UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
the Securities Exchange Act of 1934 (Amendment No. )
![[MISSING IMAGE: lg_vareximaging-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-22-130273/lg_vareximaging-4c.jpg)
Time. The Secretary'smeeting will be a virtual meeting of stockholders, which will be conducted via a live audio webcast. You will be able to attend the meeting, submit your questions and vote online during the meeting by visiting
Annual Meeting.
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| | | Sincerely, | |
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![[MISSING IMAGE: sg_ruedigernaumann-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-22-130273/sg_ruedigernaumann-bw.jpg){kind=small} Ruediger Naumann-Etienne, PhD Chairman of the Board | |
Varex Imaging Corporation
1678 S. Pioneer Road
Salt Lake City, Utah 84104
January 2, 2020
AND PROXY STATEMENT
which will be conducted via a live audio webcast. You will be able to attend the meeting, submit your questions and vote online during the meeting by visiting
www.virtualshareholdermeeting.com/VREX2023.Annual Meeting.
Annual Meeting. If you would like to view the list, please contact us to schedule an appointment by calling (801) 978-5447 and leave a message.
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| | | By Order of the Board of Directors, | |
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![[MISSING IMAGE: sg_kimberleyhoneysett-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-22-130273/sg_kimberleyhoneysett-bw.jpg) Kimberley E. Honeysett Corporate Secretary | |
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PROXY SUMMARY
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AUDIT COMMITTEE REPORT | | | | | | | |
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Delinquent Section 16(a) Reports
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Background
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| Annual Meeting of Stockholders | | | Meeting Agenda | | ||||
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Date: Time: Place: | | | Thursday, February 5:30 p.m. Mountain Time The 2023 Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/VREX2023 and following the instructions found in the Notice of Internet Availability of Proxy Materials and this Proxy Statement. | | | • Election of | ||
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| | | December 12, 2022 Stockholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on. | | | • Transact any other business that properly comes before the | | |
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| Voting Matter | | | Board vote recommendation | | ||||
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| 1. | | | Election of directors | | | For each director nominee | | |
| 2. | | | Advisory vote to approve executive compensation | | | For | | |
| 3. | | |||||||
| | Ratification of | | | For | | |||
| Name | | | Age | | | Director since | | | Occupation | | | Other public boards | | | AC | | | CC | | | NC | |
| Kathleen L. Bardwell (FE)(I) | | | 66 | | | 2022 | | | Former Senior Vice President, Regulatory Affairs and Compliance at STERIS Corporation | | | — | | | M | | | M | | | — | |
| Jocelyn D. Chertoff, M.D.(I) | | | 67 | | | 2017 | | | Chair of Radiology, Dartmouth Hitchcock Medical Center | | | — | | | M | | | — | | | C | |
| Timothy E. Guertin(I) | | | 73 | | | 2020 | | | Former CEO of Varian Medical Systems, Inc. | | | 1 | | | — | | | M | | | M | |
Name | Age | Director since | Occupation | Other public boards | AC | CC | NC | Independent | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Nominees for Election for a Two-Year Term Ending with the 2022 Annual Meeting | ||||||||||||||||
Jocelyn D. Chertoff, M.D. | 64 | 2017 | Chair of Radiology, Dartmouth Hitchcock Medical Center | — | — | M | M | ü | ||||||||
| Ruediger Naumann-Etienne (CB) | 73 | 2017 | Managing Director, Intertec Group | — | M | M | — | ü | ||||||||
Sunny S. Sanyal | 55 | 2017 | President and CEO, Varex | — | — | — | — | — | ||||||||
Directors Continuing in Office until 2021 Annual Meeting | ||||||||||||||||
Erich R. Reinhardt | 73 | 2017 | Former CEO & President, Siemens Healthcare | — | M | — | C | ü | ||||||||
| Walter M Rosebrough, Jr. | 65 | 2018 | President and CEO, Steris plc | 1 | — | C | M | ü | ||||||||
Directors Continuing in Office until the 2022 Annual Meeting | ||||||||||||||||
Jay K. Kunkel | 60 | 2017 | President Asia, Executive Vice President, Tenneco Inc. | — | M | M | — | ü | ||||||||
| Christine A. Tsingos (FE) | 61 | 2017 | Former Executive Vice President and CFO, Bio-Rad Laboratories | 2 | C | M | ü | |||||||||
(CB)Chairman of the BoardName Age Director
since Occupation Other
public
boards AC CC NC Jay K. Kunkel(I) 63 2017 Former President Asia, Executive Vice President, Tenneco Inc. — M M — Walter M Rosebrough, Jr.(I) 68 2018 CEO Emeritus and Senior Advisor, STERIS plc — — C M Sunny S. Sanyal 58 2017 President and CEO, Varex — — — — Christine A. Tsingos(FE)(I) 64 2017 Former Executive Vice President and CFO, Bio-Rad Laboratories 3 C — M (I)Independent Director(FE)Audit Committee Financial ExpertCChairMCChairMemberACMMemberACAudit CommitteeCCCCCompensation and Human Capital ManagementDevelopmentCommittee("(“Compensation Committee"”)NCNCNominating and Corporate Governance Committee("(“Nominating Committee"”)TheOur Board recommends that our stockholders vote “for” the election of each of the directornomineesnominees.Corporate Governance HighlightsWe are committed to having sound corporate governance principles that we believe serve the best interest of allcurrent directors,our stockholders. Some highlights of our corporate governance practices are listed below.•All but one of the members of our Board of Directors (the “Board”), and all members of our key Board committees, are independent;•Average director tenure is approximately 4.5 years as of December 12, 2022;•Our entire Board is required to be elected annually;•An “independent” non-employee director is Chair and the roles of Chair and Chief Executive Officer are separate;•50% of our Board members are women or ethnically diverse;•Majority voting and director resignation policy for directors in uncontested elections;•Annual assessments ofDirectors (the "Board") attended at least 75% of the aggregate of all fiscal year 2019 meetings of theour Board andeachits committees;•Regular executive sessions of independent directors;•Regular focus on management and director succession planning;•Stock ownership guidelines for our directors and executive officers;•Broad executive officer and director anti-pledging and anti-hedging policies;•Annual review of our business strategy and enterprise risk;•Board and committeeon which heoversight of cybersecurity and environmental, social and governance (“ESG”) matters;•A management level Executive Compliance Committee oversees our ESG and compliance programs and activities; and•No multi-class orshe served. All of the directors then serving on the Board were present at our 2019 Annual Meeting of Stockholders.non-voting stock.2
Our Board recommends that stockholders approve our 2020 Stock Plan, which will become the successor to our 2017 Omnibus Stock Plan (the "2017 Stock Plan"). We consider the 2020 Stock Plan to be a vital element of our employee compensation program and believe that the continued ability to
grant stock awards at competitive levels is in the best interest of the Company and our stockholders. Accordingly, our Board recommends that stockholders vote to approve the 2020 Stock Plan.
Approval of Auditors for Fiscal Year 2020
See Proposal Four "Ratification“Ratification of the Appointment of Our Independent Registered Public Accounting Firm"Firm” for more information.
Fiscal Year | 2019 | 2018 | |||||
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Audit fees | $ | 5,600,308 | * | $ | 3,230,983 | ||
Audit related fees | $ | — | $ | 50,000 | |||
Tax fees | $ | — | $ | 33,000 | |||
All Other fees | $ | 900 | $ | 900 | |||
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Total | $ | 5,601,208 | $ | 3,314,883 | |||
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*Includes $1,320,000 of estimated fees that have not yet been billed and are pending review with the Audit Committee.
August 30, 2023.
Proposal Four is the ratification of the appointment of PwCDeloitte as our independent registered public accounting firm for fiscal year 2020.
2023.
written or oral request, undertake to promptly deliver a separate copy of our Annual Report or Proxy Statement to a stockholder at a shared address to which a single copy of our Annual Report or Proxy Statement was delivered and will include instructions as to how the stockholder can notify the Company that the stockholder wishes to receive a separate copy of our Annual Report or Proxy Statement in the future. Stockholders wishing to receive a separate Annual Report or Proxy Statement
Attention: Investor Relations
1678 South Pioneer Road
Salt Lake City, Utah 84104
(801) 972-5000
1.
items. So long as the broker has discretion to vote on at least one proposal, these "broker non-votes"“broker non-votes” are counted toward establishing a quorum.quorum but will have no effect on the proposal because they are not “entitled to vote” on the matter. When voted on "routine"“routine” matters, broker non-votes are counted toward determining the outcome of that "routine"“routine” matter.
information about that beneficial ownership, all as detailed in our Bylaws. The notice must also describe any material interest the stockholder or beneficial owner has in the business and arrangements between such stockholder or beneficial owner and any other person in connection with the proposal and must include certain representations, all as detailed in our Bylaws.
for director by notifying our Corporate Secretary in writing (at our Salt Lake City, Utah headquarters) as detailed in the question and answer above.
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ELECTION OF DIRECTORS
| | | BOARD RECOMMENDATION VOTE “FOR” THE NOMINEES | | |
BOARD RECOMMENDATIONVOTE "FOR" THE NOMINEES
In accordance with our certificate of incorporation, commencing with the Annual Meeting we will beginsubject to declassify our board as follows: (i) the class of directors standing for election at the Annual Meeting will stand for election for a two-year term; (ii) the class of directors standing for election at our 2021 Annual Meeting will stand for election for a one-year term; and (iii) commencing with our 2022 Annual Meeting, and at each annual meeting thereafter, all directorsof stockholders, and each director will standserve until his or her successor has been elected, unless such director dies, resigns, retires or is disqualified or removed.
As discussed above, the current terms of Dr. Chertoff, Dr. Naumann-Etienne and Mr. Sanyal will expire atpublic company. The Board expects to appoint a new Chair promptly following the Annual Meeting. Dr. Chertoff, Dr. Naumann-Etienne and Mr. Sanyal have each been recommended by the Nominating Committee and nominated by the Board for election by the stockholders to a two-year term ending at the 2022 Annual Meeting.
When seeking new director candidates, the Nominating Committee will consider potential candidates for directors submitted by Board members, members of our management and our stockholders. The Nominating Committee does not evaluate candidates differently based upon the source of the nominee.
Nominees for Election for a Two-Year Term Ending with the 2022 Annual Meeting:
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Age: Director Since: Independent Varex Committee Memberships • Audit Committee • Compensation Committee | | | Principal occupation, business experience and directorships • Positions at STERIS Corporation • Senior Vice President, Regulatory Affairs & Compliance (2019 – 2021) • Senior Vice President, Chief Compliance Officer (2008 – 2019) • Prior to STERIS Corporation, served in several leadership roles including Vice President, Internal Audit and Tax for Cole National Corporation, a global leader in optical healthcare • Prior Public Company Board Memberships in Past Five Years: MainSource Financial Group, First Financial Bancorp | | |
| | | | | Experience, qualifications, attributes, or skills supporting directorship • 35 years of audit and accounting experience coupled with extensive background in the field of quality and regulatory affairs for a multi-national medical device company • Certified Public Accountant (CPA) since 1989; Certification in Risk Management Assurance (CRMA) designation since 2013; • Extensive experience in compliance, corporate governance and ESG matters; and • Experience serving on public company boards and committees, including audit and nominating committees, as well as audit committee chair. | |
| | Jocelyn D. Chertoff, M.D. Age: 67 Director Since: 2017 Independent Varex Committee Memberships • Audit Committee • Nominating Committee (Chair) | | | Principal occupation, business experience and directorships • Positions at Dartmouth Hitchcock Medical Center •
Chair of the Department of Diagnostic Radiology and Vice President of the Regional Radiology Service Line •
Interim Chair of the Department of Diagnostic Radiology •
Vice Chair •
Practicing Radiologist since 1991 | |
| | | | | Experience, qualifications, attributes, or skills supporting directorship •
Deep knowledge and experience in radiology; •
Provides significant end-user perspective to assist with product development as well as with relationships with existing and prospective X-ray imaging system manufacturers; and •
Experience serving on a number of non-profit boards and | |
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Age: 73 Director Since:
Varex Committee Memberships •
Compensation Committee • Nominating Committee | | | Principal occupation, business experience and directorships • Positions at Varian Medical Systems, Inc. • Chief Executive Officer (2006 – 2012) • President (2005 – 2012) • Chief Operating Officer (2004 – 2006) Corporate Executive Vice President (2002 – 2005) • President, Oncology Systems (1992 – 2005) •
Other Current Public Company Board Memberships: Teradyne, Inc., a supplier of •
Prior Public Company Board Memberships in Past Five Years: |
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| | | | | Experience, qualifications, attributes, or skills supporting directorship • Deep knowledge of Varex’s management structure, strategy, and users of Varex’s technology, which he gained over more than 30 years with the former parent company of Varex; •
Broad experience in product development, regulatory, marketing, financial and operational matters; • Past service on the •
Service on the board of healthcare and
• Service on the board of trustees and as treasurer of the Radiation Oncology Institute, a | |
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| Jay K. Kunkel
Director Since: 2017 Independent Varex Committee Memberships • Audit Committee • Compensation Committee | | | Principal occupation, business experience and directorships •
President Asia, Executive Vice President, Tenneco Inc., one of the •
President Asia Pacific, Member of the Executive Counsel, and Company Officer, Lear Corporation, a global leader in automotive and e-systems (2013 •
Positions at Continental AG, an automotive manufacturing company •
President Asia, Member of the Management Board (2007 •
President Asia, Automotive Systems Division, Member of the Management Board (2005 •
Positions at PwC Financial Advisory Services •
Head of Corporate Finance and M&A Advisory •
Managing Director and Regional Leader of Automotive & Manufacturing Practice | |
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Prior to joining PwC, held various positions at Visteon Automotive Systems, Mitsubishi Motor Sales of America, and Chrysler Corporation | |
| | | | | Experience, qualifications, attributes, or skills supporting directorship •
Extensive experience in manufacturing operations and the industrial market; •
International experience, including in key markets in Asia; •
Deep knowledge and core skills in corporate development and mergers and acquisitions; and •
Expertise in project management and restructuring operations. | |
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Age: Director Since: Independent Varex Committee Memberships • Compensation Committee (Chair) • Nominating Committee | | | Principal occupation, business experience and directorships •
CEO Emeritus and Senior Advisor,
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| | | | | Experience, qualifications, attributes, or skills supporting directorship •
Service as a director and chief executive officer of a public company; •
Over •
Leadership experience in many major business functions, including product development, business development, manufacturing, finance, and marketing; •
Experience leading ventures ranging in scale from start-up operations to •
Service on the following healthcare industry boards: AAMI (Association for the Advancement of Medical | |
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Age: Director Since: 2017
| | | Principal occupation, business experience and directorships • President and Chief Executive Officer, Varex Imaging Corporation (January 2017 – Present) • Senior Vice President and President, Imaging Components, Varian Medical Systems, Inc. (2014 – 2017) • Chief Executive Officer, T-System Inc., an information technology solutions and services provider (2010 – 2014) | |
| | | | | • Positions at McKesson Corporation, a healthcare services and information technology company • Chief Operating Officer, McKesson Provider Technologies (2006 – 2010) • Group President, Clinical Information Systems division (2004 – 2006) • Previous management positions with GE Healthcare, Accenture, and IDX Systems Corporation | |
| | | | | Experience, qualifications, attributes, or skills supporting directorship • Extensive experience in medical device and healthcare industry; • Key insight into Varex through his leadership position within Varian’s Imaging Components business before becoming our President and Chief Executive Officer; and • Significant public company operational experience. | |
| | Christine A. Tsingos Age: 64 Director Since: 2017 Independent Varex Committee Memberships • Audit Committee (Chair) • Nominating Committee | | | Principal occupation, business experience and directorships • Executive Vice President and Chief Financial Officer, Bio-Rad Laboratories, Inc., a leader in life science research and clinical diagnostics markets (2002 - 2019) •
Chief Operating Officer, Chief Financial Officer and consultant, Attest Systems, Inc., a leading software company in the IT asset management sector •
Chief Financial Officer, Tavolo, Inc., a leading online retailer of specialty food, cookware, and cooking-related content •
Vice President and Treasurer, Autodesk, Inc., a leading developer of design software •
Assistant Treasurer, The Cooper Companies, Inc., a global healthcare manufacturer of vision-related products •
Other Current Public Company Board Memberships: Onto Innovation Inc. (formerly Nanometrics Incorporated), a manufacturer of semiconductor equipment, | |
| | | | | Experience, qualifications, attributes, or skills supporting directorship •
Expertise in finance, operations, and financial reporting matters; •
Extensive experience and critical insights in financial management, strategic planning, acquisitions, treasury, and investor relations; •
Over 25 years of public company experience and a proven track record, including being named Bay Area CFO of the Year in 2010 and among the Most Influential Women in Business 2008 •
Board and committee service for other public companies, including service as | |
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| | | | Bardwell | | | Chertoff | | | Guertin | | | Kunkel | | | Rosebrough | | | Sanyal | | | Tsingos | | |||||||||||||||||||||
| Leadership | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | |
| Component Manufacturing | | | | | | | | | | | | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | | | |
| Medical | | | | | • | | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | • | | |
| Industrial/Security | | | | | | | | | | | | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | | | |
| Financial | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | |
| Gender, Ethnic, or National Diversity | | | | | • | | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | • | | | | | | • | | |
| International Experience | | | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | |
Board Diversity Matrix (as of December 12, 2022) | | ||||||||||||||||||||||||
| Total Number of Directors | | | 8 | | |||||||||||||||||||||
| Gender | | | Female | | | Male | | | Non-Binary | | | Did Not Disclose | | ||||||||||||
Number of directors based on gender identity | | | 3 | | | 5 | | | 0 | | | 0 | | ||||||||||||
| Number of directors who identify in any of the demographic categories below | | | | | | | | | | | | | | | | | | | | | | | | | |
| African American or Black | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| Alaskan Native or Native American | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| Asian | | | | | 0 | | | | | | 1 | | | | | | 0 | | | | | | 0 | | |
| Hispanic or Latinx | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| Native Hawaiian or Pacific Islander | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| White | | | | | 3 | | | | | | 4 | | | | | | 0 | | | | | | 0 | | |
| Two or More Races or Ethnicities | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| LGBTQ+ | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
•- We have a hotline for employees to report concerns regarding ethics and financial matters, including accounting, internal controls, and audit concerns, and have established procedures for anonymous submission of these matters.•
•Each director is responsible for disclosing to the Nominating Committee and General Counsel situations that he or she reasonably believes give rise to a potential conflict of interest or related person transaction. The Board, upon recommendation of the Nominating Committee and after consultation withthe Company'slegal counsel, determines on a case-by-case basis or where it deems appropriate by specific category whether such a conflict of interest or related person transaction exists. Please refer to the discussion under"Certain“Certain Relationships and RelatedTransactions"Transactions” for more information.••The Board conducts an annual assessmentonof its effectiveness and the effectiveness of each of its committees.••Directors are expected to attend all stockholder meetings.••The Board encourages directors to participate in developmental continuing education programs applicable to their position as a director of the Company, including, but not limited to, those recommended by the Nominating Committee.Director Independence•The Company hasWe have an independent non-employee director asChairman,Chair, and our Bylaws mandate that the roles ofChairmanChair and Chief Executive Officer must be separated.••A majorityOther than Mr. Sanyal, our Chief Executive Officer, all oftheour Board members are independent of the Company and our management. The definition of"independent"“independent” is included in our Corporate Governance Guidelines, which can be found through the"Corporate Governance"“Corporate Governance” link on the Investors page on our website atwww.vareximaging.com.www.vareximaging.com.••All members of our Boardcommittees—committees — the Audit Committee, the Compensation Committee, and the NominatingCommittee—Committee — are independent.Majority Voting•The Company'sOur Bylaws and Corporate Governance Guidelines include a majority voting standard for uncontested director elections. Under this standard, if the number of nominees timely nominated for an annual meeting does not exceed the number of directors to be elected, each director shall be elected if the number of shares voted"for"“for” adirector'sdirector’s election exceeds 50% of the number of votes cast with respect to thatdirector'sdirector’s election. Votes cast shall include direction to withhold authority in each case and exclude abstentions with respect to thatdirector'sdirector’s election. Any incumbent director who is not re-elected by the majority voting standard will be required to tender his or her resignation promptly following the certification of thestockholders'stockholders’ vote. The Nominating Committee will consider such resignation and recommend to the Board whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the NominatingCommittee'sCommittee’s recommendationwithin 90 daysat the next regularly scheduled Board meeting followingthe certificationreceipt ofthe stockholders' votesuch recommendation and will promptly disclose publicly its decision regarding whether to accept thedirector'sdirector’s resignation.Board Structure•In accordance with our certificate of incorporation, commencing with the Annual Meeting, we will begin to declassify our board as follows: (i) the class of directors standing for election at our 2020 Annual Meeting will stand for election for a two-year term; (ii) the class of directorsOur entire Board is elected annually.Table of Contents••The
standing for election at our 2021 Annual Meeting will stand for election for a one-year term; and (iii) commencing with our 2022 Annual Meeting, and at each annual meeting thereafter, all directors will stand for election for a one-year term.Our Board is committed to inclusiveness anddiversity.diversity, and 50% of our Board is diverse.•Our Board has adopted a guideline for director retirement that provides that nominees for directors should be 75 years or younger at the time of their election or re-election. This guideline may be waived if the Board deems it appropriate.17
director attended at least 75% of the total Board meetings and meetings of the committees on which theysuch director served that were held in fiscal year 2019.2022. Directors are encouraged to attend meetings of committees on which they do not serve as members. All our directors of the Company are strongly encouraged to attend our annual meetingmeetings of stockholders. All of the directors then serving on the Board were present at our 20192022 Annual Meeting.
