☑ |
Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
☐ |
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware |
83-4364296 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of Each Class: |
Trading Symbol(s) |
Name of Each Exchange on Which Registered: | ||
Common Stock, par value $0.01 per share | VTRS | The NASDAQ Stock Market |
Large accelerated filer |
☑ |
Accelerated filer |
☐ | |||
Non-accelerated filer |
☐ |
Smaller reporting company |
☐ | |||
Emerging growth company |
☐ |
Auditor Name: Deloitte & Touche LLP |
Auditor Location: Pittsburgh, Pennsylvania | Auditor Firm ID: 34 |
• |
the integration of Mylan and the Upjohn Business or the implementation of the Company’s global restructuring program being more difficult, time consuming or costly than expected; |
• |
the pending Biocon Biologics Transaction may not achieve its intended benefits; |
• |
the possibility that the Company may be unable to achieve expected benefits, synergies and operating efficiencies in connection with the Combination or its global restructuring program within the expected timeframe or at all; |
• |
the possibility that the Company may be unable to successfully integrate Mylan and the Upjohn Business or implement its global restructuring program; |
• |
operational or financial difficulties or losses associated with the Company’s reliance on agreements with Pfizer in connection with the Combination, including with respect to transition services; |
• |
the possibility that the Company may be unable to achieve all intended benefits of its strategic initiatives; |
• |
the potential impact of public health outbreaks, epidemics and pandemics, including the ongoing challenges and uncertainties posed by the COVID-19 pandemic; |
• |
the Company’s failure to achieve expected or targeted future financial and operating performance and results; |
• |
actions and decisions of healthcare and pharmaceutical regulators; |
• |
changes in relevant laws and regulations, including but not limited to changes in tax, healthcare and pharmaceutical laws and regulations globally (including the impact of potential tax reform in the U.S.); |
• |
the ability to attract and retain key personnel; |
• |
the Company’s liquidity, capital resources and ability to obtain financing; |
• |
any regulatory, legal or other impediments to the Company’s ability to bring new products to market, including but not limited to “at-risk launches”; |
• |
success of clinical trials and the Company’s or its partners’ ability to execute on new product opportunities and develop, manufacture and commercialize products; |
• |
any changes in or difficulties with the Company’s manufacturing facilities, including with respect to inspections, remediation and restructuring activities, supply chain or inventory or the ability to meet anticipated demand; |
• |
the scope, timing and outcome of any ongoing legal proceedings, including government inquiries or investigations, and the impact of any such proceedings on the Company; |
• |
any significant breach of data security or data privacy or disruptions to our information technology systems; |
• |
risks associated with having significant operations globally; |
• |
the ability to protect intellectual property and preserve intellectual property rights; |
• |
changes in third-party relationships; |
• |
the effect of any changes in the Company’s or its partners’ customer and supplier relationships and customer purchasing patterns, including customer loss and business disruption being greater than expected following the Combination; |
• |
the impacts of competition, including decreases in sales or revenues as a result of the loss of market exclusivity for certain products; |
• |
changes in the economic and financial conditions of the Company or its partners; |
• |
uncertainties regarding future demand, pricing and reimbursement for the Company’s products; |
• |
uncertainties and matters beyond the control of management, including but not limited to general political and economic conditions, inflation rates and global exchange rates; and |
• |
inherent uncertainties involved in the estimates and judgments used in the preparation of financial statements, and the providing of estimates of financial measures, in accordance with U.S. GAAP and related standards or on an adjusted basis. |
Page |
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PART III |
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1 |
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20 |
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47 |
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50 |
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51 |
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PART IV |
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53 |
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54 |
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A-1 |
ITEM 10. |
Directors, Executive Officers and Corporate Governance |
Michael Goettler |
54 |
Chief Executive Officer (principal executive officer) | ||
Rajiv Malik |
61 |
President | ||
Sanjeev Narula |
61 |
Chief Financial Officer (principal financial officer) | ||
Paul Campbell |
55 |
Chief Accounting Officer and Corporate Controller (principal accounting officer) | ||
Brian Roman |
52 |
Global General Counsel | ||
Andrew Cuneo |
46 |
President, Japan, Australia and New Zealand (“JANZ”) | ||
Anthony Mauro |
49 |
President, Developed Markets | ||
Xiangyang (Sean) Ni |
53 |
President, Greater China | ||
Menassie Taddese |
52 |
President, Emerging Markets | ||
Robert J. Coury |
61 |
Executive Chairman |
Name |
Age (1) |
Other Positions with Viatris and Principal Occupation | ||
W. Don Cornwell |
74 |
Retired Chairman & Chief Executive Officer, Granite Broadcasting Corporation | ||
Robert J. Coury |
61 |
Executive Chairman, Viatris | ||
JoEllen Lyons Dillon |
58 |
Retired Executive Vice President, Chief Legal Officer and Corporate Secretary, The ExOne Company | ||
Neil Dimick, C.P.A. (2) |
72 |
Retired Executive Vice President and Chief Financial Officer, AmerisourceBergen Corporation | ||
Michael Goettler |
54 |
Chief Executive Officer, Viatris | ||
Melina Higgins |
54 |
Retired Partner and Managing Director, Goldman Sachs | ||
James M. Kilts |
74 |
Founding Partner, Centerview Capital | ||
Harry A. Korman |
64 |
Retired Chief Operating Officer, Mylan Inc. | ||
Rajiv Malik |
61 |
President, Viatris | ||
Richard A. Mark, C.P.A. |
68 |
Retired Partner, Deloitte & Touche LLP | ||
Mark W. Parrish |
66 |
Lead Independent Director and Vice Chairman, Viatris; Former Executive Chairman, TridentUSA Health Services | ||
Ian Read |
68 |
Operating Executive at The Carlyle Group; Retired Executive Chairman, Pfizer | ||
Pauline van der Meer Mohr |
62 |
Former President of the Executive Board at Erasmus University, Rotterdam |
(1) |
Ages as of April 25, 2022. |
(2) |
C.P.A. distinction is “inactive” status. |
* |
C.P.A. distinction is “inactive” status. |
• | 9 out of 13 Directors are independent; |
• | The Board operates pursuant to Corporate Governance Principles, which are reviewed by the Governance and Nominating Committee at least annually; |
