THERMO FISHER SCIENTIFIC INC

Components of our annual compensation program

Pay and performance alignment

For our compensation program to be successful, it needs to effectively align with our key strategic and financial goals. We achieve this by delivering the majority of compensation in the form ofat-risk variable pay that is directly tied to clearly articulated strategic and financial performance measures. To ensure alignment with shareholder value creation we also assess total shareholder return (“TSR”) relative to the 2024 TSR Peer Group.

The majority of our NEOs’ target 2024 compensation isat-risk and variable, with the mix well-aligned to practices of our Peer Group companies. The 2024 target direct compensation mix for our CEO and other NEOs are shown in the table above.

Compensation consultants

In 2024, the Committee in its sole discretion retained Pearl Meyer as its independent compensation consultant. Pearl Meyer does not provide any other services to the Company. The Committee performed its annual independence review of Pearl Meyer and determined that Pearl Meyer’s work for the Committee does not raise any conflict of interest. Pearl Meyer reports directly, and provides various executive and director compensation services, to our Compensation Committee, including the following:

2024 compensation decisions and outcomes

Base salary

Base salary is used to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our executive officers. Decisions regarding individual positioning take into account level of responsibility, time in role, current salary and individual performance, as well as the most relevant external market reference.

In February 2024, the Committee considered the market data collected by Pearl Meyer in combination with the factors listed above. As a result of this review, in February 2024 the Committee approved increases to base salaries for our NEOs ranging from 0.0% to 9.1% as compared to base salaries in effect on December 31, 2023.

The base salary increases approved in February 2024 are reflective of prevailing market merit and performance increase practices to ensure that our NEOs’ base salary levels remain positioned competitively relative to the market. Mr. Casper did not receive a base salary increase in February 2024, reflecting the Committee’s continued focus on long-term, performance-based compensation through equity awards. The base salary increase for Mr. Pettiti was intended to better align his base pay with comparable peer group executive roles, and the base salary increase provided to Mr. Lowery reflected his anticipated promotion to Executive Vice President and his expanded responsibilities.

Annual incentive plan

OVERVIEW

Each year, the Committee approves for each executive an annual target incentive amount expressed as a percentage of the executive’s base salary. The 2024 targets are set forth in the “2024 Named Executive Officer annual incentive payouts” table. The final award can range from 0% to 200% of target, depending on the financial andnon-financial performance of the Company againstpre-set performance targets. In exceptional circumstances, the Committee can apply discretion when determining an achievement factor. In fiscal year 2024, the Compensation Committee did not exercise discretionary authority with regard to our NEOs.

Awards are paid out, if earned, in the first quarter of the following year based on the following methodology:

PERFORMANCE METRIC SELECTION

The financial metrics that we use for our annual incentive plan are designed to promote the achievement of key financial performance measures, and capture what we view as the main financial drivers of shareholder value: maximizing revenue, managing operating expense, controlling other costs, and maintaining process discipline and sound execution. In determining the achievement of the financial measures, the Company’s actual performance is then measured relative to the Company’s performance goals for 2024 set at the beginning of the year.

To better balance annual incentive plan determinations across financial andnon-financial strategic considerations, the Committee also assessesnon-financial performance across 3 identified areas of strategic importance. Quantitative and qualitative corporate performance goals arepre-established in 3 categories, and the Compensation Committee evaluates achievement of the goals atyear-end and determines the degree to which each defined goal was exceeded, met, or not achieved. Thesenon-financial performance goals are established, and overall achievement of thenon-financial performance element of our annual incentive plan is assessed, by reference to our overall goal to deliver on our commitments to all stakeholders and advance our position as the world leader in serving science, which we believe creates value for our shareholders and benefits our employees, customers, and communities.