| | Chair of the Board | | | Chief Executive Officer | |
| | • Coordinates agendas for Board meetings, information flow to the Board and other matters pertinent to the Company and the Board • Presides over meetings of the full Board, including executive sessions of independent directors • Serves as a liaison to and acts as a communication channel between the Board and our Chief Executive Officer • Presides over meetings of stockholders | | | • Sets and oversees execution of our corporate strategic direction • Creates and implements our vision, values and mission that steer our culture • Leads our affairs, subject to the overall direction and supervision of the Board and its committees and subject to such powers as reserved by the Board and its committees | |
Board focuses on Board process and governance matters.
Our Company faces a number of
The Audit Committee, the Compensation Committee, and the Nominating Committee share oversight of different aspects of our ESG programs.
Investors page on our website atwww.vareximaging.com. Please note that information on, or that can be accessed through, our website is not part of these proxy soliciting materials, is not deemed "filed"“filed” with the SEC and is not to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Exchange Act, and, except for information filed by the Company under the cover of Schedule 14A, is not deemed to be proxy soliciting materials.
Chair: Ms. Tsingos
Additional Members: Ms. Bardwell, Dr. Chertoff, Mr. Kunkel,
Meetings in Fiscal Year
The Board has also determined that Ms. Bardwell is an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K under the Exchange Act based upon her experience as a Certified Public Accountant and serving as chief audit executive of and leading the internal audit group at STERIS Corporation from March 2008 to November 2019.
Chair: Mr. Rosebrough
Additional Members:
Meetings in Fiscal Year
•- Reviews the compensation paid to directors for service on the Board and its committees.•Ensures that reviews of plans for succession of executive officers occur at the Committee or Board level at least annually.•
•Providesadviceoversight onmanagementthe development,matters that have major implications for the growth, developmentimplementation anddeptheffectiveness of our practices, policies, and strategies relating to human capital managementteam, including reviewing succession plans.as they relate to our workforce generally.••Assesses, at least annually, the risks associated with our compensation policies, and reports to the Board and the Audit Committee whether our compensation policies and practices create risks that are reasonably likely to have a material adverse effect on us.The Compensation Committee determines all compensation for our NEOs and certain other ofthe Company'sour officers. Before making decisions on compensation for individuals other than our Chief Executive Officer, the Compensation Committee reviews with our Chief Executive Officer eachindividual'sindividual’s performance and accomplishments over the prior year. Except for his own position, our Chief Executive Officer makes recommendations to the Compensation Committee about base salary increases, any changes to the incentive plan target awards, and the amount of equity awards for each executive. However, the Compensation Committee retains and does not delegate any of its exclusive power to determine and approve all matters of executive compensation and benefits for certain officers as designated in thedesignated officers.charter. The Compensation Committee meets with its independent advisors and other independent members of the Board to determine the Chief ExecutiveOfficer'sOfficer’s compensation.The Compensation Committee also reviews and provides oversight on the development, implementation and effectiveness of our practices, policies and strategies relating to human capital management as they relate to our workforce generally, including but not limited to policies and strategies regarding recruiting, selection, career development and progression, and diversity and employment practices.Compensation Committee AdvisorsTo independently assist and advise the Compensation Committee, the Compensation Committee has retained Frederic W. Cook & Co., Inc.("(“FW Cook"”) as its compensation consultant since May 2018. The engagement with FW Cook is exclusively with the Compensation Committee, which has sole authority to retain and terminate any compensation consultant or other advisor that it uses. FW Cook does not have any relationship with the Company or management except as it may relate to performing services on behalf of the Compensation Committee. The Compensation Committee has assessed the independence of FW Cook pursuant to SEC rules and concluded that no conflict of interest exists that would preventthe companyFW Cook from independently representing the Compensation Committee.
Nominating and Corporate Governance Committee
Chair: Dr. ReinhardtChertoff
Additional Members: Dr. Chertoff,Mr. Guertin, Mr. Rosebrough, and Ms. Tsingos
Meetings in Fiscal Year 2019: 42022:
6
We are investing in solutions to improve the sustainability of our operations and supply chain. Among other things, we are moving distribution from air transport to ocean freight, which will reduce greenhouse gas emissions and are investing in solutions to increase the energy efficiency of our facilities.
| | | The Board of Directors Our Board is responsible for oversight of ESG risks and opportunities. | | |
| | | Nominating and Corporate Governance Committee Oversees our ESG efforts. Reviews and evaluates our programs, policies and practices relating to ESG issues and related disclosures. Recommends to the Board our overall general strategy with respect to ESG matters. | | |
| | | Compensation and Human Capital Management Committee | | |
| | | Provides oversight on to the development, implementation and effectiveness of our practices, policies and strategies relating to human capital management as they relate to our workforce generally, including but not limited to policies and strategies regarding recruiting, selection, career development and progression, and diversity, and employment practices. | | |
| | | | | |
| | | Audit Committee | | |
| | | Reviews our public disclosures with respect to sustainability accounting standards. Reviews cybersecurity, data privacy and other risks relevant to our computerized information system controls and security, as well as mitigation plans and relevant policies and programs. Reviews our business continuity and disaster preparedness planning. | | |
ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION
| | | BOARD RECOMMENDATION VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS | | |
Table In addition, the Board expects to hold the next Advisory Vote on Frequency of Contents
PROPOSAL THREEAPPROVAL OF THE VAREX IMAGING CORPORATION 2020 OMNIBUS STOCK PLAN
We are asking our stockholdersAdvisory Vote to approveApprove Executive Compensation at the Varex Imaging Corporation 2020 Omnibus Stock Plan (referred to elsewhere in this proxy statement as the "2020 Stock Plan"). If the 2020 Stock Plan is approved by our stockholders, the 2020 Stock Plan will become effective on the day immediately following the 20202025 Annual Meeting of Stockholders (the "Effective Date").
The 2020 Stock Plan is intended to be the successor to our 2017 Omnibus Stock Plan (the "2017 Stock Plan"). If the 2020 Stock Plan becomes effective, on and after the Effective Date, no additional stock awards will be granted under the 2017 Stock Plan, although all outstanding stock awards granted under the 2017 Stock Plan will continue to be subject to the terms and conditions as set forth in the agreements evidencing such stock awards and the terms of the applicable plan.
A description of the material terms of the 2020 Stock Plan are summarized below. The key differences between the terms of the 2020 Stock Plan and the terms of the 2017 Stock Plan are as follows:
•Subject to capitalization adjustments and the share counting provisions described below, a total of 6,300,000 shares will be authorized for awards granted under the 2020 Stock Plan (which amount is equal to 5,097,488 new shares plus 1,202,512 shares that are available for issuance under the 2017 Stock Plan) as of September 27, 2019, less one (1) share for every one (1) share that was subject to a stock option or stock appreciation right ("SAR") granted after September 27, 2019 and prior to the Effective Date under the 2017 Stock Plan and two (2) shares for every one (1) share that was subject to an award other than a stock option or SAR granted after September 27, 2019 and prior to the Effective Date under the 2017 Stock Plan. See below for more information.•The 2020 Stock Plan provides for a maximum term of 10 years for stock options and SARs while the 2017 Stock Plan provides for a maximum term of seven (7) years for these awards.•The 2020 Stock Plan provides that each share issued pursuant to a full value award reduces the number of shares available for grant under the 2020 Stock Plan by two (2) shares in contrast to two and half (2.5) shares under the 2017 Stock Plan.•To conform to the limits that apply to stock option and SAR grants under the 2017 Stock Plan, the 2020 Stock Plan provides that the limit on the number of shares of our common stock that may be granted to any one participant during any one fiscal year will be 500,000 shares in the case of restricted stock or restricted stock units ("RSUs") and 500,000 shares in the case of performance units or performance shares.•Dividends and dividend equivalents will not be paid or settled with respect to any award granted under the 2020 Stock Plan until the underlying shares or units vest.•The 2020 Stock Plan does not include certain provisions relating to the grant of performance-based compensation on account of the enactment of the 2017 Tax Cuts and Jobs Act, which eliminated the performance-based compensation exception under Section 162(m) of the Internal Revenue Code (the "Code").
Stockholders.
•The 2020 Stock Plan clarifies that RSUs may be settled upon vesting or on a deferred basis (RSUs that are settled upon a deferred basis, "DSUs").•The 2020 Stock Plan does not have a term limit.
Reasons to Approve the 2020 Stock Plan
As of September 27, 2019, a total of 1,202,512 shares of our common stock remained available for future grants under the 2017 Stock Plan. We believe that the current share reserve of the 2017 Stock Plan is insufficient to meet our future needs with respect to attracting, motivating and retaining key executives and employees and non-employee directors in a competitive market for talent. We believe that approval of the 2020 Stock Plan will enable us to grant stock awards for approximately the next five years, based on historical grant and forfeiture levels, the recent market prices of our common stock, and anticipated use of equity awards as an incentive and retention tool as we continue to compete for talent.
Note Regarding Forecasts and Forward-Looking Statements
We do not as a matter of course make public forecasts as to our total shares outstanding and utilization of various equity awards due to the unpredictability of the underlying assumptions and estimates. In particular, the forecasts set forth in this Proposal Three include embedded assumptions which are highly dependent on the public trading price of our common stock and other factors, which we do not control and, as a result, we do not as a matter of practice provide forecasts. These forecasts reflect various assumptions regarding our future operations. The inclusion of the forecasts set forth above should not be regarded as an indication that these forecasts will be predictive of actual future outcomes, and the forecasts should not be relied upon as such.
Outstanding Awards Under the 2017 Stock Plan and Shares Available for Future Issuance
The following includes aggregated information regarding the overhang and dilution associated with the 2017 Stock Plan and the potential shareholder dilution that would result if the 2020 Stock Plan is approved. This information is as of September 27, 2019. As of that date, there were 38,371,305 shares of common stock outstanding:
•Outstanding full-value awards (restricted stock units, restricted stock awards, and deferred stock units): 677,584 shares (1.4% of our fully-diluted shares outstanding);•Outstanding stock options: 2,269,173 shares (4.8% of our fully-diluted shares outstanding) (outstanding stock options have a weighted average exercise price of $30.60 and a weighted average remaining term of 4.1 years);•Total shares of common stock subject to outstanding awards, as described above (restricted stock units, restricted stock awards, deferred stock units and stock options): 2,946,757 shares (6.2% of our fully-diluted shares outstanding);•Total shares of common stock available for future awards under the 2017 Stock Plan: 1,202,512 shares (2.8% of our fully-diluted shares outstanding);•The total number of shares of common stock subject to outstanding awards (2,946,757 shares), plus the total number of shares available for future awards under the 2017 Stock Plan (1,202,512 shares), represents a current fully-diluted overhang percentage of 9.8% (in other words, the potential dilution of our stockholders represented by the 2017 Stock Plan); and
•If the 2020 Stock Plan is approved, the total shares of common stock subject to outstanding awards as of September 27, 2019 (2,946,757 shares), plus the proposed shares available for issuance under the 2020 Stock Plan (6,300,000 shares), represent a total fully-diluted overhang of 9,246,757 shares (19.4%) under the 2020 Stock Plan.
In fiscal years 2017 through 2019, we granted awards under the 2017 Stock Plan as follows:
| | Equity Compensation Usage | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 2017 | 2018 | 2019 | 3-Year Avg. | |||||||||
Options | 1,052,000 | 262,000 | 297,000 | 537,000 | |||||||||
RSUs, RSAs, DSUs | 337,000 | 352,000 | 288,000 | 325,667 | |||||||||
Gross Grants | 1,389,000 | 614,000 | 585,000 | 862,667 | |||||||||
Gross Usage (% Outstanding) | 3.69 | % | 1.62 | % | 1.52 | % | 2.28 | % | |||||
Weighted Average Shares Outstanding | 37,600,000 | 38,000,000 | 38,400,000 | 38,000,000 | |||||||||
The 2020 Stock Plan includes provisions that are designed to protect our stockholders' interests and reflect corporate governance best practices.
•Repricing Not Allowed.The 2020 Stock Plan prohibits reducing the exercise price of stock options and SARs, cancelling "underwater" stock options and SARs or any action that would be considered a repricing under the applicable securities exchange on which our common stock is traded without prior stockholder approval in each case.•Stockholder Approval Required for Additional Shares.The 2020 Stock Plan does not contain an annual "evergreen" provision. The 2020 Stock Plan authorizes a fixed number of shares, so that stockholder approval is required to grant awards in excess of that number.•Limit on Full Value Awards.The 2020 Stock Plan limits the number of shares available for full value awards by providing that each share issued pursuant to a full value award reduces the number of shares available for grant under the 2020 Stock Plan by two (2) shares.•No Liberal Share Counting or Recycling.Shares that are reacquired, withheld or not issued by us to satisfy the exercise price or tax withholding obligation in connection with an award, shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of stock options, and any shares with respect to which a SAR is exercised will in each case not become available again for issuance under the 2020 Stock Plan.•No Liberal Corporate Transaction Provisions.No corporate transaction related vesting acceleration and other benefits may occur without an actual corporate transaction occurring.•No Discounted Stock Options or SARs.All stock options and SARs granted under the 2020 Stock Plan must have an exercise or strike price equal to or greater than the fair market value of our common stock on the date the stock option or SAR is granted.•No Reload Stock Options or SARs or Tax Gross-ups.The 2020 Stock Plan does not provide for reload stock options or SARs or tax gross-ups in any circumstance.•No Dividends and Dividend Equivalents on Unvested Awards.Dividends and dividend equivalents will not be paid or settled with respect to any award granted under the 2020 Stock Plan until the underlying shares or units vest.•Limit on Non-Employee Director Awards.Stock awards granted during a single fiscal year under the 2020 Stock Plan or otherwise, taken together with any cash fees paid during such fiscal year for services on the Board of Directors, will not exceed $625,000 in total value for any non-employee director serving as the lead director or chair and $525,000 in total value for any other non-employee director.
•Awards Subject to Clawback.The Company will adopt any clawback policy required under applicable listing standards or law. Prior to the adoption of such policy, in the event of a restatement of incorrect financial results, the Board of Directors will review the conduct of executive officers in relation to the restatement and in its discretion take appropriate action to remedy the misconduct.
Description of the 2020 Stock Plan
Set forth below is a summary of the material features of the 2020 Stock Plan. The 2020 Stock Plan is set forth in its entirety asAppendix A to this Proxy Statement, and all descriptions of the 2020 Stock Plan contained in this Proposal Three are qualified by reference toAppendix A.
