WST West Pharmaceutical Services Inc

Table of Contents

Table of Contents

West Pharmaceutical Services, Inc.

Table of Contents

Table of Contents

GENERAL INFORMATION

Proxy Summary

Below is a summary of important information you will find in this Proxy Statement.  This summary does not contain all the information that you should consider, and you should read the entire Proxy Statement carefully before voting.

Our Director Nominees

You are being asked to vote on the directors nominated below.  All directors are elected annually by a majority of votes cast, except in the case of a contested election where the number of nominees exceeds the number of open positions.  Detailed information about each director’s background and areas of expertise can be found beginning on page 58.  All directors, except Mr. Green, are independent.

LEGEND : M — Member; C — Chairperson; AC — Audit Committee; CC — Compensation Committee; ITC — Innovation and Technology Committee; FC — Finance Committee; NCGC — Nominating and Corporate Governance Committee

2017 Annual Meeting and Proxy Statement

1

Table of Contents

2016 Performance and Compensation Highlights

We believe that Mr. Green and the other named executive officers (“NEOs”) performed well in 2016 and that their compensation is appropriate in relation to that performance.  Under their leadership, our Company achieved a total shareholder return (“TSR”) of 42% in 2016 and a cumulative three-year TSR of 77%.  Those returns reflect our growing sales and profitability.  Compared to 2015: net sales grew 9.1% (at constant currency exchange rates), gross margin grew by 0.6 margin points to 33.2%, adjusted operating margin grew 1.2 margin points to 14.8% and adjusted diluted earnings per share (“Adjusted Diluted EPS”) increased 21.3% (at constant currency exchange rates).

(1)          See page 25 of our 2016 Form 10-K Annual Report for discussion of the impact of foreign currency rates on reported net sales.

(2)          Below is a reconciliation of Adjusted Diluted EPS growth at constant currency exchange rates:

(3)          Gross margin and adjusted operating margin are discussed on page 26 and page 29 of our 2016 Form 10-K.

The following table shows the components of 2016 compensation paid to our named executive officers, including total “realizable” pay.  Realizable pay takes a retrospective look at pay and performance.  Realizable pay is the sum of: (1) base salary paid; (2) annual incentive plan amounts actually earned for 2016 performance; (3) the in-the-money value of stock option grants made in 2016; (4) the current accrued estimate for payouts for the Performance Share Unit award made in 2016 (at 91.29% of target); and, (5) the 2016 year end value of any time-vesting restricted stock granted in 2016.  The table is not a substitute for our 2016 Summary Compensation Table set forth on page 41.

(1)              This column is each officer’s total compensation, as determined under applicable SEC rules, minus the change in pension value reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column of the Summary Compensation Table.  It shows the impact that change in pension values had on total compensation, as determined under applicable SEC rules, which vary substantially due to actuarial calculations.  The amounts reported in the SEC Total Without Change in Pension Value column may differ substantially from the amounts reported in the Total column of the Summary Compensation Table required under SEC rules and are not a substitute for total compensation as described in the 2016 Summary Compensation Table on page 41.

2

Table of Contents

Key 2016 Compensation-Related Actions

·             Reaffirmed compensation philosophy to target our executive compensation at the median (50 th  percentile) of comparator group companies.

·             Revised our annual incentive plan metrics to more closely align with our market-led enterprise strategy and revised market-led organizational design.

·             Thoroughly reviewed our Talent Market and Business Segment comparator groups to ensure alignment with our renewed enterprise strategic plan, adjusted in the members of the Business Segment group and the selection criteria for the Talent Market group and confirmed the appropriate usage of the two groups.

·             Conducted formal pay-for-performance review of CEO compensation versus peers and realizable pay analysis to assess whether Company performance and CEO realizable pay are aligned over a given period.

·             Evaluated compensation package for new Senior Vice President, Global Operations and Supply Chain and Vice President of Corporate Strategy and Investor Relations.

Other Existing Key Compensation Features

·             Clawback of incentive compensation

·             No “single trigger” feature on parachute payments in change-in-control agreements offered to future executives

·             No-hedging/no-pledging of company stock

·             Independent compensation consultant

·             Share ownership requirements

·             Annual compensation risk assessment

·             Limited perquisites and personal benefits

3

Table of Contents

General Information About the Meeting

Proxy Solicita tion

Our Board of Directors is soliciting your vote on matters that will be presented at our 2017 Annual Meeting of Shareholders and at any adjournment or postponement.  This Proxy Statement contains information on these matters to assist you in voting your shares.

The Notice, the accompanying proxy card or voting instruction card and our 2016 Form 10-K, including our annual report wrapper, are being mailed starting on or about March 22, 2017.

Shareholders Entitled to Vote

All shareholders of record of our common stock, par value $.25 per share, at the close of business on March 7, 2017, are entitled to receive the Notice and to vote their shares at the meeting.

As of that date, 73,326,840 shares of our common stock were outstanding.  Each share is entitled to one vote on each matter properly brought to the meeting.

How Your Shares Will Be Voted

In each case, for registered shareholders, your shares will be voted as you instruct.  If you return a signed card, but do not provide voting instructions, your shares will be voted FOR each of the proposals. You may revoke or change your vote any time before the proxy is exercised by filing with our Corporate Secretary a notice of revocation or a duly executed proxy bearing a later date.  You may also vote in person at the meeting, although attendance at the meeting will not by itself revoke a previously granted proxy.  If you hold shares in the Company in “Street name” or through a broker, please refer to “Broker Voting” on the next page.