• | The Executive Chairman possesses deep knowledge of our management, business, and the healthcare industry, and he fosters a culture of robust Board engagement, interaction, and oversight; |
• | The Board has a strong Lead Independent Director, who is also Vice Chairman, with key areas of expertise and experience (including, among others, public company management, corporate governance, the healthcare industry, human capital management including, but not limited to oversight of diversity, equity and inclusion, global business, information security, risk oversight, strategy and M&A) that help enhance the Board’s oversight of management and the Company; |
• | The members of the Board have collective experience overseeing each of Mylan and Upjohn, which helps support the ongoing integration of the two businesses and provides the Board with a strong understanding of the opportunities and challenges facing the combined company; |
• | The Audit, Compensation, 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); |
• | 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; |
• | All Board committees operate pursuant to written charters and conduct annual self-assessments; |
• | 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 CSR 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, CSR, certain litigation-related topics and other topics on at least a quarterly basis. On a biannual basis, the Risk Oversight Committee, the Audit Committee and chairs of each other Committee of the Board receive an information security update from the Company’s Chief Information Officer and Chief Information Security Officer. The Board and its other committees also have important roles in the oversight of risk as described in more detail in “Risk Oversight” beginning beginning on page 17; |
• | The independent Directors on the Viatris 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 Viatris Board and its committees have full access to officers and employees of the Company; and |
• | The Viatris Board and its committees have the authority to select, retain, and supervise advisors as necessary to fulfill their mandates. |
Director |
Audit |
Compensation |
Compliance |
Executive |
Finance |
Governance and Nominating |
Risk Oversight |
Science and Technology | ||||||||
W. Don Cornwell |
✓ |
✓ |
||||||||||||||
Robert J. Coury |
Chair | |||||||||||||||
JoEllen Lyons Dillon |
✓ |
✓ |
✓ |
Chair | ||||||||||||
Neil Dimick |
Chair | ✓ |
✓ |
✓ |
||||||||||||
Michael Goettler |
✓ | |||||||||||||||
Melina Higgins |
Chair | ✓ |
Chair | ✓ |
||||||||||||
Harry A. Korman |
✓ |
✓ |
Chair | ✓ | ||||||||||||
James M. Kilts |
✓ |
✓ |
||||||||||||||
Rajiv Malik |
✓ | |||||||||||||||
Richard A. Mark |
✓ |
✓ |
✓ |
|||||||||||||
Mark W. Parrish |
✓ |
Chair | ✓ |
✓ |
||||||||||||
Ian Read |
✓ |
Chair | ||||||||||||||
Pauline van der Meer Mohr |
✓ |
✓ |
✓ |
|||||||||||||
Meetings during 2021 |
8 | 6 | 4 | 2 | 6 | 4 | 5 | 4 |
• | 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 |
• | 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 |
• | Relationship between compensation policies and practices and the Company’s risk management with respect to compensation-related matters |
• | Evaluating relationship between compensation policies and practices and succession planning |
• | From time to time reviewing reports from management regarding pay equity, human capital management and succession planning |
• | 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 |
• | 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 |
• | 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 |
• | 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 |
• | 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 CSR matters |
• | Meeting with the Chairs of the other committees at least two times a year to discuss enterprise risk and related matters |
• | Reviewing the overall strategy and direction of the Company’s R&D program |
• | Reviewing presentations regarding significant emerging scientific and technological developments relevant to Viatris |
• | The Audit Committee |
• | The Compensation Committee |
• | The Compliance Committee |
the CEO, and the Committee is responsible for appointing and, as applicable, replacing, this individual, and 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, and reviews significant global compliance-related policies, including policies related to pricing and/or commercialization of Company products and services. |
• | The Finance Committee |
• | The Governance and Nominating Committee |
• | The Risk Oversight Committee |
1 |
Viatris was not providing forward-looking guidance for U.S. GAAP net earnings (loss) or a quantitative reconciliation of its 2021 adjusted EBITDA guidance and provided a quantitative reconciliation of its 2021 free cash flow guidance. See “Non-GAAP Financial Measures” and Appendix A for additional information. |
Performance Metrics |
Rationale For Use | |
Adjusted EBITDA* |
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 | |
Free Cash Flow* |
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 |
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 also supports 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. | |
Leverage* |
Reinforces commitment to investment grade rating, overall risk reduction, reducing interest expense, and delivering on financial commitments | |
Relative Total Shareholder Return (“TSR”) |
A relative market performance metric to modify final payout percentages for performance restricted stock units (“PRSUs”) and further align with shareholders |
* | Adjusted EBITDA, free cash flow and leverage are calculated from Viatris’ audited financial statements in the manner described in Appendix A. |
• | 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, success of the Company’s cash optimization efforts, and synergy capture of approximately $500 million in 2021. The Company’s 2021 publicly reported results for adjusted EBITDA and free cash flow also exceeded the upper end of the initial guidance ranges provided in February 2021 and were within the upper ends of the updated guidance ranges provided in November 2021. For more information on and the differences between how adjusted EBITDA and free cash flow are calculated for purposes of the Company’s 2021 performance metrics and public reporting purposes, see “Elements of 2021 Compensation – 2021 Annual Incentive Compensation Program – Annual Incentive Compensation Payouts for 2021” on pages 28 to 29 and “Elements of 2021 Compensation – 2021 Long-Term Incentive Compensation Programs – 2021 Three-Year PRSU Performance Metrics” on pages 29 to 30. |
• | The Company also achieved above target global product submissions, across six product areas, because it was able to accelerate certain additional submissions due to the strength of its development programs. |
• | Approximately 70% of target NEO total compensation is in the form of long-term equity grants, the value of which is directly correlated with the price of the Company’s stock. |