Purpose
The 2020 Stock Plan is intended to increase incentives and to encourage share ownership on the part of (1) employees of the Company and its affiliates, (2) consultants who provide significant services to the Company and its affiliates, and (3) non-employee directors of the Company. The 2020 Stock Plan also is intended to further the growth and profitability of the Company.
Types of Stock Awards
The 2020 Stock Plan provides for the granting of non-qualified stock options, incentive stock options, SARs, restricted stock, RSUs, performance units and performance shares to employees and consultants and RSUs and non-qualified stock options to non-employee directors (all such types of awards, collectively, "stock awards").
Share Reserve
Number of Shares
Subject to capitalization adjustments and the share counting provisions described below, a total of 6,300,000 shares will be authorized for awards granted under the 2020 Stock Plan (which amount is equal to 5,097,488 new shares plus 1,202,512 shares that are available for issuance under the 2017 Stock Plan) as of September 27, 2019, less one (1) share for every one (1) share that was subject to a stock option or SAR granted after September 27, 2019 and prior to the Effective Date under the 2017 Stock Plan and two (2) shares for every one (1) share that was subject to an award other than a stock option or SAR granted after September 27, 2019 and prior to the Effective Date under the 2017 Stock Plan. Any shares that are subject to stock options or SARs will be counted against this limit as one (1) share for every one (1) share granted, and any shares that are subject to awards other than stock options or SARs will be counted against this limit as two (2) shares for every one (1) share granted. On and after the Effective Date, no awards may be granted under the 2017 Stock Plan. A total of 6,300,000 shares may be issued as incentive stock options. The 2020 Stock Plan does not contain an evergreen provision, pursuant to which the share pool would be automatically increased each year based on a specified formula.
Lapsed Awards
If (i) any shares subject to an award are forfeited, an award expires, is forfeited or is settled for cash (in whole or in part), or (ii) after September 27, 2019 any shares subject to an award under the 2017 Stock Plan are forfeited, or an award under the 2017 Stock Plan expires, is forfeited or is settled for cash (in whole or in part), then in each such case the shares subject to such award or award under the 2017 Stock Plan will, to the extent of such forfeiture, expiration or cash settlement, be added to the shares available for awards under the 2020 Stock Plan. Any shares that again become available for awards under the 2020 Stock Plan will be added as (i) one (1) share for every one (1) share subject to
stock options or SARs granted under the 2020 Stock Plan or stock options or SARs granted under the 2017 Stock Plan, and (ii) as two (2) shares for every one (1) share subject to awards other than stock options or SARs granted under the 2020 Stock Plan or awards other than stock options or SARs granted under the 2017 Stock Plan.
Shares Not Available for Subsequent Issuance
The following shares will not be added to the shares authorized for grant under the 2020 Stock plan: (i) shares tendered by the participant or withheld by the Company in payment of the purchase price of stock options granted under the 2020 Stock Plan (or, after September 27, 2019, stock options granted under the 2017 Stock Plan), (ii) shares tendered by the participant or withheld by the Company to satisfy any tax withholding obligations with respect to awards granted under the 2020 Stock Plan (or, after September 27, 2019, awards granted under the 2017 Stock Plan), (iii) shares subject to SARs granted under the 2020 Stock Plan (or, after September 27, 2019, SARs granted under the 2017 Stock Plan) that in each case are not issued in connection with their stock settlement on exercise, and (iv) shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of stock options granted under the 2020 Stock Plan (or, after September 27, 2019, stock options granted under the 2017 Stock Plan).
Substitute Awards
Awards granted or shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted by a company acquired by the Company will not reduce the shares authorized for grant under the 2020 Stock Plan or the limitations on grants to a participant contained in the 2020 Stock Plan, nor will shares subject to a substitute award be added to the shares available for awards under the 2020 Stock Plan. Additionally, in the event that a company acquired by the Company or any subsidiary or with which the Company or any subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for awards under the 2020 Stock Plan and will not reduce the shares authorized for grant under the 2020 Stock Plan (and shares subject to such awards will not be added to the shares available for awards under the 2020 Stock Plan); provided that awards using such available shares will not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and will only be made to individuals who were not employees, consultants or directors prior to such acquisition or combination.
Eligibility
Employees and consultants of the Company and its affiliates and the Company's non-employee directors are all eligible to participate in the 2020 Stock Plan. As of December 2, 2019, for equity plan purposes we had a total of approximately 2,132 employees, approximately 149 consultants, and six non-employee directors who would be eligible to be granted awards from the 2020 Stock Plan.
Administration
The Compensation Committee will administer the 2020 Stock Plan. The members of the Compensation Committee must qualify as "non-employee directors" under Rule 16b-3 under the Exchange Act and as "independent directors" under Nasdaq Listing Rule 5605(a)(2).
Subject to the terms of the 2020 Stock Plan, the Compensation Committee has the sole discretion to determine the employees and consultants who will be granted stock awards, the size and types of these stock awards, and the terms and conditions of these stock awards, including the authority to accelerate the vesting of awards. Subject to applicable law and certain other limitations, the Compensation Committee may delegate all or any part of its authority and powers under the 2020 Stock Plan to a committee of one or more directors and/or to officers of the Company. The Board of Directors will determine and administer stock options and RSUs granted to non-employee directors.
No Repricing, Underpriced Options or SARs or Reload Options
The 2020 Stock Plan expressly prohibits the repricing of outstanding stock options and SARs, the cancellation of any outstanding stock options or SARs that have an exercise or strike price greater than the then-current fair market value of our common stock in exchange for cash or other awards under the 2020 Stock Plan and any other action with respect to a stock option or SAR that would be treated as a repricing under the rules and regulations of the principal securities market on which the Company's shares are traded without prior stockholder approval. Furthermore, the 2020 Stock Plan does not permit the granting of discounted stock options or SARs.
Stock Options
The Compensation Committee may grant non-qualified stock options to purchase shares of our common stock, incentive stock options (which are entitled to favorable tax treatment), or a combination thereof. Incentive stock options may only be granted to employees of the Company or its subsidiaries. The Compensation Committee will determine the number of shares covered by each option, but during any fiscal year, no participant may be granted stock options for more than 500,000 shares.
The Compensation Committee sets the exercise price for each stock option, which cannot be less than 100% of the fair market value of the underlying shares of our common stock on the date of grant. In addition, if the participant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its subsidiaries, the exercise price of an incentive stock option must be at least 110% of fair market value on the date of grant.
Nevertheless, substitute stock options may be granted at less than fair market value to persons who become employees and consultants of the Company on account of a corporate transaction. Also, the aggregate fair market value of the shares (determined on the date of grant) covered by incentive stock options that first become exercisable by any participant during any calendar year may not exceed $100,000.
The Compensation Committee may permit payment through any other means that the Compensation Committee determines to be consistent with the 2020 Stock Plan's purpose and constitutes legal consideration including, but not limited to: (a) cash or its equivalent, (b) previously acquired shares having an aggregate fair market value at the time of exercise equal to the total exercise price, (c) a "same day sale" pursuant to a program developed under Regulation T, or (d) having the Company withhold otherwise deliverable shares.
Stock options become exercisable at the times and on the terms established by the Compensation Committee. Stock options expire at the times established by the Compensation Committee, which may not be more than 10 years after the date of grant. In addition, if the participant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its subsidiaries, the maximum term of a stock option may not be more than five (5) years from the date of grant. If the participant terminates services prior to a stock option's normal expiration date, the period of exercisability may be shorter depending on the reason for the termination. The Compensation Committee may extend the term of any stock option granted under the 2020 Stock Plan but in no event may the term of the option exceed 10 years from the date of grant.
Stock Appreciation Rights
The Compensation Committee will determine the terms and conditions of each SAR; provided however, the exercise price for each SAR cannot be less than 100% of the fair market value (i.e., the closing price) of the underlying shares of our common stock on the date of grant. SARs may be granted in conjunction with a stock option, or may be granted on an independent basis. The Compensation Committee will determine the number of shares covered by each SAR, but during any fiscal year no participant may be granted SARs for more than 500,000 shares. Upon exercise of a SAR, the participant will receive payment from us in an amount determined by multiplying: (i) the difference between the fair market value of a share on the date of exercise over the grant price (fair market value of a share on the date of grant), by (ii) the number of shares with respect to which the SAR is exercised. SARs may be paid in cash or shares of our common stock, as determined by the Compensation Committee. SARs are exercisable at the times and on the terms established by the Compensation Committee.
Restricted Stock and RSUs
Restricted stock awards are grants of shares of our common stock that are subject to various restrictions, including restrictions on transferability and forfeiture provisions. Shares of restricted stock will vest and the restrictions on such shares will lapse in accordance with terms and conditions established by the Compensation Committee. Each RSU is a bookkeeping entry representing an amount equal to the fair market value of one share of our common stock. The Compensation Committee will determine the number of shares subject to a restricted stock or RSU award, but during any fiscal year no participant may be granted more than 500,000 shares of restricted stock or RSUs.
In determining whether restricted stock or RSUs should be granted, and/or the vesting schedule for such a stock award, the Compensation Committee may impose whatever conditions on vesting as it determines to be appropriate. For example, the Compensation Committee may determine to grant restricted stock or RSUs only if performance goals established by the Compensation Committee are satisfied. Any performance goals may be applied on a Company-wide or an individual business unit basis, as determined by the Compensation Committee. Please refer to the discussion below under "—Performance Goals" for more information.
Participants holding shares of restricted stock granted after the 2020 Annual Meeting will not be entitled to receive dividends and other distributions on any restricted shares. Notwithstanding the foregoing, at the Compensation Committee's sole discretion, participants holding restricted shares may be credited with such dividends and other distributions while such shares are restricted provided that such dividends and other distributions will be paid or distributed to participants only if, when and to the extent such restrictions on such shares lapse. The value of dividends and other distributions payable or distributable with respect to any shares for which such restrictions do not lapse during the applicable restriction period will be forfeited.
Performance Units and Performance Shares
Performance units and performance shares are stock awards that will result in a payment to a participant only if the performance goals that the Compensation Committee establishes are satisfied. The Compensation Committee will determine the applicable performance goals, which may be applied on a Company-wide or an individual business unit basis, as deemed appropriate in light of the participant's specific responsibilities. Please refer to the discussion below under "—Performance Goals" for more information. After the applicable performance period has ended, the participant will be entitled to receive a payout of the number of performance units or shares earned during the performance period, depending upon the extent to which the applicable performance objectives have
been achieved. During any fiscal year, no participant will receive more than 500,000 performance units or performance shares.
Performance Goals
The Compensation Committee in its discretion may make performance goals applicable to a participant with respect to a stock award. Currently, at the Compensation Committee's discretion, one or more of the following performance goals may apply: EBIT, EBITDA, earnings per share, net income, operating cash flow, return on assets, return on equity, return on sales, revenue, shareholder return, orders or net orders, expenses, cost of goods sold, profit/loss or profit margin, working capital, operating income, cash flow, market share, economic value add, stock price of our stock, price/earnings ratio, debt or debt-to-equity ratio, accounts receivable, cash, write-offs, assets, liquidity, operations, intellectual property (e.g., patents), product development, regulatory activities, manufacturing, production or inventory, mergers, acquisitions or divestitures, financings, days sales outstanding, backlog, deferred revenue, employee headcount, and other financial or strategic goals.
Under the 2020 Stock Plan, certain performance goals are specifically defined. "EBIT" means the Company's or a business unit's income before reductions for interest and taxes. "EBITDA" means the Company's or a business unit's income before reductions for interest, taxes, depreciation and amortization. "Earnings per share" means the Company's or a business unit's net income, divided by a weighted average number of common shares outstanding and dilutive common equivalent shares deemed outstanding. "Net income" means the Company's or a business unit's income after taxes. "Operating cash flow" means the Company's or a business unit's sum of net income plus depreciation and amortization less capital expenditures plus certain specified changes in working capital. "Return on assets" means the percentage equal to the Company's or a business unit's EBIT (before incentive compensation), divided by the Company's or a business unit's, as applicable, average net assets. "Return on equity" means the percentage equal to the Company's net income, divided by average stockholders' equity. "Return on sales" means the percentage equal to the Company's or a business unit's EBIT (before incentive compensation), divided by the Company's or the business unit's, as applicable, revenue. "Revenue" means the Company's or a business unit's sales. "Net orders" means the Company's or a business unit's net orders calculated for and reported in the Company's quarterly financial earnings. "Shareholder return" means the total return (change in price plus reinvestment of any dividends) of a share.
Non-Employee Director Compensation Limit
Stock awards granted during a single fiscal year under the 2020 Stock Plan or otherwise taken together with any cash fees paid during such fiscal year for services on the Board of Directors, will not exceed $625,000 in total value for any non-employee director serving as the lead director or chair and $525,000 in total value for any other non-employee director (calculating the value of any such stock awards based on the grant date fair value of such stock awards for financial reporting purposes). Such applicable limit will include the value of any stock awards that are received in lieu of all or a portion of any annual committee cash retainers or other similar cash-based payments.
Non-Employee Director Options
Under the 2020 Stock Plan, the Board of Directors will determine the number of shares subject to stock options to be issued to each non-employee director. Non-employee director stock options may only be non-qualified options. The exercise price of each non-employee director stock option will be 100% of the fair market value (i.e., the closing price) of the underlying shares of our common stock on the date of grant. Nevertheless, substitute stock options may be granted at less than fair market value to persons who become non-employee directors of the Company on account of a corporate transaction. Unless provided otherwise in an award agreement, each stock option is immediately exercisable on the
date of grant. All stock options granted to non-employee expire at the times established by the Board of Directors, which may not be more than 10 years after the date of grant. If a director terminates service on the Board of Directors (including a voluntary resignation) prior to a stock option's normal expiration date, the period of exercisability of the stock option may be shorter, depending upon the reason for the termination.
In addition, the 2020 Stock Plan allows the Board of Directors to adopt procedures to permit non-employee directors to forego all or part of their cash compensation in exchange for stock options or shares of our common stock.
Non-Employee Director RSUs
Under the 2020 Stock Plan, the Board of Directors will determine the number of RSUs to be granted to each non-employee director. RSUs will vest over a period provided in the grant agreement as determined by the Board of Directors, and vesting may be pro rata during the vesting period. Unless otherwise provided in the grant agreement as determined by the Board of Directors, settlement of RSUs will be made in shares of our common stock, with one share of our common stock being issued for each RSU. Payment may be made in a lump sum, in installments or may be made on a deferred basis, in the form of DSUs.
Nontransferability of Stock Awards
In general, stock awards granted under the 2020 Stock Plan may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the applicable laws of descent and distribution, and any stock awards may be exercised only by the participant during a participant's lifetime. Notwithstanding the above, the Compensation Committee (or the Board of Directors, in the case of stock awards granted to non-employee directors) may, in its discretion, permit stock awards to be transferred to an individual or entity other than the Company subject to any restrictions as the Compensation Committee or the Board of Directors may impose; provided, however, that in no event may any award be transferred for consideration to a third-party financial institution.
Dividend Equivalents
The recipient of a stock award other than stock options or SARs (including, without limitation, any deferred stock award) may, at the Compensation Committee's, or if applicable, the Board of Director's, sole discretion, receive dividend equivalents. Such dividend equivalents entitle the participant to be credited with an amount equal to all dividends and other distributions (whether in cash or other property) paid on an equivalent number of shares while the stock award is outstanding. Dividend equivalents may be converted into additional stock awards (for example, additional RSUs). Settlement of dividend equivalents may be made in the form of cash, in the form of shares, or a combination of both. Any dividend equivalents credited with respect to stock awards will be settled only if, when and to the extent such stock awards vest and are settled. The value of amounts payable with respect to stock awards that do not vest will be forfeited.
Recoupment Policy
All stock awards granted under the 2020 Stock Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company's securities are listed or as is otherwise required by applicable law. In the event that the Company has not adopted such a policy and notwithstanding anything to the contrary set forth in the 2020 Stock Plan or any stock award agreement, in the event of a restatement of incorrect financial results, the Board of Directors will review the conduct of executive officers in relation to the restatement. If the Board of Directors
determines that an executive officer has engaged in misconduct or other violations of the Company's code of ethics in connection with the restatement, the Board of Directors would, in its discretion, take appropriate action to remedy the misconduct, including, without limitation, seeking reimbursement of any portion of performance-based or incentive compensation paid or awarded to the executive under the 2020 Stock Plan that is greater than would have been paid or awarded if calculated based on the restated financial results, to the extent not prohibited by governing law. Such action by the Board would be in addition to any other actions the Board of Directors or the Company may take under the Company's policies, as modified from time to time, or any actions imposed by law enforcement, regulators or other authorities.
Corporate Transaction
Except as set forth in a stock award agreement, upon the occurrence of (a) a merger, combination, consolidation, reorganization or other corporate transaction; (b) an exchange of shares of the Company's common stock or other securities of the Company; (c) a sale of all or substantially all the business, stock or assets of the Company; (d) a dissolution of the Company; or (e) any event in which the Company does not survive (or does not survive as a public company in respect of its shares of common stock), then any surviving corporation or acquiring corporation (or the surviving or acquiring corporation's parent company) may assume or continue any or all stock awards outstanding under the 2020 Stock Plan or may substitute similar stock awards for stock awards outstanding under the 2020 Stock Plan (including but not limited to, stock awards to acquire the same consideration paid to the stockholders of the Company pursuant to the transaction), and any reacquisition or repurchase rights held by the Company in respect of shares issued pursuant to stock awards may be assigned by the Company to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation's parent company) in connection with such transaction. Except as set forth in a stock award agreement, if the Compensation Committee does not provide for the assumption, continuation or substitution of stock awards, each stock award will fully vest and terminate upon the related event, provided that holders of stock options or SARs be given reasonable advance notice of the impending termination and a reasonable opportunity to exercise their outstanding vested stock options and SARs before the termination of such awards; provided, however, that any payout in connection with a terminated stock award will comply with Section 409A of the Code ("Section 409A") to the extent necessary to avoid taxation thereunder.
