NLPC presented a shareholder proposal this morning at Merck & Co., Inc.‘s 2025 annual meeting of shareholders that asked the company to consider eliminating diversity, equity, and inclusion goals from its executive pay incentives.
Speaking at the meeting for NLPC was the director of its Corporate Integrity Project, Paul Chesser. Merck tried in recent months to convince the Securities and Exchange Commission to let it omit our proposal from the meeting, claiming it already does what the proposal requests. The SEC disagreed with Merck, stating that it saw no evidence that the company has implemented the proposal. The board of directors’ opposition statement to NLPC’s proposal is explained on Page 90 of Merck’s proxy statement.
Merck has been gaslighting its shareholders. During a question-and-answer session following the business portion of today’s meeting, Chairman and CEO Robert Davis (pictured above) stated in response to an inquiry about DEI policies that, “It’s at the core of who we are,” adding that it helps the company “execute on the scientific method.”
If DEI is “at the core” of what Merck is, then it is almost certainly a lie that the board has thought about removing executives’ incentives that are tied to the policies. As Chesser stated in his remarks at the meeting (transcript below), this represents “materially false and misleading” information which is prohibited under federal law.
NLPC also filed a detailed proxy memorandum with the SEC in support of its proposal, after circulating it to other investors that own millions of voting shares in the company.
Chesser’s three-minute remarks as presented at the meeting can be heard here, and a transcript follows:
Good morning.
Merck’s Board and legal team tried extremely hard to keep Proposal 6 from being considered at this meeting.
Proposal 6 calls upon the Board’s Compensation Committee to re-examine and consider eliminating the portion of its executive pay that is incentivized by pursuing diversity, equity and inclusion – or DEI – goals.
Most of Corporate America has recognized that DEI policies have become toxic and rejected by most consumers in the United States, but Merck still clings to these discriminatory practices.
But Company leadership acts like they are either ashamed or afraid to admit that their DEI policies still exist.
Proposal 6 explains why the Company should look hard at removing DEI-based incentives from top executives’ compensation formulas.
But rather than just admit that they don’t want to do that, instead Merck states in its opposition response to the Proposal that it “already conducts the review sought by the proposal.”
In other words, Merck says they have already substantially implemented the Proposal and thus it is not necessary.
That’s what the Company told the Securities and Exchange Commission in hopes the agency would allow Merck to exclude our Proposal from this annual meeting.
There’s just one problem.
You, my fellow shareholders, are hearing me present Proposal 6, because the SEC told the Company that in its expert view, Merck absolutely has not already implemented the Proposal.
So to briefly review:
- Merck said it already reviews DEI in executive incentives and implied that they think about eliminating them.
- The SEC refuted Merck and said no you didn’t do anything of the sort. The Proposal must stay.
- Merck comes back and tells you, the shareholders, that it already reviews and considers removal of DEI incentives for executives, directly contravening the SEC’s ruling.
This in our view is called “providing materially false and misleading information” to shareholders and treads dangerously close to SEC penalty territory.
Further, Merck told the SEC that it “does not have any DEI milestones in its executive compensation programs.”
This defies logic, as Merck maintains “sustainability metrics” which include “DEI metrics.”
In plain English, a metric is a milestone.
Further, DEI has an outsized influence in Merck’s incentive formula because if executives fall short on any part of the sustainability metric, they risk losing the payout for the entire sustainability part of executive incentive pay.
This also appears to be materially false and misleading.
So in addition to voting for Proposal 6, we urge investors to demand accurate and honest information from Merck in the information it provides to shareholders.
You can view NLPC’s shareholder proposal for Merck & Co., Inc.’s annual meeting here.
Listen to Chesser’s delivered remarks in support of the proposal here.
Read NLPC’s proxy memorandum in support of the proposal, filed with the Securities and Exchange Commission, here.