• | 60% of NEO equity awards are subject to leverage ratio and free cash flow metrics measured over a three-year time period. These equity awards are also subject to a relative market performance metric (relative TSR), which we included after discussions with shareholders to maximize alignment of executive and shareholder interests. Although we believe that Viatris stock is significantly undervalued and this modifier is measured on a three-year time frame, at the relevant stock price on the close of business April 25, 2022, any payouts of PRSUs would be automatically reduced by 30%, as described in more detail on pages 29 to 30. |
• | Uniting Upjohn and Mylan colleagues located in 59 markets globally into Viatris’ Human Relations management system; |
• | Reaching our year 1 synergy target (approximately $500 million in cost synergies) through actions focused on cost of goods, selling, general and administrative expenses, cost avoidance, and restructuring; |
• | Developing a comprehensive Transition Service Agreements (TSA) exit strategy relating to the Combination; and |
• | Beginning to implement an integrated management reporting system and Enterprise Resource Planning (ERP) capabilities that will enable the Company to combine and enhance insights in support of our new business model and will, we believe, provide for a smooth ERP TSA exit. |
• | Met or exceeded its initial financial guidance announced in February 2021 for Total Revenues, Adjusted EBITDA and Free Cash Flow 2 . |
• | Achieved over $500 million in cost synergies. |
• | Paid down $2.1 billion of debt. |
• | The first U.S. Food and Drug Administration (“FDA”) approval for the first interchangeable biosimilar Semglee ® injections for the treatment of diabetes. |
• | The first FDA approval for a generic to Restasis ® , a treatment for Chronic Dry Eye Syndrome. |
• | The first FDA-approved generic version of Symbicort® called Breyna™ . |
• | In 2021, Viatris was the first to bring to market the much-anticipated 10 mg, dispersible, scored, strawberry-flavored, pediatric formulation of dolutegravir. This was made possible through a partnership between Unitaid, the Clinton Health Access Initiative, ViiV Healthcare Limited and Viatris, which resulted in the fastest regulatory approval under the U.S. President’s Emergency Plan For AIDS Relief of a generic pediatric HIV drug to date. The approval allows the treatment to be offered outside of the U.S. |
• | Fortune |
• | Forbes |
• | Newsweek |
• | Fast Company |
• | Published our first Sustainability Report. |
• | Signed on to the UN Global Compact’s Water Mandate and Women’s Empowerment Principles. |
• | Joined the Pharmaceutical Supply Chain Initiative. |
• | Committed to science-based climate targets. |
• | Donated ~ 500 million doses of medicine. |
2 |
Viatris was not providing forward-looking guidance for U.S. GAAP net earnings (loss) or a quantitative reconciliation of its 2021 adjusted EBITDA guidance and provided a quantitative reconciliation of its 2021 free cash flow guidance. See “Non-GAAP Financial Measures” and Appendix A for additional information. |
• | Announcement of the Biocon Biologics Transaction, which we believe will create a uniquely positioned, vertically integrated global biosimilars leader. Upon closing, the transaction is expected to provide Viatris with immediate, enhanced financial flexibility, and accelerate its financial commitments. |
• | Announcement of an increase of 9% in the Company’s dividend to be paid in March 2022 over the per share dividend amounts paid in the prior year. |
• | Authorization of a share repurchase program of up to $1 billion. The Company expects share buybacks to be an important benchmark as it makes future capital allocation decisions and decides how best to invest in its future. |
• | The Company recently announced that it has entered its first Global Healthcare Gateway ® transaction focused on ophthalmology, acquiring an exclusive license for Pimecrolimus ophthalmic ointment for the treatment of Blepharitis, a common type of eye irritation. Blepharitis affects approximately 6.5 million patients in the United States alone—where there is no product specifically indicated for chronic Blepharitis. We expect that this product will contribute to the Company’s ophthalmology franchise while we continue to search for an anchor asset in this area. |
• | Attract, Motivate, and Retain Highly-Skilled Executives. on-going basis in a highly competitive market for talent. |
• | Align with Shareholder Interests. |
• | Drive Company Performance. |
NEO |
Base Salary |
Target Annual Incentive (as % of Base Salary) |
Target LTI (as % of Base Salary) |
|||||||||
Michael Goettler |
$1,300,000 | 150% | 700% | |||||||||
Rajiv Malik |
$1,200,000 | 125% | 600% | |||||||||
Sanjeev Narula |
$800,000 | 100% | 350% | |||||||||
Anthony Mauro |
$800,000 | 115% | 400% | |||||||||
Robert J. Coury |
$1,800,000 | 150% | 600% |
• | Annual incentive metrics: (1) (40% weighting), free cash flow(1) (40% weighting), and global regulatory submissions (20% weighting) metrics, each of which is designed to incentivize executives toward achievement of important and challenging financial and sustainability objectives. See pages 27 to 29 for a detailed discussion of 2021 annual incentive metrics and payouts. |
• | Long-term incentive metrics: (1) and leverage metrics(1) , as well as a relative market performance metric (relative TSR), which is used as a shareholder-aligned modifier to determine the final payout percentage. Each metric is measured over a three-year performance period. These metrics align with and further our strategies of de-levering, returning capital to shareholders, and delivering shareholder returns, among others. |
(1) | Adjusted EBITDA, free cash flow and leverage metrics are calculated from Viatris’ audited financial statements in the manner described in Appendix A. |
NEO |
Base Salary |
Target Annual Incentive |
Target Long-Term Incentive |
2021 Total Target Compensation (1) |
||||||||||||
Michael Goettler |
$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 |
$800,000 | $800,000 | $2,800,000 | $4,400,000 | ||||||||||||
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. |
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 SA | ||
Baxter International Inc. |
Merck & Co., Inc. |
Teva Pharmaceutical Limited |
NEO |
Annualized Viatris 2020 |
Viatris 2021 |
||||||
Michael Goettler |
$1,300,000 | $1,300,000 | ||||||
Rajiv Malik |
$1,200,000 | $1,200,000 | ||||||
Sanjeev Narula |
$800,000 | $800,000 | ||||||
Anthony Mauro |
$800,000 | $800,000 | ||||||
Robert J. Coury |
$1,800,000 | $1,800,000 |
• | Adjusted EBITDA (40% Weighting): top-line growth as well as efficient operations. |
• | Free Cash Flow (40% Weighting): |
• | Global Regulatory Submissions (20% Weighting): |
product pipeline supports the sustainability of the business model while serving Viatris’ mission of providing access to high quality, affordable medications. In addition, this metric serves as a stepping stone to implementing ESG sustainability metrics in the future. |
NEO |
Target (as % of Base Salary) |
Annual Incentive Target |
||||||
Michael Goettler |
150% | $1,950,000 | ||||||
Rajiv Malik |
125% | $1,500,000 | ||||||
Sanjeev Narula |
100% | $800,000 | ||||||
Anthony Mauro |
115% | $920,000 | ||||||
Robert J. Coury |
150% | $2,700,000 |
Metric |
Weighting |
Threshold |
Target |
Maximum |
Results | |||||
Adjusted EBITDA* |
40% | $5,900 million | $6,200 million | $6,500 million | $6,429.3 million | |||||
