Dean Li
Merck & Co.About Dean Li
Dean Y. Li, M.D., Ph.D., is executive vice president and president of Merck Research Laboratories (MRL), leading Merck’s global human vaccines and therapeutics R&D organization. He joined Merck in 2017 and was appointed president of MRL in January 2021; he previously held senior translational medicine and discovery roles at Merck and held academic leadership roles at the University of Utah. He holds a B.A. in chemistry from the University of Chicago and received his M.D. and Ph.D., plus clinical and cardiology training, from Washington University School of Medicine in St. Louis . As of the 2025 proxy, Dr. Li is age 63 with eight years of tenure at Merck (NEO age/tenure disclosure). Company performance under the incentive scorecard achieved 10% revenue growth in 2024 (ex-FX) and an annual scorecard payout of 114%; the 2022–2024 PSU cycle paid at 169% on EPS and relative TSR metrics .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Merck Research Laboratories | President, EVP | Jan 2021–present | Leads global human health R&D across vaccines and therapeutics, advancing late-stage pipeline and BD execution . |
| Merck Research Laboratories | SVP, Discovery Sciences & Translational Medicine; previously VP, Head of Translational Medicine | 2017–2020 | Built discovery and translational capabilities; oversight for discovery and early human clinical trials . |
| University of Utah Health | H.A. & Edna Benning Professor of Medicine & Cardiology; CSO; Associate VP; Vice Dean | Pre-2017 | Academic leadership and translational research; interim CEO of ARUP (2015–2016), a large clinical reference lab . |
| ARUP Laboratories | Interim CEO | 2015–2016 | Led one of the largest U.S. clinical reference labs . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Recursion Pharmaceuticals | Board member | Current | Co-founded Recursion; current board listing on company site . |
| Biotech ventures | Co-founder | Prior to 2017 | Co-founded Hydra Biosciences and Navigen based on lab research . |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary earned ($) | 1,095,055 | 1,368,819 | 1,451,077 |
| Target annual incentive (% of base) | — | 100% | 100% |
| Base salary rate as of 12/31 ($) | — | — | 1,456,000 |
| Target LTI ($) | — | — | 5,600,000 |
Notes: 2024 base salary increased 4.0% YoY; target annual incentive unchanged; LTI target unchanged; total target direct compensation up ~1.3% .
Performance Compensation
Annual Incentive (Executive Incentive Plan)
- Company Scorecard metrics and weighting: Revenue 35%, Pre-Tax Income 35%, Pipeline 20%, Sustainability 10% .
- 2024 results: Revenue (Target $64.0B; Actual adj. $64.41B) 109%; Pre-Tax Income (Target $25.70B; Actual adj. $26.15B) 115%; Pipeline 128%; Sustainability 100%; total payout 114% .
- Dr. Li 2024 final EIP award: $1,659,840 (114% of $1,456,000 target) .
| Annual EIP Payouts ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Dr. Li | 2,225,000 | 2,072,000 | 1,659,840 |
Long-Term Incentives
Program design and outcomes:
- Vehicles and vesting: PSUs (3-year EPS and R-TSR, 50/50; formulaic; 0–200% payout) and stock options (10-year term; vest 1/3 annually over 3 years) .
- 2022–2024 PSU performance: EPS 200%; R-TSR 139%; total payout 169%; Dr. Li PSU distribution 61,329 shares (target 33,272; incl. accrued dividends; vested 1/27/2025) .
2024 equity grants (awarded in 2024):
| Grant | Grant date | Target/Number | Terms | Grant date fair value ($) |
|---|---|---|---|---|
| PSUs | 3/28/2024 | 29,708 target units | 3-year EPS and R-TSR; 0–200% payout; settles after performance period | 4,724,760 |
| Stock Options | 4/30/2024 | 65,625 options | Exercise price $129.22; vest 1/3 on 4/30/2025, 2026, 2027; 10-year term | 1,680,000 |
2024 realized equity activity:
- Options exercised: 14,702 shares; value realized $932,530 (difference between market price at exercise and strike) .
- PSUs vested (2022 grant): 61,329 shares; value realized $6,006,562 at settlement date .
Equity Ownership & Alignment
| Ownership detail | Data |
|---|---|
| Beneficial ownership (common stock) | 329,870 shares as of 3/3/2025 |
| Right to acquire within 60 days | 250,278 shares via vested stock options |
| Ownership as % of shares outstanding | Each listed officer <1% (Merck had 2,521,758,443 shares outstanding) |
| Hedging/pledging | Prohibited for directors and officers (no pledging, short sales, or derivative/hedging transactions) |
| Executive ownership policy | Required multiple of base salary; until met, must retain 75% of after-tax net shares from option exercises/PSU/RSU settlements (excludes unexercised options and unvested PSUs/RSUs) |
Outstanding equity and vesting (as of 12/31/2024):
-
Options by grant (selected lines):
- 5/4/2018: 15,087 exercisable; $56.04; expire 5/3/2028
- 5/3/2019: 17,455 exercisable; $77.62; expire 5/2/2029
- 5/1/2020: 21,014 + 3,891 exercisable; $75.36; expire 4/30/2030
- 5/4/2021: 94,654 exercisable; $73.73; expire 5/3/2031
- 5/3/2022: 50,484 exercisable; 25,244 unexercisable; $87.10; first vest 5/3/2023; expire 5/2/2032
- 5/2/2023: 25,818 exercisable; 51,637 unexercisable; $117.89; first vest 5/2/2024; expire 5/1/2033
- 4/30/2024: 65,625 unexercisable; $129.22; first vest 4/30/2025; expire 4/29/2034
-
Unvested / unearned PSUs (max opportunity at 200% and market values at $99.48 on 12/31/2024):
- 2023 PSUs: 73,692 max; $7,330,880 market value
- 2024 PSUs: 59,416 max; $5,910,704 market value
Employment Terms
- No individual employment agreement; Merck “does not use employment agreements” for executives .