Plan Participants.  Any shares you may hold in the West Pharmaceutical Services, Inc. 401(k) Plan or the Tech Group Puerto Rico Savings and Retirement Plan have been added to your other holdings on your proxy card.  Your completed proxy card serves as voting instructions to the trustee of those plans.  You may direct the trustee how to vote your plan shares by submitting your proxy vote for those shares,

4

Table of Contents

along with the rest of your shares, by Internet, phone or mail, all as described on the enclosed proxy card.  If you do not instruct the trustee how to vote, your plan shares will be voted by the trustee in the same proportion that it votes shares in other plan accounts for which it received timely voting instructions.

Deadline for Voting .  The deadline for voting by telephone or Internet is 11:59 PM Eastern Time on May 1, 2017.  If you are a registered shareholder and attend the meeting, you may deliver your completed proxy card in person.  “Street name” shareholders who wish to vote at the meeting will need to obtain a proxy form from the institution that holds their shares.

Broker Voting

If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the “beneficial owner” of shares held in “Street name.”  The Notice would have been made available to you by your broker, bank or other holder of record who is considered the shareholder of record of those shares.  As the beneficial owner, you may direct your broker, bank or other holder of record on how to vote your shares by using the proxy card included in the materials made available to you or by following their instructions for voting on the Internet. A broker non-vote occurs when a broker or other nominee that holds shares for another does not vote on a particular item because the nominee does not have discretionary voting authority for that item and has not received instructions from the owner of the shares.  Although there is no controlling precedent under Pennsylvania law regarding the treatment of broker non-votes in certain circumstances, we intend to apply the principles outlined in the table below:

5

Table of Contents

Quorum

We must have a quorum to conduct business at the 2017 Annual Meeting.  A quorum consists of the presence at the meeting either in person or represented by proxy of the holders of a majority of the outstanding shares of our common stock entitled to vote.  For the purpose of establishing a quorum, abstentions, including brokers holding customers’ shares of record who cause abstentions to be recorded at the meeting, and broker non-votes are considered shareholders who are present and entitled to vote, and count toward the quorum.

Mailings to Multiple Shareholders at the Same Address

We have adopted a procedure called “householding” for making the Proxy Statement and the Annual Report available.  Householding means that shareholders who share the same last name and address will receive only one copy of the materials, unless we are notified that one or more of these shareholders wishes to continue receiving additional copies.

We will continue to make a proxy card available to each shareholder of record.  If you prefer to receive multiple copies of the proxy materials at the same address, please contact us in writing or by telephone: Corporate Secretary, West Pharmaceutical Services, Inc., 530 Herman O. West Drive, Exton, PA 19341, (610) 594-3319.

Table of Contents

CORPORATE GOVERNANCE AND BOARD MATTERS

Corporate Governance and Board Matters

During 2016, our Board met six times.  Each director attended at least 75% of the Board meetings and the meetings of the Board committees on which he or she served except for Paula Johnson who attended 40% of our Audit Committee meetings, 67% of our ITC Committee meetings and 67% of our Board meetings.  All directors are expected to attend the 2017 Annual Meeting, and all our directors attended the 2016 Annual Meeting.

Our principal governance documents are our Corporate Governance Principles, Board Committee Charters, director qualification standards and Code of Business Conduct.  Aspects of our governance documents are summarized below.  We encourage our shareholders to read our governance documents, as they present a comprehensive picture of how the Board addresses its governance responsibilities to ensure our vitality and success.  The documents are available in the “ Investors — Corporate Governance ” section of our website at www.westpharma.com and copies of these documents may be requested by writing to our Corporate Secretary, West Pharmaceutical Services, Inc., 530 Herman O. West Drive, Exton, PA 19341.

Corporate Governance Principles

Our Board has adopted Corporate Governance Principles to provide guidance to our Board and its committees on their respective roles, director qualifications and responsibilities, Board and committee composition, organization and leadership.  During 2016, we significantly updated our Corporate Governance Principles to meet best practices in corporate governance and ensure the Corporate Governance Principles address our current and long-term business needs.  Our revised Corporate Governance Principles address, among other things:

·                   Statements of the Board’s commitment to high ethical standards, principles of fair dealing and high ethical standards;

·                   The requirement to hold separate executive sessions of the independent directors;

·                   The importance of robust executive succession planning and the role of directors in succession planning;

·                   The Board’s policy on setting director compensation and director share-ownership guidelines;

·                   Guidelines on Board organization and leadership, including the number and structure of committees and qualifications of committee members;

·                   Guidelines on outside board memberships;

·                   Policies on making charitable contributions and prohibition of political contributions;

·                   Policies on access to Management;

·                   Requirements fostering leadership development by senior executives;

·                   Statements of our executive compensation philosophy and our independent auditor standards;

·                   Director orientation and education; and

·                   Self-assessments of Board and Committee performance to determine their effectiveness.

7

Table of Contents

Code of Business Conduct

All our employees, officers and directors are required to comply with our Code of Business Conduct as a condition of employment.  The Code of Business Conduct covers fundamental ethical and compliance-related principles and practices such as accurate accounting records and financial reporting, avoiding conflicts of interest, protection and proper use of our property and information and compliance with legal and regulatory requirements.  In 2016, we substantially updated and enhanced our Code of Business Conduct.  The Board has adopted a comprehensive Compliance and Ethics Program and has named Mr. Miller our Compliance Officer.  Our Compliance Officer delivers regular reports on program developments and initiatives to the Audit Committee and the Board.

·                   All the members of the Board, other than Mr. Green, are independent;

·                   All Board Committees are composed solely of independent directors;

·                   Our independent directors meet regularly in executive session both at the Board and Board committee levels; and

·                   Our directors as a group possess a broad range of skills and experience sufficient to provide the leadership and strategic direction the Company requires as it seeks to enhance long-term value for shareholders.

