This is Organon and Company's 2025 Annual Meeting of Shareholders. My name is Elvis, and I'll be the operator of the meeting and will be assisting the speakers this morning. I will now turn the meeting over to Kirke Weaver, Organon's General Counsel and Corporate Secretary.
Good morning and welcome, everyone. Thank you for joining us today. I'm Kirke Weaver, Organon's General Counsel and Corporate Secretary. We'll begin with a short briefing about the process for today's virtual meeting, the format of which allows us to be more inclusive and reach a greater number of our shareholders than an in-person meeting. We designed the format of our annual meeting to ensure that our shareholders who have logged into today's meeting using their 16-digit control number will be provided similar rights and opportunities to participate as they would be at an in-person meeting, including the ability to vote and ask questions. It's now 9:01 A.M. Eastern Daylight Time. The polls are now open for voting. The annual meeting will follow the agenda displayed on the virtual meeting website. Following the introductions and open remarks, we will conduct the formal business of the meeting.
After we conclude the formal portion of the meeting, Organon CEO Kevin Ali will speak briefly about the company and answer some questions submitted before or during the meeting. Shareholders who have logged into the virtual meeting using their 16-digit control number will be able to submit questions by typing them into the Ask the Question field on the virtual meeting website and clicking Submit. In order to ensure an orderly meeting, we ask everyone to follow the rules of conduct available electronically in the meeting portal at the bottom of your screen. Please also note that this meeting is being recorded. However, no one attending via webcast or telephone is permitted to use any audio recording device. If you experience any technical difficulties during the meeting, please call the technical support number posted near the meeting portal on your screen.
In the event we experience any technical difficulties before the conclusion of the formal business of the meeting, we may temporarily adjourn and reconvene the meeting in accordance with our bylaws. I would now like to turn things over to our Chairman of the Board and Chair of the Talent Committee, Carrie Cox, for her welcome remarks.
Thank you, Kirke, and welcome, everyone. Thank you for joining us today. We're pleased to be hosting our 2025 Annual Meeting of Shareholders. Participating in this meeting are all of the members of our board, including Robert Essner, who chairs our Environmental, Social, and Governance Committee; Alan Ezekowitz; Helene Gayle; Shelly Lazarus; Deborah Leone; Philip Ozuah, Chairman of our Portfolio Development Committee; Cynthia Patton; Grace Puma; Shalini Sharp, Chairman of our Audit Committee; and Kevin Ali, who is also our CEO. Also joining us today are our executive officers, including Kevin Ali, Juan Camilo Arjona Ferreira, Aaron Falcione, Daniel Karp, Joe Morrissey, Vit Nisita, Rachel Stuhler, Matt Walsh, and Kirke Weaver. Mark Bode, a representative of PricewaterhouseCoopers LLP, Organon's independent registered public accounting firm, is present as well. Michael Barbera, who serves as the inspector of elections for this meeting, is also present. It's now 9:03 A.M. Eastern Daylight Time, and this meeting is officially called to order. At this time, I'll ask Kirke to commence with the official business of the meeting.
Thank you, Carrie. Only matters for which notice has been given in accordance with our bylaws may be brought before the annual meeting. Those matters are set forth as proposals in the proxy statement relating to this meeting. This annual meeting was called by Organon's board of directors, who fixed April 14, 2025, as the record date for determining shareholders entitled to vote at this meeting. A copy of the proxy statement, which includes the notice of the meeting and the affidavit of mailing establishing that notice of the annual meeting was duly given, will be filed within minutes of this meeting. Michael Barbera, a representative of First Coast Results Inc., has been appointed to act as the inspector of election for the annual meeting and will tabulate the votes of the shareholders.
He has signed the oath of inspector of election, which will be filed within minutes of the meeting. As of the record date, there will be 259,956,063 shares of common stock outstanding and entitled to vote at this meeting. The inspector of election has informed me that immediately prior to the commencement of this meeting, we have represented in person or by proxy 250,273,708 shares of common stock, or approximately 82.81% of the voting power on the record date. Since this represents more than a majority of the voting power of all issued and outstanding stock entitled to vote as of the record date, a quorum is present for purpose of transacting business. As I announced earlier, the polls are open for voting. Shareholders who have not already voted or wish to change their votes can vote their shares online by clicking the Vote Here button on their screen.
Note that if you did not use a 16-digit control number to enter the meeting, you may not vote at the meeting. If you have previously voted by proxy and do not wish to change your prior vote, your vote will be cast as previously instructed and no further action is required. If you have already voted in advance of this meeting, a vote at this meeting will supersede your earlier vote. Please note the polls will be closing immediately after we address any questions relating to the proposals. Since the legal notice of this annual meeting has been given and a quorum is present, the meeting is properly convened and open for business. Our first item of business is the election of director nominees to hold off until the 2026 Annual Meeting of Shareholders or until their successors are duly elected and qualified.