- Clawback: Dodd-Frank-compliant policy plus broader recoupment for misconduct or detrimental conduct with significant negative impact .
- Change-in-control (CIC) plan economics (double-trigger):
- Multiples: CEO 3x; other NEOs 2x base salary plus lesser of target bonus or average of last three bonuses in same position; pro rata target bonus paid; continued medical/dental/life at active rates up to two years for other NEOs; no excise tax gross-ups .
- Equity treatment: Double-trigger vesting; options generally extended exercise period post-CIC termination; PSUs/RSUs governed by plan terms; if options not assumed/converted at CIC, cash-out based on deal price less strike .
Estimated severance and CIC benefits for Dr. Li (assuming 12/31/2024 termination):
| Scenario | Severance pay | Welfare benefits continuation | Option accel. vesting | PSU accel. vesting | RSU accel. vesting | Outplacement/financial planning | Total |
|---|---|---|---|---|---|---|---|
| Involuntary termination (no CIC) | 1,288,000 | 21,850 | — | 3,064,656 | — | 14,650 | 4,389,156 |
| Involuntary termination after CIC (double-trigger) | 5,824,000 | 58,267 | 312,521 | 6,620,792 | — | 14,650 | 12,830,230 |
Restrictive covenants: eligibility for severance requires a general release and compliance with applicable restrictive covenants; plans specify treatment of options/RSUs/PSUs upon retirement or termination, including pro rata vesting conditions and timing .
Perquisites and retirement benefits (2024):
- All other compensation for Dr. Li totaled $170,183: financial/tax planning $10,000; personal use of company aircraft $1,413; personal car/driver $592; company savings plan match/credits $158,178 .
- Pension present values at 12/31/2024: Qualified Plan $235,629; Supplemental Retirement Plan (SRP) $1,135,094 .
Compensation Structure Analysis
- Mix and at-risk orientation: For non-CEO NEOs, majority of target pay is variable (annual incentive + PSUs + options); 2024 program used company-level financials (Revenue, Pre-Tax Income), pipeline milestones, and sustainability metrics, plus 3-year EPS and peer-relative TSR in PSUs—demonstrating strong pay-for-performance linkage .
- Metric difficulty and outcomes: 2024 scorecard exceeded targets (114% payout), and 2022–2024 PSU cycle paid 169% on above-plan EPS and ~8% R-TSR outperformance versus primary peer median, indicating above-target long-term performance under the plan design .
- Governance practices: Double-trigger CIC vesting, clawback policy exceeding listing requirements, prohibition on hedging/pledging, no option repricing without shareholder approval, and no employment agreements (limiting guaranteed pay) .
Risk Indicators & Red Flags
- Hedging/pledging: Prohibited (reduces misalignment risk) .
- Option repricing/tax gross-ups: Repricing without shareholder approval is prohibited; no excise tax gross-ups on CIC .
- Related-party transactions: Governance Committee found no transactions requiring disclosure for 2024 under Item 404(a) .
- Say-on-pay: Strong support ~94% in 2024 (program stability) .
Investment Implications
- Pay-performance alignment: Dr. Li’s incentive payouts are tightly linked to company-level growth, profitability, pipeline, and TSR. Above-target scorecard and PSU outcomes suggest alignment with multi-year value creation during his leadership tenure at MRL .
- Vesting calendar/selling pressure: Upcoming option tranches (e.g., 4/30/2025/2026/2027 from 2024 grant) and PSU settlements may create periodic liquidity events; however, hedging/pledging is prohibited, and ownership/retention requirements apply until guidelines are met, mitigating adverse alignment signals .
- Retention and CIC economics: Absent employment contracts, retention relies on outstanding equity and market-competitive LTI; CIC benefits (2x multiple plus equity treatment for non-CEO NEOs) are meaningful but standard for large-cap pharma, not shareholder-unfriendly (no gross-ups; double-trigger) .
- Track record: Company reported 10% 2024 revenue growth (ex-FX), strong pipeline advancement and diversified late-stage assets under MRL leadership; KEYTRUDA growth and broadening indications continue to support value creation, though China HPV vaccine dynamics tempered vaccine growth—factors relevant to future performance risk/reward under Dr. Li’s remit .
Appendix: Key Multi-Year Compensation (from SCT)
| Component ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | 1,095,055 | 1,368,819 | 1,451,077 |
| Stock awards (PSUs/RSUs) | 2,943,574 | 4,147,202 | 4,724,760 |
| Option awards | 1,169,998 | 1,679,999 | 1,680,000 |
| Non-equity incentive (EIP) | 2,225,000 | 2,072,000 | 1,659,840 |
| Change in pension value | 210,204 | 339,249 | 400,472 |
| All other compensation | 122,233 | 172,146 | 170,183 |
| Total | 7,766,063 | 9,779,414 | 10,086,332 |