While the offices of Chairman and CEO are currently separate, the Board takes a flexible approach to the issue of whether the offices of Chairman and CEO should be separate or combined.  This approach allows the Board to regularly evaluate whether it is in the best interests of the Company for the CEO or another director to hold the position of Chairman.

The Board does not currently have a lead independent director, although the Board believes it may be useful and appropriate to designate a lead independent director if the offices of Chairman and CEO are combined in the future.

We believe the current Board leadership structure is appropriate now because it allows the Chairman to focus on corporate governance and management of the Board priorities and allows the CEO to focus directly on managing our operations and growing the Company.

8

Table of Contents

Chairman of the Board of Directors

The responsibilities of the Chairman include:

·                   Chairing Board meetings, including executive sessions of the independent directors;

·                   Approving agendas and schedules for each Board meeting in consultation with the CEO; and,

·                   Serving as principal liaison between the CEO and the independent directors.

Each independent director may add items to the agenda.  Independent directors meet in regularly scheduled executive sessions and in special executive sessions called by the Chairman.

Committees

The Board has five standing committees:

·             Audit Committee;

·             Compensation Committee;

·             Finance Committee;

·             Innovation and Technology Committee; and,

·             Nominating and Corporate Governance Committee.

The Finance Committee was added in 2016 to review proposals made by Management regarding the optimal capital structure and spending of the Company, analyze, oversee and approve potential opportunities for business combinations, acquisitions, divestitures and similar strategic transactions and to ensure all transactions are in alignment with the Company’s strategic plan.  From time to time, the Board may form ad hoc committees to address specific situations as they may arise.  Each committee consists solely of independent directors.  Each standing committee has a written charter, which is posted in the “Investors—Corporate Governance” section of our website at www.westpharma.com .

You may request a copy of each committee’s charter from our Corporate Secretary.

9

Table of Contents

10

Table of Contents

Board Matters

During 2016, our Board and each of its Committees played pivotal roles in helping to develop and approve our corporate strategy.  The major issues debated and decided by the Board during 2016 included:

·             Reviewing our progress on our revised enterprise strategic plan;

·             Establishment of a new Finance Committee to assist with corporate strategy and strategic partnerships;

·             Reviewing the hiring of: (1) a new Senior Vice President of Operations and Global Supply Chain, and (2) a new Vice President of Corporate Strategy and Investor Relations;

·             Reviewing potential targets for mergers and acquisitions and potential licensing opportunities;

·             Continuation of a strategic share buyback program; and

·             Substantial updates to our Corporate Governance Principles and Code of Business Conduct.

The Board’s Role in Risk Oversight

The Board’s role in risk oversight is consistent with our leadership structure, with Management having day-to-day responsibility for assessing and managing our risk exposure and the Board actively overseeing Management of our risks—both at the Board and committee level.

The Board regularly reviews and monitors the risks associated with our financial condition and operations and specifically reviews the enterprise risks associated with our five-year plan.  In particular, the Board reviews our risk portfolio, confirms that Management has established risk-management processes that are functioning effectively and efficiently and are consistent with our corporate strategy, reviews the most significant risks and determines whether Management is responding appropriately.

The Board performs its risk oversight role by using several different levels of review.  Each Board meeting begins with a strategic overview by the CEO that describes the most significant issues, including risks, affecting the Company and includes business updates from each reportable segment.  In addition, the Board reviews in detail the business and operations of each reportable segment quarterly, including the primary risks associated with that segment.

The Board focuses on the overall risks affecting West.  Each committee has been delegated the responsibility for the oversight of specific risks that fall within its areas of responsibility.  For example:

·             The Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation policies, plans and arrangements and the extent to which those policies or practices increase or decrease risk for the Company.

·             The Audit Committee oversees management of financial reporting, compliance and litigation risks as well as the steps Management has taken to monitor and control such exposures.

·             The Finance Committee assesses the risks associated with allocation of our capital, potential acquisitions, divestitures and major business partnerships.

·             The Innovation and Technology Committee reviews risks associated with intellectual property, innovation efforts and our technology strategy.

11

Table of Contents

·             The Nominating and Corporate Governance Committee manages risks associated with the independence of the Board, potential conflicts of interest and the effectiveness of the Board.

Although each committee is responsible for evaluating certain risks and overseeing the management of those risks, the full Board is regularly informed about those risks through committee reports.

Director Independence

Our Board has adopted a formal set of categorical director independence determination standards (“Standards”).  The Standards meet or exceed the independence requirements of the NYSE corporate governance listing standards.  Under the Standards, a director must have no material relationship with us other than as a director.  The Standards specify the criteria for determining director independence, including strict guidelines for directors and their immediate families regarding employment or affiliation with us, members of our senior Management or their affiliates.  The full text of the Standards may be found under the “ Investors — Corporate Governance ” section on our website at www.westpharma.com .

The Board undertook its annual review of director independence in February 2017.  As a result of this review, the Board did not substantively revise the Standards.  Subsequently, the Board considered whether any relationships described under the Standards between the Company and each individual director existed.  As a result of the review, the Board affirmatively determined that each of its non-employee directors is independent of the Company and its Management team as defined under the Standards.

Executive Sessions of Independent Directors

Our Board also holds regular executive sessions of only independent directors to review the Company’s strategy and Management’s operating plans, the criteria by which our CEO and other senior executives are measured, Management’s performance against those criteria and other related issues and to conduct a self-assessment of its performance.  Last year, our independent directors held six executive sessions.

