services agreements with Pfizer.

 

 

Increased the quarterly dividend payment to $0.12 per share.

 

 

Paid approximately $580 million in dividends in 2022. Returned capital to shareholders in the form of dividends and share buybacks in the amount of approximately $1.5 billion through the end of Q2 2023.

 

 

Completed the Biocon Biologics Transaction; received a $2 billion cash payment, adjusted as set forth in the agreement, and approximately $1 billion of compulsory convertible preferred shares representing a stake of approximately 12.9% (on a fully diluted basis) in Biocon Biologics.

 

 

Announced acquisitions of Oyster Point and Famy Life Sciences to establish an eye care division, that it subsequently established in early 2023.

Science and Regulatory Achievements

The Company has industry-leading science, regulatory and manufacturing capabilities complemented by a strong commitment to quality and an unparalleled geographic footprint to deliver high-quality medicines. This includes more than 3,000 scientists and medical professionals working across 11 development centers globally in multiple technology platforms and therapeutic areas, coupled with in-country regulatory expertise in 55 markets. In 2022, Viatris advanced key development programs across complex injectables, novel products, complex generics, as well as progressed its efforts to establish a Phase III-ready eye care pipeline. The Company:

 

 

Announced positive top-line results for the GA Depot Phase III clinical trial with partner Mapi Pharma.

 

 

Received FDA approvals of Fingolimod and Levothyroxine Oral Solution.

 

 

Expanded first-to-market opportunities of complex injectables with generics of Sandostatin® LAR Depot, Ozempic® and Abilify Maintena®.

 

 

Initiated Phase III trials for Effexor® Generalized Anxiety Disorder in Japan.

 

 

Achieved FDA acceptance of the new drug application review for the reversal of mydriasis program and was granted a Prescription Drug User Fee Act date of September 28, 2023.

 

 

Started enrollment in the first pivotal Phase III trial for presbyopia.

 

 

Made more than 100 additional submissions globally in 2022.

 

 

Had 10 products under review with the health authorities in China, including complex products, such as generic Symbicort®.

Our 2022 Annual Incentive Plan Payouts Aligned with Strong Financial and Operational Results

Short-term incentive compensation comprised approximately 17% of 2022 NEO target total compensation. While we believe that Viatris stock continues to be significantly undervalued, our management team’s operational execution resulted in strong performance results and corresponding above-target payout under the 2022 short-term incentive program. Drivers of our 2022 short-term incentive results included:

 

 

Above-target adjusted EBITDA and free cash flow for short-term incentive compensation purposes, driven by the focus and efforts of the Company’s management and the success of the Company’s cash optimization efforts. For more information on and the differences between how adjusted EBITDA and free cash flow are calculated for purposes of the Company’s 2022 short-term incentive compensation and public reporting purposes, see “Elements of 2022 Compensation – 2022 Annual Incentive Compensation Program – Annual Incentive Compensation Awards for 2022” on page [].

 

 

Above-target global product submissions, across broad and therapeutic-area agnostic product categories, driven by the strength of the Company’s development programs and successful acceleration of certain additional submissions.

The annual incentive performance metric targets were informed by higher expectations regarding incremental research and development expense, incremental cost inflation and expectations regarding exchange rates.

 

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Executive Compensation Philosophy

 

The Compensation Committee and Board’s compensation philosophy for 2022 reflects the Company’s continued focus on a performance-based, shareholder-value-focused business model and is intended to help ensure that Viatris continues to attract and retain high-performing executives given the highly competitive market for executive talent. The compensation program has the following key objectives, among others:

 

   

Attract, Motivate, and Retain Highly-Skilled Executives. To attract and retain the leaders needed to drive execution of our ambitious goals, we provided market competitive compensation with an emphasis on performance-based, long-term incentives. We designed our compensation program to help ensure that the Company, shareholders, and other stakeholders continue to benefit from the talents of our leadership team and global workforce, while also recruiting new talent on an on-going basis in a highly competitive market for talent.

 
   

Align with Shareholder Interests. We aligned executive compensation with shareholder interests by linking pay to the Company’s stated strategic priorities, long-term performance, and share price appreciation, including through the use of a relative TSR modifier for PRSUs in our long-term incentive plan and robust share ownership requirements (see “2022 Share Ownership Requirements” on page []). We believe this linkage helps drive long-term performance and encourages decision making to foster share price appreciation.

 

 

   

Drive Company Performance. As described in more detail on pages [] to [], our 2022 compensation program was designed with metrics carefully linked to our business strategies and financial goals. If the Company does not meet its short and long-term objectives, executive pay is meaningfully impacted.

 

 

2022 Performance-Based Compensation Program

2022 Total Target Compensation

The chart below shows the target total compensation opportunity for each of our NEOs in 2022.

