More than a name
2023 Proxy Statement
CEO Letter
Dear Shareholders:
West continues to fulfill its mission of improving patient lives through the containment and delivery of injectable therapies-a mission that has guided our work for the past century and one that continues to be critical to the customers who rely upon our partnership and expertise to bring their innovative, new therapies to the patients that need them.
Our performance in 2022 was solid with an overall organic net sales growth of approximately 8% following the dynamic and accelerated growth of 2020 and 2021 generated by the COVID-19 pandemic. Now that the pandemic is under better control, we are seeing a return to our core baseline growth. We have continued with approximately $285 million in capital investments across our manufacturing network to meet the increased customer demand. I thank our team of more than 10,000 people across the globe that has delivered this sustained success during such a challenging period.
A highlight of 2022 was the initiation of our landmark collaboration with Corning to build the next generation of leading elastomer-glass containment system solutions. Together with the launch of the Daikyo CZ 2.25 mL insert needle syringe and the FDA approval of three drugs using our SmartDose® technology, these milestones demonstrate that West is continuing to invest and innovate to support our customers and the future needs of patients, setting the Company up for long-term growth.
I am proud to report that West has once again been recognized for our Environmental, Social and Governance ("ESG") business practices with a MSCI AA rating; a listing in Newsweek's Americas Most Responsible Companies for 2022; and a top 50 listing in Barron's Most Sustainable Companies. We have made tremendous strides across the six priority areas of our ESG strategy and newly defined performance indicators, which we will outline in detail in our annual ESG Report this spring.
As our Company grows, so does our team. We welcomed 600 new team members over the course of the year and added new senior leaders including a Chief Quality Officer and a New Global Head of Corporate Development. In addition, we elected an 11th member to the Board of Directors-Stephen H. Lockhart, M.D., Ph.D., a board-certified anesthesiologist and former Chief Medical Officer of Sutter Health, whose contributions have already proven indispensable.
As in years past, the Management team has worked together with the Board of Directors to ensure the performance of our team is reflected in their compensation and awards framework and is aligned with the business results we have delivered. The detailed pay-for-performance plans of our executives, which in the past have received more than 93 percent support from you, our shareholders, are detailed in this Proxy Statement.
As we celebrate 100 years in business, we know that the West name has come to mean so much to so many people. We realize that our products and pursuit of scientific innovations are critical to healthcare across the globe, which is why we are so committed to support patient health today and well into the future. I am grateful to all our shareholders who have been a part of West's journey so far and I thank you for your continued support of our Company.
Eric M. Green
President, Chief Executive Officer and Chair of the Board
West Pharmaceutical Services, Inc.
Notice of 2023 Annual Meeting
530 Herman O. West Drive
Exton, Pennsylvania 19341
March 15, 2023
The 2023 Annual Meeting of Shareholders of West Pharmaceutical Services, Inc. will be held by live webcast on:
Tuesday, April 25, 2023
9:30 AM, Eastern Daylight Time
To participate in the virtual Annual Meeting or to vote in that meeting, shareholders must enter the 16-digit digital control number found on their individualized proxy cards at the meeting specific website www.virtualshareholdermeeting.com/WST2023 on the day of the meeting. Online access to the webcast will open 15 minutes prior to the start of the meeting. We encourage you to log on early. Additionally, shareholders participating in the Annual Meeting via the webcast may submit questions through the virtual meeting platform by following the instructions described in this Proxy Statement and on the website.
The scheduled items of business are:
- Election of nominees named in the Proxy Statement as directors, each for a term of one year or until their successor is appointed or elected
- Consideration of an advisory vote to approve Named Executive Officer compensation
- Ratification of the appointment of PricewaterhouseCoopers LLP ("PwC") as our independent registered public accounting firm for 2023
- Consideration of an advisory vote on the frequency of an advisory vote on Executive Compensation
- Shareholder proposal entitled "Fair Elections"
We will also transact such other business as may properly come before the meeting and any adjournments or postponements thereof.
Shareholders of record of West common stock at the close of business on March 3, 2023 are entitled to notice of, and to vote at, the meeting and any postponements or adjournments thereof.
Kimberly B. MacKay
Sr. Vice President, General Counsel
and Corporate Secretary
Important Notice Regarding the Internet Availability of Proxy Materials for the Shareholder Meeting on April 25, 2023
This Notice of Annual Meeting and Proxy Statement ("Notice") and the 2022 Annual Report on Form 10-K ("2022 Annual Report") are available on our website at:
www.westpharma.com/investors
Your Vote is Important
Please vote as promptly as possible electronically via the Internet or by completing, signing, dating and returning the proxy card or voting instruction card.