Director Mandatory Retirement

A non-employee director must retire on the date of the Annual Meeting of Shareholders immediately following his or her 72 nd  birthday.  An employee director must submit his or her resignation upon the date he or she ceases to be an executive of the Company.

Director Education

The Board believes shareholders are best served by Board members who are well versed in corporate governance principles and other subject matters relevant to board service.  Therefore, all directors are encouraged to attend any director education programs they consider appropriate to stay informed about developments in corporate governance and the markets we serve.  The Company reimburses directors for the reasonable costs of attending director education programs.  To encourage continuing director education, the Board also arranges for a series of annual educational presentations on its calendar.

12

Table of Contents

Share Ownership Goals for Directors and Executive Management

To encourage significant share ownership by our directors and further align their interests with the interests of our shareholders, directors are expected to acquire within three years of appointment, and to retain during their Board tenure, shares of our common stock equal in value to at least five times their annual retainer.  All directors meet this requirement or are within the three-year period to obtain the necessary shares.  The Board has also set share ownership goals for senior executive Management, which are described under “Compensation Discussion and Analysis — Other Compensation Policies.”

Communicating with the Board

You may communicate with the Chairman of the Board or the independent directors as a group by sending a letter addressed to the Board of Directors, c/o Corporate Secretary, West Pharmaceutical Services, Inc., 530 Herman O. West Drive, Exton, Pennsylvania 19341.  Communications to a particular director should be addressed to that director at the same address.

Our Corporate Secretary maintains a log of all communications received through this process.  Communications to specific directors are forwarded to those directors.  All other communications are given directly to the Chairman of the Board who decides whether they should be forwarded to a Board committee or to Management for further handling.

Nomination of Director Candidates

Candidates for nomination to our Board are selected by the Nominating and Corporate Governance Committee in accordance with the Committee’s charter, our Articles of Incorporation, our Bylaws and our Corporate Governance Principles.  All persons recommended for nomination to our Board, regardless of the source of the recommendation, are evaluated by the Committee.

The Board and the Nominating and Corporate Governance Committee consider, at a minimum, the following factors in recommending potential new Board members or the continued service of existing members:

·       A director is nominated based on his or her professional experience.  A director’s traits, expertise and experience add to the skill-set of the Board as a whole and provide value in areas needed for the Board to operate effectively.

·       A director must have high standards of integrity and commitment, and exhibit independence of judgment, a willingness to ask hard questions of Management and the ability to work well with others.

·       A director should be willing and able to devote sufficient time to the affairs of the Company and be free of any disabling conflict.

·       All the non-employee directors should be “independent” as outlined in our Standards.

·       A director should exhibit confidence and a willingness to express ideas and engage in constructive discussion with other Board members, Company Management and all relevant persons.

·       A director should actively participate in the decision-making process, be willing to make difficult decisions, and demonstrate diligence

13

Table of Contents

and faithfulness in attending Board and committee meetings.

·       The Board generally seeks active or former senior executives of public companies, particularly those with international operations, leaders in healthcare or public health fields, with science or technology backgrounds, and individuals with financial expertise.

When reviewing nominees, the Nominating and Corporate Governance Committee considers whether the candidate possesses the qualifications, experience and skills it considers appropriate in the context of the Board’s overall composition and needs.  The Nominating and Corporate Governance Committee also values diversity on the Board in the director nominee identification and nomination process.  Our Corporate Governance Principles were revised in 2016 to specifically include a statement of the importance of board diversity to ensure that the director nomination process considers a diverse mix of background, age, gender, sexual orientation, and cultural and ethnic composition.

Accordingly, the Committee’s evaluation of director nominees includes consideration of their ability to contribute to the diversity of personal and professional experiences, opinions, perspectives and backgrounds on the Board.  The Committee regularly assesses the effectiveness of this approach as part of its review of the Board’s composition.

To assist it with its evaluation of the director nominees for election at the 2017 Annual Meeting, the Committee considered the factors listed above and used a skills matrix highlighting the experience of our directors in areas such as industry experience, international background, leadership, financial literacy, risk management expertise and independence.

Under the heading “Director Qualifications and Biographies,” we provide an overview of each nominee’s principal occupation, business experience and other directorships of publicly-traded companies, together with the qualifications, experience, key attributes and skills the Committee and the Board believe will best serve the interests of the Board, the Company and our shareholders.

Shareholders who wish to recommend or nominate director candidates must provide information about themselves and their candidates and comply with procedures and timelines contained in our Bylaws.  These procedures are described under “Other Information — 2018 Shareholder Proposals or Nominations” in this Proxy Statement.

Related Person Transactions and Procedures

The Board has adopted written policies and procedures relating to the Nominating and Corporate Governance Committee’s review and approval of transactions with related persons that are required to be disclosed in proxy statements under SEC regulations.  A “related person” includes our directors, officers, 5% shareholders and immediate family members of these persons.

Under the policy, the Nominating and Corporate Governance Committee reviews the material facts of all related-person transactions, determines whether the related person has a material interest in the transaction and may approve, ratify, rescind or take other action with respect to the transaction.

In approving a transaction, the Committee will consider, among other factors, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transactions.

The Committee reviews and pre-approves certain types of related person transactions, including certain transactions with companies at which the related person is an employee only, and charitable contributions that would not disqualify a director’s independent status.  The policy and procedures can be found in the “ Investors—Corporate Governance — Governance Documents ” section of our website, www.westpharma.com .

We have no related person transactions required to be reported under applicable SEC rules.