 

NEO

   Base
Salary
     Target
Annual
Incentive
     Target
Long-Term
Incentive
     2022 Total
Target
Compensation
(1)
 

Michael Goettler(2)

     $1,300,000        $1,950,000        $9,100,000        $12,350,000  

Rajiv Malik

     $1,200,000        $1,500,000        $7,200,000        $9,900,000  

Sanjeev Narula

     $850,000        $850,000        $3,400,000        $5,100,000  

Anthony Mauro

     $800,000        $920,000        $3,200,000        $4,920,000  

Robert J. Coury

     $1,800,000        $2,700,000        $10,800,000        $15,300,000  

 

(1)

Total Target Compensation is defined as the sum of base salary, target annual incentive, and target long-term incentive.

(2)

Mr. Goettler ceased to serve as the Company’s Chief Executive Officer and ceased to serve on the Board effective as of April 1, 2023. As noted above, Scott A. Smith became CEO of the Company effective April 1, 2023 (see “Leadership Transitions - CEO Transition” on page []).

Considerations for Setting 2022 Incentive Performance Goals

In setting annual and long-term incentive performance goals, the Compensation Committee considered a broad variety of data, including potential divestitures, industry forecasts, internal projections, demographic data, advice from outside advisors, benchmarking data against the peer company medians, and the Company’s annual operating plan and strategies. The Compensation Committee also considered the variability and cyclicality of the business, noting that performance metric targets may increase or decrease from year-to-year due to factors impacting the business, such as market conditions, the regulatory environment, timing of product approvals, and both immediate and long-term strategic priorities of the business. Although the performance metric targets may vary from year-to-year, the Compensation Committee is committed to maintaining high levels of rigor and motivational impact on the executive team and aligning with the Company’s long-term strategy for sustainable business development and its goal of creating value for shareholders. Consistent with our philosophy of driving long-term company performance, the Compensation Committee, with the advice of its independent compensation consultant, will annually consider potential alternative performance metrics that link to our strategy and align with shareholder interests in long-term value creation.

 

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2022 Peer Group

The Compensation Committee used compensation data derived from the 2022 peer group as one of several reference points for determining executive compensation. Although the competitive market for our executives is one factor the Compensation Committee considers when making compensation decisions, the Committee does not target the compensation of NEOs within a specific percentile of any set of peer companies and considers peer group and industry data along with many other factors when determining compensation.

Below is the peer group selected by the Compensation Committee for 2022, with the advice of the Committee’s independent compensation consultant. The Committee considered a number of factors when choosing the peer group such as industry, annual revenue and market capitalization, as well as considering those companies that most compete with the Company for executive talent and companies that are business competitors of Viatris.

 

     

Abbott Laboratories

   Biogen Inc.    Novartis AG

Abbvie Inc.

   Bristol-Myers Squibb Company    Pfizer Inc.

Amgen Inc.

   Eli Lilly and Company    Regeneron Pharmaceuticals, Inc.

Bausch Health Companies Inc.

   Gilead Sciences, Inc.    Sanofi

Baxter International Inc.

   Merck & Co., Inc.    Teva Pharmaceutical Limited

 

 

Elements of 2022 Compensation

Base Salaries

The Compensation Committee considers a variety of factors in deciding base salary, including, among others: individual performance, responsibilities, and expected future performance; Company performance; management structure; marketplace practices (including external benchmarks prepared by an independent compensation consultant); internal pay equity considerations; competitive recruitment for outstanding talent; and the executive’s experience, tenure, and leadership. The Compensation Committee also considers, among other factors, what the marketplace would require in terms of the costs to hire a similarly qualified and experienced individual externally.

As reflected in the table below, in 2022, there were no changes to NEO base salaries except for a 6.25% increase for Mr. Narula, our CFO, to align with changes in market data.

 

NEO

  

2021 Base

Salary

    

2022 Base

Salary

 

Michael Goettler

     $1,300,000        $1,300,000  

Rajiv Malik

     $1,200,000        $1,200,000  

Sanjeev Narula

     $800,000        $850,000  

Anthony Mauro

     $800,000        $800,000  

Robert J. Coury

     $1,800,000        $1,800,000  

2022 Annual Incentive Compensation Program

Annual Incentive Compensation Awards for 2022

Viatris’ annual incentive compensation consists of performance-based annual cash awards that are subject to achievement of metrics that were identified by the Compensation Committee and the Board as critical to the successful execution of Viatris’ business strategy and aligned with the continued creation of shareholder value. The metrics are specifically related to the actions and leadership of our executive team and measure their ability to generate shareholder returns, both in the short- and long-term. The Compensation Committee approved annual incentive award grants and corresponding performance targets in the first quarter of 2022.

Setting 2022 Annual Incentive Performance Metrics

The Compensation Committee identified the following metrics as important measures of Company performance relating to its stated strategy:

 

 

Adjusted EBITDA (40% Weighting): Measures the Company’s profitability and motivates the organization to focus on commercial execution and driving new product revenue, maintaining efficiency of our operations, capturing synergies, and disciplined expense management.