Free Cash Flow** |
40% | $1,950 million | $2,150 million | $2,350 million | $2,578 million | |||||
Global Regulatory Submissions*** |
20% | 110 | 120 | 130 | 145 |
* | Adjusted EBITDA is derived from Viatris’ financial statements in the same manner as Viatris’ publicly reported adjusted EBITDA, except that the calculation for the incentive program utilized budgeted foreign exchange rates. Viatris’ adjusted EBITDA as reported for the twelve months ended December 31, 2021 is reconciled to the most directly comparable U.S. GAAP measure in Appendix A. |
** | 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 2021 annual incentive compensation further adjusts the publicly reported measure for unplanned litigation gains or losses equal to or greater than $25 million in the aggregate, if any, and for proceeds from the sale of property, plant and equipment. Viatris’ free cash flow as reported for the twelve months ended December 31, 2021 is reconciled to the most directly comparable U.S. GAAP measure in Appendix A. |
*** | The Science and Technology Committee reviewed the actual results of the global submissions included in the incentive compensation program. |
NEO |
Actual Annual Incentive Payout |
|||
Michael Goettler |
$3,716,115 | |||
Rajiv Malik |
$2,858,550 | |||
Sanjeev Narula |
$1,524,560 | |||
Anthony Mauro |
$1,753,244 | |||
Robert J. Coury |
$5,145,390 |
NEO |
PRSUs |
RSUs |
Total LTI Award |
|||||||||
Michael Goettler |
$5,460,000 | $3,640,000 | $9,100,000 | |||||||||
Rajiv Malik |
$4,320,000 | $2,880,000 | $7,200,000 | |||||||||
Sanjeev Narula |
$1,680,000 | $1,120,000 | $2,800,000 | |||||||||
Anthony Mauro |
$1,920,000 | $1,280,000 | $3,200,000 | |||||||||
Robert J. Coury |
$6,480,000 | $4,320,000 | $10,800,000 |
* | 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 2021 PRSUs further adjusts the publicly reported measure for unplanned litigation gains or losses equal to or greater than $25 million in the aggregate, if any, for certain material asset sales, if any, and for proceeds from the sale of property, plant and equipment. Viatris’ free cash flow as reported for the twelve months ended December 31, 2021 is reconciled to the most directly comparable U.S. GAAP measure in Appendix A. |
** | Gross Leverage Ratio is derived from Viatris’ audited financial statements in the manner described in Appendix A. |
*** | 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 our peer group. |
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 |
What We Don’t Do |
X |
X gross-ups |
X |
X |
X Re-pricing of stock options |
X |
• | 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 privacy of business information and communications), we also may from time-to-time |
• | For reasons of continued security-related concerns, we may from time-to-time |
Position |
Ownership Requirement |
|||
Executive Chairman |
6x | |||
Chief Executive Officer |
6x | |||
President |
4x | |||
Other NEOs |
3x |
Name and Principal Position |
Fiscal Year |
Salary ($) (1) |
Bonus ($) (2) |
Stock Awards ($) (3) |
Option Awards ($) (4) |
Non-Equity Incentive Plan Compensation ($) (5) |
Changes in Pension Value and Non- qualified Deferred Compensation Earnings ($) (6) |
All Other Compensation ($) (7) |
Total ($) |
|||||||||||||||||||||||||||
Michael Goettler Chief Executive Officer |
|
2021 2020 |
|
|
1,300,000 871,875 |
|
|
— 1,000,000 |
|
|
9,100,015 2,400,000 |
|
|
— — |
|
|
3,716,115 951,675 |
|
|
— — |
|
|
553,462 249,355 |
|
|
14,669,592 5,472,905 |
| |||||||||
Sanjeev Narula Chief Financial Officer |
|
2021 2020 |
|
|
800,000 539,183 |
|
|
— 1,000,000 |
|
|
2,800,011 425,000 |
|
|
— — |
|
|
1,524,560 303,021 |
|
|
— — |
|
|
526,114 661,719 |
|
|
5,650,685 2,928,923 |
| |||||||||
Rajiv Malik President |
|
2021 2020 |
|
|
1,200,000 1,155,769 |
|
|
— 2,500,000 |
|
|
7,200,017 6,210,015 |
|
|
— 690,001 |
|
|
2,858,550 2,358,386 |
|
|
— 336,290 |
|
|
363,683 851,522 |
|
|
11,622,250 14,101,983 |
| |||||||||
Anthony Mauro President, Developed Markets |
|
2021 2020 |
|
|
800,000 800,000 |
|
|
— 1,000,000 |
|
|
3,200,017 2,880,022 |
|
|
— 320,005 |
|
|
1,753,244 1,501,164 |
|
|
— — |
|
|
296,654 243,446 |
|
|
6,049,915 6,744,637 |
| |||||||||
Robert J. Coury Executive Chairman |
|
2021 2020 |
|
|
1,800,000 1,800,000 |
|
|
— 10,000,000 |
|
|
10,800,010 12,451,936 |
|
|
— — |
|
|
5,145,390 4,405,590 |
|
|
— — |
|
|
806,678 399,850 |
|
|
18,552,078 29,057,376 |
|
(1) |
Represents the base salary actually paid to the NEO in 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) |
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, 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, 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 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 2021 and 2020, as applicable. The grant date fair value of PRSUs for 2021 is based on the target value and is as follows: |
Messrs. Goettler ($5,460,009), Narula ($1,680,004), Malik ($4,320,010), Mauro ($1,920,004) and Coury ($6,480,001). If the maximum achievement of performance goals had been assumed, the grant date fair value of the PRSUs for 2021 would have been as follows: Messrs. Goettler ($10,647,022), Narula ($3,276,011), Malik ($8,424,026), Mauro ($3,744,009) and Coury ($12,636,004). 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 one-for-one |
(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 |
(5) |
Represents amounts paid under the Company’s annual short-term incentive plan. For a discussion of this plan, see “2021 Annual Incentive Compensation Program” on page 27 of this Form 10-K/A. |
(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 $336,290 for Mr. Malik. For further information concerning Mr. Malik’s Retirement Benefit Agreement, see the Pension Benefits for 2021 Table on page 42. Messrs. Goettler and Narula participated in pension plans of Pfizer prior to the Combination, and Pfizer retained all liabilities with respect to such plans. |
(7) |
Amounts shown in this column are detailed in the following chart. |
Name |
Fiscal Year |
Use of Company Provided Automobile ($) (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 |
|
2021 2020 |
|
|
19,451 2,400 |
|
|
58,797 — |
|
|
227,481 43,863 |
|
|
30,300 9,750 |
|
|
215,784 193,199 |
|
|
1,649 143 |
|
|
553,462 249,355 |
| ||||||||
Sanjeev Narula |
|
2021 2020 |
|
|
19,200 2,400 |
|
|
— — |
|
|
336,440 631,856 |
|
|
26,454 7,231 |
|
|
139,419 20,089 |
|
|
4,601 143 |
|
|
526,114 661,719 |
| ||||||||
Rajiv Malik |
|
2021 2020 |
|
|
6,847 2,204 |
|
|
62,141 9,482 |
|
|
26,036 606,221 |
|
|
32,700 31,222 |
|
|
228,787 182,052 |
|
|
7,172 20,341 |
|
|
363,683 851,522 |
| ||||||||
Anthony Mauro |
|
2021 2020 |
|
|
19,200 19,200 |
|
|
9,150 — |
|
|
— — |
|
|
31,570 31,484 |
|
|
230,711 189,360 |
|
|
6,023 3,402 |
|
|
296,654 243,446 |
| ||||||||
Robert J. Coury |
|
2021 2020 |
|
|
24,563 25,111 |
|
|
29,184 30,363 |
|
|
— — |
|
|
31,377 28,300 |
|
|
680,312 275,306 |
|
|
41,242 40,770 |
|
|
806,678 399,850 |
|
(a) |
In the case of Messrs. Goettler, Narula, Mauro, and Coury, these costs represent a vehicle allowance and ancillary expenses associated with such vehicle. In the case of Mr. Malik, this number represents the cost of a vehicle (based on lease value), insurance and ancillary expenses associated with such vehicle. |