14

Table of Contents

Table of Contents

Fees Earned or Paid in Cash

The amounts in the “Fees Earned or Paid in Cash” column are retainers earned for serving on our Board, its committees and as committee chairs and Chairman, Independent Directors or Chairman, as applicable.  All annual retainers are paid quarterly.  For Mr. Zenner this amount includes his fees for serving as Chairman of the Board.

The amounts are not reduced to reflect elections to defer fees under the Non-Qualified Deferred Compensation Plan for Non-Employee Directors (“Director Deferred Compensation Plan”).  During 2016, Mr. Buthman, Mr. Michels, Mr. Pucci, Mr. Weiland and Mr. Welters deferred 100% of their cash compensation.  Dr. Lai-Goldman deferred 50% of her fees.

Stock Awards

The amounts in the “Stock Awards” column reflect the grant date fair value of stock-settled restricted stock unit (“RSU”) awards made in 2016.  The grant date fair value is determined under Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718.  In 2016, each continuing non-employee director was awarded 2,262 RSUs, with a grant date fair market value of $70.73 per share based on the closing price of our common stock on the award date, May 3, 2016.  Mr. Pucci was given a prorated award upon the commencement of his service on September 12, 2016.  His award was for 1,277 Shares and had a grant date fair value of $105,148.  For a discussion on RSU grant date fair value, refer to Note 12 of the consolidated financial statements in our 2016 Form 10-K.

RSUs are granted on the date of our Annual Meeting (or, as in the case with Mr. Pucci, upon commencement of service) and fully vest on the date of the next Annual Meeting so long as a director remains on the Board as of that date.  Generally, all unvested grants of equity forfeit upon termination.  However, if a director retires during the calendar year that he reaches age 72, the award will vest pro rata on a monthly basis through the date of retirement.

Stock-settled RSUs are distributed upon vesting, unless a director elects to defer the award under the Director Deferred Compensation Plan.  In 2016, all continuing directors (including Mr. Pucci) elected to defer their awards except for Mr. Hofmann and Dr. Johnson.  All awards are distributed as shares of common stock, as described below.  When dividends are paid on common stock, additional shares are credited to each director’s deferred stock account as if those dividends were used to purchase additional shares.

All Other Compensation

The amounts in the “All Other Compensation” column are the sum of the: (1) Dividend Equivalent Units (“DEUs”) credited to accounts under the Director Deferred Compensation Plan; (2) with respect to Mr. Welters a distribution of $77,444 in cash (for amounts invested in his cash account and residual share value) and 101,604 shares of stock with an average per share value of $74.55 and total value of $7,651,590 from the Director Deferred Compensation Plan due to his retirement in May 2016; and, (3) with respect to Dr. Johnson, Mr. Weiland, Mr. Welters and Dr. Feehery, a charitable contribution of $1,000 each was made under our charitable contribution matching program, which is available to our employees, retirees and directors on a non-discriminatory basis.

16

Table of Contents

(1)   As noted above, Mr. Welters received a complete distribution of his account following his termination of service in May 2016.

Director Deferred Compensation Plan

All non-employee directors may participate in the Director Deferred Compensation Plan, which permits participants to defer all or a part of their annual cash compensation until their Board service terminates.  Deferred fees may be credited to a “stock-unit” account that is deemed invested in our common stock or to an account that earns interest at the prime rate of our principal commercial bank.  Stock-unit accounts are credited with DEUs based on the number of stock units credited on the dividend record date.

The value of a director’s account balance is distributed on termination of Board service.  The value of a director’s stock-unit account is determined by multiplying the number of units credited to the account by the fair market value of our common stock on the termination date.

RSUs that a director elects to defer (and all shares of deferred stock) are distributed in shares of stock.  Pre-2014 stock units may be distributed in cash in lieu of stock, if a director made an election in 2013.  All post-2013 stock units are only distributable in stock.  Partial shares are distributed in cash.

Directors may receive their distribution as a lump sum or in up to ten annual installments.  Separate elections apply to amounts earned and vested before January 1, 2005 and amounts earned and vested after December 31, 2004.  If a director elects the installment option, any cash-account balances during the distribution period will earn interest at the prime rate of our principal commercial bank and deferred stock and stock-settled units will be credited with DEUs until paid.

17

Table of Contents

(1)          Value is determined by multiplying the number of stock units or shares of deferred stock, as applicable, times $84.83, the fair market value of a share of stock on December 31, 2016.  Stock units relate to deferred compensation that has previously been reported in the “Fees Earned or Paid in Cash” column for the year the compensation was earned.

Table of Contents

EXECUTIVE COMPENSATION

Investor Outreach and 2016 Say-on-Pay Results

At our 2016 Annual Meeting of Shareholders, we held a shareholder “Say-on-Pay” advisory vote to approve the compensation of our NEOs as disclosed in our Proxy Statement.  Shareholders expressed overwhelming support for the compensation of our NEOs, with approximately 99% of the votes (present at the meeting and entitled to vote) cast to approve NEO compensation.

The Committee considered this vote as demonstrating strong support for our compensation programs and continued to apply the same effective principles and philosophies that have been applied in prior years when making compensation decisions for 2016.  These principles and philosophies are highlighted above and described more fully below.

To ensure that the Committee considers shareholder views on compensation matters, we maintain an active shareholder engagement program.  Throughout the year, we meet with our actively-managed, institutional shareholders, which own a majority of our shares.  These shareholders have historically expressed support for our long-term performance goals, including ROIC and CAGR.  The Committee receives regular updates on investor feedback and understands that shareholders remain very focused on the alignment of pay and performance.

