Caroline Litchfield
Merck & Co.About Caroline Litchfield
Executive Vice President and Chief Financial Officer of Merck & Co., Inc.; age 56 with 34 years of tenure at the company. 2024 performance drivers used to determine incentive payouts included 10% revenue growth, Revenue and Pre‑Tax Income beats vs targets, and a 169% PSU payout on three‑year EPS and peer‑relative TSR; Merck’s TSR was −6.2% (1‑yr), 12.2% (3‑yr), and 6.0% (5‑yr) through YE‑2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Merck & Co., Inc. | Executive Vice President and Chief Financial Officer | — | Principal finance leader and Named Executive Officer (NEO) |
External Roles
Not disclosed in the 2025 proxy .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | $959,959 | $1,093,063 | $1,166,044 |
| Target Annual Incentive (% of base) | — | 100% | 100% |
| Target Long‑Term Incentive ($) | — | $4,250,000 | $4,250,000 |
Performance Compensation
Company Scorecard (Annual Cash Incentive, 2024)
| Metric | Weighting | Target | Actual | Payout Score |
|---|---|---|---|---|
| Revenue | 35% | $64.00B | $64.41B (adjusted) | 109% |
| Pre‑Tax Income (non‑GAAP) | 35% | $25.70B | $26.15B (adjusted) | 115% |
| Pipeline | 20% | — | — | 128% |
| Sustainability | 10% | — | — | 100% |
| Total Company Payout | — | — | — | 114% |
| Executive | Base Salary ($) | Target (%) | Company Scorecard (%) | Final Annual Incentive ($) |
|---|---|---|---|---|
| Caroline Litchfield | $1,170,000 | 100% | 114% | $1,333,800 |
PSU Program (2022–2024 cohort; paid Jan 27, 2025)
| Metric | Weight | Target | Actual | Payout |
|---|---|---|---|---|
| 3‑Year EPS | 50% | $21.46 | $26.11 | 200% |
| 3‑Year R‑TSR vs peer median | 50% | 5.7% (peer median) | 13.5% (Merck) | 139% |
| Total PSU Payout | — | — | — | 169% |
| Executive | PSU Target (shares) | Final PSU Shares (incl. accrued dividends) | Vest Date |
|---|---|---|---|
| Caroline Litchfield | 23,461 | 43,244 | Jan 27, 2025 |
2024 Grants
| Award Type | Grant Date | Target/Quantity | Exercise/Price | Vesting | Grant‑date Fair Value ($) |
|---|---|---|---|---|---|
| PSUs | Mar 28, 2024 | 22,546 target shares | — | 3‑yr perf (2024–2026) | $3,585,716 |
| Stock Options | Apr 30, 2024 | 49,805 options | $129.22 | 1/3 each year (starts Apr 30, 2025) | $1,275,008 |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 344,406 shares (less than 1% of outstanding) |
| Shares outstanding (reference) | 2,521,758,443 shares (Mar 3, 2025) |
| Ownership as % | ~0.0136% (344,406 ÷ 2,521,758,443; calculated from cited figures) |
| Options exercisable within 60 days | 270,066 |
| Unexercisable options outstanding | 17,800 (5/3/2022 grant, $87.10) ; 39,189 (5/2/2023 grant, $117.89) ; 49,805 (4/30/2024 grant, $129.22) |
| Outstanding PSUs (maximum 200%) | 55,926 (2023 grant; market value $5,563,518 at $99.48) ; 45,092 (2024 grant; market value $4,485,752 at $99.48) |
| Hedging/pledging | Prohibited for officers and directors |
| Ownership guidelines | Executives must hold stock at a set multiple of salary; until met, retain 75% of net after‑tax shares from option exercises/PSU/RSU settlements |
| Clawback | Robust recoupment policy exceeding NYSE clawback; applies to incentive‑based pay upon misconduct/negative impact |
Employment Terms
| Provision | Key Terms |
|---|---|
| Severance (before change in control) | Lump sum under Separation Plan; for CFO, estimated $1,804,999 total if terminated Dec 31, 2024 (includes $1,755,000 severance, $35,349 welfare continuation, $14,650 outplacement/financial planning) |
| Change in Control (CIC) cash | Double‑trigger; 2× (base salary + lesser of target bonus or 3‑yr average actual) paid in lump sum; plus pro‑rata annual incentive at target |
| CIC benefits | Medical/dental/life at active rates for up to 2 years; pension vesting; retiree bridges if near eligibility; outplacement; financial/tax planning allowance |
| CIC equity | Unvested options vest upon involuntary termination within 2 years post‑CIC; PSUs/RSUs generally pro‑rated per plan terms |
| CIC estimated payout (if terminated Dec 31, 2024) | $7,143,947 total (includes $4,680,000 cash severance; $47,133 welfare continuation; $2,402,164 PSU acceleration; $14,650 outplacement/financial planning) |
| Tax gross‑up | No excise tax gross‑ups under CIC |
| Insider trading policy | Prohibits short sales, derivatives, hedging, and pledging of Company securities |
Multi‑Year Compensation Summary (reported)
| Component | 2022 ($) | 2023 ($) | 2024 ($) |
|---|---|---|---|
| Salary | 959,959 | 1,093,063 | 1,166,044 |
| Stock Awards (RSUs/PSUs, grant‑date fair value) | 2,075,595 | 3,147,375 | 3,585,716 |
| Option Awards (grant‑date fair value) | 824,999 | 1,275,003 | 1,275,008 |
| Non‑Equity Incentive (EIP) | 1,735,500 | 1,665,000 | 1,333,800 |
| Change in Pension Value | $0 (aggregate negative per SEC rule) | 792,534 | $0 (aggregate negative per SEC rule) |
| All Other Compensation | 326,605 | 327,410 | 147,210 |
| Total | 5,922,657 | 8,300,385 | 7,507,778 |
Perquisites and Benefits (2024)
- Financial/tax counseling: $10,000; relocation/tax equalization: $10,102; savings plan match/credits: $127,108; no personal aircraft or car/driver usage disclosed for CFO in 2024; total $147,210 .
Pension & Deferred Compensation (as of/for 2024)
- Pension present value: Qualified Plan $178,995; SRP $931,106; U.K. Pension Plan $2,316,296 .
- Nonqualified deferral: Company credits $111,583; aggregate account balance $471,131 .
Investment Implications
- Pay‑for‑performance alignment is strong: 82% of non‑CEO NEO target compensation is variable; CFO’s annual incentive and PSU outcomes were directly tied to Revenue, Pre‑Tax Income, Pipeline/Sustainability, EPS, and peer‑relative TSR, with 2024 company payout at 114% and 2022–2024 PSU payout at 169% .
- Insider selling pressure windows: A portion of 2024 options vest on Apr 30, 2025 and 2022 PSUs settled Jan 27, 2025; monitor Form 4 activity around these dates, noting hedging/pledging prohibitions and retention/ownership guidelines that require 75% post‑tax share retention until guideline compliance .
- Retention risk appears mitigated by double‑trigger CIC protections (2× cash + benefits) and pro‑rata equity vesting, while the robust clawback and prohibition on hedging/pledging support shareholder alignment and risk controls .
- Governance and shareholder sentiment: Say‑on‑pay support remained high at ~94% in 2024; compensation design changes in 2024 were not significant, with continued use of EPS and R‑TSR metrics and independent consultant oversight—reducing pay risk inflation and preserving alignment with peers .