(b) |
Amounts disclosed represent the actual aggregate incremental costs associated with the personal use of corporate aircraft. Incremental costs include annual average hourly fuel and maintenance costs, landing and parking fees, customs and handling charges, passenger catering and ground transportation, crew travel expenses, away from home hanger fees, and other trip-related variable costs. Because the aircrafts are used primarily for business travel, incremental costs exclude fixed costs that do not change based on usage, such as pilots’ salaries, aircraft purchase or lease costs, home-base hangar costs, and certain maintenance fees. Aggregate incremental cost as so determined with respect to personal deadhead flights is allocable to the NEO. In certain instances where there are both business and personal passengers, the incremental costs per hour are pro-rated. |
(c) |
For 2021, amounts disclosed include for Messrs. Goettler and Narula the value of certain expatriate, repatriation and relocation benefits of $227,481 and $336,440, respectively. For 2020, amounts for Messrs. Goettler and Narula, include the value of certain expatriate, repatriation and relocation benefits of $43,863 and $631,856, respectively, paid by Pfizer and/or Viatris in 2020. Repatriation for Messrs. Goettler and Narula occurred on September 30, 2020. For 2021, the amount disclosed for Mr. Malik represents immigration expenses of $26,036. For 2020, the amount disclosed reflects expatriate benefits for Mr. Malik that represent income taxes paid by Mylan in connection with Mr. Malik’s expatriate assignment to the United States from India effective January 1, 2012. Specifically, Mr. Malik was responsible for, and continued to pay taxes equal to those he would have been obligated to pay had he maintained his principal work location and residence in India rather than having transferred, at Mylan’s request, to the United States, while Mylan generally paid for all additional taxes, including Mr. Malik’s tax obligations on the imputed income associated with Mylan’s payment of taxes on his behalf. This amount for Mr. Malik is net of Mylan’s estimated tax refunds for each year. The estimated refund was $274,822 for 2020. Mr. Malik is no longer eligible for these legacy tax equalization benefits. |
(d) |
For 2021, amounts for each NEO include a matching contribution for Messrs. Goettler ($10,000), Narula ($6,154), Malik ($12,400), Mauro ($11,270), and Coury ($11,077) and a profit sharing contribution received in March 2022 in respect of fiscal year 2021 to each of Messrs. Goettler, Narula, Malik, Mauro, and Coury ($20,300). For 2020, amounts disclosed for each NEO include a matching contribution for Messrs. Narula ($1,231), Malik ($14,122), Mauro ($14,384), and Coury ($11,200) and a profit sharing contribution received in March 2021 in respect of fiscal year 2020 for Messrs. Goettler ($9,750) and Narula ($6,000) and to each of Messrs. Malik, Mauro, and Coury ($17,100). |
(e) |
For 2021, amounts disclosed include a matching contribution under the Restoration Plan for Messrs. Goettler ($78,467), Narula ($80,782), Mauro ($89,930), and Coury ($266,221), and a profit sharing contribution under the Restoration Plan received in March 2022 in respect of fiscal year 2021 for Messrs. Goettler ($137,317), Narula ($58,637), Malik ($228,787), Mauro ($140,781), and Coury ($414,091). For 2020, amounts disclosed include, for Messrs. Goettler, Mauro and Coury a matching contribution under the Restoration Plan of $36,467, $130,584, and $215,857, respectively, and a profit sharing contribution under the Restoration Plan received in March 2021 in respect of fiscal year 2020 for each of Messrs. Malik, Mauro, and Coury equal to $182,052, $58,776, and $59,449, respectively. Amounts disclosed for Messrs. Goettler and Narula include Retirement Savings Contributions under Pfizer’s plans in the amount of $156,732 and $20,089, respectively. |
(f) |
For 2021, amounts disclosed represent health insurance for Messrs. Malik and Coury ($11,601); certain personal security services for Mr. Coury ($29,233); international travel assistance premiums for each of the NEOs; events for Messrs. Narula, Malik, and Mauro; tax preparation services related to U.K. tax returns for Messrs. Malik and Mauro; and long-term disability premiums for Messrs. Goettler, Narula, Malik, and Mauro. For 2020, amounts disclosed represent health insurance for Messrs. Malik and Coury ($29,102); certain personal security services for Messrs. Malik and Coury; events for Mr. Malik; tax preparation services related to U.K. tax returns for Messrs. Mauro and Coury; long-term disability premiums for Messrs. Goettler, Narula, Malik, Mauro, and Coury; and international travel assistance premiums for Messrs. Malik, Mauro, and Coury. |
Estimated Future Payments Under Non-Equity Incentive Plan Awards (1) |
Estimated Future Payments Under Equity Incentive Plan Awards (2) |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name |
Grant Date |
Approval Date |
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
All Other Stock Awards: Number of Shares of Stock or Units (#) (3) |
All Other Option Awards: Number of Securities Underlying Options (#) |
Exercise or Base Price of Option Awards ($/Sh) |
Grant Date Fair Value of Stock and Option Awards ($) (4) |
||||||||||||||||||||||||||||||||||||||||||||
Michael Goettler |
975,000 | 1,950,000 | 3,900,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
3/2/2021 | 3/2/2021 | — | — | — | 133,731 | 382,086 | 745,068 | — | — | — | 5,460,009 | |||||||||||||||||||||||||||||||||||||||||||||
3/2/2021 | 3/2/2021 | — | — | — | — | — | — | 254,724 | — | — | 3,640,006 | |||||||||||||||||||||||||||||||||||||||||||||
Sanjeev Narula |
400,000 | 800,000 | 1,600,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
3/2/2021 | 3/2/2021 | — | — | — | 41,148 | 117,565 | 229,252 | — | — | — | 1,680,004 | |||||||||||||||||||||||||||||||||||||||||||||
3/2/2021 | 3/2/2021 | — | — | — | — | — | — | 78,377 | — | — | 1,120,007 | |||||||||||||||||||||||||||||||||||||||||||||
Rajiv Malik |
750,000 | 1,500,000 | 3,000,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
3/2/2021 | 3/2/2021 | — | — | — | 105,809 | 302,310 | 589,505 | — | — | — | 4,320,010 | |||||||||||||||||||||||||||||||||||||||||||||
3/2/2021 | 3/2/2021 | — | — | — | — | — | — | 201,540 | — | — | 2,880,007 | |||||||||||||||||||||||||||||||||||||||||||||
Anthony Mauro |
460,000 | 920,000 | 1,840,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
3/2/2021 | 3/2/2021 | — | — | — | 47,026 | 134,360 | 262,002 | — | — | — | 1,920,004 | |||||||||||||||||||||||||||||||||||||||||||||
3/2/2021 | 3/2/2021 | — | — | — | — | — | — | 89,574 | — | — | 1,280,012 | |||||||||||||||||||||||||||||||||||||||||||||
Robert J. Coury |
1,350,000 | 2,700,000 | 5,400,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
3/2/2021 | 3/2/2021 | — | — | — | 158,713 | 453,464 | 884,255 | — | — | — | 6,480,001 | |||||||||||||||||||||||||||||||||||||||||||||
3/2/2021 | 3/2/2021 | — | — | — | — | — | — | 302,310 | — | — | 4,320,010 |
(1) |