 

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Free Cash Flow (40% Weighting): Creates organizational emphasis and focus on cash through improved cash flow conversion, optimized working capital, and overall cash generation which can increase the return to shareholders.

 

 

Global Regulatory Submissions (20% Weighting): Emphasizes the importance of developing a robust pipeline of molecules that Viatris could manufacture and sell over subsequent years. A robust product pipeline can help Viatris move its products up the value chain and support sustainability while serving Viatris’ mission of providing access to high quality, affordable medications. In addition, we view this metric as a stepping stone to implementing ESG/sustainability metrics in the future.

The setting of annual incentive performance metric targets reflected the Company’s expectations regarding incremental research and development expense, incremental cost inflation and foreign exchange rates. Incremental investments were intended to support long-term value creation for shareholders and other stakeholders by, among other things, furthering Viatris’ efforts to move its portfolio and pipeline up the value chain. The Compensation Committee recognized these expectations would be expected to reduce the adjusted EBITDA compensation metric in 2022.

In addition, an increase in the number of global regulatory submissions was not expected due in part to a continued emphasis on more challenging specialty and complex generic products and Viatris’ focus on submission of products expected to generate greater economic profit.

Determination of Annual Incentive Compensation Payouts for 2022

Individual annual incentive payout targets were established for each NEO, expressed as a percentage of base salary, as noted in the table below. Actual payouts could range from 0% to 200% of each NEO’s annual incentive target based on achievement of performance goals. There were no changes to the individual targets for 2022.

 

NEO

  

Target

(as % of Base Salary)

   

Annual

Incentive Target

 

Michael Goettler

     150     $1,950,000  

Rajiv Malik

     125     $1,500,000  

Sanjeev Narula

     100     $850,000  

Anthony Mauro

     115     $920,000  

Robert J. Coury

     150     $2,700,000  

Annual Incentive Compensation Payouts for 2022

In 2022, Viatris achieved the following performance against the Compensation Committee approved performance goals:,

 

Metric

   Weighting   Threshold      Target      Maximum      Results  

Adjusted EBITDA*

   40%   $ 5,700 million        $6,000 million      $ 6,300 million      $ 6,200 million  

Free Cash Flow**

   40%   $ 2,400 million        $2,700 million      $ 3,000 million      $ 3,168 million  

Global Regulatory Submissions

   20%     110        120        130        134  

 

*

Adjusted EBITDA is derived from Viatris’ financial statements in the same manner as Viatris’ publicly reported adjusted EBITDA, except that the calculation for the 2022 incentive program utilized budgeted foreign exchange rates and further adjusts for unbudgeted in-process research and development (“IPR&D”) costs and the December 2022 results of the divested biosimilars business. Viatris’ adjusted EBITDA as reported for the twelve months ended December 31, 2022 is reconciled to the most directly comparable U.S. GAAP measure in Appendix B.

**

Free cash flow is derived from Viatris’ audited financial statements in the same manner as Viatris’ publicly reported free cash flow, except that the calculation for 2022 incentive program utilized budgeted foreign exchange rates and further adjusts for any of the following, as applicable: unplanned litigation gains or losses equal to or greater than $25 million in the aggregate, material changes related to changes in tax laws, unbudgeted IPR&D costs, proceeds from the sale of property, plant and equipment, all impacts of the Biocon Biologics Transaction following its consummation including results after closing and transaction related costs, and any incremental transaction costs related to other select assets sales/reshaping initiatives and material acquisition activities. Viatris’ free cash flow as reported for the twelve months ended December 31, 2022 is reconciled to the most directly comparable U.S. GAAP measure in Appendix B.

 

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The following table shows the 2022 actual incentive payout for each NEO reflecting Company performance at 186.63% of target.

 

NEO

  

Actual Annual 

Incentive Award 

 

Michael Goettler

     $3,639,285   

Rajiv Malik

     $2,799,450   

Sanjeev Narula

     $1,586,355   

Anthony Mauro

     $1,716,996   

Robert J. Coury

     $5,039,010   

2022 Long-Term Incentive Compensation Programs

Long-Term Incentive Compensation Grants for 2022

The Compensation Committee believes that the value of long-term incentives should be directly related to the performance of Viatris’ ordinary shares over several years, as well as other measures associated with the growth, success, and long-term sustainability of Viatris. The Compensation Committee approved annual long-term incentive (“LTI”) award grants in the first quarter of 2022.

In 2022, we increased the percentage of performance-based awards (which are subject to a TSR modifier) from 60% to 65%, with 65% of each NEO’s award in the form of PRSUs and 35% in the form of RSUs. RSUs vest ratably over a three-year period following the grant date, and PRSUs vest as described below. This mix of LTI awards provides NEOs with a combination of incentives and aligns them with the interests of shareholders.

Each NEO’s 2022 LTI award had a targeted value at grant equal to a percentage of the NEO’s base salary. In setting each NEO’s LTI targeted value, the Compensation Committee considered a variety of factors, including, among others, peer group compensation and expectations regarding individual roles and responsibilities.