The director nominees are Kevin Ali, Carrie Cox, Robert Essner, Alan Ezekowitz, Helene Gayle, Shelly Lazarus, Deborah Leone, Philip Ozuah, Cynthia Patton, Grace Puma, Shalini Sharp. The second matter to be voted on is the non-binding advisory vote to approve the compensation of Organon's named executive officers as described in Organon's proxy statement. The third matter to be voted on is the approval of an amendment and restatement of the Organon & Co. 2021 Incentive Stock Plan. The fourth matter to be voted on is the ratification of the appointment of PricewaterhouseCoopers LLP as Organon's independent registered public accounting firm for 2025. The board of directors unanimously recommends that shareholders vote for each of these proposals. The final matter to be voted on is the shareholder proposal requesting adoption of a director election resignation guideline.
The shareholder representative will be given three minutes to present their proposal and should restrict his or her comments to the proposal before the meeting. If Michael Piccirrillo or a representative for the New York City Carpenters Pension Fund is on the line, I would now ask the operator to unmute their line to allow them to present this proposal.
Hello? Hi. My name is Michael Piccirrillo and I represent the New York City Carpenters Pension Fund, the proponent of the director election resignation guideline proposal. The fund is a long-term holder of Organon and Company common stock and supports the company's board of director nominees. We appreciate the dialogue we had with the company representatives on the post-election director resignation issue. Shareholders possess several rights, with none more important than the right to vote for director nominees. The company has in place a governance guideline that requires an incumbent director nominee to tender the resignation for the board consideration should the director nominee fail to win reelection under the majority vote standard. The board has full discretion to determine whether to accept or reject a director's resignation. If the resignation is not accepted, the unelected director continues to serve as a holdover director under state corporate law.
The fund's proposal is straightforward and designed to strengthen shareholder voting rights. The director resignation guideline, if implemented, would require the board to accept the tendered resignation of an incumbent director following his or her failure to be reelected under a majority vote standard. The majority vote standard in director elections was instituted for the explicit purpose of giving shareholders a meaningful right to determine who is elected to a corporate board. The election votes are not adversary, r ather, they have a legal effect in determining whether a director is elected. The company's current director resignation policy, like that at most corporations, weakens shareholder voting rights through the grant of total discretion to the board to determine an election outcome. The proposal resignation is designed to bolster shareholder voting rights in director elections.
The board accountability created by the proposal guideline, combined with voting policies based on long-term corporate performance, will help focus boards and management teams on the task of long-term value creation. We believe this is an overdue reform which serves the best interests of Organon and its shareholders. Thank you.
Great. Thank you, Mr. Piccirrillo. The board of directors has carefully considered the shareholder proposal regarding the director election resignation guideline and believes it is overly prescriptive and unnecessary in light of the company's existing director resignation policy and other robust governance practices, both of which are consistent with widely accepted best market practices and promote board accountability to our shareholders. For more information regarding the board's position on the proposal, please see the board's full statement and opposition, which is available on pages 97 and 98 of the company's proxy statement. The board of directors unanimously recommends a vote against this proposal. No other items of business have been properly brought before the meeting. We'll now address any shareholder questions that we have received relating to matters being voted on today.
As a reminder, all questions must adhere to the rules of conduct, which, as I noted earlier, are available electronically in the meeting portal at the bottom of your screen. Jennifer Halchak, Organon's Vice President of Investor Relations, is here to read the questions we will answer today. Jen, do we have any questions on these proposals?
No, Kirke. There are no questions on these proposals.
Great. Thank you, Jen. In a moment, we will close the polls. As a reminder, shareholders who have sent in proxies or voted via telephone or internet and do not wish to change their vote do not need to take any further action. I would now like to confirm that all online ballots have been submitted. It appears that all proxies and online ballots have been submitted and all voting has been completed. It is now 9:10 A.M. Eastern Daylight Time, and I hereby declare the polls closed.
We have been informed by the inspector of election that the preliminary vote report shows that a majority of the company's shareholders, as provided in the company's bylaws and proxy statement, have voted for the election of each of the director nominees, for the non-binding advisory vote to approve the compensation of Organon's named executive officers as described in Organon's proxy statement, for the amendment and restatement of the 2021 Incentive Stock Plan, and for the ratification of the appointment of PricewaterhouseCoopers LLP as Organon's independent registered public accounting firm for 2025. Thus, I declare that each director nominee has been elected, the non-binding advisory vote on the 2024 compensation of our named executive officers has been approved, the amended and restated Organon & Co. 2021 Incentive Stock Plan has been approved, and the appointment of PricewaterhouseCoopers LLP as Organon's independent registered public accountants for 2025 has been ratified.
