Nancy Schlichting

About Nancy M. Schlichting

Nancy M. Schlichting, age 70, is Baxter’s Lead Independent Director (appointed February 3, 2025) and has served on Baxter’s Board since 2021 following Baxter’s acquisition of Hillrom. She is the retired President and CEO of Henry Ford Health System (HFHS) with 35+ years in senior healthcare administration; at Baxter she chairs the Compensation and Human Capital (CHC) Committee and serves on the Quality and Regulatory Compliance (QRC) Committee. Schlichting is considered independent under NYSE standards; in 2024 each director attended at least 75% of Board/committee meetings and participated in the annual meeting.

Past Roles

Organization	Role	Tenure	Committees/Impact
Henry Ford Health System (HFHS)	President & CEO	Jun 2003–Jan 2017	Led turnaround; quality and human capital initiatives
Henry Ford Hospital	President & CEO	2001–2003	Oversight of hospital operations
HFHS	EVP & COO	1999–2003	System operations leadership
HFHS	SVP & Chief Administrative Officer	1998–1999	Administrative leadership

External Roles

Organization	Role	Tenure/Status	Notes
Encompass Health, Inc.	Director	Current	Public company board
Walgreens Boots Alliance, Inc.	Director	Current	Public company board; sector adjacency
Duke University	Trustee; Chair, Duke University Health System Board	Current	Non‑profit leadership
Pear Therapeutics, Inc.	Director	Former	Prior public board
Kresge Foundation	Trustee	Former	Non‑profit trustee

Board Governance

Committee assignments: Chair, Compensation & Human Capital (CHC); Member, Quality & Regulatory Compliance (QRC). Not a member of the Operating Committee or CEO Search Working Group.
Lead Independent Director responsibilities: presides over executive sessions, approves agendas/schedules, principal liaison with Chair/CEO, leads CEO performance evaluation and succession (with NCGPP), engages with shareholders on governance/compensation.
Independence and attendance: Board determined Schlichting is independent; in 2024 the Board held nine meetings, and each director attended ≥75% of Board/committee meetings; all directors participated in the 2024 annual meeting.
Executive sessions: independent directors met in executive session at every regularly scheduled meeting; topics included strategy, portfolio actions (Kidney Care sale), capital allocation, succession planning, and disaster recovery.

Fixed Compensation

Component	Baxter Director Program Terms (2024)	Nancy Schlichting (2024 $)
Annual cash retainer	$100,000	$140,000 (incl. committee chair/member fees)
Committee meeting fees	$2,000 per committee meeting	Included in “Fees Earned” above
Lead Independent Director cash retainer	$50,000 (unchanged for 2025)	N/A for 2024; appointed LID in 2025
Equity grant (fully vested shares)	$215,000 grant-date value (May 2024)	$214,986; 5,952 fully vested shares
Other compensation	Foundation matching gifts; DEUs on deferred RSUs	$14,535 DEUs on deferred RSUs
Total	—	$369,521

Program updates effective 2025: annual cash retainer raised to $120,000; committee meeting fees eliminated; QRC/NCGPP chair retainers increased to $20,000; CHC chair ($20,000) and Audit chair ($25,000) unchanged; LID retainer $50,000 unchanged.

Performance Compensation

Equity Element	Structure	Nancy Schlichting (2024 Grants)
Director equity grant	100% fully vested Baxter shares; six‑month forfeiture if Board service ends (except death/disability/qualifying retirement)	5,952 fully vested shares granted May 2024 (grant-date fair value $214,986)
Options/PSUs	Directors prohibited from options trading; no performance-conditioned equity for directors	0 options outstanding; no PSUs

Baxter does not use performance‑conditioned equity for non‑employee directors; the annual grant is fully vested common shares to align directors with shareholders.

Other Directorships & Interlocks

Company	Potential Interlock/Exposure	Notes
Walgreens Boots Alliance	Potential customer/channel adjacency in healthcare products	No related‑party transaction disclosed in Baxter’s proxy
Encompass Health	Potential customer adjacency (post‑acute care)	No related‑party transaction disclosed in Baxter’s proxy

Baxter’s NCGPP Committee reviews and must approve/ratify any related person transactions ≥$120,000; none involving Schlichting are disclosed.

Expertise & Qualifications

Healthcare administration and human capital: extensive senior‑level provider leadership; led HFHS turnaround and quality initiatives.
Quality/regulatory oversight and M&A: quality/regulatory management expertise; experience in public company M&A (Baxter–Hillrom; Walgreens–Alliance Boots).
Board skills matrix: human capital management; healthcare delivery; quality/regulatory competence.

Equity Ownership

Holder	Common Shares Beneficially Owned	Options Exercisable (within 60 days)
Nancy M. Schlichting	787	0

Notes:

Directors may defer fully vested stock grants under Baxter’s Directors’ Deferred Compensation Plan; deferred shares are not reflected as beneficially owned in the table.
Stock ownership guidelines (Directors): after five years of Board service, hold Baxter stock equal to 5x the annual cash Board retainer; as of Dec 31, 2024, all directors with ≥5 years of service were in compliance. Schlichting joined in 2021 (not yet at five years).
Trading restrictions: directors are prohibited from short‑term trading, short sales, margin, pledging, and derivatives on Baxter stock; anti‑hedging and anti‑pledging policies apply.

Governance Assessment

Board effectiveness: As Lead Independent Director and CHC Chair, Schlichting sits at the center of CEO evaluation/succession, executive pay design, and shareholder engagement—responsibilities that enhance independent oversight during Baxter’s CEO transition and post‑divestiture transformation.
Independence and attendance: Independence affirmed; 2024 attendance thresholds met; robust executive sessions each meeting.
Director pay alignment: Director equity grants are fully vested shares; anti‑hedging/pledging policies and a 5x retainer ownership guideline (at 5 years) support alignment. Visible reported ownership is low (787 shares) but may reflect deferrals; guideline compliance is not yet required due to tenure.
Compensation oversight signals: As CHC Chair, Schlichting led enhancements to disclosure and maintained pay‑for‑performance for executives; 2024 say‑on‑pay support was ~80%, with added transparency in response to shareholder feedback.
Consultant independence: Aon serves as independent compensation consultant to the CHC Committee; while Aon provided additional services to the company and a legacy Hillrom pension plan, the CHC Committee assessed and concluded no conflicts impairing independence.

RED FLAGS and mitigants:

Consultant multi‑service exposure (Aon): Potential conflict mitigated by annual independence review and CHC Committee oversight.
Low visible share ownership: Reported beneficial holdings are low; deferral mechanics and guideline timing mitigate concern; anti‑pledging/hedging rules in place.
Overboarding risk: Baxter limits directors to ≤4 public boards (if not full‑time employees); Schlichting’s current public boards (Baxter, Walgreens Boots Alliance, Encompass Health) are within limits; Board reviews time commitments annually.

Overall, Schlichting’s independent leadership across CHC/QRC, coupled with rigorous governance policies (executive sessions, stock ownership guidelines, trading prohibitions), supports board effectiveness during Baxter’s strategic transition, with manageable risks appropriately mitigated.