The Committee selected the financial measures described below and further defined in Appendix A, as opposed to financial measures computed under GAAP, because this is consistent with how management measures and forecasts the Company’s performance, and as such, how the Company communicates performance to investors. The use of adjusted measures enables investors and management to compare the Company’s performance to the market on alike-for-like basis, which is particularly important given the varying degrees of acquisition across peer companies and the acquisitive nature of the Company.

RIGOROUS GOAL SETTING

In February of each year, the Committee sets challenging annual goals, taking into account Company and industry outlooks for the year, historical and projected growth rates for the Company and its peers, and performance expectations from analysts. The Company’s annual operating and 5-year strategic plans serve as the basis of the annual earnings guidance we communicate to investors. The annual operating plan builds on the prior year’s results and is based on the anticipated business environment. As a result, the goals established for our annual company performance measures are closely aligned with our annual corporate operating plan and the financial objectives we communicate to investors.

In setting performance goals, the Committee generally establishes standards such that the target payout (100% of target bonus) represents attractive financial performance and can be achieved with strong execution; payouts above target require outstanding performance.

The Committee followed the process described above when establishing our 2024 performance targets. Consistent with prior years, our 2024 targets aligned with our publicly disclosed outlook for the year, including the expected negative impact in 2024 from the continued roll-off of COVID-19 pandemic related revenue, which was expected to decline year over year as the societal need for COVID-19 testing, vaccines and therapies continued to reduce. The Committee believes the performance targets it established for 2024 appropriately reflected the dynamic macroeconomic environment and were appropriately challenging. For each financial metric, the Committee set the performance target at a level it believed would represent attractive financial performance within our industry and would require strong execution, while requiring what it believed would be outstanding performance to achieve the maximum payout level. The Committee believes it is important to reward for above-industry performance to support the retention of key talent amidst multiple years of market uncertainty in a highly competitive environment, as our executives are critical to executing on our long-term strategic objectives.

2024 PERFORMANCE TARGETS AND ACHIEVEMENT DETERMINATIONS

ACHIEVEMENT EARNED ON FINANCIAL PERFORMANCE

Based on the formulaic weighted average of the organic revenue, adjusted net income and free cash flow payouts noted above, the Committee concluded an overall achievement of 172.5% of target was earned for the financial performance element.

The Committee assesses performance in our 3 identified areas of strategic importance, taking account of the Company’s overall Mission and goal to deliver on our commitments to all stakeholders and advance our position as the world leader in serving science.

ACHIEVEMENT EARNED ONNON-FINANCIAL PERFORMANCE

The Committee determined that as a result of the key achievements noted above, we meaningfully delivered on our commitments to all stakeholders and significantly advanced our position as the world leader in serving science, and therefore concluded an overall achievement of 100% of target was earned for thenon-financial performance element.

OVERALL ACHIEVEMENT

After weighing the earned factors for the financial andnon-financial performance described above, the Committee concluded that a formulaic payout of 150.7% was earned, reflecting the team’s delivery of operational excellence and strong commercial execution in 2024.

HOW WE ARRIVED AT THE 150.7% OVERALL PERFORMANCE SCORE

2024 NAMED EXECUTIVE OFFICER ANNUAL INCENTIVE PAYOUTS

As a result of the 150.7% overall performance score, the following payouts were earned in 2024 by our NEOs:

Long-term incentives

OBJECTIVES

The objectives of our long-term equity incentive program are to align the interests of our executives with those of our shareholders by motivating and rewarding achievement of financial performance and long-term shareholder value and to promote retention of our executive talent. We achieve this by granting our executive officers equity through a combination of vehicles, each serving a different objective.

KEY FEATURES OF 2024 ANNUAL EQUITY AWARDS

To promote retention, awards generally provide that any unvested awards are forfeited upon termination of service, except as described in the section titled “Treatment of equity.”