Table of Contents
Proxy Summary | 1 |
Election of Directors | 7 |
Director Nominations, Skills and Criteria | 7 |
Board Commitment to Diversity and Inclusion | 9 |
Board Refreshment and Retirement Age | 9 |
Board Evaluation Process | 10 |
Proposal 1-Election of Directors | 11 |
Director Nominee Biographies | 12 |
Board and Director Information and Policies | 23 |
Board Leadership Structure | 23 |
Chair of the Board of Directors | 24 |
Lead Independent Director | 24 |
Committees | 25 |
The Board's Role in Risk Oversight | 28 |
Executive Officer Succession Planning | 30 |
CEO Evaluation Process | 30 |
Environmental, Social and Governance Responsibilities | 31 |
Human Capital Management | 33 |
2022 Shareholder Engagement | 33 |
Communicating with the Board | 33 |
Director Education and Onboarding | 34 |
Corporate Governance Documents and Policies | 35 |
Corporate Governance Principles | 35 |
Ethics and Code of Conduct | 36 |
Director Independence | 36 |
Related Person Transactions and Procedures | 36 |
Political Contributions and Lobbying | 37 |
Anti-Hedging and Pledging Policies | 37 |
Share Ownership Goals | 37 |
Stock Ownership | 38 |
Director Compensation | 40 |
2022 Non-Employee Director Compensation | 40 |
Director Deferred Compensation Plan | 42 |
Compensation Committee Report | 43 |
Compensation Discussion and Analysis | 44 |
Executive Summary: 2022 Performance at a Glance | 44 |
Governance and Compensation | 45 |
Say-on-Pay | 46 |
Executive Compensation Program Design | 47 |
Factors Used in the Compensation Process | 49 |
Business Segment Group | 51 |
Impact of Business Results on our 2021 Incentive Plans | 52 |
Incentive Compensation: Important Facts about Our Incentive Targets | 53 |
Our Annual Incentive Compensation | 54 |
Financial Measures and Adjustments | 55 |
2022 Consolidated Performance | 55 |
Our Long-Term Equity Incentive Compensation | 56 |
2022 Compensation Decisions | 57 |
Other Compensation Practices | 63 |
Compensation Tables | 65 |
2022 Summary Compensation | 65 |
2022 Grant of Plan-Based Awards | 68 |
Outstanding Equity Awards at Year-End 2022 | 69 |
2022 Option Exercises and Stock Vested | 70 |
2022 Pension Benefits | 71 |
2022 Nonqualified Deferred Compensation | 72 |
Payments on Disability | 73 |
Payments on Death | 73 |
Estimated Payments Following Termination | 73 |
Estimated Additional Severance Payments | 74 |
Payments on Termination in Connection with a Change-in-Control | 75 |
CEO Pay Ratio | 78 |
Pay Versus Performance | 79 |
Proposal 2-Advisory Vote to Approve Named Executive Officer Compensation | 83 |
Independent Auditors and Fees | 84 |
Audit Committee Report | 85 |
Proposal 3-Ratification of the Appointment of PricewaterhouseCoopers LLP | 86 |
Proposal 4-Advisory Vote on the Frequency of an Advisory Vote on Executive Compensation | 87 |
Proposal 5-Shareholder Proposal entitled "Fair Elections" | 88 |
Voting and Other Information | 92 |
PROXY SUMMARY
Proxy Summary
Below is a summary of important information you will find in this Proxy Statement. This summary does not contain all the information that you should consider, and you should read the entire Proxy Statement carefully before voting.
Summary of Shareholder Voting Matters
Our Board of Directors is soliciting your vote on matters that will be presented at our 2023 Annual Meeting of Shareholders and at any adjournment or postponement thereof. This Proxy Statement contains information to assist you in voting your shares.
The Notice, the accompanying proxy card or voting instruction card and our 2022 Annual Report, including our annual report wrap, are being mailed starting on or about March 15, 2023.
Recommended | |||
Proposal 1: Election of Directors | Page 11 | ✔ FOR | |
Mark A. Buthman | Deborah L. V. Keller | Each Nominee | |
William F. Feehery | Myla P. Lai-Goldman | ||
Robert F. Friel | Stephen H. Lockhart | ||
Eric M. Green | Douglas A. Michels | ||
Thomas W. Hofmann | Paolo Pucci | ||
Molly E. Joseph | |||
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation | Page 83 | ✔ FOR | |
Proposal 3: Ratification of the Appointment of PricewaterhouseCoopers LLP as our | Page 86 | ✔ FOR | |
Independent Registered Public Accounting Firm for 2023 | |||
Proposal 4: Advisory vote on the Frequency of an Advisory Vote on Executive | Page 87 | ✔ FOR Every One | |
Compensation | Year | ||
Proposal 5: Shareholder Proposal entitled "Fair Elections" | Page 88 | X AGAINST |
2022 Business Highlights*
Our market-led focus, global operations and One West philosophy continued to be the foundations of our Company's 2022 success in both net sales growth and operating cash flow. We continue to see favorable trends in the pharmaceutical and biotech industries that are expected to enable the Company to fulfill our long-term growth strategy, including:
- Biotechnology continues to emerge as a promising source of therapies and products for patient care, requiring specialized packaging and delivery solutions due to the sensitive nature of these large molecules. We continue to have a high participation rate in providing primary containment components for approved new molecular entities, especially large-molecule injectable drugs.