2016 Financial Highlights

The Company delivered exceptional financial performance in 2016, achieving record net sales, adjusted operating profit and Adjusted Diluted EPS.  Compared to 2015 net sales increased 9.1% (at constant currency exchange rates), gross margin grew by 0.6 margin points to 33.2%, adjusted operating margin grew 1.2 margin points to 14.8% and Adjusted Diluted EPS increased 21.3% (at constant currency exchange rates).  For additional information please see “Performance and Compensation Highlights” on page 2.

Our shareholders also benefitted as we delivered a three-year and one-year TSR which exceeded the average of the S&P 500 and the Business Segment Group of companies we use for benchmarking our executive compensation.

As discussed in more detail below, our annual incentive plan uses a one-year measurement period and our long-term incentive plan uses three-year metrics.  Despite favorable comparisons to our competitive group and the market in general, due to performance at levels that were less than our ambitious growth targets, we paid out at less than 100% for both plans.   However, long-term incentive plan recipients benefitted from the 77% TSR, including dividend equivalents and a price increase from $47.34 on February 24, 2014, which was the grant date for executives who were employed at the beginning of the period, to $86.93, the price on the payout date, February 14, 2017.  Our NEOs also benefitted from this price appreciation with regard to options awarded on that date (or their employment commencement date, if later).

One-Year Comparative TSR                                                   Three-Year Cumulative TSR

19

Table of Contents

2016 Performance-Based Bonuses (Cash)

AIP payouts for all officers, including the NEOs, are based on our performance against three principal corporate financial metrics: Adjusted Diluted EPS, Adjusted Revenue and Adjusted OCF.  The target bonus is set as a percentage of base salary, which for the NEOs, ranges from 60% to 100%.  2016 AIP target goals were set by the Committee based on the budget approved by the Board and the Committee’s determination that the targets contained sufficient “stretch.”  This analysis is aided by a retrospective look at our performance compared to our competitors and payout history completed by the Board’s compensation consultant, Pay Governance, annually.

20

Table of Contents

During 2016, we exceeded our target levels, for Adjusted Revenue and Adjusted Diluted EPS achieving 102.3% and 101.8%, respectively compared to target.  We exceeded threshold at 85.3% for Adjusted OCF, but below target level resulting in an overall payout of 95.3% for these corporate metrics for all NEOs except Ms. Flynn who had a 98.4% payout due to different weightings discussed below.  While our EPS performance was similarly favorable in 2016, overall performance was less so due to underperformance on Adjusted OCF.  These results and consequent lesser payouts demonstrate our pay-for-performance philosophy discussed in the “Compensation Discussion and Analysis” below.  A reconciliation of the Adjusted Diluted EPS and Adjusted OCF to amounts reported under U.S. GAAP is provided below under “Financial Measures.”

2016 AIP Performance Against Corporate Metrics

Threshold, Target and Actual Performance

2016 Long-Term Incentive Awards (Equity)

Long-term incentive compensation opportunities for our executives, including the NEOs, are entirely equity based.  Executives receive an award of PSUs and time-vested stock options, approximately equal in grant date fair value.  The value of each NEO’s long-term grant is determined by the Committee based on its review of peer-group market data, the executive’s roles and responsibilities, his or her impact on our results, and advancement potential.  PSUs entitle the recipient to receive common shares based on achievement of three-year CAGR and ROIC targets.  The following chart shows the performance against target and threshold for the three-year performance period that ended December 31, 2016.

21

Table of Contents

Performance Against Long-Term Metrics (1) — 2014-2016 Performance Periods

CAGR                                                                                           ROIC

(1)          Calculated at 2016 budgeted foreign exchange translation rates.

Our Compensation Practices

We continue to incorporate leading practices into our compensation programs:

·                   Our compensation philosophy targets total direct compensation of our NEOs at the 50 th  percentile of comparator group companies.

·                   We prohibit our officers and directors from hedging, pledging or engaging in any derivatives trading with respect to our common stock.

·                   Our equity incentive plan prohibits the repricing or exchange of awards without shareholder approval.

·                   Dividend equivalent units are paid on equity awards only if the underlying award is earned and vested.

·                   We conduct realizable-pay analyses on our CEO compensation and review tally sheets to provide additional benchmarking information on executive pay.

·                   We require a “double-trigger” feature and have not provided golden parachute excise tax gross-ups in any change-in-control agreements offered to executives after 2010.

·                   We require our executive officers to meet share-ownership guidelines, and to take a portion of their bonus in shares until their ownership guidelines are met.  The ownership guideline for our CEO is six times base salary and the guideline for our other officers is two times base salary.

·                   The Committee has engaged an independent outside compensation consultant.  See “Role of the Compensation Consultant and Executives.”

·                   The Committee may cancel or recover any cash- or equity-based incentive compensation based on achievement of specified financial results that are the subject of a subsequent restatement.  We will seek repayment of any amount determined to have been inappropriately received due to mathematical errors, fraud, misconduct or gross negligence.

·                   We annually review the potential risk associated with our compensation programs.

22

Table of Contents

Table of Contents

·                   Our 2016 gross margin improved to 33.2%, an increase of 0.6 margin points and our adjusted operating margin increased by 1.2 margin points to 14.8%.

·                   Continued emphasis on products that meet higher quality standards and create greater revenue, which resulted in 2016 sales growth of 19.5% at constant currency exchange rates for high-value products.

·                   Introduced new 1-3mL NovaPure ®  plunger using Quality by Design principles.

·                   Continued momentum on the development of our SmartDose ®  electronic wearable injector, which was approved for use in the U.S. in July 2016.