2024 NAMED EXECUTIVE OFFICER EQUITY AWARDS

As further discussed in “Annual compensation review” on page 47, the Committee reviewed the Peer Group information provided by Pearl Meyer, Company and business unit performance, individual performance, prevailing market trends, feedback from shareholders, and the views of both the CEO (in the case of the other NEOs) and the othernon-employee directors of the Board, and applied its judgment to determine that the following equity awards were appropriate, and aligned with our compensation philosophy and our strategic market positioning. The target values and actual award values as of the grant date in February 2024 of the awards made to each of our NEOs are reflected in the table below. The difference between the approved target value and the actual grant date value reported below and in the compensation tables that follow reflects the variation between the 20-day average stock price ending 5 trading days prior to the Compensation Committee meeting, which is used to calculate the target award value, and the closing price of our common stock on the grant date, which is used as the basis for calculating the actual grant date value for accounting purposes, as well as other minor differences in the option pricing variables used for each calculation.

2024 PERFORMANCE-BASED RESTRICTED STOCK UNITS

Performance metric selection

Our performance-based restricted stock unit awards are directly tied to clearly articulated strategic and financial performance measures. To ensure alignment with shareholder value creation, we also assess TSR relative to the 2024 TSR Peer Group. Further details on these metrics are provided in the table below:

Rigorous goal setting

We set challenging goals for organic revenue growth and adjusted EPS following the process described on page 36. With regard to these measures for this 3-year award, performance is measured over the fiscal year in which the award is made. The Committee believes aone-year measurement period for these metrics is appropriate given the dynamic and acquisitive nature of the Company. The incorporation of the financial results of the acquired entities into the Company’s financial results that would occur over a longer measurement period could undermine the program rigor, resulting in an undue windfall to participants. To mitigate against this scenario, we use aone-year measurement period to incentivize executives to achieve these metrics, but ensure long-term retention of executives through the use of a 3-year vesting period. In addition, the incorporation of a long-term,3-year relative TSR metric ensures executives’ interests are aligned with those of shareholders with regard to the Company’s performance over the long-term. Finally, by using performance-based restricted stock units that vest over a 3-year period, the Committee incentivizes executives to take a long-term view, as any impact to the Company’s long-term performance will decrease the realizable value of the executive’s award.

2024 financial performance targets and achievement before relative TSR metric is applied

The performance targets and level of payout that apply to awards made in February 2024 are structured in a matrix, meaning that strong performance is required with respect to both organic revenue growth and adjusted EPS to earn an above-target payout.

The weighting of the financial performance targets for 2024 were:

One-third of the total number of units earned vested on February 28, 2025, and the same number of restricted units will vest on both the first anniversary and the second anniversary of this vesting date (subject to adjustment based on our TSR, as discussed below), so long as the executive is employed by the Company on each such date (subject to certain exceptions).

PERFORMANCE ACHIEVEMENT BEFORE APPLICATION OF RELATIVE TSR METRIC

Actual organic revenue growth for the year was (0.19)% and actual adjusted earnings per share for the year was $21.86, resulting in a payout of 163% before the application of the relative TSR metric.

TSR metric

For the 2024 compensation cycle, the Committee reviewed and updated the peer group used for measuring TSR. Updates to the 2024 TSR Peer Group are generally aligned with changes to the Peer Group based on relevance from a revenue, market capitalization, and operational complexity standpoint.

At the end of the 3-year performance period beginning on January 1, 2024 and ending on December 31, 2026, the Company’s 3-year TSR for the performance period will be measured against the 2024 TSR Peer Group:

The number of performance-based restricted stock units finally distributed on the third and final vesting date in 2027 will be subject to adjustment based on the Company’s relative performance against this high-performing 2024 TSR Peer Group, as shown below:

To earn an upward further adjustment based on relative TSR, the Company will need to deliver exceptional performance, as TSR performance in the bottom half of the 2024 TSR Peer Group will result in a downward adjustment to the amount of total shares earned.