Notwithstanding the foregoing, except as set forth in a stock award agreement, in the event that a stock award would otherwise terminate upon the effective time of any transaction described above, the Compensation Committee may provide for a payment in such form as may be determined by the Compensation Committee, equal in value to the excess, if any, of (A) the value of the property the participant would have received upon the exercise or vesting of the stock award immediately prior to the effective time of the transaction, over (B) any exercise price payable by such holder in connection with such exercise, and provided further, that at the discretion of the Compensation Committee, such payment may be subject to the same conditions that apply to the consideration that will be paid to holders of shares in connection with the transaction; provided, however, that any payout in connection with a terminated stock award will comply with Section 409A to the extent necessary to avoid taxation thereunder.
Amendment, Termination and Duration of the 2020 Stock Plan
The Board of Directors generally may amend or terminate the 2020 Stock Plan at any time and for any reason; provided, however, that any amendment will be subject to the approval of our stockholders to the extent required by applicable law or regulation. In addition, the amendment or termination of the 2020 Stock Plan will not alter or impair any rights or obligations under any stock award without the
participant's consent. Without further stockholder approval, no incentive stock options may be granted under the 2020 Stock Plan after December 19, 2029.
A participant who receives a stock option or SAR will not have taxable income upon the grant of the stock option or SAR. For stock options, other than incentive stock options, and SARs the participant will recognize ordinary income upon exercise in an amount equal to the excess of the fair market value of the shares over the exercise price—the appreciation value—on the date of exercise. Any gain or loss recognized upon any later disposition of the shares generally will be capital gain or loss.
Purchase of shares upon exercise of an incentive stock option will not result in any taxable income to the participant, except for purposes of the alternative minimum tax. Gain or loss recognized by the participant on a later sale or other disposition of the shares will either be long-term capital gain or loss or ordinary income depending upon whether the participant holds the shares transferred upon exercise for a specified period. Any ordinary income recognized will be in the amount, if any, by which the lesser of the fair market value of the shares on the date of exercise or the amount realized from the sale exceeds the stock option price.
A participant who receives restricted stock will not have taxable income upon grant, but upon vesting unless the participant elects to be taxed at the time of grant of restricted stock. Absent such election, the participant will recognize ordinary income equal to the fair market value of the shares at the time of vesting.
A participant who receives RSUs, performance units or performance shares will not have taxable income upon grant of the stock award; instead the participant will be taxed upon settlement of the stock award. The participant will recognize ordinary income equal to the fair market value of the shares or the amount of cash received by the participant. In addition, Section 409A imposes certain restrictions on deferred compensation arrangements. Stock awards that are treated as deferred compensation under Section 409A are intended to meet the requirements of this section of the Code.
At the discretion of the Compensation Committee, the 2020 Stock Plan allows a participant to satisfy tax withholding requirements under applicable U.S. federal and state tax laws or applicable foreign tax laws by any means which the Compensation Committee, in its sole discretion, determines both to satisfy the required tax withholding obligations and to be consistent with the purposes of the 2020 Stock Plan, including, but not limited to: (a) having the Company withhold otherwise deliverable shares, (b) delivering to the Company already-owned shares having a fair market value equal to the amount required to be withheld, or (c) a "same day sale" pursuant to a program developed under Regulation T provided, however, that the amount of tax withholding to be satisfied by any such method will be limited to the extent necessary to avoid adverse accounting consequences, including but not limited to the award being classified as a liability award. The fair market value of the shares to be withheld, delivered or sold will be determined as of the date that the taxes are required to be withheld. Currently, we require employees to satisfy the taxes due upon vesting of RSUs through the withholding shares and the taxes due upon the exercise of non-qualified stock options through same day sales.
The Company will be entitled to a tax deduction in connection with a stock award under the 2020 Stock Plan only in an amount equal to the ordinary income realized by the participant and at the time the participant recognizes the income. Section 162(m) places a limit of $1 million on the amount of compensation that we may deduct as a business expense in any year with respect to certain of our most highly paid executive officers. While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee retains the discretion to award and pay compensation that is not deductible as it believes that it is in the best interests of our stockholders to maintain flexibility in our approach to executive compensation and to structure a program that we consider to be the most effective in attracting, motivating and retaining key employees.
The 2020 Stock Plan does not provide for set benefits or amounts of awards and we have not approved any awards that are conditioned on stockholder approval of the 2020 Stock Plan. While each of our current non-employee directors is entitled to receive a grant of DSUs on the date of our 2020 Annual Meeting of Stockholders with a grant date fair value of $160,000 and our current non-employee chair of the Board of Directors will receive an additional annual award of DSUs with a grant date fair value of $60,000, such awards will be granted under the 2017 Stock Plan and not under the 2020 Stock Plan as the 2020 Stock Plan will not become effective until the day immediately following the date of 2020 Annual Meeting.
For informational purposes only, we have provided the following table which shows (a) that none of our executive officers (including our named executive officers) or employees will receive any set benefits or awards that are conditioned upon shareholder approval of the 2020 Stock Plan and (b) the DSU grants that our current non-employee directors as a group would receive under the 2020 Stock Plan if they are re-elected at subsequent Annual Meetings of Stockholders based on the terms of our current director compensation program.
Name and position | Dollar value | Number of shares | |||||
|---|---|---|---|---|---|---|---|
Sunny S. Sanyal | — | — | |||||
President and Chief Executive Officer | |||||||
Clarence R. Verhoef | — | — | |||||
Senior Vice President and Chief Financial Officer | |||||||
Brian W. Giambattista | — | — | |||||
Senior Vice President and General Manager, Detectors | |||||||
Kimberley E. Honeysett | — | — | |||||
Senior Vice President, General Counsel and Corporate Secretary | |||||||
Mark S. Jonaitis | — | — | |||||
Senior Vice President and General Manager, X-Ray Sources | |||||||
All current executive officers as a group (5 persons) | — | — | |||||
All current directors who are not executive officers as a group (6 persons)(1) | $ | 1,020,000 | — | ||||
All employees, including all current officers who are not executive officers, as a group (approximately 2,132 persons) | — | — | |||||
(1)The number of shares subject to each non-employee director's DSU grant will not be determinable until the date of grant. See the section entitled "Compensation of Directors" for more information.
TABLE OF CONTENTS Equity Compensation Plan Information
The following table provides information as of September 27, 2019 with respect to the shares of our common stock that may be issued under our existing equity compensation plans.
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights(1) (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders | 2,946,757 | (2) | $ | 30.60 | 1,905,699 | (3) | ||||
Equity compensation plans not approved by security holders | — | — | — | |||||||
Total | 2,946,757 | $ | 30.60 | 1,905,699 | ||||||
(1)The weighted average exercise price does not take into account the shares issuable upon vesting of outstanding RSUs and DSUs, which have no exercise price.(2)Consists of stock options, RSUs, and DSUs granted under the 2017 Stock Plan. Excludes purchase rights under the ESPP.(3)Includes 1,202,512 shares available for future issuance under the 2017 Stock Plan. Also includes 703,187 shares available for future issuance under the ESPP, including shares subject to purchase during the current purchase period, which commenced on October 28, 2019 (the exact number of which will not be known until the purchase date on April 24, 2020). Subject to the number of shares remaining in the share reserve, the maximum number of shares purchasable by any participant on any one purchase date for any purchase period, including the current purchase period may not exceed 1,000 shares.
PROPOSAL FOURTHREE
RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
| | | BOARD RECOMMENDATION VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2023 | | |
BOARD RECOMMENDATION
VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OFPRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENTREGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2019
SelectionRatification of the Accounting Firm
Independent Auditors
Deloitte.
| Fee Category | | | Fiscal Year 2022 | | | Fiscal Year 2021 | | ||||||
Audit Fees(1)(2) | | | | $ | 2,916,207 | | | | | $ | 2,651,085 | | |
| Audit-Related Fees | | | | $ | — | | | | | $ | — | | |
| Tax Fees | | | | $ | — | | | | | $ | — | | |
All Other Fees(3) | | | | $ | 86,858 | | | | | $ | 5,685 | | |
| Total Fees | | | | $ | 3,003,065 | | | | | $ | 2,656,770 | | |
Fee Category | Fiscal Year 2019 | Fiscal Year 2018 | |||||
|---|---|---|---|---|---|---|---|
Audit Fees(1) | $ | 5,600,308 | (5) | $ | 3,230,983 | (6) | |
Audit-Related Fees(2) | — | 50,000 | |||||
Tax Fees(3) | — | 33,000 | |||||
All Other Fees(4) | 900 | 900 | |||||
| | | | | | | | |
Total Fees | $ | 5,601,208 | $ | 3,314,883 | |||
(1)
(1)- Audit Fees. Consist of fees
billed or expected to be billedfor the audit of annual financial statements, review of quarterly financial statements and services normally provided in connection with statutory and regulatory filings or engagements. Audit fees for fiscal year 2022 increased over the prior year primarily due to the increased number of statutory audits performed by Deloitte in 2022 compared to 2021.
Ratification of the appointment of PwC as our independent registered public accounting firm for the fiscal year ending October 2, 2020 requires an affirmative vote of the majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote. Unless marked to the contrary, proxies received will be voted "FOR" ratification of the appointment of PwC.
Board (the “
PCAOB”) and the Securities and Exchange Commission (the “SEC”).30, 2022.
Kathleen L. Bardwell
Jocelyn D. Chertoff
Jay K. Kunkel
Ruediger Naumann-Etienne
| | | | Amount and Nature of Common Stock Beneficially Owned | | |||||||||
| | | | Number of Shares Beneficially Owned(16) | | | Percent of Class | | ||||||
| Stockholders | | | | | | | | | | | | | |
Blackrock, Inc.(1) | | | | | 6,676,255 | | | | | | 16.7% | | |
55 East 52nd Street, New York, NY 10055 | | | | | | | | | | | | | |
The Vanguard Group, Inc.(2) | | | | | 4,264,345 | | | | | | 10.6% | | |
| 100 Vanguard Blvd., Malvern, PA 19355 | | | | | | | | | | | | | |
Shapiro Capital Management LLC(3) | | | | | 2,977,970 | | | | | | 7.4% | | |
| 3060 Peachtree Road, Suite 1555 N.W., Atlanta, GA 30305 | | | | | | | | | | | | | |
| Kathleen L. Bardwell | | | | | — | | | | | | * | | |
Jocelyn D. Chertoff, M.D.(4) | | | | | 27,138 | | | | | | * | | |
Brian W. Giambattista(5) | | | | | 117,401 | | | | | | * | | |
Timothy E. Guertin(6) | | | | | 11,721 | | | | | | * | | |
Andrew J. Hartmann(7) | | | | | 110,555 | | | | | | * | | |
Kimberley E. Honeysett(8) | | | | | 141,590 | | | | | | * | | |
Jay K. Kunkel(9) | | | | | 27,599 | | | | | | * | | |
Shubham Maheshwari(10) | | | | | 140,031 | | | | | | * | | |
Ruediger Naumann-Etienne, PhD(11) | | | | | 39,308 | | | | | | * | | |
Walter M Rosebrough, Jr.(12) | | | | | 35,742 | | | | | | * | | |
Sunny S. Sanyal(13) | | | | | 1,088,007 | | | | | | 2.6% | | |
Christine A. Tsingos(14) | | | | | 27,599 | | | | | | * | | |
| All directors, nominees for director and executive officers as a group (12 persons) | | | | | 1,766,691 | | | | | | 4.2% | | |
| | Amount and Nature of Common Stock Beneficially Owned | ||||||
|---|---|---|---|---|---|---|---|
| | Number of Shares Beneficially Owned | Percent of Class | |||||
Stockholders | |||||||
Blackrock, Inc.(1) | 5,916,732 | 15.4 | % | ||||
55 East 52nd Street, New York, NY 10055 | |||||||
The Vanguard Group, Inc.(2) | 3,966,819 | 10.3 | % | ||||
100 Vanguard Blvd., Malvern, PA 19355 | |||||||
Directors, Nominees for Director and Named Executive Officers | |||||||
Jocelyn D. Chertoff(3) | 8,999 | * | |||||
Brian W. Giambattista(4) | 32,145 | * | |||||
Kimberley E. Honeysett(5) | 58,502 | * | |||||
Mark S. Jonaitis(6) | 133,254 | * | |||||
Jay K. Kunkel(7) | 9,460 | * | |||||
Ruediger Naumann-Etienne(8) | 28,836 | * | |||||
Erich R. Reinhardt(9) | 37,609 | * | |||||
Walter M Rosebrough, Jr.(10) | 17,603 | * | |||||
Sunny S. Sanyal(11) | 717,946 | 1.9 | % | ||||
Christine A. Tsingos(12) | 9,460 | * | |||||
Clarence R. Verhoef(13) | 223,795 | * | |||||
All directors, nominees for director and executive officers as a group (11 persons) | 1,277,609 | 3.3 | % | ||||
*
*- The percentage of shares of common stock beneficially owned does not exceed one percent of the shares of common stock outstanding at December 2,
2019.2022.
Prior to January 28, 2017, we were a wholly-owned subsidiary of Varian Medical Systems, Inc. ("Varian"). On January 28, 2017, Varian completed its spin-off of the Company (the "Spin-off"). As a result of the Spin-off, we became an independent publicly traded company. Because the Spin-off was completed in the middle of a fiscal year, our executives were initially compensated under the Varian executive compensation program, which transitioned to the Varex executive compensation program for fiscal year 2018.
In establishing the executive compensation program for fiscal year 2019,
Our three-year long-term incentive program covering fiscal years 2017, 2018, and 2019 was established with the objective of aligning executives with stockholders following the Spin-off. To ensure close alignment, the Compensation Committee approved a partially front-loaded equity grant strategy that established equity grants for fiscal years 2017, 2018, and 2019 as follows: 1) the Company established guideline annual equity values that approximated the median equity values of the identified peer group of companies for each Named Executive Officer; 2) fiscal year 2017 equity grants included the fiscal year 2017 guideline value plus 30% of fiscal year 2018 and fiscal year 2019 guideline values; and 3) fiscal year 2018 and fiscal year 2019 equity grants are offset by the portion front-loaded$859 million from $818 million in fiscal year 2017 so that the cumulative awards made over the three-year period are equal to three times the median annual guideline value. Over the three-year period, the equity award mix was approximately 63% stock options and 37% RSUs. As discussed in further detail below, for 2020, the Committee plans to implement a long-term incentive program comprised of annual grants of time- and performance-based equity awards.
In fiscal year 2019, revenues increased from the prior year despite a sizeable tariff-related headwind, and our gross margins and profitability were comparable with the prior year. We believe our business is well positioned for future growth.
Our key operationalMedical revenues increased by 5% and strategic accomplishments during fiscal year 2019 included:
•We completed the acquisition of Direct Conversion AB, which added photon counting digital detector technology to our product portfolio for medical and industrial applications, and we launched a joint venture to develop nanotube technology for X-ray tubes.
•We launched dozens of new or updated X-ray imaging products across all of our solution lines and we exhibited our X-ray imaging products at 33 medical and industrial trade shows held in more than 10 countries. In December 2019, we again attended RSNA, the largest tradeshow event of the year for the medical imaging industry, where we showcased several new products and technologies including a new family of IGZO digital detectors, our new photon counting linear array detectors and a nanotube based X-ray tube.•In China, we saw good quarterly sequential growth in CT tubes during the year. Our Chinese OEM customers continued to make progress in bringing their CT systems to market and in fiscal year 2019 shipments of our CT tubes to local OEMs more than doubledIndustrial revenues increased by 6% from the prior year.Consistent with demand from other world markets, about two-thirds of the units shipped were for value and mid-level CT systems. For the fiscal year, 8%The Medical segment represented 79% of total company revenueswere generated by product sales in China.•During the past fiscal year, we expanded manufacturing and service capabilities at our facilities in China, Germanyand thePhilippines. Among other things, these global footprint changes are intended to help us mitigate the impact of the trade war between the U.S. and China.
Our financial results included:
•Revenues increased to $781 million from $773 million in the prior year and continued to grow despite a sizeable tariff-related headwind. Medical revenues declined 1% andIndustrialrevenues increased 7% from the prior year and as of the end of the fiscal yearsegment representednearly 25% of our total revenues.21%.
NEOs.
stockholders. To promote these objectives, the Compensation Committee is guided by the following principles in developing our executive compensation program and in making pay decisions:
| Name | | | ||
| Title | | |||
| Sunny S. Sanyal | | | President and Chief Executive Officer | |
| | | Chief Financial Officer | | |
| Kimberley E. Honeysett | | | Senior Vice President, Chief Legal Officer, General Counsel and | |
| Brian W. Giambattista | | | Senior Vice President and General Manager, Detectors | |
| | | Senior Vice President, | ||
Each program component and the rationale for it are highlighted below:
| Component | | | ||
| Purpose and Role | | |||
Base salary | | | • Provide a competitive, fixed level of cash compensation to attract and retain talented and skilled senior executives. | |
| | | | • Recognize sustained performance, capabilities, job scope, experience, and internal pay equity. | |
Annual cash incentives | | | • Motivate and reward achievement of annual financial results that drive stockholder value. | |
| | | | • Reward achievement of strategic goals that provide the foundation for future growth and profitability. | |
| | | • Align executives with stockholders on gains in equity | |
| | | | • Encourage retention and long-term | |
Restricted stock units | | | • Align the interest of executives with those of our stockholders | |
| | | | • Encourage executive retention and long-term | |
Executive benefits and perquisites | | | • Provide the same 401(k) and other benefits as non-executive employees. | |
• Provide a competitive retirement benefit by allowing executives to defer compensation pursuant to a | |
at-risk and aligned with our stockholdersand/or performance based in the form of annual cash incentives and long-term equity compensation.LTIs. For our other NEOs as a group 62%on average, 68% of their Target TDC was at-risk and/or performance-based. The Compensation Committee determined that, as we have matured, target TDC for the NEOs should generally be reflective of the median in terms of mix and value of base salary, annual cash incentive, and long-term equity incentives. This is a change from the prior compensation philosophy of target TDC disproportionately emphasizing long-term incentives over base salary and annual cash incentives versus market practice during the first several years of the Company being public. In particular, for fiscal year 2022, this was at-risk.