For 2022, the Compensation Committee approved the following annual LTI award values for our NEOs:

 

NEO

   PRSUs       RSUs       Total LTI 
Award 
 

Michael Goettler

     $5,915,000         $3,185,000         $9,100,000   

Rajiv Malik

     $4,680,000         $2,520,000         $7,200,000   

Sanjeev Narula

     $2,210,000         $1,190,000         $3,400,000   

Anthony Mauro

     $2,080,000         $1,120,000         $3,200,000   

Robert J. Coury

     $7,020,000         $3,780,000         $10,800,000   

2022 Three-Year PRSU Performance Metrics

The 2022 grant of PRSUs was subject to a free cash flow metric and relative TSR metric (i.e., Viatris TSR relative to the TSR of the S&P 500 Pharmaceutical Index, which is used to modify the final payout percentage), as described below. The free cash flow metric incentivizes effective use of Viatris’ capital to drive cash flow generation, encouraging behavior that is closely aligned with our efforts to drive a durable and sustainable business. In addition, the relative TSR modifier impacts executive pay based on Viatris’ performance as compared to industry competitors.

As shown in the table below, payouts under the 2022 PRSUs will be determined in two steps. First, in the first quarter of 2025, performance against the free cash flow metric will be assessed, resulting in an initial payout percentage of 50% of target for threshold performance (with 0% payout for below threshold performance) and 150% of target for maximum performance, with linear interpolation for achievement between threshold and maximum. Second, the relative TSR metric will be applied as a modifier to the initial payout percentage, decreasing it by 30%, leaving it unaffected, or increasing it by 30%, in order to calculate the final payout percentage.

 

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Metric

   Weighting    Threshold    Target    Maximum

Free Cash Flow*

   100%    $6,900 million    $7,900 million    $8,900 million

Relative TSR of Peer Group**

   Multiplier    At or Below
25th Percentile
of Peer Group
   Between 25th and
75th Percentiles of
Peer Group
   At or Above
75th Percentile
of Peer Group

Payout Opportunity (as % of Target)

    

 

   35%    100%    195%

 

*

Free cash flow is derived from Viatris’ audited financial statements in the same manner as Viatris’ publicly reported free cash flow, except that the calculation for the 2022 PRSUs utilized budgeted foreign exchange rates and further adjusts for any of the following, as applicable: unplanned litigation gains or losses equal to or greater than $25 million in the aggregate, material changes related to changes in tax laws, unbudgeted IPR&D costs, proceeds from the sale of property, plant and equipment, all impacts of the Biocon Biologics Transaction following its consummation including results after closing and transaction related costs, any incremental transaction costs related to other select assets sales/reshaping initiatives and material acquisition activities, all impacts of other select asset sales/reshaping initiatives, all impacts of material acquisition activities and proceeds from the monetization of the Biocon Biologics equity interest. Viatris’ free cash flow as reported for the twelve months ended December 31, 2022 is reconciled to the most directly comparable U.S. GAAP measure in Appendix B.

**

Relative TSR is calculated by comparing the difference between Viatris’ 30-day trailing average closing ordinary share price at the day before the beginning of the performance period and day before the end of the performance period plus any dividends paid during the performance period against the same metric for each company in the S&P 500 Pharmaceutical Index.

Payouts with respect to PRSUs granted in 2022 will be determined in early 2025 following the conclusion of the three-year performance cycle.

 

 

Compensation Governance and Policies

Governance and Other Considerations Impacting Viatris Compensation Decisions

The Compensation Committee and Board proactively consider external governance-related developments and trends relating to executive compensation. In setting or approving executive compensation, the Compensation Committee and Board may consider, in addition to any corporate goals and objectives applicable to an individual executive, some or all of the following: recognition of individual performance and contributions; pay for performance; alignment with long-term shareholder interests; advancement of Company strategic goals; maintenance of an appropriate level of fixed and at-risk compensation; remaining competitive with companies within the Company’s peer group; competition for executive talent; internal pay equity; leadership and mentoring skills and contributions; talent management; contributions to establishment or execution of corporate strategy; retention; compliance with applicable law and the Code of Business Conduct and Ethics and Company policy; and/or any other factors determined by the Compensation Committee or the Board to be in the interests of the Company and shareholders.

The Compensation Committee and Board believe that each company must independently assess which market practices and trends are appropriate for the company at any particular time in the company’s history and remain fully committed to maintaining a strong compensation governance philosophy that is aligned with shareholder interests and best practices. See also page [].

 

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Commitment to Responsible, Shareholder-Aligned Compensation Governance Practices

The following table summarizes certain specific compensation-related governance practices adopted by the Compensation Committee and Board with respect to 2022 compensation. We note that implementation of many of these practices was responsive to comments from shareholders or otherwise endorsed by shareholders.