- Certain forward-looking statements are included in this Proxy Statement. They use such words as "will," "continue," "estimate," "expect," "looking to the future," and other similar terminology. These statements reflect Management's current expectations regarding future events and operating performance and speak only as of the date of this document. These statements are based on Management's beliefs and assumptions, current expectations, estimates, and forecasts. There are many factors that can influence the Company's future results that are beyond the ability of the Company to control or predict. Because of these known or unknown risks or uncertainties, actual results could differ materially from past results and those expressed or implied in any forward-looking statement. For a description of factors that could cause the Company's future results to differ from those expressed in any such forward-looking statements, see Item 1A, entitled "Risk Factors," in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, and as revised or supplemented by our quarterly reports on Form 10-Q or Form 8-K. Except as required by law or regulation, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
2023 Annual Meeting and Proxy Statement | 1
PROXY SUMMARY
- The regulatory landscape continues to evolve as global regulatory bodies are updating guidance on the manner in which newer, self-administered combination products are reviewed and approved for sale with increased attention on quality and documentation that are required.
- Continued research of subcutaneous administration, as an alternative to intravenous administration, prompted by its cost-effectiveness and increased patient adherence, fuels more opportunities to develop self-administration technology that places easy-to-use delivery systems in the hands of patients.
Each year, we have seen growing interest and demand for our high value product offerings, delivery device platforms and our services. Customers are also coming to West for our scientific expertise and insight into the regulatory landscape that governs our industry. This demand has translated into positive results for the business. In 2022, we reported:
NET SALES BY |
GEOGRAPHIC |
LOCATION |
NET SALES BY |
PRODUCT |
CATEGORY |
PROXY SUMMARY
NET SALES BY |
MARKET |
GROUP |
- Full-year2022 net sales of $2.887 billion, a 2.0% increase; organic net sales growth of 7.7%; currency translation decreased net sales growth by 570-basis points
- Full-year2022 reported-diluted EPS of $7.73, a decrease of 10.8%, and full-year 2022 adjusted-diluted EPS of $8.58 remained unchanged from the prior year
- Full-year2022 operating profit margin of 25.4%, a decrease of 4.5%, and full-year 2022 adjusted operating profit margin of 26.4%, a decrease of 1.9%
- Full-year2022 operating cash flow was $724.0 million, an increase of 24.0%; capital expenditures were
$284.6 million, compared to $253.4 million over the same period last year, and represented 9.9% of full-year 2022 net sales; free cash flow (operating cash flow minus capital expenditures) was $439.4 million, an increase of 32.9%
Long-Term Shareholder Return
Examining our results over the past five years, West has consistently delivered against its objectives, posting long-term sales growth and EPS improvements. The Company has also outperformed both the S&P 500 Index and S&P 500 Health Care Index in Total Shareholder Return ("TSR") during this same period.
48% | Americas | 55% | High-Value Components | 41% | Biologics |
43% | Europe, Middle East, Africa | 23% | Standard Packaging | 18% | Generics |
9% Asia Pacific | 5% | High-Value Delivery Devices | 24% | Pharma | |
17% | Contract-Manufactured Products3 | 17% | Contract-Manufactured Products3 |
- Please refer to our 2022 Form 10K, February 16, 2023 Earnings Release on Form 8-K and prior year earnings releases for the reconciliation of Non-U.S. GAAP financial measures.
- Sources: IR Insight
- Non-proprietaryproducts
CONSTANT CURRENCY | $2.89 |
CAGR 15.5% |
BILLION | ||||
REPORTED | ||||
CAGR 13.9% | ||||
$1.72 | ||||
BILLION | ||||
2018 | 2019 | 2020 | 2021 | 2022 |
ADJUSTED DILUTED EPS
CAGR 32.2%
$8.58 | ||||
$2.81 | ||||
2018 | 2019 | 2020 | 2021 | 2022 |
600%
NYSE: WST
500% | S&P 500 |
S&P 500 Health Care Index | |
400% | |
300% | |
200% |
100%
2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
NET SALES
ADJUSTED DILUTED EPS1 | COMPARISON OF CUMULATIVE |
(NON-U.S. GAAP) | FIVE-YEAR TOTAL RETURN2 |
(DEC.31, 2017 - DEC. 31, 2022) |
2 | 2023 Annual Meeting and Proxy Statement
2023 Annual Meeting and Proxy Statement | 3
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
West Pharmaceutical Services Inc. published this content on 14 March 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 March 2023 13:29:05 UTC.