The performance goals under the annual incentive compensation program applicable to the NEOs during 2021 are described above in the CD&A. For a discussion of these awards, see “2021 Annual Incentive Compensation Program” on pages 27 to 29 of this Form 10-K/A. |
(2) |
Consists of PRSUs awarded under the Viatris 2020 Stock Plan. The vesting terms applicable to these awards are described above in the CD&A and below following the Outstanding Equity Awards at the End of 2021 table. |
(3) |
Consists of RSUs awarded under the Viatris 2020 Stock Plan. The vesting terms applicable to these awards are described above in the CD&A and below following the Outstanding Equity Awards at the End of 2021 table. |
(4) |
Represents the grant date fair value of the specific award granted to the NEO. For information regarding assumptions used in determining such value, please refer to Note 13 to the Company’s Consolidated Financial Statements contained in the Original Filing. |
Option Awards |
Stock Awards |
|||||||||||||||||||||||||||||||||||||||
N AME |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable (1) |
Option Exercise Price ($) |
Option Expiration Date |
|
|
Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of Shares or Units of Stock That Have Not Vested ($) (2) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (2) |
||||||||||||||||||||||||||||||
Michael Goettler |
— | — | — | — | 55,248 | (3) |
747,499 | — | — | |||||||||||||||||||||||||||||||
— | — | — | — | 122,842 | (3) |
1,662,055 | — | — | ||||||||||||||||||||||||||||||||
— | — | — | — | 260,812 | (4) |
3,528,780 | 391,217 | (5) |
5,293,170 | |||||||||||||||||||||||||||||||
Sanjeev Narula |
— | — | — | — | 21,754 | (3) |
294,328 | — | — | |||||||||||||||||||||||||||||||
— | — | — | — | 80,250 | (4) |
1,085,784 | 120,375 | (5) |
1,628,669 | |||||||||||||||||||||||||||||||
Rajiv Malik |
34,389 | — | 55.84 | 3/5/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||
41,637 | — | 50.66 | 11/17/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||
50,168 | — | 46.27 | 2/17/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||
65,574 | — | 45.18 | 3/3/2027 | — | — | — | — | |||||||||||||||||||||||||||||||||
71,600 | — | 40.97 | 3/2/2028 | — | — | — | — | |||||||||||||||||||||||||||||||||
40,035 | 20,018 | 27.45 | 3/1/2029 | — | — | — | — | |||||||||||||||||||||||||||||||||
28,291 | 56,580 | 17.48 | 3/2/2030 | — | — | — | — | |||||||||||||||||||||||||||||||||
— | — | — | — | 33,516 | (6) |
453,471 | — | — | ||||||||||||||||||||||||||||||||
— | — | — | — | 125,684 | (7) |
1,700,505 | — | — | ||||||||||||||||||||||||||||||||
— | — | — | — | 105,263 | (6) |
1,424,208 | — | — | ||||||||||||||||||||||||||||||||
— | — | — | — | 197,369 | (7) |
2,670,403 | — | — | ||||||||||||||||||||||||||||||||
— | — | — | — | 206,356 | (4) |
2,792,003 | 309,535 | (5) |
4,188,005 | |||||||||||||||||||||||||||||||
Anthony Mauro |
4,266 | — | 23.44 | 2/22/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||
3,236 | — | 30.90 | 3/6/2023 | — | — | — | — | |||||||||||||||||||||||||||||||||
12,009 | — | 55.84 | 3/5/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||
16,265 | — | 50.66 | 11/17/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||
27,314 | — | 46.27 | 2/17/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||
29,275 | — | 45.18 | 3/3/2027 | — | — | — | — | |||||||||||||||||||||||||||||||||
29,833 | — | 40.97 | 3/2/2028 | — | — | — | — | |||||||||||||||||||||||||||||||||
18,567 | 9,284 | 27.45 | 3/1/2029 | — | — | — | — | |||||||||||||||||||||||||||||||||
13,121 | 26,240 | 17.48 | 3/2/2030 | — | — | — | — | |||||||||||||||||||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
— | — | — | — | 15,544 | (6) |
210,310 | — | — | ||||||||||||||||||||||||||||||||
— | — | — | — | 58,288 | (7) |
788,637 | — | — | ||||||||||||||||||||||||||||||||
— | — | — | — | 48,818 | (6) |
660,508 | — | — | ||||||||||||||||||||||||||||||||
— | — | — | — | 91,534 | (7) |
1,238,455 | — | — | ||||||||||||||||||||||||||||||||
— | — | — | — | 91,715 | (4) |
1,240,900 | 137,571 | (5) |
1,861,336 | |||||||||||||||||||||||||||||||
Robert J. Coury |
4,266 | — | 23.44 | 2/22/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||
3,236 | — | 30.90 | 3/6/2023 | — | — | — | — | |||||||||||||||||||||||||||||||||
58,952 | — | 55.84 | 3/5/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||
63,235 | — | 50.66 | 11/17/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||
82,776 | — | 46.27 | 2/17/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||
— | — | — | — | — | — | 1,600,000 | (8) |
21,648,000 | ||||||||||||||||||||||||||||||||
— | — | — | — | 309,535 | (4) |
4,188,005 | 464,301 | (5) |
6,281,994 |
(1) |
Vesting dates applicable to unvested stock options are as follows, in each case, generally subject to continued employment with Viatris: on March 2, 2022, the unvested options at the $27.45 exercise price for Messrs. Malik and Mauro vested and one-half of the unvested stock options at the $17.48 exercise price for Messrs. Malik and Mauro vested. Subject to applicable employment agreement provisions, following termination of employment, vested stock options will generally remain exercisable for 30 days following termination, except that (i) in the case of termination because of disability, 100% of options become vested and vested options will remain exercisable for two years following termination; (ii) in the case of a termination due to a reduction in force, vested options will remain exercisable for one year following termination; (iii) in the case of death, including within two years following termination because of disability, or, in the case of options granted prior to January 1, 2017, retirement, 100% of options become vested and vested options will remain exercisable for the remainder of the original term; and (iv) in the case of an involuntary termination without cause or a voluntary resignation for good reason that occurs within two years following a change in control, 100% of options become vested (double-trigger awards) and remain exercisable for the remainder of the original term. |
(2) |
The market value of RSUs and PRSUs was calculated using the closing price of the Company’s shares as of December 31, 2021, $13.53. |
(3) |
In connection with the Combination, Viatris granted Make-Whole RSU awards to Messrs. Goettler and Narula to replace the Pfizer equity awards forfeited by such NEOs. These Make-Whole RSU awards have the same vesting schedule as the original Pfizer awards and will cliff-vest on the third anniversary of the original grant date. On February 28, 2022, Mr. Goettler vested in 55,248 RSUs; Mr. Goettler is expected to vest in 122,842 RSUs and Mr. Narula is expected to vest in 21,754 RSUs on February 27, 2023. Amounts include all accrued and unvested whole share DEUs that vest only to the extent and at the same time the underlying award on which they are issued vest. In accordance with their terms, all of these awards would vest upon an involuntary termination without cause or a voluntary resignation for good reason that occurs within two years following a change in control (double-trigger awards) or upon the executive’s death or disability. For any other termination reason, these RSUs will be forfeited. |
(4) |