* Note: Duereflected in a slight re-balancing of our CEO’s target TDC via a market-based increase to rounding, percentagesbase salary, and a slight decrease in the above graphs sum to 101%
- target LTI value.
![[MISSING IMAGE: tm2225010d1-pc_ceoneo4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-22-130273/tm2225010d1-pc_ceoneo4c.jpg)
| | | | Fiscal Year 2022 Realized TDC(1) | | | | | | | | | | | | Difference | | ||||||||||||||||||||||||||||||||||||||||||||||||
| Name | | | Salary Paid | | | + | | | Actual Annual Incentive | | | + | | | Option Value | | | + | | | RSU Value | | | = | | | Total | | | FY 2022 Target TDC(2) | | | = | | | ($) | | | (%) | | ||||||||||||||||||||||||
| Sunny S. Sanyal | | | | $ | 714,776 | | | | | | | | $ | 734,753 | | | | | | | | $ | 0 | | | | | | | | $ | 1,126,847 | | | | | | | | $ | 2,576,375 | | | | | $ | 4,452,750 | | | | | | | | $ | (1,876,374) | | | | | | (42)% | | |
| Shubham Maheshwari | | | | $ | 470,769 | | | | | | | | $ | 339,000 | | | | | | | | $ | 0 | | | | | | | | $ | 298,603 | | | | | | | | $ | 1,108,372 | | | | | $ | 1,573,836 | | | | | | | | $ | (465,465) | | | | | | (30)% | | |
| Kimberley E. Honeysett | | | | $ | 373,077 | | | | | | | | $ | 263,000 | | | | | | | | $ | 0 | | | | | | | | $ | 215,996 | | | | | | | | $ | 852,043 | | | | | $ | 1,157,050 | | | | | | | | $ | (305,007) | | | | | | (26)% | | |
| Brian W. Giambattista | | | | $ | 372,965 | | | | | | | | $ | 219,000 | | | | | | | | $ | 0 | | | | | | | | $ | 197,194 | | | | | | | | $ | 789,159 | | | | | $ | 1,106,953 | | | | | | | | $ | (317,794) | | | | | | (29)% | | |
| Andrew J. Hartmann | | | | $ | 376,812 | | | | | | | | $ | 211,000 | | | | | | | | $ | 0 | | | | | | | | $ | 197,194 | | | | | | | | $ | 785,006 | | | | | $ | 1,113,550 | | | | | | | | $ | (328,544) | | | | | | (30)% | | |
| | FY 2019 Realizable TDC(1) | | | | | |||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Difference | |||||||||||||||||||||||||||||||||||||
| | | | Actual Annual Incentive | | Option Value | | RSU Value | | | FY 2019 Target TDC(2) | | |||||||||||||||||||||||||||||
Name | Salary | + | + | + | = | Total | = | ($) | (%) | |||||||||||||||||||||||||||||||
Sunny S. Sanyal | $ | 620,000 | $ | 403,000 | $ | 0 | $ | 947,267 | $ | 1,970,267 | $ | 3,344,900 | $ | (1,374,633 | ) | (41 | )% | |||||||||||||||||||||||
Clarence R. Verhoef | $ | 385,875 | $ | 139,440 | $ | 0 | $ | 243,095 | $ | 768,410 | $ | 1,157,626 | $ | (389,216 | ) | (34 | )% | |||||||||||||||||||||||
Brian W. Giambattista | $ | 339,993 | $ | 142,800 | $ | 0 | $ | 160,630 | $ | 643,423 | $ | 866,984 | $ | (223,561 | ) | (26 | )% | |||||||||||||||||||||||
Kimberley E. Honeysett | $ | 334,425 | $ | 126,390 | $ | 0 | $ | 158,000 | $ | 618,815 | $ | 852,784 | $ | (233,969 | ) | (27 | )% | |||||||||||||||||||||||
Mark S. Jonaitis | $ | 324,135 | $ | 93,740 | $ | 0 | $ | 153,164 | $ | 571,039 | $ | 826,545 | $ | (255,506 | ) | (31 | )% | |||||||||||||||||||||||
(1)
(1)FY 2019 RealizableFiscal year 2022 Realized TDC is the sum of salary paid, annual cash incentive earned, and the intrinsic value of stock options and RSUs granted in fiscal year20192022 based on the closing share price on September27, 201930, 2022 ($28.28)21.14).
•Use of Strategic Goals.Achievement of team and individual strategic goals represents 25% of the annual cash incentive opportunity for our executive officers. We believe this is a useful metric for rewarding achievement of key milestones in the implementation of our strategy, which includes growing revenue in China, reducing cost of product failure, innovation in our products, successful launch of critical new products, and improvements in quality and operational excellence. The Compensation Committee carefully evaluates management's accomplishments relative to our key strategic goals.
Key Changes for Fiscal Year 20202023 Compensation and Governance Programs
For
amounts calculated based on EBIT.
| | ||||||||||||||||
| What we do | | | What we | | | | | | | | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
✓ Independent Compensation Committee | ||||||||||||||||
✓ | Independent compensation advisor | |||||||||||||||
✓ | NEOs employed | |||||||||||||||
“at will” ✓ | Robust CEO & NEO stock ownership guidelines | |||||||||||||||
✓ | Clawback policy that applies to our annual cash incentive plan and equity incentive plan | |||||||||||||||
✓ | Require NEOs to sell Company stock in the public market through a 10b5-1 trading plan | | × | Routinely target pay above market median × Provide golden parachute tax gross ups × NEO employment contracts × Permit directors and NEOs to engage in common stock margining, pledging, or hedging × Provide excessive NEO perquisites × Reprice and repurchase options × | ||||||||||||
Egregious pension/supplemental NEO retirement plan payouts | | | | |||||||||||||
| | What we do | | | What we do not do | | | | | | | |
| ✓ | Annual compensation review and risk assessment ✓ Annual stockholder ✓ Award 50% of LTI value in performance-based option awards ✓ Place caps on maximum payouts from our annual cash incentive plan ✓ Annual review of succession plan | | × | Provide for a liberal change in control definition in individual contracts or equity plans which could result in payments to NEOs without an actual change in control occurring × | ||||||
Change in control severance payments without involuntary job loss or substantial diminution of duties × | |||||||||||
Excessive severance/change in control provisions that provide cash payments exceeding two and a half times base salary plus target/average/most recent bonus | |||||||||||
| | | |||||||||
How We Make Compensation Decisions
The Compensation Committee oversees the development and administration of our executive compensation programs, including the underlying philosophy and related policies. The Compensation Committee'sCommittee’s responsibilities include:
Peer Group and Market Analysis. The Compensation Committee uses a compensation peer group to monitor the compensation practices of our primary competitors for executive talent. The Compensation Committee reviews executive pay relative to the median pay of comparable positions in peer group companies and, as appropriate, compensation survey data. The Compensation Committee's ConsultantCommittee’s independent compensation consultant reviews the companies in the peer group annually and proposes changes in response to mergers and acquisitions, significant movements in revenues or market capitalization, and revised business strategies. For the peer group developed during fiscal year 20182021 and used as context for fiscal year 20192022 pay decisions, the Compensation Committee approved the deletionremoval of seven peersKEMET Corporation (which was acquired) and Kimball Electronics (due to the size and nature of its business) from the prior year peer group (ABIOMED, Inc., Accuray, Inc., Cognex Corporation, Daktronics, Inc., FLIR Systems, Inc., Masimo Corporation, and National Instruments Corporation) and the addition of seven peers (marked with an asterisk in the table below)Accuray (which has a relatively similar size and business model). The peer group companies compete in the healthcare equipment and supplies, life sciences tools and services, and electronic equipment instruments and components industries that the Compensation Committee believes reflect the competitive market for executive talent similar to that required by the Company.
| | Accuray Incorporated* | | | Methode Elec. | |
| Angio Dynamics, Inc. | | | MTS Systems Corporation | | |
| | CONMED Corporation | | | Natus Medical Incorporated | |
| | CTS Corporation | | | Orthofix Medical Inc. | |
| | Cryolife Inc. | | | OSI Systems, Inc. | |
| | Lantheus Holdings, Inc. | | | Rogers Corporation | |
| | Luminex Corporation | | | Vishay Precision Group | |
| | Merit Medical Systems, Inc. | ||||
| | |||||
- *
| | | | | | | | | | Peer Group | | |||||||||||||||
| Company Scope | | | Varex | | | 25P | | | Median | | | 75P | | ||||||||||||
| Revenue ($M) (trailing 4 quarters) | | | | | 722 | | | | | | 361 | | | | | | 438 | | | | | | 857 | | |
| Market Capitalization as (last fiscal year average) ($M) | | | | | 859 | | | | | | 650 | | | | | | 802 | | | | | | 1,464 | | |
| | | Peer Group | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company Scope | Varex | 25P | Median | 75P | |||||||||
Revenue ($M) | 763 | 477 | 774 | 1,051 | |||||||||
Market Capitalization at time of selection ($M) | 1,359 | 1,175 | 1,700 | 2,451 | |||||||||
| Name | | | Fiscal Year 2021 Base Salary | | | Fiscal Year 2022 Base Salary | | ||||||
| Sunny S. Sanyal | | | | $ | 637,360 | | | | | $ | 738,000 | | |
| Shubham Maheshwari | | | | $ | 460,000 | | | | | $ | 474,000 | | |
| Kimberley E. Honeysett | | | | $ | 350,000 | | | | | $ | 380,000 | | |
| Brian W. Giambattista | | | | $ | 349,513 | | | | | $ | 380,000 | | |
| Andrew J. Hartmann | | | | $ | 349,520 | | | | | $ | 385,000 | | |
Name | FY2019 Base Salary | |||
|---|---|---|---|---|
Sunny S. Sanyal | $ | 620,000 | ||
Clarence R. Verhoef | $ | 385,875 | ||
Brian W. Giambattista | $ | 339,993 | ||
Kimberley E. Honeysett | $ | 334,425 | ||
Mark S. Jonaitis | $ | 324,135 | ||
Annual Cash Incentives. Our NEOs receive annual incentives through our Management Incentive Plan ("(“MIP"”), which rewards our executive officers for the achievement of predeterminedpre-determined annual financial and strategic goals. On November 16, 2018,18, 2021, the Compensation Committee set the fiscal year 20192022 performance goals under the MIP for the NEOs and certain other executive officers. For fiscal year 2019,2022, the Compensation Committee established a pool of funds equal to 4.0% of our fiscal year 20192022 EBIT results (the "“MIP Bonus Pool"”) to be available for annual cash incentives under the MIP to the executive officers. The Compensation Committee retained negative discretion to pay each of these executive officers less than their corresponding maximum share of the MIP Bonus Pool based on the financial performance measures, team and individual strategic goals summarized below. The corresponding maximum share of the MIP Bonus Pool was the lesser of two times the target participation level of each executive officer under the MIP or a specified percentage of the MIP Bonus Pool, which is defined in the table below for each NEO.
| | | | | | | | | | MIP Target | | | MIP Maximum (lesser of the following) | | ||||||||||||||||||
| Name | | | Base Salary | | | % of Base Salary | | | Amount | | | % of Base Salary | | | As a % of MIP Bonus Pool | | |||||||||||||||
| Sunny S. Sanyal | | | | $ | 738,000 | | | | | | 100% | | | | | $ | 738,000 | | | | | | 200% | | | | | | 39.4% | | |
| Shubham Maheshwari | | | | $ | 474,000 | | | | | | 65% | | | | | $ | 308,100 | | | | | | 130% | | | | | | 16.4% | | |
| Kimberley E. Honeysett | | | | $ | 380,000 | | | | | | 55% | | | | | $ | 209,000 | | | | | | 110% | | | | | | 11.1% | | |
| Brian W. Giambattista | | | | $ | 380,000 | | | | | | 55% | | | | | $ | 209,000 | | | | | | 110% | | | | | | 11.1% | | |
| Andrew J. Hartmann | | | | $ | 385,000 | | | | | | 55% | | | | | $ | 211,750 | | | | | | 110% | | | | | | 11.3% | | |
| | | MIP Target | MIP Maximum (lesser of the following) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Base Salary | % of Base Salary | Amount | % of Base Salary | As a % of MIP Bonus Pool | |||||||||||
Sunny S. Sanyal | $ | 620,000 | 100 | % | $ | 620,000 | 200 | % | 39 | % | ||||||
Clarence R. Verhoef | $ | 385,875 | 60 | % | $ | 231,525 | 120 | % | 15 | % | ||||||
Brian W. Giambattista | $ | 339,993 | 50 | % | $ | 169,996 | 100 | % | 10.5 | % | ||||||
Kimberley E. Honeysett | $ | 334,425 | 50 | % | $ | 167,213 | 100 | % | 10.5 | % | ||||||
Mark S. Jonaitis | $ | 324,135 | 50 | % | $ | 162,068 | 100 | % | 10.5 | % | ||||||
75%For fiscal year 2022, we revised our approach to bonus pool funding for all our primary non-sales incentives plans. A pool was to be established based on the financial achievement as measured by adjusted EBIT compared against a pre-established target and 100% of the MIP opportunity iswas based on achievement of this financial measures and 25% ismeasure with a potential modifier based on pre-established individual strategic measures. Both portions havegoals. The financial portion had potential funding of between 0% and 200% of target. For fiscal year 2019, for corporate executives (Messrs. Sanyaltarget and Verhoef and Ms. Honeysett), the 75% financial portion is determined by metrics based on overall company performance (revenue, EBITDA, and free cash flow), and for solution and business line executives (Messrs. Giambattista and Jonaitis), the 75% financial portion is determined 50% by metrics based on overall company performance and 50% by metrics related to each executive's solution or business line. The strategic portion includes an Executive Scorecard that applies to all executive officers as well as an individual modifier that is determined based on achievementhad potential results of pre-established individual goals. The individual modifier applies80% to all executive officers except for our Chief Executive Officer, who is evaluated entirely on performance
against financial measures and the Executive Scorecard.120%. The mechanics for calculating the fiscal year 20192022 MIP awards was as follows:
![[MISSING IMAGE: tm2225010d1-fc_fiscal4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-22-130273/tm2225010d1-fc_fiscal4c.jpg)
Financial Portion ——On November 16, 2018,18, 2021, the Compensation Committee set the fiscal year 20192022 financial performance goals under the MIP for the NEOs and other officers reporting directly to our CEO, as well as for our Chief Accounting Officer. For fiscal year 2019,2022, the Compensation Committee selected revenue, EBITDA and free cash flowEBIT as the equally-weighted financial performance measuresmeasure applicable to overall Company performance because it believesbelieved that these measures drivethis measure aligns with stockholder interest and drives our stock market value. As noted above, Messrs. Giambattista and Jonaitis also had metrics related to their solution or business line. For these metrics, the Compensation Committee selected solution or business line revenue and contribution margin (gross margin less research and development costs) because it believes these are the best measures of financial success at the solution or business line level. Each of these metrics is subject to adjustment provisions adopted by the Compensation Committee at the time the MIP goals were set.
| Measure ($M) | | | Min | | | Target | | | Maximum | | | Result | | ||||||||||||
| Full Year EBIT $ | | | | $ | 31.9 | | | | | $ | 106.2 | | | | | $ | 144.6 | | | | | $ | 108.1 | | |
| % of Financial Target | | | | | 30% | | | | | | 100% | | | | | | 130% | | | | | | 102% | | |
| % of Bonus Target | | | | | 30% | | | | | | 100% | | | | | | 200% | | | | | | 105% | | |
| Full year Payout Percentage: | | | | | | | | | | | | | | | | | | | | | | | 105% | | |
| | | FY 2019 Goals ($M) | | | | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | FY 2019 Payout Based on Achievement (% Target) | ||||||||||||||||||
MIP Financial Component | Weighting (% Total) | Threshold Performance- 50% payout | Target Performance- 100% payout | Maximum Performance- 200% payout | Actual Performance ($M)* | Percentage Achieved | ||||||||||||||||
Revenue | 25 | % | $ | 702 | $ | 780 | $ | 819 | $ | 790 | 101 | % | 127 | % | ||||||||
EBITDA | 25 | % | $ | 100 | $ | 125 | $ | 144 | $ | 109 | 87 | % | 55 | % | ||||||||
Free Cash Flow | 25 | % | $ | 66 | $ | 83 | $ | 95 | $ | 58 | 70 | % | 0 | % | ||||||||
Weighted Financial Payout (% of total MIP opportunity): | 46 | % | ||||||||||||||||||||
*
*- As noted above, calculation of actual performance was subject to certain pre-approved adjustments, including the impact of implementing new or changed accounting rules, restructuring charges, acquisition related expenses, and unbudgeted impacts from tariffs.
Financial Goals Applicable for Solution and Business Line Executives
| | | FY 2019 Goals ($M) | | | | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | FY 2019 Payout Based on Achievement (% Target) | ||||||||||||||||||
MIP Financial Component | Weighting (% Total) | Threshold Performance- 50% payout | Target Performance- 100% payout | Maximum Performance- 200% payout | Actual Performance ($M) | Percentage Achieved | ||||||||||||||||
Corporate Revenue | 12.5 | % | $ | 702 | $ | 780 | $ | 819 | $ | 790 | 101 | % | 127 | % | ||||||||
Corporate EBITDA | 12.5 | % | $ | 100 | $ | 125 | $ | 144 | $ | 109 | 87 | % | 55 | % | ||||||||
Corporate Free Cash Flow | 12.5 | % | $ | 66 | $ | 83 | $ | 95 | $ | 58 | 70 | % | 0 | % | ||||||||
Bus. Line Revenue—Giambattista | 18.75 | % | * | * | * | * | 101 | % | 121 | % | ||||||||||||
Bus. Line Cont. Margin—Giambattista | 18.75 | % | * | * | * | * | 100 | % | 103 | % | ||||||||||||
Bus. Line Revenue—Jonaitis | 18.75 | % | * | * | * | * | 94 | % | 61 | % | ||||||||||||
Bus. Line Cont. Margin—Jonaitis | 18.75 | % | * | * | * | * | 84 | % | 46 | % | ||||||||||||
Weighted Financial Payout (% of total MIP opportunity): | 65% (Giambattista)/ 43% (Jonaitis) | |||||||||||||||||||||
*Due to potential competitive harm, we do not disclose the solution and business line goals that were applicable to 50% of the financial portion of the MIP for Messrs. Giambattista and Jonaitis. The goals were rigorous and considered difficult to achieve at the time they were set.