·                   Contract manufacturing products sales increased 5.9% over 2015 on a constant currency basis.

·                   Continued construction and progress on a new state-of-the-art production facility in Waterford, Ireland, which is scheduled to begin commercial operations in 2018.

·                   Increased quarterly dividend to $0.13 per share.

As discussed in this Proxy Statement, our overall one-year performance during 2016 fell below targeted levels, and payouts under the AIP accordingly were less than 100% of target.  Additionally, our three-year performance was at ROIC target but below our CAGR target, which makes up 50% of our long-term incentive payout, and, therefore, that payout was lower.  Both our annual and long-term TSR performance exceeded the average performance of our peer group and the S&P 500.  Our one-year TSR performance exceeded the 95th percentile and our three-year performance exceeded the 86th percentile among our peers.  Reflective of our pay-for-performance philosophy, long-term incentive plan participants share in this price increase over the performance period, as payout values greatly exceed original grant date fair values.  These participants also share in the price increase to the same extent as our shareholders, with increasing option values.

2016 Committee Actions

The Committee regularly evaluates the design and performance of our executive compensation programs to ensure they are operating as intended and consistent with relevant benchmarks and market practices.  The Committee also reviews its compensation philosophy each year.  As a result of these evaluations and reviews, the Committee took the following actions in 2016:

24

Table of Contents

Executive Compensation Elements

The following chart summarizes the key features of each element of our executive compensation program: Cash (salary and annual bonus); equity (long-term incentive); retirement (Retirement Plan, Supplemental Employee Retirement Plan (“SERP”), 401(k) Plan, and Employee Nonqualified Deferred Compensation Plan); and other compensation (perquisites).  Each type is discussed in detail in the remainder of this Compensation Discussion and Analysis, and the accompanying tables.

25

Table of Contents

26

Table of Contents

Summary of Key 2016 Compensation Decisions

The Committee reviewed our pay practices, including benchmarking our process and concluded to not make any significant changes to our compensation structure in light of the strong linkage between pay-for-performance and the Company’s positioning relative to its peers.

The following highlights the Committee’s key NEO compensation decisions for 2016, as reported in the Summary Compensation Table on page 41.  The decisions were made after considering input from the Committee’s independent compensation consultant, Pay Governance, the CEO (for pay other than his own) and the CHRO (for pay other than her own).

CEO Compensation

Mr. Green’s 2016 pay elements were considered after a thorough review of CEO realizable pay and pay-for-performance materials distributed by Pay Governance.  The materials examined realizable pay and performance as compared to our peer groups and realized pay (actual compensation received including stock option exercises and stock vesting) versus pay opportunity.  The Committee concluded that our aggregate performance and CEO pay were aligned on a one-year and three-year basis.  Strong stock price growth has also contributed to pay that demonstrates a strong linkage between pay and performance.

The Committee held an executive session with Pay Governance and Ms. Favorite during which Mr. Green’s 2015 objective attainment and proposed 2016 objectives were reviewed.  Additionally, the Committee considered Mr.

27

Table of Contents

Green’s position in the market.  Compared to our Business Segment Group, Mr. Green’s base salary and total cash consideration (“TCC”), which is the sum of his base salary and AIP target, were 15% and 20% below the 50 th  percentile, respectively.  Additionally, Mr. Green’s Total Direct Compensation (“TDC”), which is the sum of his TCC and long-term incentive plan opportunity, was approximately 29% to 43% below the median of each of our comparator groups.

Based on the Company’s strong performance, and Mr. Green’s relatively low pay given that he was appointed CEO in 2015, and the Committee’s desire to bring Mr. Green closer to the 50 th  percentile over a three-year period (assuming continued outstanding performance), the Committee determined that increases should be slightly larger than might be expected annually going forward than those for other officers.  The Committee approved a 10.7% increase in salary from $700,000 to $775,000 and an increase in long-term incentive opportunity from $1,700,000 to $2,000,000, which is a 17.6% increase.  The larger increase for long-term incentive reflects the Committee’s commitment to maintaining a healthy pay mix weighted towards long-term goals, which most closely aligns with our shareholders and locks in his commitment to growing shareholder value.

Compensation of Other NEOs

The Committee approved salaries and set incentive-compensation targets of the other NEOs taking into account the CEO’s recommendations, the advice of Pay Governance, comparator group salary, TCC and TDC data, relative duties and responsibilities, advancement potential and impact on our financial and strategic performance.  Upon reviewing the data, Mr. Federici and Ms. Flynn were both modestly below the 50th percentile of our comparator groups from a TCC and TDC perspective.  Given our strong performance, that these executives took on new challenges and individually performed well during our transition in management and refreshing of our enterprise strategy, increases of 4.44% and 6.95% were proposed for Mr. Federici and Ms. Flynn respectively.  Additionally, to shift our pay mix to be more variable and incentive-based, and better align with the market, the Committee approved an increase in Mr. Federici’s AIP target from 70% to 75%.   The Committee also approved an increase in Ms. Flynn’s LTIP target value from $600,000 to $700,000 to align her TDC better with market.  Mr. Miller and Ms. Favorite were both hired late in 2015 and their pay had been benchmarked based on their experience and in a manner consistent with our internal pay structure.  Therefore, the Committee made no changes to their 2016 base salary or incentive pay targets.

2016 Continuing NEO Base Salaries, Annual Incentive Plan Target,

Long-Term Grant Date Fair Value and Incentive Compensation (1)

(1)          All NEO salary increases for incumbents were effective May 2016.