Of the 260,812 RSUs held by Mr. Goettler, 86,938 vested on March 2, 2022 and 86,937 will vest on March 2, 2023 and March 2, 2024; of the 80,250 RSUs held by Mr. Narula, 26,750 vested on March 2, 2022 and 26,749 will vest on March 2, 2023 and 26,751 will vest on March 2, 2024; of the 206,356 RSUs held by Mr. Malik, 68,785 vested on March 2, 2022 and 68,785 will vest on March 2, 2023 and 68,786 will vest on March 2, 2024; of the 91,715 RSUs held by Mr. Mauro, 30,572 vested on March 2, 2022 and 30,571 will vest on March 2, 2023 and 30,572 will vest on March 2, 2024; of the 309,535 RSUs held by Mr. Coury, 103,179 vested on March 2, 2022 and 103,178 will vest on March 2, 2023 and March 2, 2024. Amounts include all accrued and unvested whole share DEUs that vest only to the extent and at the same time the underlying award on which they are issued vest. |
(5) |
The PRSUs will vest on March 2, 2024, subject to attainment of performance goals. Amounts include all accrued and unvested whole share DEUs that vest only to the extent and at the same time the underlying award on which they are issued vest. |
(6) |
The 33,516 RSUs held by Mr. Malik, and 15,554 RSUs held by Mr. Mauro vested on March 2, 2022; of the 105,263 RSUs held by Mr. Malik, 52,631 vested on March 2, 2022 and 52,632 will vest on March 2, 2023 and of the 48,818 RSUs held by Mr. Mauro, 24,409 RSUs vested on March 2, 2022 and 24,409 will vest on March 2, 2023. In accordance with their terms, all of these awards would vest upon an involuntary termination without cause or a voluntary resignation for good reason that occurs within two years following a change in control (double-trigger awards) or upon the executive’s death or disability. |
(7) |
Mr. Malik is expected to vest in 197,369 shares and Mr. Mauro is expected to vest in 91,534 shares which represents 100% of their original target PRSUs. In accordance with their terms, all of these awards would vest upon an involuntary termination without cause or a voluntary resignation for good reason that occurs within two years following a change in control (double-trigger awards) or upon the executive’s death or disability. The |
remaining converted Viatris RSUs are expected to vest upon the earliest to occur of (i) March 2, 2023 (ii) an involuntary termination without cause or a voluntary resignation for good reason within two years following a change in control, and (iii) the executive’s death or disability. |
(8) |
The PRSUs were granted on November 23, 2020 and are divided into five separate vesting tranches requiring share price appreciation and shareholder returns (including dividends and other distributions) of 25%, 50%, 75%, 100% and 150% from the date of grant through December 30, 2025. In the case of the first three tranches, the PRSUs are subject to a retention requirement through the first anniversary of achieving the shareholder return goal, and in the case of the final two tranches, the PRSUs are subject to a retention requirement through the term of the award. The PRSUs would vest in full upon termination of employment without cause, resignation for good reason, disability, or death. |
Option Awards |
Stock Awards |
|||||||||||||||||||
N AME |
Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($) |
||||||||||||||||
Michael Goettler |
— | — | 3,499 | 54,235 | ||||||||||||||||
Sanjeev Narula |
— | — | — | — | ||||||||||||||||
Rajiv Malik |
— | — | 174,017 | 2,486,703 | ||||||||||||||||
Anthony Mauro |
— | — | 76,565 | 1,094,114 | ||||||||||||||||
Robert J. Coury |
— | — | 250,000 | 3,590,000 |
Name |
Plan Name (1) |
Number of Years of Credited Service (#) |
Present Value of Accumulated Benefit ($) (2) |
Payments During Last Fiscal Year ($) |
||||||||||
Michael Goettler |
N/A | N/A | — | — | ||||||||||
Sanjeev Narula |
N/A | N/A | — | — | ||||||||||
Rajiv Malik |
The Executive Plan for Rajiv Malik (3) |
N/A | 509,732 | — | ||||||||||
Rajiv Malik |
Retirement Benefit Agreement (4) |
15 | 5,342,449 | — | ||||||||||
Anthony Mauro |
N/A | N/A | — | — | ||||||||||
Robert J. Coury |
N/A | N/A | — | — |
(1) |
Messrs. Goettler, Narula, Mauro and Coury are not party to a defined benefit pension arrangement. |
(2) |
See pages 32 and 36 of this Form 10-K/A for further information on the value of the accumulated pension benefit. |
(3) |
This is a deferred compensation plan established for the benefit of Mr. Malik. The Company is no longer contributing to this plan. |
(4) |
The Malik RBA has been frozen. Mr. Malik no longer accrues any additional benefits under the agreement. |
Name |
Aggregate Balance at Last FYE ($) |
Executive Contributions in Last FY ($) |
Company Profit Sharing and Match Contributions in Last FY ($) |
Aggregate Earnings (Loss) in Last FY ($) |
Aggregate Withdrawals/ Distributions ($) |
Aggregate Balance at FYE ($) |
||||||||||||||||||
Michael Goettler |
— | 78,467 | 78,467 | 9,725 | — | 166,659 | ||||||||||||||||||
Sanjeev Narula |
— | 25,846 | 25,846 | 1,296 | — | 52,988 | ||||||||||||||||||
Rajiv Malik |
709,248 | — | 182,052 | 129,026 | — | 1,020,327 | ||||||||||||||||||
Anthony Mauro |
2,513,831 | 80,447 | 139,223 | 135,284 | — | 2,868,785 | ||||||||||||||||||
Robert J. Coury |
85,796 | 236,624 | 296,073 | 37,510 | — | 656,003 |
Name |
Fees Earned or Paid in Cash ($) |
RSUs ($) (2) |
All Other Compensation ($) (3) |
Total ($) |
||||||||||
W. Don Cornwell |
150,000 | 200,003 | 20,000 | 370,003 | ||||||||||
JoEllen Lyons Dillon |
200,000 | 200,003 | — | 400,003 | ||||||||||
Neil Dimick |
200,000 | 200,003 | 20,000 | 420,003 | ||||||||||
Melina Higgins |
225,000 | 200,003 | 20,000 | 445,003 | ||||||||||
James Kilts |
150,000 | 200,003 | 20,000 | 370,003 | ||||||||||
Harry A. Korman |
175,000 | 200,003 | — | 375,003 | ||||||||||
Richard Mark |
150,000 | 200,003 | 20,000 | 370,003 | ||||||||||
Mark W. Parrish |
250,000 | 200,003 | — | 450,003 | ||||||||||
Ian Read |
175,000 | 200,003 | — | 375,003 | ||||||||||
Pauline van der Meer Mohr (1) |
150,000 | 200,003 | — | 350,003 |
(1) |
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. |
(2) |
Represents the grant date fair value of the specific award granted to the Non-Employee Director. RSU awards granted in 2021 vested on March 2, 2022. For information regarding assumptions used in determining the amounts reflected in the table above, please refer to Note 13 to the Company’s Consolidated Financial Statements contained in the Original Filing. The number of unvested RSUs held by each of the Non-Employee Directors, as of December 31, 2021, were as follows: Mr. Cornwell; 14,331, Ms. Dillon, 14,331; Mr. Dimick, 14,331; Ms. Higgins, 14,331; Mr. Kilts, 14,331; Mr. Korman, 14,331; Mr. Mark, 14,331; Mr. Parrish, 14,331; |
Mr. Read, 14,331; and Ms. van der Meer Mohr, 14,331. Amounts include all accrued and unvested whole share 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, 2021, were as follows: Ms. Dillon, 24,780; Mr. Dimick, 24,780; Ms. Higgins, 31,403; Mr. Korman, 30,770; Mr. Mark, 12,260; Mr. Parrish, 24,780; and Ms. van der Meer Mohr, 13,949. |
(3) |
The amounts represent charitable contributions made in 2021 under our matching gift program. |
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 |
ITEM 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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 |