The fiscal year 2019 goals were rigorous, which is illustrated by: 1) the fact that the EBITDA funded below target and free cash flow funded at zero and 2) the following year-over-year growth rates were required to achieve target performance with respect to the company-level metrics. Considering the negative impact tariffs had on our revenue, we believe that the fiscal year 2019 revenue goal represented a meaningful increase over fiscal year 2018.
MIP Financial Component | FY 2018 Actual | FY 2019 Target | % Increase | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Revenue ($M) | $ | 773 | $ | 780 | 1 | % | ||||
EBITDA ($M) | $ | 102 | $ | 125 | 23 | % | ||||
Free Cash Flow ($M) | $ | 69 | $ | 83 | 20 | % | ||||
Executive Scorecard Portion—On November 16, 2018, the Compensation Committee approved the executive scorecard goals (the "Executive Scorecard"). Components of, and related actual achievement for, the Executive Scorecard portion of the MIP, which was weighted as 25% of the total annual incentive opportunity, were as follows:
MIP Executive Scorecard Component | Weighting (% Total) | FY 2019 Payout Based on Achievement (% Target) | |||||
|---|---|---|---|---|---|---|---|
Grow Revenue in China | 10 | % | 46 | % | |||
Drive Innovation | 10 | % | 100 | % | |||
On-Time Delivery | 5 | % | 92 | % | |||
Weighted Executive Scorecard Payout (% of total MIP opportunity): | 19 | % | |||||
The China revenue growth component of the Executive Scorecard did not reach our rigorous goal due to OEM customer delays in ramping up CT production and lower sales of non-OEM aftermarket tube products. However, our engineering programs (drive innovation) and on-time delivery results were at or near our targets.
Fiscal Year 20192022 Payouts—
marketing expenses.
| Name | | | MIP Target ($) | | | EBIT Attainment (%) | | | Individual Modifier (%) | | | MIP Payout ($) | | | MIP Payout (% of Target) | | |||||||||||||||
| Sunny S. Sanyal | | | | $ | 738,000 | | | | | | 104.8% | | | | | | 95% | | | | | $ | 734,753 | | | | | | 100% | | |
| Shubham Maheshwari | | | | $ | 308,100 | | | | | | 104.8% | | | | | | 105% | | | | | $ | 339,000 | | | | | | 110% | | |
| Kimberley E. Honeysett | | | | $ | 209,000 | | | | | | 104.8% | | | | | | 120% | | | | | $ | 263,000 | | | | | | 126% | | |
| Brian W. Giambattista | | | | $ | 209,000 | | | | | | 104.8% | | | | | | 100% | | | | | $ | 219,000 | | | | | | 105% | | |
| Andrew J. Hartmann | | | | $ | 211,750 | | | | | | 104.8% | | | | | | 95% | | | | | $ | 211,000 | | | | | | 100% | | |
Long-Term Incentive Compensation. An important objective of our compensation program is aligning the interests of our executive officers with those of our stockholders. In order toTo accomplish this objective, we tie a significant portion of the total compensation of executive officers to our long-term stock performance through the grant of equity awards. We also believe that equity compensation helps motivate executive officers to drive long-term profitable growth because they will be rewarded with increased equity value and also assists in the retention of executive officers who may have significant value in unvested equity awards.
Our long-term incentive program was put into place in
50% performance-based stock options. The performance-based (premium priced) stock options have a strike price set 10% above our stock price on the applicable grant date. We believe the performance-based stock options, together with RSUs provide a strong balance incentivizing financial performance and 37% RSUs. All awards were granted under the Company's 2017 Stock Plan. The Fiscal 2017 through 2019growth, while also supporting executive retention.
Illustration of Fiscal 2017 - 2019 LTI Program
Executive officers' annual guideline LTI values are established asopposed to a percentagepercent of salary, which in fiscal year 2019 was 485% for Mr. Sanyal, 200% for Mr. Verhoef, and 150% for Messrs. Giambattistaare determined together with total direct compensation, considering competitive market positioning and Jonaitis and Ms. Honeysett.
Stockinternal equity.
date to further encourage retention.
Set forth below are the individual NEO annual and guideline LTI grant values under the Fiscal 2017 through 2019 LTI Program:
| | LTI Grant Value | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | FY 2017(1)(2) | + | FY 2018 | + | FY 2019 | = | Total (FY 2017 - 2019) | | | = | 3-Year Avg. Guideline | |||||||||||||||||
Sunny S. Sanyal | $ | 4,655,993 | $ | 2,104,864 | $ | 2,104,888 | $ | 8,865,745 | ÷ | 3 years | $ | 2,955,248 | ||||||||||||||||
Clarence R. Verhoef | $ | 1,200,010 | $ | 540,195 | $ | 540,192 | $ | 2,280,399 | ÷ | 3 years | $ | 760,132 | ||||||||||||||||
Brian W. Giambattista | $ | 471,000 | (3) | $ | 356,973 | $ | 356,954 | $ | 1,184,927 | ÷ | 3 years | $ | 394,976 | |||||||||||||||
Kimberley E. Honeysett | $ | 649,986 | $ | 327,698 | $ | 351,108 | $ | 1,328,792 | ÷ | 3 years | $ | 442,931 | ||||||||||||||||
Mark S. Jonaitis | $ | 756,221 | $ | 340,311 | $ | 340,334 | $ | 1,436,866 | ÷ | 3 years | $ | 478,955 | ||||||||||||||||
(1)Includes partial front load of FY 2018 and FY 2019 LTI awards.(2)Excludes grant value of Varian awards converted into Varex awards at the time of Spinoff.
(3)Fiscal year 2017 award was pro-rated due to partial year of employment.
The NEOs fiscal year 20192022 LTI awards as granted under the Fiscal 2017 through 2019 LTI Program, were granted in an equal mix of stock options and RSUs, asare summarized in the table below. The grants were made under our 2020 Stock Plan. The grant date fair value of each award was determined using the Black-Scholes model for stock options and was based on the closing price of the Company'sour common stock on the date of grant for RSUs. Additional information about equity awards granted in fiscal year 20192022 is provided below in the Grants of Plan-Based Awards table.
| | FY19 LTI Grant Value | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Stock Options | + | RSUs | = | Total | |||||||||
Sunny S. Sanyal | $ | 1,052,444 | $ | 1,052,444 | $ | 2,104,888 | ||||||||
Clarence R. Verhoef | $ | 270,106 | $ | 270,086 | $ | 540,192 | ||||||||
Brian W. Giambattista | $ | 178,488 | $ | 178,466 | $ | 356,954 | ||||||||
Kimberley E. Honeysett | $ | 175,564 | $ | 175,544 | $ | 351,108 | ||||||||
Mark S. Jonaitis | $ | 170,163 | $ | 170,171 | $ | 340,334 | ||||||||
| | | | Fiscal Year 2022 LTI Grant Value | | |||||||||||||||||||||
| Name | | | Stock Options | | | + | | | RSUs | | | = | | | Total | | |||||||||
| Sunny S. Sanyal | | | | $ | 1,499,999 | | | | | | | | $ | 1,499,975 | | | | | | | | $ | 2,999,974 | | |
| Shubham Maheshwari | | | | $ | 397,489 | | | | | | | | $ | 397,478 | | | | | | | | $ | 794,967 | | |
| Kimberley E. Honeysett | | | | $ | 287,495 | | | | | | | | $ | 287,478 | | | | | | | | $ | 574,973 | | |
| Brian W. Giambattista | | | | $ | 262,498 | | | | | | | | $ | 262,490 | | | | | | | | $ | 524,988 | | |
| Andrew J. Hartmann | | | | $ | 262,498 | | | | | | | | $ | 262,490 | | | | | | | | $ | 524,988 | | |
The Company
change-in-control change in control agreements are "double-trigger"“double trigger” meaning that to receive benefits under the agreements there must be a change-in-controlchange in control event and the executive must either:
| Position | | | |||||
| Stock Ownership Multiple of Salary | | ||||||
|---|---|---|---|---|---|---|---|
CEO | | | | | 6x | | |
CFO | | | | | 3x | | |
Other corporate officers | | | | | 1x | | |
The program counts owned shares and unvested RSUs towards the guideline.
guidelines.
foregoing, we intend to revise our existing clawback policy or adopt an additional clawback policy that complies with the Nasdaq listing standards within the required timing.
collateral for a loan. For all other employees subject to the quarterly blackout period under the insider trading policy,Insider Trading Policy, which includes business unit general managers, and other employees who have access to, or assist in compiling, companyCompany financial data, purchases on margin and the pledging of or borrowing against Company securities are not strictly prohibited, but such activities are strongly discouraged and advance consultation with the Company'sCompany’s Legal Department is required. The insider trading policyInsider Trading Policy also prohibits officers, directors, and other employees subject to the quarterly blackout period from engaging in transactions in puts, calls or other derivatives on an exchange or in any other organized market and other hedging transactions. In addition, our NEOs are required to sell Company stock through a 10b5-1 trading plan.
Special grants to continuing employees, such as for promotions or retention purposes, are typically approved on the date ofcoincident with the first regularly scheduled quarterly Compensation Committee meeting following the recommendation to make a special grant. Scheduling decisions are made without regard to anticipated earnings or the release of other material non-public information by us.
However, in September 2020, with the intent of simplifying the grant process while minimizing the potential for grants being made when management could possibly possess material inside information, the Committee approved fixed grant dates of the 15
th of February, May, August or November for subsequent equity grants. The November 15 fixed grant date was later modified to December 10, to ensure that the grant date would follow the filing of our Annual Report on Form 10-K.approval and grant of discount options.
The Compensation Committee believes that the following risk oversight and compensation design features described in greater detail above in this Compensation Discussion and Analysis section safeguard against excessive risk taking:
Timothy E. Guertin
Jay K. Kunkel
Ruediger Naumann-Etienne
| Name and Principal Position | | | Fiscal Year | | | Salary ($)(1) | | | Bonus ($)(2) | | | Stock Awards ($)(3) | | | Option Awards ($)(4) | | | Non-Equity Incentive Plan Compensation ($)(5) | | | Nonqualified Deferred Compensation Earnings ($) | | | All Other Compensation ($)(6) | | | Total ($) | | |||||||||||||||||||||||||||
Sunny S. Sanyal President and Chief Executive Officer | | | | | 2022 | | | | | | 714,776 | | | | | | — | | | | | | 1,499,975 | | | | | | 1,499,999 | | | | | | 734,753 | | | | | | — | | | | | | 29,685 | | | | | | 4,479,188 | | |
| | | | 2021 | | | | | | 637,360 | | | | | | 200 | | | | | | 1,544,985 | | | | | | 1,544,995 | | | | | | 956,040 | | | | | | — | | | | | | 9,707 | | | | | | 4,693,287 | | | ||
| | | | 2020 | | | | | | 584,817 | | | | | | — | | | | | | 1,545,000 | | | | | | 1,544,998 | | | | | | 230,885 | | | | | | — | | | | | | 27,062 | | | | | | 3,932,762 | | | ||
Shubham Maheshwari(7) Chief Financial Officer | | | | | 2022 | | | | | | 470,769 | | | | | | — | | | | | | 397,478 | | | | | | 397,489 | | | | | | 339,000 | | | | | | — | | | | | | 68,081 | | | | | | 1,672,817 | | |
| | | | 2021 | | | | | | 460,000 | | | | | | 272 | | | | | | 187,475 | | | | | | 187,493 | | | | | | 448,500 | | | | | | — | | | | | | 172,606 | | | | | | 1,456,346 | | | ||
| | | | 2020 | | | | | | 88,461 | | | | | | — | | | | | | 749,993 | | | | | | 749,999 | | | | | | 26,000 | | | | | | — | | | | | | — | | | | | | 1,614,453 | | | ||
Kimberley E. Honeysett SVP, CLO, GC and Corporate Secretary | | | | | 2022 | | | | | | 373,077 | | | | | | 142 | | | | | | 287,478 | | | | | | 287,495 | | | | | | 263,000 | | | | | | — | | | | | | 12,523 | | | | | | 1,223,715 | | |
| | | | 2021 | | | | | | 349,493 | | | | | | 200 | | | | | | 262,494 | | | | | | 262,495 | | | | | | 262,500 | | | | | | — | | | | | | 10,769 | | | | | | 1,147,951 | | | ||
| | | | 2020 | | | | | | 331,338 | | | | | | — | | | | | | 259,996 | | | | | | 259,991 | | | | | | 88,647 | | | | | | — | | | | | | 9,631 | | | | | | 949,603 | | | ||
Brian W. Giambattista SVP and General Manager, Detectors | | | | | 2022 | | | | | | 372,965 | | | | | | — | | | | | | 262,490 | | | | | | 262,498 | | | | | | 219,000 | | | | | | — | | | | | | 10,200 | | | | | | 1,127,153 | | |
| | | | 2021 | | | | | | 349,513 | | | | | | — | | | | | | 262,494 | | | | | | 262,495 | | | | | | 262,135 | | | | | | — | | | | | | 10,754 | | | | | | 1,147,391 | | | ||
| | | | 2020 | | | | | | 334,200 | | | | | | — | | | | | | 262,476 | | | | | | 262,498 | | | | | | 63,032 | | | | | | — | | | | | | 11,391 | | | | | | 933,597 | | | ||
Andrew J. Hartmann(8) SVP, Medical Global Sales and Marketing | | | | | 2022 | | | | | | 376,812 | | | | | | 1,418 | | | | | | 262,490 | | | | | | 262,498 | | | | | | 211,000 | | | | | | — | | | | | | 10,849 | | | | | | 1,125,067 | | |
| | | | 2021 | | | | | | 349,520 | | | | | | 200 | | | | | | 262,494 | | | | | | 262,495 | | | | | | 260,964 | | | | | | — | | | | | | 8,066 | | | | | | 1,143,739 | | | ||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | Option Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation(4) ($) | Total ($) | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sunny S. Sanyal | 2019 | 620,000 | 468 | (5) | 1,052,444 | 1,052,444 | 403,000 | — | 36,765 | 3,165,121 | ||||||||||||||||||
President and Chief Executive | 2018 | 615,769 | — | 1,052,416 | 1,052,448 | 256,665 | — | 24,134 | 3,001,432 | |||||||||||||||||||
Officer | 2017 | 567,408 | — | 1,164,008 | 4,160,806 | 630,000 | — | 37,414 | 6,559,636 | |||||||||||||||||||
Clarence R. Verhoef | 2019 | 385,875 | 198 | (5) | 270,086 | 270,106 | 139,440 | — | 26,500 | 1,092,205 | ||||||||||||||||||
SVP and Chief Financial | 2018 | 383,575 | 714 | (5) | 270,088 | 270,107 | 71,652 | — | 28,906 | 1,025,042 | ||||||||||||||||||
Officer | 2017 | 361,114 | — | 300,015 | 1,057,403 | 247,500 | — | 123,439 | 2,089,471 | |||||||||||||||||||
Brian W. Giambattista | 2019 | 339,993 | 1,487 | (5) | 178,466 | 178,488 | 142,800 | — | 17,750 | 858,964 | ||||||||||||||||||
SVP and General Manager—X-Ray Detectors | 2018 | 337,966 | — | 178,488 | 178,485 | 83,522 | �� | 14,970 | 793,431 | |||||||||||||||||||
Kimberley E. Honeysett | 2019 | 334,425 | 462 | (5) | 175,544 | 175,564 | 126,390 | — | 20,400 | 832,785 | ||||||||||||||||||
SVP, General Counsel and | 2018 | 332,433 | 208 | (5) | 163,834 | 163,864 | 77,959 | — | 20,504 | 758,802 | ||||||||||||||||||
Corporate Secretary | 2017 | 310,491 | 25,000 | 162,486 | 487,500 | 178,750 | — | 352,515 | 1,516,742 | |||||||||||||||||||
Mark S. Jonaitis | 2019 | 324,135 | 196 | (5) | 170,171 | 170,163 | 93,740 | — | 19,255 | 777,660 | ||||||||||||||||||
SVP and General Manager—X-Ray Sources | ||||||||||||||||||||||||||||
(1)- (2)
| Name | | | Company Contributions to 401(k)(a) | | | Other(b) | | ||||||
| Sunny S. Sanyal | | | | $ | 9,685 | | | | | $ | 20,000 | | |
| Shubham Maheshwari | | | | $ | 10,939 | | | | | $ | 57,142 | | |
| Kimberley E. Honeysett | | | | $ | 12,523 | | | | | $ | 0 | | |
| Brian W. Giambattista | | | | $ | 10,200 | | | | | $ | 0 | | |
| Andrew J. Hartmann | | | | $ | 7,454 | | | | | $ | 3,395 | | |
Name | Company Contributions to 401(k)(a) | Other(b) | |||||
|---|---|---|---|---|---|---|---|
Sunny S. Sanyal | $ | 16,500 | $ | 20,265 | |||
Clarence R. Verhoef | $ | 16,500 | $ | 10,000 | |||
Brian W. Giambattista | $ | 16,500 | $ | 1,250 | |||
Kimberley E. Honeysett | $ | 16,500 | $ | 3,900 | |||
Mark S. Jonaitis | $ | 16,500 | $ | 2,755 | |||
(a)
(a)- Amount represents Company matching contributions to the
NEO'sNEO’s contributions to theCompany'sCompany’s 401(k) plan during the fiscal year, matched at a level of $1.00 for each dollar contributed, up to6%4% of eligible earnings.