 

 
 What We Do
 

  Maintain a significant portion of compensation aligned with shareholder interests and tied to share price or financial and operational business performance

 

  Employ metrics for annual and long-term incentives that support both short- and long-term strategies and align with shareholder interests, including a non-financial metric in the annual program tied to important product development initiatives

 

  Base long-term incentives heavily on performance-based metrics and short-term incentives entirely on performance-based metrics

 

  Set rigorous and measurable performance goals and periodically review and discuss our executives’ performance

 

  Use double-trigger vesting for annual long-term incentive awards upon a change in control

 

  Retain independent compensation consultants that report directly to the Compensation Committee

 

  Maintain strong share ownership guidelines

 

  Maintain a robust clawback policy

 

  Engage with shareholders on compensation and governance matters

 

  Consider peer groups and market data in determining compensation

 

  Annual Say-on-Pay Vote

 

 
 What We Don’t Do
 

X   New fixed-term NEO employment agreements

 

X   Excise tax gross-ups

 

X   Supplemental retirement agreements

 

X   Exercise positive discretion in determining annual incentive compensation or LTI payouts

 

X   Re-pricing of stock options without shareholder approval

 

X   Hedging or pledging of shares

Limited Perquisites

We provide certain limited perquisites to our NEOs, including the following:

 

 

Each NEO receives a car allowance or the use of a leased vehicle and payment of certain ancillary expenses. The NEOs are responsible for paying any taxes incurred relating to this perquisite.

 

 

Our NEOs take an extraordinarily active approach to overseeing and managing Viatris’ global operations, which necessitates and will continue to necessitate a significant amount of U.S. domestic and international travel time due to our diverse business centers, manufacturing and other facilities, and many client and vendor locations around the world. Viatris provides management with access to corporate aircraft to assist in the management of Viatris’ global platform by providing a more efficient and secure traveling environment, including where sensitive business issues may be discussed or reviewed, as well as maximum flexibility to our executives in the conduct of business. For reasons of business efficiency and continued security-related concerns (including personal security, especially given the global nature of Viatris’ business, as well as

 

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privacy of business information and communications), we also may from time to time require certain executives to use corporate aircraft for business and personal purposes.

 

 

Because of continued security-related concerns, we may from time to time provide certain NEOs with personal security.

401(k) Restoration Plan

The 401(k) Restoration Plan (the “Restoration Plan”) permits employees (including NEOs) who earn compensation in excess of the limits imposed by Section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the “Code”) to (i) defer a portion of base salary and bonus compensation, (ii) be (for employees other than the NEOs with a Retirement Benefit Agreement) credited with a Company matching contribution in respect of deferrals under the Restoration Plan, and (iii) be credited with Company non-elective contributions (to the extent made by Viatris), in each case, to the extent that participants otherwise would be able to defer or be credited with such amounts, as applicable, under Viatris’ 401(k) plan if not for the limits on contributions and deferrals imposed by the Code. Company matching contributions immediately vest and Company non-elective contributions are subject to an initial three-year vesting period. Upon a change in control (as defined in the Restoration Plan), a participant will become 100% vested in any unvested portion of their non-elective contributions. Distributions of such participant’s vested account balance will be made in a lump sum within 60 days following a participant’s separation from service (or such later date as may be required by Section 409A of the Code).

2022 Share Ownership Requirements

Viatris maintains robust share ownership requirements for our NEOs. The requirement is expressed as a multiple of base salary and shown in the table below.

 

Position

   Ownership
Requirement
 

Executive Chairman

     6x  

Chief Executive Officer

     6x  

President

     4x  

Other NEOs

     3x  

In addition to the NEOs, the Viatris share ownership policy covers the most senior employees at Viatris to promote an ownership culture and further align the interests of those leaders with those of shareholders. Each covered employee has five years from the date they became subject to the policy to achieve the minimum ownership requirement. Common stock actually owned by the covered employee (including shares of common stock held by the covered employee in the Restoration Plan), as well as restricted shares and unvested RSUs and PRSUs (including corresponding DEUs) count toward compliance with these requirements. All NEOs meet these share ownership requirements or are expected to meet them by the applicable date.

Clawback Policy

The Board has approved a clawback policy relating to incentive compensation programs. The policy provides that Viatris may take action to recoup annual incentive compensation and equity-based incentive compensation gains resulting from specified misconduct that causes Viatris to materially restate its financial statements.

The policy also provides that Viatris may take action to recoup some or all bonus and equity incentive compensation in the event of executive misconduct involving material violations of law or Viatris policy as well as failure to manage or monitor another individual who committed such misconduct, and that the Board or a designated Board committee will disclose the circumstances of any recoupment relating to such misconduct if required by law or regulation or if it determines that disclosure is in the best interests of Viatris and its shareholders.