RELATIVE TSR DETERMINATION FOR 2022 PERFORMANCE-BASED RESTRICTED STOCK UNIT GRANT

In February 2023, the Compensation Committee certified the payout level of the performance-based restricted stock unit awards granted to our executives in February 2022 (“2022 PSUs”), prior to the application of the TSR metric, at 175%. The 2022 PSUs were eligible to be earned based on achievement versus an organic revenue growth* goal and an adjusted EPS* goal, measured over the fiscal year in which the award was made.

The 2022 PSUs were also subject to further adjustment based on the Company’s relative TSR performance. The Company’s TSR for the 3-year performance period beginning on January 1, 2022 and ending on December 31, 2024 was measured against the companies shown in the peer group below (the “2022 TSR Peer Group”) at the end of the three-year vesting cycle.

PERFORMANCE ACHIEVEMENT AFTER APPLICATION OF RELATIVE TSR METRIC

The 2022 PSUs were earned at 175% prior to the application of the relative TSR metric. Thermo Fisher’s actual 3-year relative TSR was in the 14th percentile of the 2022 TSR Peer Group, and the payout level was further adjusted downward by 10%, resulting in a final payout level of 157.5%. In order to effectuate this further adjustment, the third tranche of the award, which vested in February 2025, was reduced by 30%.

The table below shows the target and earned 2022 PSUs for those NEOs who had received this grant.

TSR LONG-TERM INCENTIVE STOCK OPTION AWARDS

Purpose. Throughout 2023, the Committee engaged in an ongoing review of the Company’s continuity of leadership for the next several years and considered its importance to the Company’s strategy. Based on this review, in February 2024, in connection with the annual equity grants, the Committee approved a performance-based stock option program for senior leaders, including our NEOs (the “2024 performance-based options”). The Committee made these exclusively performance-based awards to retain key talent amidst market uncertainty in a highly competitive talent environment to support the execution of our growth initiatives and strategic objectives.

The awards were also designed to further align executive compensation with long-term shareholder value creation:

Competitive market positioning. In approving the value of the 2024 performance-based options, the Committee considered market benchmarks for overall positioning of our executive officers among our immediate and broader industry peers, the costs associated with a potential need to attract executives of similar caliber and proven track record of success, and the strategic priority to drive successful execution of our strategic initiatives to support sustained above-market out-performance, both on an absolute and relative basis. The grant date fair value of the 2024 performance-based option award was $6,352,907 for Mr. Casper, $2,588,149 for Mr. Williamson, $3,105,831 for Mr. Lagarde, $2,823,471 for Mr. Pettiti, and $1,882,314 for Mr. Lowery. Underscoring the rigor of this performance incentive opportunity, as of December 31, 2024, the TSR long-term incentive stock option awards were underwater and had zero intrinsic value.

Terms. To earn a payout, the Company needs to deliver exceptional, sustained performance against the 2024 TSR Peer Group defined above.

Relative TSR is measured for the period beginning on January 1, 2024 and ending on December 31, 2026 (the “TSR Performance Period”).

Other terms. The exercise price for these options is equal to the closing price on the date of grant ($552.85). The options, if earned, will only deliver value if the Company’s share price appreciates over the 8-year term. The Committee believes this grant will promote long-term value creating actions and retention.

This award is also subject to the clawback provisions set forth in our clawback policy, which is described in further detail on page 50.

Other compensation

We maintain broad-based benefits that are provided to all employees, including health and dental insurance, life and disability insurance and a 401(k) plan. Executives are eligible to participate in all of our employee benefit plans, in each case on the same basis as other eligible employees.

Executive compensation decision-making process

Compensation oversight

The Committee, which is comprised solely of independent directors, is responsible for discharging the Board’s responsibilities relating to the compensation of our executives, including our CEO.

The Committee has overall responsibility for approving and evaluating all of our compensation plans, policies and programs as they affect our executives. This includes reviewing and approving the compensation of the executives, approving performance goals, reviewing the achievement of performance goals at year end, administering our equity programs, and reviewing and recommending to the Board management succession plans.