(5)Represents a years of service award for Mr. Sanyal and a wellness appreciation cash bonus award given to, Ms. Honeysett. Through the Company's internal discretionary spot bonus program, Messrs. Verhoef and Jonaitis received recognition.
| | | | Grant Date | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | All other Stock Awards: # of Shares of RSUs(2) | | | All Other Option Awards: # of Securities Underlying Options(3) | | | Exercise or Base Price of Option Awards | | | Grant Date Fair Value of Stock and Option Awards(4) | | ||||||||||||||||||||||||||||||
| Name | | | Threshold(1) | | | Target(1) | | | Maximum(1) | | |||||||||||||||||||||||||||||||||||||||
| Sunny S. Sanyal | | | | | — | | | | | $ | 221,400 | | | | | $ | 738,000 | | | | | $ | 1,476,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | 12/10/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | 53,304 | | | | | | — | | | | | | — | | | | | $ | 1,499,975 | | |
| | | | | | 12/10/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 124,275 | | | | | $ | 30.95 | | | | | $ | 1,499,999 | | |
| Shubham Maheshwari | | | | | — | | | | | $ | 92,430 | | | | | $ | 308,100 | | | | | $ | 616,200 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | 12/10/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,125 | | | | | | — | | | | | | — | | | | | $ | 397,478 | | |
| | | | | | 12/10/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 32,932 | | | | | $ | 30.95 | | | | | $ | 397,489 | | |
| Kimberley E. Honeysett | | | | | — | | | | | $ | 62,700 | | | | | $ | 209,000 | | | | | $ | 418,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | 12/10/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | 10,216 | | | | | | — | | | | | | — | | | | | $ | 287,478 | | |
| | | | | | 12/10/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 23,819 | | | | | $ | 30.95 | | | | | $ | 287,495 | | |
| Brian W. Giambattista | | | | | — | | | | | $ | 62,700 | | | | | $ | 209,000 | | | | | $ | 418,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | 12/10/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,328 | | | | | | — | | | | | | — | | | | | $ | 262,490 | | |
| | | | | | 12/10/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 21,478 | | | | | $ | 30.95 | | | | | $ | 262,498 | | |
| Andrew J. Hartmann | | | | | — | | | | | $ | 63,525 | | | | | $ | 211,750 | | | | | $ | 423,500 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | 12/10/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,328 | | | | | | — | | | | | | — | | | | | $ | 262,490 | | |
| | | | | | 12/10/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 21,478 | | | | | $ | 30.95 | | | | | $ | 262,498 | | |
| | | | | | | All Other Option Awards: # of Securities Underlying Options(3) | | | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | All other Stock Awards: # of Shares of RSUs(2) | Exercise or Base Price of Option Awards | Grant Date Fair Value of Stock and Option Awards(4) | ||||||||||||||||||||
| | Grant Date | ||||||||||||||||||||||||
Name | Threshold(1) | Target(1) | Maximum(1) | ||||||||||||||||||||||
Sunny S. Sanyal | $ | 232,500 | $ | 620,000 | $ | 1,240,000 | |||||||||||||||||||
| 2/15/2019 | 33,496 | $ | 1,052,444 | ||||||||||||||||||||||
| 2/15/2019 | 103,282 | $ | 31.42 | $ | 1,052,444 | ||||||||||||||||||||
Clarence R. Verhoef | $ | 86,822 | $ | 231,525 | $ | 463,050 | |||||||||||||||||||
| 2/15/2019 | 8,596 | $ | 270,086 | ||||||||||||||||||||||
| 2/15/2019 | 26,507 | $ | 31.42 | $ | 270,106 | ||||||||||||||||||||
Brian W. Giambattista | $ | 63,749 | $ | 169,996 | $ | 339,993 | |||||||||||||||||||
| 2/15/2019 | 5,680 | $ | 178,466 | ||||||||||||||||||||||
| 2/15/2019 | 17,516 | $ | 31.42 | $ | 178,488 | ||||||||||||||||||||
Kimberley E. Honeysett | $ | 62,705 | $ | 167,213 | $ | 334,425 | |||||||||||||||||||
| 2/15/2019 | 5,587 | $ | 175,544 | ||||||||||||||||||||||
| 2/15/2019 | 17,229 | $ | 31.42 | $ | 175,564 | ||||||||||||||||||||
Mark S. Jonaitis | $ | 63,669 | $ | 162,068 | $ | 324,135 | |||||||||||||||||||
| 2/15/2019 | 5,416 | $ | 170,171 | ||||||||||||||||||||||
| 2/15/2019 | 16,699 | $ | 31.42 | $ | 170,163 | ||||||||||||||||||||
- (1)These columns represent the potential awards under our MIP for fiscal year
20192022 as further discussed in"—“— Compensation Discussion andAnalysis—Analysis — FiscalYear 2019year 2022 Compensation Program and PayDecisions—Decisions — Annual CashIncentives"Incentives”. The Threshold level represents the award that would be paid upon attainment of the minimum achievement level with a payout. Below such performance level, no bonus is earned. The dollar value of the actual bonus award earned for fiscal year20192022 for each NEO is set forth in the Summary Compensation Table (refer to"—“— Summary CompensationTable"Table” above). As such, the amounts set forth in this column do not represent the actual compensation earned by any of the NEOs for fiscal year2019.2022.(2)(2)Each RSU award was granted under the20172020 Stock Plan and vestsin four equal annual increments beginning50% onFebruary 15, 2020.December 10, 2023 and 50% on December 10, 2025. Vesting will occur only if the NEO is employed by the Company or an affiliate through each vesting date, except in cases involving death, disability, or termination without cause or for good reason in the change of control context. Additionally, such awards will accelerate in the event of certain corporate transactions if such awards are not assumed, continued, or substituted. See"—“— Potential Payments Upon Termination or Change in Control."”(3)(3)Each stock option award was granted under the20172020 Stock Planatwith an exercise price equal to 110% of the closing price(fair market value)of the underlying shares on the grant date and will expireseventen years from the grant date unless NEO employment with the Company or an affiliate terminates earlier.One-fourthOne fourth of the stock option grant vests onFebruary 15, 2020December 10, 2022 and the remainder vests monthly during the following 36-month period. Vesting will occur only if the NEO is employed by the Company or an affiliate through each vesting date, except in cases involving death, disability, or termination without cause or good reason in the change of control context. Additionally, such awards will accelerate in the event of certain corporate transactions if such awards are not assumed, continued, or substituted. See"—“— Potential Payments Upon Termination or Change in Control."”(4)(4)This column represents the aggregate grant date fair value of RSU and stock option grants to the NEOs computed in accordance with ASC 718. The grant date fair value for RSU awards granted in fiscal year20192022 was determined using the closing price ofthe Company'sour common stock on the grant date multiplied by the number of shares subject to the award. The assumptions used to calculate the grant date fair value of each stock option grant are set forth under the Notes to Consolidated Financial Statements included in theCompany'sCompany’s Annual Report on Form 10-K for fiscal year2019.2022. These amounts reflect our calculation of the value of these awards, and do not necessarily correspond to the actual value that may ultimately be realized by the NEOs.
The following table sets forth the outstanding equity awards of the NEOs as of the end of fiscal year2019:2022:Name Grant
Date Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)(1) Option
Exercise
Price
($)(2) Option
Expiration
Date Number of
Shares
or Units
of Stock
That
Have Not
Vested
(#)(1) Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(3) Sunny S. Sanyal 2/12/2016 80,280(4) — $ 25.17 2/12/2023 — — 2/16/2017 12,467(5) — $ 31.08 2/16/2024 — — 2/16/2017 34,889(6) — $ 31.08 2/16/2024 — — 2/16/2017 34,254(6) — $ 31.08 2/16/2024 — — 2/16/2017 396,525(7) — $ 31.08 2/16/2024 — — 2/15/2018 89,115(9) — $ 37.10 2/15/2025 — — 2/15/2019 92,523(11) 10,759(11) $ 31.42 2/15/2026 — �� — 2/18/2020 111,862(12) 61,344(12) $ 28.12 2/15/2030 — — 2/16/2021 65,688(14) 100,262(14) $ 25.06 2/16/2031 — — 12/10/2021 — 124,275(16) $ 30.95 12/10/2031 — — NameGrant
DateNumber
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)(1)Option
Exercise
Price
($)(2)Option
Expiration
DateNumber
of
Shares
or Units
of Stock
That Have
Not Vested
(#)(1)Market
Value
of Shares
or Units
of Stock
That
Have
Not Vested
($)(3)Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units
or Other
rights
That
Have
Not Vested
(#)Equity
Incentive
Plan
Awards;
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($)Sunny S. Sanyal
2/21/2014 111,330 (5) — 27.77 2/21/2021 — — — — 2/13/2015 70,503 (6) — 30.74 2/13/2022 — — — — 2/12/2016 80,280 (7) — 25.17 2/12/2023 — — — — 2/16/2017 12,467 (8) — 31.08 2/16/2024 — — — — 2/16/2017 34,889 (9) — 31.08 2/16/2024 — — — — 2/16/2017 34,254 (9) — 31.08 2/16/2024 — — — — 2/16/2017 256,089 (10) 140,436 (10) 31.08 2/16/2024 — — — — 2/15/2018 35,274 (12) 53,841 (12) 37.10 2/15/2025 — — — — 2/15/2019 — 103,282 (13) 31.42 2/15/2026 — — — — 2/16/2017 18,726 (14) 529,571 — — 2/15/2018 21,276 (16) 601,685 2/15/2019 33,496 (17) 947,267 — — 635,086 297,559 73,498 2,078,523 — — Clarence R. Verhoef
11/9/2012
21,047
(4)
—
$
22.84
11/9/2019
—
—
—
—2/21/2014 22,063 (5) — $ 27.77 2/21/2021 — — — — 2/13/2015 27,116 (6) — $ 30.74 2/13/2022 — — — — 2/12/2016 47,786 (7) — $ 25.17 2/12/2023 — — — — 2/16/2017 4,795 (8) — $ 31.08 2/16/2024 — — — — 2/16/2017 14,537 (9) — $ 31.08 2/16/2024 — — — — 2/16/2017 66,002 (10) 36,195 (10) $ 31.08 2/16/2024 — — — — 2/15/2018 9,053 (12) 13,818 (12) $ 37.10 2/15/2025 — — — — 2/15/2019 — 26,507 (13) $ 31.42 2/15/2026 — — — — 2/16/2017 4,827 (14) 136,508 — — 2/15/2018 5,460 (16) 154,409 2/15/2019 8,596 (17) 243,095 — — 212,399 76,520 18,883 534,012 — — Brian W. Giambattista
5/25/2017
21,792
(11)
15,567
(11)
$
34.13
5/15/2024
—
—
—2/15/2018 5,982 (12) 9,131 (12) $ 37.10 2/15/2025 — — — 2/15/2019 — 17,516 (13) $ 31.42 2/15/2026 — — — 5/25/2017 1,725 (15) 48,783 — — 2/15/2018 3,609 (16) 102,063 — — 2/15/2019 5,680 (17) 160,630 27,774 42,214 11,014 311,476 — — Kimberley E. Honeysett
2/12/2016
9,189
(7)
—
$
25.17
2/12/2023
—
—
—
—2/16/2017 35,751 (10) 19,606 (10) $ 31.08 2/16/2024 — — — — 2/15/2018 5,492 (12) 8,383 (12) $ 37.10 2/15/2025 — — — — 2/15/2019 — 17,229 (13) $ 31.42 2/15/2026 — — — — 2/16/2017 2,614 (14) 73,924 — — 51NameGrant
DateNumber
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)(1)Option
Exercise
Price
($)(2)Option
Expiration
DateNumber
of
Shares
or Units
of Stock
That Have
Not Vested
(#)(1)Market
Value
of Shares
or Units
of Stock
That
Have
Not Vested
($)(3)Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units
or Other
rights
That
Have
Not Vested
(#)Equity
Incentive
Plan
Awards;
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($)2/15/2018 3,312 (16) 93,663 2/15/2019 5,587 (17) 158,000 — — 50,432 45,218 11,513 325,588 — — Mark S. Jonaitis
11/9/2012
13,530
(4)
—
$
22.84
11/9/2019
—
—
—
—2/21/2014 13,790 (5) — $ 27.77 2/21/2021 — — — — 2/13/2015 12,472 (6) — $ 30.74 2/13/2022 — — — — 2/12/2016 14,703 (7) — $ 25.17 2/12/2023 — — — — 2/16/2017 41,581 (10) 22,803 (10) $ 31.08 2/16/2024 — — — — 2/15/2018 5,703 (12) 8,706 (12) $ 37.10 2/15/2025 — — — — 2/15/2019 — 16,699 (13) $ 31.42 2/15/2026 — — — — 2/16/2017 3,041 (14) 85,999 — — 2/15/2018 3,440 (16) 97,283 2/15/2019 5,416 (17) 153,164 — — 101,779 48,208 11,897 336,446 — — Name Grant
Date Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)(1) Option
Exercise
Price
($)(2) Option
Expiration
Date Number of
Shares
or Units
of Stock
That
Have Not
Vested
(#)(1) Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(3) 2/15/2019 — — — — 8,374(17) 177,026 2/18/2020 — — — — 30,223(18) 638,914 2/16/2021 — — — — 67,822(20) 1,433,757 12/10/2021 53,304(22) 1,126,847 Total 917,603 296,640 159,723 3,376,544 Shubham Maheshwari 10/02/2020 83,824(13) 77,120(13) $ 13.61 8/15/2030 — — 05/21/2021 5,868(15) 11,737(15) $ 27.95 5/21/2031 — — 12/10/2021 — 32,932(16) $ 30.95 12/10/2031 — — 10/02/2020 — — — — 30,315(19) 640,859 05/21/2021 — — — — 7,378(21) 155,971 12/10/2021 — — — — 14,125(22) 298,603 Total 89,692 121,789 51,818 1,095,433 Kimberley E. Honeysett 2/12/2016 9,189(4) — $ 25.17 2/12/2023 — — 2/16/2017 55,357(7) — $ 31.08 2/16/2024 — — 2/15/2018 13,875(9) $ 37.10 2/15/2025 — — 2/15/2019 15,434(11) 1,795(11) $ 31.42 2/15/2026 — — 2/18/2020 18,824(12) 10,323(12) $ 28.12 2/15/2030 — — 2/16/2021 11,159(14) 17,036(14) $ 25.06 2/16/2031 — — 12/10/2021 — 23,819(16) $ 30.95 12/10/2031 — — 2/15/2019 — — — — 1,397(17) 29,533 2/18/2020 — — — — 5,086(18) 107,518 2/16/2021 — — — — 11,523(20) 243,596 12/10/2021 — �� — — — 10,216(22) 215,966 Total 123,838 52,973 28,222 596,613 Brian W. Giambattista 5/25/2017 37,359(8) — $ 34.13 5/15/2024 — — 2/15/2018 15,113(9) — $ 37.10 2/15/2025 — — 2/15/2019 15,691(11) 1,825(11) $ 31.42 2/15/2026 — — 2/18/2020 19,005(12) 10,423(12) $ 28.12 2/15/2030 — — 2/16/2021 11,159(14) 17,036(14) $ 25.06 2/16/2031 — — 12/10/2021 — 21,748(16) $ 30.95 12/10/2031 — — 2/15/2019 — — — — 1,420(17) 30,019 2/18/2020 — — — — 5,135(18) 108,554 2/16/2021 — — — — 11,523(20) 243,596 12/10/2021 — — — — 9,328(22) 197,194 Total 98,327 51,032 27,406 579,363 Andrew J. Hartmann 8/24/2018 30,237(10) — $ 31.14 8/15/2025 — — 2/15/2019 26,900(11) 3,129(11) $ 31.42 2/15/2026 — — 2/18/2020 19,005(12) 10,423(12) $ 28.12 2/15/2030 — — 2/16/2021 11,159(14) 17,036(14) $ 25.06 2/16/2031 — — 12/10/2021 — 21,748(16) $ 30.95 12/10/2031 — — 2/15/2019 — — — — 1,623(17) 34,310 2/18/2020 — — — — 5,135(18) 108,554 2/16/2021 — — — — 11,523(20) 243,596 12/10/2021 — — — — 9,328(22) 197,194 Total 87,301 52,336 27,609 583,654 52
(1)For stock options and RSU awards reflected in these columns, vesting will occur only if the NEO is employed by the Company or an affiliate through each vesting date, except in cases involving death, disability, or termination without cause or for good reason in the change of control context.In addition, unvested stock option and RSU awards originally granted by Varian will continue to vest according to the original vesting schedule if the NEO terminates his or her employment due to retirement.Additionally, such awards will accelerate in the event of certain corporate transactions if such awards are not assumed, continued or substituted. See"Potential“Potential Payments Upon Termination or Change in Control."”(2)(2)All stockStock option awards prior to 2020 are granted at an exercise price equal to the fair market value(i.e.(i.e., the closing price) of the underlying shares ofthe Company'sour common stock on the date of grant. Starting in 2020, stock option awards are granted at an exercise price of fair market value plus a 10% premium on the date of the grant.(3)(3)This column is based on the closing price ofthe Company'sour common stock as of September27, 201930, 2022 ($28.28)21.14).(4)(4)TheseThis stockoptions fully vested on 11/11/2015 based on a vesting schedule that provided for 331/3% vesting on 11/9/2013option award was originally granted by Varian Medical Systems, Inc. (“Varian”) andpro rata monthly vesting thereafter.*(5)Thesecovered shares of Varian’s common stockoptions fully vested on 2/21/2017 based on a vesting schedule that provided for 331/3% vesting on 2/21/2015 and pro rata monthly vesting thereafter.*(6)Thesebut was converted into an option award covering shares of the Company’s common stockoptions fully vested on 2/13/2018 based on a vesting schedule that provided for 331/3% vesting on 2/13/2016 and pro rata monthly vesting thereafter.*in connection with the spin-off of the Company from Varian (the “Spin-off”).(5)(7)These stock options fully vested on 2/12/2019 based on a vesting schedule that provided for 331/3% vesting on 2/12/2017 and pro rata monthly vesting thereafter.*(8)These stock options fully vested on 2/16/2018 based on a vesting schedule that provided for 100% vesting on such date.(6)(9)These stock options fully vested on 2/16/2019 based on a vesting schedule thatprovidedprovides for 100% vesting on such date.(7)(10)These stock optionsare scheduled tofullyvestvested on 2/16/2021 based on a vesting schedule that provides for 25% vesting on 2/16/2018 and pro rata monthly vesting thereafter.(8)(11)ThisThese stockoption is scheduled tooptions fullyvestvested on 5/25/2021 based on a vesting schedule that provides for 25% vesting on 5/25/2018 and pro rata monthly vesting thereafter.(9)(12)These stock optionsare scheduled tofullyvestvested on 2/15/2022 based on a vesting schedule that provides for 25% vesting on 2/15/2019 and pro rata monthly vesting thereafter.(10)These stock options fully vested on 8/15/2022 based on a vesting schedule that provides for 25% vesting on 8/15/2019 and pro rata monthly vesting thereafter.(11)(13)These stock options are scheduled to fully vest on 2/15/2023 based on a vesting schedule that provides for 25% vesting on 2/15/2020 and pro rata monthly vesting thereafter.(12)These stock options are scheduled to fully vest on 2/15/2024 based on a vesting schedule that provides for 25% vesting on 2/15/2021 and pro rata monthly vesting thereafter.- These stock options are scheduled to fully vest on 8/15/2024 based on a vesting schedule that provides for 25% vesting on 8/15/2021 and pro rata monthly vesting thereafter.