(2)          TDC is base salary plus annual bonus target plus long-term value.  Both Talent Market and Business Segment group data are reviewed for all executives, where available.  For purposes of this chart, percentages are based on the Business Segment Group for Mr. Green and Mr. Federici.  For all other NEOs the TDC percentile is based upon the Talent Market Group.

28

Table of Contents

Pay Mix

Our compensation philosophy is to put the greatest emphasis on creating long-term shareholder value.  Therefore, the largest percentage of an NEO’s pay is awarded under our long-term incentive plan (split equally between options and performance shares).  Approximately 56% of Mr. Green’s TDC is based upon long-term value creation, and the remainder of his pay is divided equally among salary and short-term incentives.  For our other executives, approximately 45% of their pay is based upon long-term awards.  Consistent with market practices, a larger portion of their pay mix is salary, but it is still less than one-third of their TDC.

Our Annual Incentive Compensation Program

Plan Criteria and Rationale

The annual incentives for all AIP participants are based on our financial performance as a whole measured by Adjusted Diluted EPS, Adjusted Revenue and Adjusted OCF.

In 2016, as in past years, the Committee evaluated and decided upon the appropriate AIP financial measures using the following principles:

·        Metrics must support achievement of an annual Board-approved operating plan;

·        Metrics must support profitable growth while preserving cash for longer-term investment;

·        Metrics must provide a clear line of sight—i.e., that are clearly understood and can be affected by the performance of our executives and employees; and

·        Metrics should be consistent with market practice and used within our comparator group.

Following this review, the Committee concluded that the continued use of the AIP financial measures supports the foregoing principles for the following reasons:

·       EPS is a comprehensive measure of income and provides an emphasis on profitable growth while focusing managers on expense control.

·       Consolidated revenue provides a clear line of sight target for all members of our executive officer team as we strive to grow our sales to meet increasing demand for our products, particularly high-value products.

·       OCF provides a focus on generating cash in the short term to fund operations, research and capital projects and focuses managers on expense control.

Our AIP targets for NEOs are global, rather than regional, reflecting the growing globalization of our business and the expectations of our customers that the Company acts as a single enterprise.

29

Table of Contents

Target Setting

The target annual incentive awards for our NEOs are set as a percentage of base salary.  Target awards are reviewed annually to ensure alignment with our compensation philosophy to target each compensation element and total direct compensation at the market median.

Variances from this goal are based on an evaluation of competitive market data, internal equity considerations among the CEO’s direct reports and individual performance evaluations.

For 2016, target annual incentive opportunities for the NEOs ranged from 60% to 100% of their year-end base salary rate. As noted above, we increased Mr. Federici’s target by 5% to 75% to reflect market trends and his responsibilities.  Our payout curve is structured to reflect our philosophy that Management should be rewarded for exceeding goals and with diminished payouts, ultimately to zero, when targets are missed.

The payout factor is a pre-established multiplier that corresponds, on a sliding scale, to the achievement percentage of the AIP target objective so that if actual performance is less than target, the multiplier decreases on a sliding scale based on the achievement percentage and is based on the following chart.

Achievement between the threshold and maximum levels is straight-line interpolated.

Financial Results for AIP Purposes

The Committee set the AIP performance targets based on its evaluation of the 2016 business operating plan and its assessment that the targets contained a sufficient degree of “stretch.”  Our 2016 actual performance level for all metrics was 85.3% or greater.  The metrics used for all our NEOs (but not all of our officers) were identical.  However, given Ms. Flynn’s position as commercial leader and her responsibilities for contract manufacturing, her goals were more heavily weighted on Adjusted Revenue.  Payouts were 95.3% for all NEOs except Ms. Flynn who was at 98.4%, because our Adjusted Revenue performed at 102.3% of target.  This demonstrates our focus and structured link between business alignment, pay and short-term performance.

30

Table of Contents

(1)     Adjusted Diluted EPS for annual incentive purposes is based on budgeted foreign exchange rates and excludes restructuring and certain non-recurring items.  Therefore, they differ from the comparable U.S. GAAP measures. See “Financial Measures” for a reconciliation of U.S. GAAP diluted EPS to Adjusted Diluted EPS for annual incentive purposes.

(2)     Adjusted Revenue is based on budgeted foreign exchange rates.  See “Financial Measures” for a reconciliation of the comparable U.S. GAAP financial measures to the adjusted measures for annual incentive purposes.

(3)     Adjusted OCF for annual incentive purposes is based on budgeted foreign exchange rates and excludes certain non-recurring items.  See “Financial Measures” for a reconciliation of U.S. GAAP operating cash flow to Adjusted OCF.

Our Long-Term Equity Incentive Program

Plan Criteria and Rationale

Long-term compensation for all our executives, including our NEOs, is entirely equity based.  Our long-term awards are structured to align our executives’ interests with those of our shareholders and to emphasize the Committee’s expectation that our executive officers should focus their efforts on growing our business while carefully managing capital.

To help further these objectives, we use CAGR and ROIC as the performance measures for determining PSU payouts.  Each metric is weighted equally because we believe CAGR and ROIC are equally important in creating shareholder value.

The use of stock options is intended to align our executives’ longer-term interests with those of our shareholders because options deliver value to the executive only when and to the extent that share price exceeds the exercise price of the option.  Therefore, options provide a strong performance-based link between shareholder value and executive pay.

31

Table of Contents

Performance Share Units

The number of shares that may be earned under the PSUs is based on achievement of CAGR and ROIC targets.  Each PSU award agreement contains a target payout for the recipient.  The number of shares an executive earns at the end of a performance period is calculated by multiplying the target number of PSUs awarded at the beginning of the period times the applicable “payout factor” for each performance metric times the weighting for that performance metric.