 

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In addition, Viatris has a number of other policies in effect that govern our executive team’s behavior and that set out clear ethical expectations. Those policies, including our Code of Business Conduct and Ethics, empower Viatris to take a full range of disciplinary responses for any violations, and the Compensation Committee and the Board are not otherwise constrained from seeking to clawback from or deny compensation to any member of the executive team in response to any breach of duties or ethics. The Board considers additional updates to the clawback policy from time to time.

On October 26, 2022, the SEC adopted rules implementing the clawback provisions of the Dodd-Frank Act. The final rules direct the stock exchanges to establish listing standards requiring listed companies to develop and implement a policy providing for the recovery of erroneously awarded incentive-based compensation received by current or former executive officers and to satisfy related disclosure obligations. We intend to timely amend our clawback policy to reflect these new requirements.

Anti-Hedging and Anti-Pledging Policy

Viatris has a securities trading policy that prohibits directors and Section 16 Officers and their respective designees from trading in hedging instruments or otherwise engaging in any transaction that limits or eliminates, or is designed to limit or eliminate, economic risks associated with the ownership of our securities. Hedging instruments are defined as any prepaid variable forward contracts, equity swaps, collars, exchange funds, insurance contracts, short sales, options, puts, calls or other instruments that hedge or offset, or are designed to hedge or offset, movements in the market value of our securities. For purposes of this policy, our securities include shares and options to purchase shares, and any other type of securities that we may issue, including but not limited to, preferred shares, notes, debentures, and warrants issued by Viatris or any parent, subsidiary, or subsidiary of any parent of Viatris, as well as any derivative financial instruments pertaining to such securities, whether or not issued by us, such as options and forward contracts.

The policy also prohibits Directors and Section 16 Officers and their respective designees from entering into any transaction that involves the holding of our securities in a margin account (other than the “cashless exercise” of stock options) or the pledging of our securities as collateral for loans. The Compensation Committee may approve exceptions to the prohibition on the use of margin accounts or pledging or securities if, among other factors, the Director or Section 16 Officer demonstrates, in advance, that he or she has the continuing financial capacity to repay any underlying loan or potential margin call without resorting to our securities held in such margin account or our pledged securities and is not in possession of any material information about the Company that has not been made widely available to the investing public.

Consideration of Risk in Company Compensation Policies

The Compensation Committee has considered risk management in determining compensation policies and believes that our programs are designed appropriately to encourage outstanding, consistent, sustainable business performance over extended periods of time. Management and the Compensation Committee have considered and discussed the risks inherent in our business and the design of our compensation plans, policies and programs that are intended to drive the achievement of our long-term business objectives while avoiding excessive short-term risk-taking. In addition, we utilize a mix of objective performance measures, so that undue emphasis is not placed on one particular measure, and we employ different types of compensation to provide value over the short-, medium- and long-term. These performance measures are reevaluated annually in light of the evolving risk environment facing our business. When making compensation decisions, we also consider qualitative factors to avoid the consequences that an overly formulaic approach may have on excessive risk-taking by management. At least annually, the Compensation Committee also receives and discusses a report from Meridian Compensation Partners, LLC (“Meridian”), its independent compensation consultant, on risk management in connection with the Company’s compensation program.

The Compensation Committee believes that our compensation policies and practices do not encourage excessive risk and are not reasonably likely to have a material adverse effect on the Company.

 

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Role of the Compensation Committee

The Compensation Committee is comprised solely of independent Directors and oversees the design and implementation of our executive compensation programs. The Compensation Committee reviews and evaluates the performance of our NEOs and determines their compensation and objectives, or, in the case of our Executive Chairman and CEO, recommends compensation and objectives to the independent, non-executive members of the Board. The Compensation Committee monitors compensation trends and developments periodically and undertakes a comprehensive assessment of our compensation programs at least annually. In fulfilling these responsibilities, the Compensation Committee utilizes the support of independent compensation consulting firms, independent outside counsel, and an internal executive compensation team.

The Compensation Committee has retained Meridian to provide advice and information regarding the design and implementation of Viatris’ executive compensation programs. Meridian also provided information to the Compensation Committee regarding regulatory and other technical developments that may be relevant to our executive compensation programs. In addition, Meridian provided the Compensation Committee with competitive market information, analyses and trends on executive base salary, annual incentives, long-term incentives, benefits and perquisites.

The Compensation Committee also receives advice from outside counsel, including, but not limited to, Cravath, Swaine & Moore LLP.

The Compensation Committee performs an annual review of the independence of its outside advisors, consistent with NASDAQ requirements and the Compensation Committee charter.

Tax Deduction Cap on Executive Compensation

Section 162(m) of the Code restricts the deductibility for U.S. federal income tax purposes of the compensation paid to the CEO, CFO, each of the other NEOs who was an executive officer at the end of the applicable fiscal year, and certain other executives to the extent that such compensation for such executive exceeds $1 million. As a result, except to the extent provided in limited transition relief, compensation over $1 million paid to any NEO is not deductible under Section 162(m) of the Code. The Compensation Committee and the Board reserve the right to provide compensation to our executives that is not deductible, including, but not limited to, when necessary to comply with contractual commitments, or to maintain the flexibility needed to attract talent, promote retention, or recognize and reward desired performance.