22,197 | — | * | |||||||||
Robert J. Coury |
1,061,659 | 208,199 | * | |||||||||
JoEllen Lyons Dillon |
39,564 | (1) |
24,780 | * | ||||||||
Neil Dimick |
75,200 | 24,780 | * | |||||||||
Michael Goettler |
137,155 | — | * | |||||||||
Melina Higgins |
137,068 | (2) |
31,403 | * | ||||||||
James M. Kilts |
79,402 | — | * | |||||||||
Harry A. Korman |
50,638 | 26,504 | * | |||||||||
Rajiv Malik |
881,315 | (3) |
380,002 | * | ||||||||
Richard A. Mark |
33,165 | 12,260 | * | |||||||||
Anthony Mauro |
240,865 | (4) |
172,024 | * | ||||||||
Sanjeev Narula |
22,378 | — | * | |||||||||
Mark W. Parrish |
82,250 | 24,780 | * | |||||||||
Ian Read |
14,497 | — | * | |||||||||
Pauline van der Meer Mohr |
29,974 | 13,949 | * | |||||||||
All directors and executive officers as a group (20 persons) |
3,085,085 | (5) |
1,037,763 | * |
* |
Less than 1%. |
(1) |
Includes 18 shares of common stock held by Ms. Dillon’s spouse. |
(2) |
Includes 74,000 shares of common stock held by Ms. Higgins’ spouse. |
(3) |
Includes 460,319 shares held in an irrevocable trust for the benefit of Mr. Malik’s spouse and children. |
(4) |
Includes 5,574 shares held in Mr. Mauro’s 401(k) account. |
(5) |
Includes the 15 individuals set forth above as well as Messrs. Campbell, Cuneo, Ni, Roman and Taddese. |
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership |
Percent of Class |
||||||
The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355 |
131,074,042 | (1) |
10.81% | |||||
BlackRock, Inc., 55 East 52nd Street, New York, NY 10055 |
86,554,658 | (2) |
7.14% |
(1) |
Based on the Schedule 13G filed by The Vanguard Group with the SEC on February 10, 2022, The Vanguard Group has sole voting power over 0 shares of common stock, shared voting power over 1,934,699 shares of common stock, sole dispositive power over 126,099,047 shares of common stock and shared dispositive power over 4,974,995 shares of common stock. |
(2) |
Based on the Schedule 13G/A filed by BlackRock, Inc. with the SEC on February 3, 2022, BlackRock, Inc. has sole voting power over 76,993,236 shares of common stock, shared voting power over 0 shares of common stock, sole dispositive power over 86,554,658 shares of common stock and shared dispositive power over 0 shares of common stock. |
ITEM 13. |
Certain Relationships and Related Transactions, and Director Independence |
ITEM 14. |
Principal Accounting Fees and Services |
In Millions |
||||||||
2021 |
2020 |
|||||||
Audit Fees (1) |
$12.29 | $11.93 | ||||||
Audit Related Fees (2) |
0.19 | 0.21 | ||||||
Tax Fees (3) |
0.27 | 2.38 | ||||||
All Other Fees (4) |
0.10 | — | ||||||
|
|
|
|
|||||
Total Fees |
$12.85 |
$14.52 |
(1) |
Represents fees for professional services provided for the audit of the Company’s annual consolidated financial statements, the audit of the Company’s internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002, reviews of the Company’s quarterly condensed consolidated financial statements, audit services provided in connection with other statutory or regulatory filings, and accounting, reporting and disclosure matters. |
(2) |
Represents fees for assurance services related to the audit of the Company’s annual consolidated financial statements, including statutory audits of certain of the Company’s subsidiaries, the audit of the Company’s employee benefit plans, comfort letters, certain SEC filings and other agreed-upon procedures. |
(3) |
Represents fees primarily related to tax return preparation, tax planning and tax compliance support services, as well as fees related to tax advice provided in connection with the Combination. |
(4) |
Represents fees related primarily to advisory services. |
ITEM 15. |
Exhibits |
31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
104 | Cover Page Interactive Data File—the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101). |
Date: April 29, 2022 |
VIATRIS INC. | |||
By: |
/s/ Sanjeev Narula | |||
Sanjeev Narula Chief Financial Officer (Principal Financial Officer) |
December 31, 2021 |
||||||||
(in millions) |
As Reported |
Adjusted for Currency Impact |
||||||
U.S. GAAP net loss |
$(1,269.1 | ) | $(1,271.0 | ) | ||||
Add / (deduct) adjustments: |
||||||||
Net contribution attributable to equity method investments |
61.9 | 61.9 | ||||||
Income tax provision (benefit) |
604.7 | 603.2 | ||||||
Interest expense (a) |
636.2 | 636.3 | ||||||
Depreciation and amortization (b) |
4,506.5 | 4,502.7 | ||||||
EBITDA |
$4,540.2 | $4,533.1 | ||||||
Add adjustments: |
||||||||
Share-based compensation expense |
111.2 | 111.2 | ||||||
Litigation settlements and other contingencies, net |
329.2 | 328.7 | ||||||
Restructuring, acquisition related and other special items (c) |
1,445.5 | 1,456.3 | ||||||
Adjusted EBITDA |
$6,426.1 | $6,429.3 |
(a) | Includes amortization of premiums and discounts on long-term debt. |
(b) | Includes purchase accounting related amortization. |
(c) | Includes restructuring related costs, acquisition related costs (primarily including selling, general and administrative expenses) and other special items, including cost of sales, research and development expense, selling, general and administrative expense, and other expense. |
Year Ended December 31, 2021 |
||||
U.S. GAAP net cash provided by operating activities |
$3,016.9 | |||
Add / (deduct): |
||||
Capital expenditures |
(457.2 | ) | ||
Free cash flow (As reported) |
2,559.7 | |||
Proceeds from sale of certain property, plant and equipment |
18.3 | |||
Free cash flow (for 2021 annual incentive compensation) |
$2,578.0 |
(In millions) |
Twelve Months Ended December 31, 2021 |
|||
Viatris Adjusted EBITDA (As reported) |
$6,426.1 | |||
Add: other adjustments including estimated synergies |
20.6 | |||
Credit Agreement Adjusted EBITDA |
$6,446.7 | |||
Reported debt balances: |
||||
Long-term debt, including current portion |
21,577.4 | |||
Short-term borrowings and other current obligations |
1,493.0 | |||
Total |
23,070.4 | |||
Add / (deduct): |
||||
Net premiums on various debt issuances |
(651.6 | ) | ||
Deferred financing fees |
42.4 | |||
Fair value adjustment for hedged debt |
(16.3 | ) | ||
Total debt at notional amounts |
$22,444.9 | |||
Notional debt to Credit Agreement Adjusted EBITDA Leverage Ratio |
3.5 |
Estimated GAAP Net Cash provided by Operating Activities |
$2,650 - $2,800 |
|||
Less: Capital Expenditures |
$(500) - $(650 | ) | ||
|
|
|||
Free Cash Flow |
$2,000 - $2,300 |
Estimated GAAP Net Cash provided by Operating Activities |
$2,900 - $3,100 |
|||
Less: Capital Expenditures |
$(450) - $(550 | ) | ||
|
|
|||
Free Cash Flow |
$2,400 - $2,600 |
Exhibit 31.1
Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Michael Goettler, certify that:
1. I have reviewed this Form 10-K/A of Viatris Inc.; and
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
/s/ Michael Goettler |
Michael Goettler |
Chief Executive Officer |
(Principal Executive Officer) |
Date: April 29, 2022 |
Exhibit 31.2
Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Sanjeev Narula, certify that:
1. I have reviewed this Form 10-K/A of Viatris Inc.; and
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
/s/ Sanjeev Narula |
Sanjeev Narula |
Chief Financial Officer |
(Principal Financial Officer) |
Date: April 29, 2022 |