The inspector has determined that the shareholder proposal requesting adoption of a director election resignation guideline received an affirmative vote of 20.9% of total votes cast. A majority of the votes cast was required for each proposal to be approved. We will report the final vote results in a Form 8-K filing with the U.S. Securities and Exchange Commission within the next few days in compliance with SEC rules. With that, I'll turn the meeting back over to our Chairman, Carrie Cox.
Thank you, Kirke. The time is now 9:11 A.M. Eastern Daylight Time. There being no further business to come before the meeting, the annual meeting of shareholders of Organon is now concluded. Here to provide a brief presentation followed by some Q&A is our CEO, Kevin Ali.
Thank you, Carrie. Thank you to everyone joining us today for your continued interest and engagement. Before we begin, Jen will make brief remarks about any forward-looking statements made by me today.
Thank you, Kevin. I'd like to remind our listeners that some of our discussion today may relate to forward-looking statements. Forward-looking statements are statements about, among other things, financial projections, management plans or objectives, or future performance. Actual results may differ materially from those projected by any forward-looking statements. Please see our annual report on Form 10-K for a discussion of certain risk factors that could materially or adversely affect our business, financial condition, and results of operations.
Thank you, Jen. Earlier this month, we marked Organon's fourth anniversary. In that time, we built a profitable, mission-driven business focused on delivering impactful medicines and solutions for a healthier everyday. In 2024, Organon once again delivered. We reported full-year revenue of $6.4 billion, representing 3% growth at constant currency. This marked our third consecutive year of constant currency revenue growth across all three franchises: women's health, biosimilars, and established brands. Last year, we met every strategic objective we set. Importantly, we generated $967 million in free cash flow before one-time costs, in line with our expectations. We also improved adjusted EBITDA margin year- over- year, excluding IPR&D. In addition, we acquired Dermavant, one of several transactions we've completed that enhance our long-term revenue growth profile. Our 2024 performance reinforces that we have the right strategy in place to deliver long-term shareholder value through our diversified global portfolio.
Let's take a closer look at our full-year 2024 results. Our women's health franchise grew 5% year- over- year at constant currency, driven by the strong double-digit performance of Nexplanon, our largest product. Notably, 2024 marked Nexplanon's best annual performance to date. We believe it's on track to reach over $1 billion in 2025. Turning to biosimilars, the franchise delivered 12% growth at constant currency in 2024, reflecting the continued strength of our portfolio. This includes Hadlima, which remains one of the leading biosimilars by total prescriptions in the U.S., a testament to the confidence prescribers have in our product. We also grew established brands 2% year- over- year at exchange. This marks the franchise's third consecutive year of constant currency growth, which underscores the entrepreneurial approach we've taken to managing this business for profitable growth.
In our brief history, we've differentiated ourselves with our competitive strengths, among them our broad portfolio, global commercial excellence, and expertise in women's health. We're now building on these advantages to help us achieve our long-term top and bottom-line growth aspirations. I'm proud of all we've achieved in our brief history. We've positioned Organon as a leader in women's health, delivered double-digit revenue CAGR with Nexplanon, and driven consistent growth across our base business. Our base business continues to be a meaningful contributor to long-term shareholder value. We've actively managed this portfolio to generate strong cash flow, enabling reinvestment in innovation and future growth. For the past two years, we have focused on transactions like Emgality and Dermavant that enhance our revenue growth profile. With these drivers in place, we're prioritizing capital allocation to reduce debt faster.
We've reset our dividend payout to direct more free cash flow towards debt reduction. In the near term, we'll be doing everything we can within the strategic focus of the company to further strengthen the balance sheet. In closing, I'm proud of the efforts of our employees worldwide. Their hard work and dedication reinforce my confidence in the road ahead. As Carrie mentioned earlier, we're now going to answer questions with shareholders submitted prior to and during the meeting. Please note, only questions that are germane to the meeting and in compliance with the meeting's rules of conduct will be addressed. I'll now turn it over to Jennifer Halchak, Organon's Vice President of Investor Relations.
Thank you, Kevin. The first question we have is, your financial guidance for this year would imply flat constant currency revenue growth at the midpoint. When can we expect Organon to return to growth?
Thanks, Jen. As we've discussed in our recent earnings calls, in 2025, we're working through the loss of exclusivity, or LOE, of one of our largest products, Atozet in Europe. Next year, we will not only lap the headwind of the Atozet LOE, but we also expect to see continued uptake in VTAMA, a return to growth in our biosimilars business, and good performance coming from other strategic growth pillars like Emgality. Those factors support our commentary since spin, which is that over the medium term, the revenue growth profile of Organon should be in the low to mid single-digit range on a constant currency basis.