Compensation Committee Report

We have reviewed and discussed the CD&A with management. Based on such review and discussions, we recommended to the Board that the CD&A be included in this Proxy Statement.

Respectfully submitted,

Melina Higgins, Chair

James M. Kilts

Harry A. Korman

Pauline van der Meer Mohr

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee during 2022 was an officer or employee of Viatris, was formerly an officer of Viatris, or had any relationship requiring disclosure by Viatris under Item 404 of Regulation S-K. During 2022, no executive officer of Viatris served on the compensation committee or board of another entity, one of whose executive officers served on the Compensation Committee or the Board of Viatris.

 

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Executive Compensation Tables

 

 

2022 Summary Compensation Table

The following summary compensation table sets forth the cash and non-cash compensation paid or granted to or earned by the NEOs. The 2021 and 2022 compensation reflects the first full years of Viatris’ simplified performance-based compensation program. Portions of reported 2020 compensation include one-time transaction-related items and address certain legacy company (Upjohn and Mylan) commitments that are not components of the Viatris 2021 and 2022 compensation program.

 

Name and

Principal

Position

 

Fiscal

Year

    Salary
($)
(1)
    Bonus
($)
(2)
    Stock
Awards
($)
(3)
    Option
Awards
($)
(4)
    Non-Equity
Incentive Plan
Compensation
($)
(5)
    Change in
Pension Value
and
Non-qualified
Deferred
Compensation
Earnings
($)
(6)
    All Other
Compensation
($)
(7)
    Total
($)
 

Michael Goettler

Chief Executive Officer

    2022       1,300,000             9,100,001             3,639,285             731,984       14,771,270  
    2021       1,300,000             9,100,015             3,716,115             663,440       14,779,570  
    2020       871,875       1,000,000       2,400,000             951,675             249,355       5,472,905  

Sanjeev Narula

Chief Financial Officer

    2022       840,385             3,400,006             1,586,355             281,660       6,108,406  
    2021       800,000             2,800,011             1,524,560             526,114       5,650,685  
    2020       539,183       1,000,000       425,000             303,021             661,719       2,928,923  

Rajiv Malik

President

    2022       1,200,000       10,950,000       7,200,007             2,799,450             405,434       22,554,891  
    2021       1,200,000             7,200,017             2,858,550             363,683       11,622,250  
    2020       1,155,769       2,500,000       6,210,015       690,001       2,358,386       336,290       851,522       14,101,983  

Anthony Mauro

President,

Developed

Markets

    2022       800,000       6,553,800       3,200,005             1,716,996             317,968       12,588,769  
    2021       800,000             3,200,017             1,753,244             296,654       6,049,915  
    2020       800,000       1,000,000       2,880,022       320,005       1,501,164             243,446       6,744,637  
                 

Robert J. Coury

Executive Chairman

    2022       1,800,000             10,800,015             5,039,010             859,620       18,498,645  
    2021       1,800,000             10,800,010             5,145,390             806,678       18,552,078  
    2020       1,800,000       10,000,000       12,451,936             4,405,590             399,850       29,057,376  

 

(1)

Represents the base salary actually paid to the NEO in 2022, 2021 and 2020. The 2020 amount includes the salary paid by Mylan or Upjohn, as applicable, prior to the closing of the Combination, and by Viatris after the closing of the Combination. For Mr. Coury, the amount includes the cash retainer received while serving as Mylan’s non-executive Chairman from January 1, 2020 through April 15, 2020, his base salary for serving as Mylan’s Executive Chairman from April 15, 2020 to the closing of the Combination, and his base salary for serving as Viatris’ Executive Chairman for the remainder of 2020.

(2)

Last year’s 90.7% approval for our shareholder advisory vote regarding executive compensation at our 2022 Annual Meeting have already taken into consideration certain legacy retention payments relating to Transition and Succession Agreements with Mylan Inc. for Messrs. Malik and Mauro, both of whom have played extremely instrumental roles in our success to date. We recently announced that both Messrs. Malik and Mauro will depart the Company effective as of April 1, 2024. As we previously disclosed in our 2021 and 2022 proxy statements, the Summary Compensation Table for 2022 reflects the conclusion of these legacy retention payments. In connection with the Combination in 2020 and in light of their importance to the launch, integration, leadership, and operation of Viatris, as well as to the development and execution of our two-phased strategic plan to set the Company up for future success, and because of their existing Transition and Succession Agreement severance rights, Messrs. Malik and Mauro were each granted a retention bonus (equal to $10,950,000 and $6,553,800, respectively), which became payable in 2022 upon the two-year anniversary of the Combination, subject to Messrs. Malik’s and Mauro’s continued employment through such date. These arrangements were successful, as Messrs. Malik and Mauro remained with Viatris for this critical transition period. In connection with the Combination in 2020, Messrs. Goettler and Narula each became entitled to receive a $1 million transaction-related payment previously granted to them by Pfizer. In connection with the Combination in 2020, Mr. Malik and Mr. Mauro received cash awards equal to $2.5 million and $1 million, respectively, in recognition of their significant efforts in connection with integration planning matters related to the Combination in addition to their customary responsibilities. In connection with the Combination in 2020, Mr. Coury received a one-time cash recognition award of $10 million (which recognized and rewarded Mr. Coury for, among other things: the fact that Mr. Coury assumed an executive role with Mylan in April 2020 but did not receive an annual equity grant at that time (which, had it been awarded, would have been valued at approximately $10.8 million); his strategic leadership of Mylan; the unexpected and significantly

