Grace McArdle

About Grace McArdle

Grace McArdle, 46, is Executive Vice President, Manufacturing and Quality at Elanco, a role she has held since July 2023. She previously led Supply Chain Operations and Operational Excellence at Elanco, and earlier held manufacturing roles at Eli Lilly in the U.S. and Ireland. She holds master’s degrees in Biopharmaceutical Engineering (University College Dublin) and Chemical Engineering (Queen’s University Belfast) . Elanco’s 2024 operating backdrop included $4.439B revenue, $910M adjusted EBITDA, and 3% organic constant-currency revenue growth; annual cash incentive (company-wide) paid at 103% of target on ECE performance, framing incentive alignment during her tenure .

Past Roles

Organization	Role	Years	Strategic impact
Elanco Animal Health	EVP, Manufacturing & Quality	Jul 2023 – Present	Leads global manufacturing and quality for product supply and launches
Elanco Animal Health	VP, Supply Chain Operations	Mar 2020 – Jul 2023	Oversaw end‑to‑end supply chain operations
Elanco Animal Health	Exec Director, Manufacturing Strategy & Operational Excellence	May 2019 – Mar 2020	Drove manufacturing strategy and OpEx programs
Elanco Animal Health	Senior Director, Operational Excellence	Apr 2018 – May 2019	Led continuous improvement initiatives
Elanco (within Lilly)	Senior Director, API External Manufacturing	Jul 2017 – Apr 2018	Managed external manufacturing for API
Eli Lilly (US & Ireland)	Multiple manufacturing leadership roles	Sep 2000 – 2017	Manufacturing operations and leadership across geographies

External Roles

Not disclosed in Elanco’s proxy biographies; no external directorships or outside roles are listed for Ms. McArdle .

Fixed Compensation

Elanco discloses detailed compensation only for Named Executive Officers (NEOs); Ms. McArdle is an executive officer but not an NEO, so her base salary and bonus targets are not individually disclosed in the proxy .
Company philosophy: target total compensation at peer-group median, with higher equity weighting; 2024 NEO base salaries rose ~4% on average as part of market benchmarking .
Governance guardrails include no employment agreements for NEOs, limited perquisites, and no SERP or excise-tax gross-ups .

Performance Compensation

Elanco applies a common program design across senior executives; NEO details illustrate structure and outcomes.

Incentive component	Weighting	Performance metric	Target definition	2024 outcome/payout	Vesting
Annual Cash Incentive	n/a (company plan)	Elanco Cash Earnings (ECE)	Year-over-year change; prior year ECE is the target	2024 ECE improved $11M vs 2023; payout multiple = 103% of target	Paid annually
Performance Awards (PAs)	50% of LTI	Adjusted EBITDAR	Prior-year Adjusted EBITDAR plus required return on change in Gross Investments	For 2023 grants: 2024 performance year attained 103.97%; 2‑year average payout = 90.36%	Earned over 2-year performance period; settle after certification
RSUs	25% of LTI	Time-based	n/a	n/a	Vest ~1/3 annually over 3 years
Stock Options	25% of LTI	Time-based (exercise price = grant FMV)	n/a	n/a	Vest ~1/3 annually over 3 years

Notes:

ECE and Adjusted EBITDAR were emphasized to align incentives to cash generation, capital efficiency, and long‑term value creation; mid‑year aqua divestiture was excluded from 2024/2025 ECE and PA calculations to avoid penalizing value‑accretive portfolio actions .

Equity Ownership & Alignment

Policy/Practice	Detail	Implications
Executive stock ownership	Executive officers have 5 years to meet guidelines; CEO 6x salary; other NEOs 3x salary; must retain 50% of equity until met. PAs and options don’t count; RSUs count .	Encourages sustained skin‑in‑the‑game; reduces near‑term selling pressure until guideline compliance .
Anti‑hedging/pledging	Hedging and pledging of Elanco stock prohibited for directors and employees .	Reduces misalignment/credit risk and selling pressure from collateral calls .
Clawback policies	(1) Required policy for restatements (faultless) covering former/current executive officers; (2) Supplemental policy enabling recovery for misconduct or restatements across senior management (incl. equity and severance) .	Strong recourse on financial misreporting or misconduct; mitigates risk-taking incentives .
Deferred compensation	Enhanced plan allows deferral of base/bonus/equity; 1:1 company match on deferrals into Elanco stock up to 6% of base+bonus (two‑year cliff) .	Incentivizes ownership accumulation and retention via matching/vesting .
Beneficial ownership/pledge status	As of Mar 19, 2025, the company reported no pledged shares among reported directors and NEOs; group total for all directors and executive officers (24 persons) was 4,393,945 shares .	No reported pledging across the reported insider cohort at that date .

Employment Terms

Change‑in‑Control (CIC) plan (select employees, including NEOs): double‑trigger required (CIC plus qualifying termination within 2 years); severance for NEOs equals 2x base salary + 2x target bonus; 18 months of benefits; equity vests (RSUs/options full; PAs at target) upon qualifying termination after CIC or if awards aren’t assumed .
Executive Severance (non‑CIC): for “other executives” (non‑CEO), lump sum equal to 1x base salary + 1x target annual cash incentive + 12 months of company contributions to medical/dental; outplacement up to 12 months .
Insider trading policy: quarterly and event‑specific blackout periods, pre‑clearance for covered persons, and anti‑tipping provisions .

Compensation Structure Analysis (levers and signals)

Shift to cash‑economic metrics: Annual bonus on ECE and PAs on Adjusted EBITDAR emphasize capital discipline, cash conversion, and multi‑year improvements; 2024 bonus factor at 103% and PA adjustments for divestiture effects indicate responsiveness to portfolio strategy while maintaining rigor .
Higher equity weighting vs cash, with RSU/option time‑based vesting and 2‑year PA cycles, balances retention and performance; holding requirements (50% until guideline met) curb immediate monetization pressure .
Governance tighteners: dual clawbacks, anti‑hedge/pledge, no NEO employment agreements, and no repricing without shareholder approval reduce governance risk and pay‑for‑failure concerns .

Compensation Peer Group (benchmarking and inflation risk)

2024 peer group (17 companies) included Agilent, Charles River, Edwards Lifesciences, Hologic, IDEXX, Incyte, Perrigo, QuidelOrtho, Revvity, Vertex, Zimmer Biomet, among others; updated in Aug 2024 to remove Horizon and add Bausch Health and Biogen for 2025 benchmarking .
Targeting median pay positioning with equity‑heavy mix seeks competitiveness without outsized fixed guarantees .

Say‑on‑Pay & Shareholder Feedback

2024 say‑on‑pay support: 93% of votes cast in favor; Committee cited ongoing shareholder engagement and adjustments to metrics/definitions (e.g., Gross Investments normalization, divestiture treatment) to balance rigor and fairness .

Investment Implications

Alignment: McArdle’s role sits within a structure that ties pay chiefly to ECE and Adjusted EBITDAR, with equity-heavy, multi‑year vesting and stringent ownership/anti‑hedging rules—favorable for long‑term alignment and reduced forced‑selling risk during vesting windows .
Retention risk: RSU/option tranches (3‑year) and PA cycles (2‑year) plus stock‑match deferral incentives provide ongoing retention hooks for senior executives; absence of employment agreements suggests at‑will flexibility balanced by severance/CIC protections .
Governance quality: Double‑trigger CIC, robust clawbacks, and strong say‑on‑pay support mitigate compensation and governance red flags, supporting confidence in execution incentives across the leadership team that includes McArdle .