Thank you for that, Kevin. The next question relates to capital allocation. What drove the company's recent decision to reduce its dividend payout?
As I mentioned, we recently reset our capital allocation priorities to accelerate progress towards deleveraging. We believe this will enable a path to achieve a net leverage ratio of below 4x by year-end, and we will aim to further decrease this ratio over time. By deleveraging more rapidly, we will continue to strengthen the prospects of the company. We will be better positioned to weather what has been a volatile macroeconomic environment for pharma. In the not-so-distant future, we will be in a better position to consider M&A that can further drive revenue acceleration.
Thank you. The next question is, can Organon improve its margins? Are there opportunities to reduce organizational costs?
Thanks, Jen, for this important question. Optimizing our cost structure has been an intense focus for us. At the beginning of this year, we talked about our plan to take out $200 million of costs in 2025. We're on track to achieve those savings. We expect these savings to benefit not only 2025, but to annualize to roughly $275 million, which we'll realize in 2026 and thereafter. This restructuring is the largest we've done to date. With a more fit-for-purpose organization going forward, we're better positioned to deliver profitable growth that outpaces revenue growth, driving operating margin expansion. Delivering this financial profile is key for us to be able to continue advancing our vision of a healthier every day for every woman. There's tremendous opportunity in women's health to address significant unmet needs, and we're positioned at the forefront of that effort.
That's a good segue to our next question, which is, how committed is Organon to seeing out its vision to being a leader in women's health?
We remain very committed to our mission and vision of improving the lives of women. Women's health has been woefully underinvested for decades. No other company our size has a strategic focus with women's health at its center, making us the focal point in this therapy area. We launched four years ago with contraception and fertility assets, both therapy areas, by the way, that continue to grow for Organon. Additionally, we continue to assess commercialization opportunities and conditions that are either unique to women or disproportionately affect women. A perfect example of this is our licensing agreement for two migraine assets. Migraines are 3x more common in women than in men. We've also made clinical investments in areas of high unmet need, like endometriosis.
While we are guided by our North Star of advancing the health of women, the most effective way for Organon to achieve that vision is to operate efficiently, maximize our free cash flow, and allocate our capital in the best interests of building the company for the long term.
Okay, thank you. Our final question that we received is related to executive compensation. Given the recent decline in Organon's performance, can you explain how the current executive compensation aligns with our financial results? Specifically, which measures are being taken to ensure that executive pay is reflective of the company's performance and is in the best interest of shareholders? I'll ask Carrie to address this question.
Thank you, Jen. I want to emphasize that our executive compensation programs are designed to be very closely tied to performance and therefore aligned with shareholder interests. At the same time, we do benchmark every year and make sure that we're providing market-competitive total compensation opportunities for our CEO and our named executive officers. Importantly, though, a significant portion of our total compensation is variable comp tied to performance. The performance-based compensation for Kevin as our CEO is 72% of his total target compensation. That's a very significant amount. This includes the annual incentive program, the performance shares, PSUs, performance share units, and the non-qualified stock options that are all based on measurable outcomes.
For AIP, for example, in 2024, our AIP was primarily driven by the achievement of constant currency revenue and adjusted EBITDA goals, which were each weighted at 40% of the total, and an additional focus on organizational health, which was weighted at 20%. The long-term incentives include the PSUs, which are 50% of the annual long-term awards, and PSUs are earned based on free cash flow, constant currency revenue, and adjusted EBITDA goals over the three-year period. The non-qualified stock options comprise 25% of the annual long-term awards and only deliver value if our share price increases. I think it is very important to note that the named executive officer's target compensation is heavily equity-based at 78% for the CEO and on average 64% for the other named executive officers.
Ultimately, value realized by the executive team is very dependent on stock price movement, which therefore ensures a strong alignment with the shareholder value. Thank you.
Thanks very much, Carrie. This concludes our question and answer session for our meeting, and I'll hand it back to you, Kevin.
Thanks, Jen. Again, I want to thank you for your attendance today and continued support. It is our pleasure and privilege to be involved with such a great company with the vision and commitment for a better and healthier every day for every woman. Back to you, Carrie.
Thank you, Kevin. Our annual shareholders meeting is now concluded. I want to extend my gratitude to our shareholders and all attendees for your support and participation today. As we move forward, united in our mission to create a healthier and brighter future for every woman, your dedication and trust in our vision is very important to us. Thank you once again. Goodbye.
That concludes our meeting today. Thank you for joining. You may now disconnect.
The host has ended this call. Goodbye.