 

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  increased efforts expended by Mr. Coury on company matters since April 2020, including during the COVID-19 pandemic; his significant leadership in the analysis and negotiation relating to the Combination and integration planning matters with respect to the Combination; and his expected leadership, direction and efforts for the combined company so that shareholders can realize the significant opportunity and benefits that are expected from the Combination).
(3)

Represents the grant date fair value of the long-term incentive awards granted to the NEO in 2022, 2021 and 2020, as applicable. The grant date fair value of PRSUs for 2022 is based on the target value and is as follows: Messrs. Goettler ($5,915,000), Narula ($2,210,003), Malik ($4,680,005), Mauro ($2,080,004) and Coury ($7,020,007). If the maximum achievement of performance goals had been assumed, the grant date fair value of the PRSUs for 2022 would have been as follows: Messrs. Goettler ($11,534,250), Narula ($4,309,506), Malik ($9,126,010), Mauro ($4,056,008) and Coury ($13,689,014). All Combination-related awards were previously disclosed in the Company’s 2021 and 2022 proxy statements. With respect to Messrs. Goettler and Narula’s 2020 award, the grant date fair value represents cash-based awards granted by Pfizer in 2020 prior to the Combination, equal to $2,400,000 and $425,000, respectively. In connection with the Combination, these and certain other Pfizer awards were canceled and forfeited, and Messrs. Goettler and Narula were granted Viatris RSUs to replace such forfeited Pfizer awards. With respect to Messrs. Malik and Mauro’s 2020 award, the grant date fair value represents RSUs and PRSUs granted by Mylan in 2020 prior to the Combination. In the case of PRSUs, value is based on the target value as follows: Mr. Malik ($3,450,010) and Mr. Mauro ($1,600,014). In connection with the Combination, PRSUs were converted into an award of Viatris RSUs on a one-for-one basis assuming target level performance and RSUs were also converted into Viatris RSUs on a one-for-one basis. With respect to Mr. Coury, the grant date fair value of stock awards for 2020 represents the 1.6 million PRSUs granted by Viatris in connection with the Combination pursuant to his Value Creation Award, based on the Monte Carlo value equal to $12,451,936. For information regarding assumptions used in determining the expense of such awards, please refer to Note 14 to the Company’s Consolidated Financial Statements contained in the Form 10-K.

(4)

Represents the grant date fair value of the option awards granted by Mylan in 2020 prior to the Combination. In connection with the Combination, these option awards were converted into options to purchase shares of Viatris common stock on a one-for-one basis.

(5)

Represents amounts paid under the Company’s annual short-term incentive plan. For a discussion of this plan, see “2022 Annual Incentive Compensation Program” on pages [] to [].

(6)

Represents the aggregate change in present value of Mr. Malik’s accumulated benefit under Mr. Malik’s Retirement Benefit Agreement. Mr. Malik’s Retirement Benefit Agreement was frozen as of the Combination and Mr. Malik no longer accrues additional benefits under the agreement. In computing this amount, we used the same assumptions that were used to determine the expense amounts recognized in our 2020 financial statements. In 2020, the impact of a decrease in the applicable discount rates led to an increase in the present value of accumulated benefits of $336,290 for Mr. Malik. For further information concerning Mr. Malik’s Retirement Benefit Agreement, see the Pension Benefits for 2022 table on page []. Messrs. Goettler and Narula participated in pension plans of Pfizer prior to the Combination, and Pfizer retained all liabilities with respect to such plans.

(7)

Amounts shown in this column are detailed in the following chart.

 

Name

  Fiscal
Year
    Use of
Company
Provided
Automobile
($)
(a)
    Personal
Use of
Company
Aircraft
($)
(b)
    Expatriate
Benefits
($)
(c)
    401(k) and
Profit
Sharing
Plan
Matching
and Profit
Sharing
Contribution
($)
(d)
    Restoration
Plan
Contribution
($)
(e)
    Other
($)
(f)
    Total
($)
 

Michael Goettler

    2022       21,162       68,081       95,554       31,350       514,149       1,688       731,984  
    2021       19,451       58,797       227,481       30,300       325,762       1,649       663,440  
    2020       2,400             43,863