(14)These stock options are scheduled to fully vest on 2/15/2025 based on a vesting schedule that provides for 25% vesting on 2/15/2022 and pro rata monthly vesting thereafter.(15)These stock options are scheduled to fully vest on 5/15/2025 based on a vesting schedule that provides for 25% vesting on 5/15/2022 and pro rata monthly vesting thereafter.(16)These stock options are scheduled to fully vest on 12/10/2025 based on a vesting schedule that provides for 25% vesting on 12/10/2022 and pro rata monthly vesting thereafter.(17)The unvested portion of this RSU award is scheduled to vestas follows: 25%on 02/15/2020 and the remaining 25% on 02/15/2021.2023.(18)(15)The unvested portion ofthisthese RSUawardawards is scheduled to vest on 02/15/2024.(19)The unvested portion of these RSU awards is scheduled to vest on 08/15/2024.(20)The unvested portion of these RSU awards is scheduled to vest as follows:25%50% on05/25/202002/15/2023 and the remaining25%50% on05/25/2021.02/15/2025.(21)(16)The unvested portion ofthisthese RSUawardawards is scheduled to vest as follows:25% vests50% on02/05/15/2020; 25% on 02/15/20212023 and the remaining25%50% on02/05/15/2022.2025.(22)(17)The unvested portion ofthisthese RSUawardawards is scheduled to vest as follows:25%50% on02/15/2020; 25% on 02/15/2021, 25% on 02/15/202212/10/2023 and the remaining25%50% on02/15/2023.12/10/2025.53*This stock option award was originally granted by Varian and covered shares of Varian's common stock but was converted into a stock option award covering shares of the Company's common stock in connection with the Spin-off.Option Exercises and Stock VestedThe following table sets forth the number of shares of theCompany'sCompany’s common stock acquired by NEOs through stock option exercises and vesting of RSUs during fiscal year2019.2022. In addition, the table presents the value realized upon such exercises or vesting, as calculated, in the case of stock options, based on the difference between the market price of theCompany'sCompany’s common stock at exercise and the option exercise price and, in the case of RSUs, based on the closing price per share of theCompany'sCompany’s common stock on the vesting date. Option Awards Stock Awards Name Number of
Shares
Acquired on
Exercise Value
Realized
Upon
Exercise Number of
Shares
Acquired on
Vesting Value
Realized
on Vesting Sunny S. Sanyal 70,503 $ 98,241 45,689 $ 1,072,321 Shubham Maheshwari — — 30,315 $ 676,328 Kimberley E. Honeysett — — 7,587 $ 178,067 Brian W. Giambattista — — 7,757 $ 182,057 Andrew J. Hartmann — — 8,395 $ 195,131 Option Awards Stock Awards NameNumber of Shares
Acquired on ExerciseValue Realized
Upon ExerciseNumber of Shares
Acquired on VestingValue Realized
on VestingSunny S. Sanyal
— — 19,210 $ 603,578 Clarence R. Verhoef
— — 7,104 $ 223,208 Brian W. Giambattista
— — 2,065 $ 62,932 Kimberley E. Honeysett
— — 3,516 $ 110,473 Mark S. Jonaitis
— — 4,433 $ 139,285 The following table sets forth contributions, earnings and distributions during fiscal year2019,2022, and account balances as of September27, 201930, 2022 for each of the NEOs under (i) our nonqualified DCP and (ii) the now frozen deferred compensation planthatin which they participatedinat Varian prior to theSpin off:Spin-off:Name Plan Executive
Contributions
in Last Fiscal
Year(1) Registrant
Contributions
in Last Fiscal
Year(2) Aggregate
Earnings
in Last Fiscal
Year(3) Aggregate
Withdrawals/
Distributions Aggregate
Balance at
Last Fiscal
Year End(4) Sunny S. Sanyal DCP $ 17,160 — $ 9,576 $ (137,773) $ 52,446 Frozen DCP — — $ (35,160) — $ 83,569 Kimberley E.
Honeysett Frozen DCP — — $ 303 — $ 23,794 Brian W. Giambattista DCP $ 55,538 — $ (38,693) — $ 298,570 NamePlan Executive
Contributions
in Last Fiscal
Year(1)Registrant
Contributions
in Last Fiscal
Year(2)Aggregate
Earnings in
Last Fiscal
Year(3)Aggregate
Withdrawals/
DistributionsAggregate
Balance at
Last Fiscal
Year EndSunny S. Sanyal
DCP $ 16,692 — $ 6,315 — $ 147,154 Frozen DCP — — $ 4,165 $ 110,530 Clarence R. Verhoef
DCP $ 115,762 — $ 8,520 — $ 341,948 Frozen DCP — — $ 10,460 — $ 547,093 Brian W. Giambattista
DCP $ 45,768 — $ 11,745 — $ 183,883 Kimberley E. Honeysett
Frozen DCP — — $ 512 — $ 23,429 Mark S. Jonaitis
Frozen DCP — — $ 4,956 — $ 1,187,234
(1)(1)- These amounts represent the respective executive contributions attributable to fiscal year
2019,2022, which were included in the"Salary"“Salary” column of the Summary Compensation Table for fiscal2019.year 2022.
(2)(2)There were no Company contributions.(3)(3)- None of the earnings in this column are included in the Summary Compensation Table (refer to
"—“— Summary CompensationTable"Table” above) because they were not preferential or above market.
(4)Balance at last fiscal year end includes the following amounts reported as compensation to the NEOs in the Summary Compensation Table for fiscal years prior to fiscal year 2022: Mr. Sanyal: $124,807 and Mr. Giambattista: $249,680.In October 2016, the Board approved the DCP and it became effectivebeginning with deferral elections made by eligible participants during the open enrollment period commencing November 1, 2016.for 2017 compensation. In addition, the DCP assumed certain deferred compensation obligations from the Varian Medical Systems, Inc. 2005 Deferred Compensation Plan in connection with the Spin-off.The CompanyWe alsomaintainsmaintain the Varex Imaging Corporation Frozen Deferred Compensation Plan (the"Frozen DCP"“Frozen DCP”), which assumed certain pre-Spin-off deferred compensation obligations from the Varian Frozen Deferred Compensation Plan.NoSince the Spin-off, no deferrals have been made under the Frozen DCP.The DCP is designed to allow a select group of management and highly compensated employees, including its executive officers, to defer receipt of a specified percentage of their base salaries (up to 50%) and to allow its non-employee directors to defer receipt of their director fees (up to 100%). Further,the Companywe may54
if we terminate the Company terminates the NEO'sNEO’s employment other than by reason of death, disability, retirement or "cause"“cause”, or if the NEO voluntarily terminates for "good reason"“good reason”, in either case, within 60 days prior to, or 18 months following, a change in control of the Company, then the NEO will be entitled to:
Post-Spin-Off Equity Grants
The NEOs'NEOs’ equity agreements under the 2017 Stock Plan provide that if the applicable NEO'sNEO’s employment terminates due to death or disability, his or her unvested stock option and RSU awards will fully vest upon such termination. StockVested stock options granted in 2017-19 may be exercisable for up to three years from the date his or her employment terminates due to death and one year from the date his or her employment terminates due to disability, unless in each case the stock option term expires earlier.
Stock options granted under the 2020 Stock Plan, once vested, remain exercisable for up to one year upon a disability and for the remainder of the option term in the instance of a retirement or death.
upon retirement.
Potential Payments upon Termination of Employment in Connection with a Change in Control
| Name | | | Cash Severance | | | Benefit Continuation | | | Options(1) | | | RSUs(1) | | | Total | | |||||||||||||||
| Sunny S. Sanyal | | | | $ | 3,690,000 | | | | | $ | 26,632 | | | | | $ | 0 | | | | | $ | 3,376,544 | | | | | $ | 7,093,176 | | |
| Shubham Maheshwari | | | | $ | 1,564,200 | | | | | $ | 0 | | | | | $ | 1,211,908 | | | | | $ | 1,095,433 | | | | | $ | 3,871,541 | | |
| Kimberley E. Honeysett | | | | $ | 1,178,000 | | | | | $ | 26,632 | | | | | $ | 0 | | | | | $ | 596,613 | | | | | $ | 1,801,245 | | |
| Brian W. Giambattista | | | | $ | 1,178,000 | | | | | $ | 18,872 | | | | | $ | 0 | | | | | $ | 579,363 | | | | | $ | 1,776,235 | | |
| Andrew J. Hartmann | | | | $ | 1,193,500 | | | | | $ | 18,872 | | | | | $ | 0 | | | | | $ | 583,654 | | | | | $ | 1,796,026 | | |
Name | Cash Severance | Benefit Continuation | Options(1)(2) | RSUs(1) | Total | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sunny S. Sanyal | $ | 3,100,000 | $ | 31,387 | $ | 306,449 | $ | 2,078,523 | $ | 5,516,359 | ||||||
Clarence R. Verhoef | $ | 1,234,800 | $ | 27,658 | $ | 274,362 | $ | 534,011 | $ | 2,070,831 | ||||||
Brian W. Giambattista | $ | 1,019,979 | $ | 22,114 | $ | 0 | $ | 369,874 | $ | 1,411,967 | ||||||
Kimberley E. Honeysett | $ | 1,003,275 | $ | 31,387 | $ | 28,578 | $ | 325,588 | $ | 1,388,828 | ||||||
Mark S. Jonaitis | $ | 972,405 | $ | 39,274 | $ | 126,362 | $ | 336,447 | $ | 1,474,488 | ||||||
(1)
(1)- Represents the intrinsic value of accelerated equity awards based on
the Company'sour closing stock price as of September27, 201930, 2022 ($28.28)21.14). (2)Includes options originally granted by Varian that were converted to Varex options.
| Name | | | Options(1) | | | RSUs(1) | | | Total | | |||||||||
| Sunny S. Sanyal | | | | $ | 0 | | | | | $ | 3,376,544 | | | | | $ | 3,376,544 | | |
| Shubham Maheshwari | | | | $ | 1,211,908 | | | | | $ | 1,095,433 | | | | | $ | 2,307,341 | | |
| Kimberley E. Honeysett | | | | $ | 0 | | | | | $ | 596,613 | | | | | $ | 596,613 | | |
| Brian W. Giambattista | | | | $ | 0 | | | | | $ | 579,363 | | | | | $ | 579,363 | | |
| Andrew J. Hartmann | | | | $ | 0 | | | | | $ | 583,654 | | | | | $ | 583,654 | | |
Name | Options(1)(2) | RSUs(1)(2) | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Sunny S. Sanyal | $ | 306,449 | $ | 2,078,523 | $ | 2,384,972 | ||||
Clarence R. Verhoef | $ | 274,362 | $ | 534,011 | $ | 808,373 | ||||
Brian W. Giambattista | $ | 0 | $ | 369,874 | $ | 369,874 | ||||
Kimberley E. Honeysett | $ | 28,578 | $ | 325,588 | $ | 354,166 | ||||
Mark S. Jonaitis | $ | 126,362 | $ | 336,447 | $ | 462,809 | ||||
(1)
(1)- Represents the intrinsic value of accelerated equity awards based on
the Company'sour closing stock price as of September27, 201930, 2022 ($28.28)21.14). (2)Includes options originally granted by Varian that were converted to Varex options.
After a competitive
| Component | | | ||
| Description | | |||
| Annual Retainer | | | • $65,000 in cash, payable in equal quarterly installments in arrears, and pro-rated for any partial year of | |
Non-Executive Board Chair | | | • Additional $40,000 in cash, payable in equal quarterly installments in arrears, and pro-rated for any partial year of | |
Committee Member Retainer | | | | |
| | | • $15,000 in cash | | |
| | | • $8,000 in cash |
| | | |||||
| – Nominating | | | ||||
•
| | |||||
| | | | Payable in equal quarterly installments in arrears; and pro-rated for any partial year of service. | | ||
| Committee Chair Retainers | | | | | ||
| – Audit | | | • $30,000 in cash | | ||
| – Compensation | | | • $18,000 in cash | | ||
| – Nominating | | | • $15,000 in cash | | ||
| | | | Payable in equal quarterly installments in arrears, and pro-rated for any partial year of | | ||
| ||||||
| ||||||
| ||||||
Annual Equity | | | • On or about | | ||
| | | | • DSUs vest 100% after the earlier of the one-year anniversary of the grant date and the next annual meeting of stockholders that occurs after the grant date, subject to the applicable | | ||
| | | | • The DSUs will generally be settled for shares of | |
| Component | | | Description | |
Share Ownership Guidelines | | | • Each non-employee director is expected to own shares valued at five times the annual Board service retainer | |
| | | | • Shares underlying DSU awards held by the non-employee directors (whether or not vested) will be counted toward satisfaction of the | |
| | | | • Ownership levels must be achieved within five years from the date upon which an individual becomes a non-employee director; all non-employee directors have met the guidelines or are on track to do so within five years of joining the | |
Non-employee directors may elect to defer their cash retainers and/or meeting fees under our DCP, subject to the restrictions of applicable tax law. Please refer to the discussion in "—“— Nonqualified Deferred Compensation"Compensation” above for more information.
The following table sets forth the compensation received by each non-employee director during fiscal year 2019 (note that all All directors are reimbursed for reasonable out-of-pocket expenses associated with attending Board and committee meetings, and for expenses related to attending continuing directors'directors’ education programs):
| Name | | | Fees Earned or Paid in Cash | | | Stock Awards(1) | | | Nonqualified Deferred Compensation Earnings | | | All Other Compensation | | | Total | | |||||||||||||||
Kathleen L. Bardwell(2) | | | | $ | 22,000 | | | | | $ | 85,918 | | | | | | — | | | | | | — | | | | | $ | 107,918 | | |
Jocelyn Chertoff, M.D.(3) | | | | $ | 95,000 | | | | | $ | 159,983 | | | | | | — | | | | | | — | | | | | $ | 254,983 | | |
| Timothy E. Guertin | | | | $ | 80,000 | | | | | $ | 159,983 | | | | | | — | | | | | | — | | | | | $ | 239,983 | | |
Jay K. Kunkel(4) | | | | $ | 88,000 | | | | | $ | 159,983 | | | | | | — | | | | | | — | | | | | $ | 247,983 | | |
Ruediger Naumann-Etienne, PhD(5) | | | | $ | 128,000 | | | | | $ | 219,992 | | | | | | — | | | | | | — | | | | | $ | 347,992 | | |
| Walter M Rosebrough, Jr. | | | | $ | 90,000 | | | | | $ | 159,983 | | | | | | — | | | | | | — | | | | | $ | 249,983 | | |
| Christine A. Tsingos | | | | $ | 102,000 | | | | | $ | 159,983 | | | | | | — | | | | | | — | | | | | $ | 261,983 | | |
Name | Fees Earned or Paid in Cash | Stock Awards(1) | Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jocelyn Chertoff | $ | 80,000 | $ | 159,975 | — | — | $ | 239,975 | ||||||||
Jay K. Kunkel | $ | 93,500 | $ | 159,975 | — | — | $ | 253,475 | ||||||||
Ruediger Naumann-Etienne | $ | 128,000 | $ | 219,974 | — | — | $ | 347,974 | ||||||||
Erich R. Reinhardt | $ | 93,500 | $ | 159,975 | — | — | $ | 253,475 | ||||||||
Walter M Rosebrough, Jr. | $ | 85,000 | $ | 159,975 | — | — | $ | 244,975 | ||||||||
Christine A. Tsingos | $ | 99,500 | $ | 159,975 | — | — | $ | 259,475 | ||||||||
- (1)
| Name | | | Outstanding DSUs | | |||
| Kathleen L. Bardwell | | | | | 3,619 | | |
| Jocelyn D. Chertoff, M.D | | | | | 19,614 | | |
| Timothy E. Guertin | | | | | 18,294 | | |
| Jay K. Kunkel | | | | | 19,614 | | |
| Ruediger Naumann-Etienne, PhD | | | | | 26,971 | | |
| Walter M Rosebrough, Jr. | | | | | 19,614 | | |
| Christine A. Tsingos | | | | | 19,614 | | |
Name | Outstanding DSUs | |||
|---|---|---|---|---|
Jocelyn D. Chertoff, M.D | 14,097 | |||
Jay K. Kunkel | 14,558 | |||
Ruediger Naumann-Etienne | 20,017 | |||
Erich R. Reinhardt | 14,558 | (1) | ||
Walter M Rosebrough, Jr. | 8,701 | |||
Christine A. Tsingos | 14,558 | |||
(1)- In
addition, Dr. Reinhardt holds 15,074 options awarded by VarianNovember 2022, the Board modified the director compensation program such thatwere convertedcommencing in fiscal year 2023, the Non-Executive Board Chair Retainer will be reduced toVarex options at$35,000 from $40,000 and thetimeadditional annual equity award payable to the non-employee chair of theSpin-off.
company's company’s shares, if the amount involved does not exceed the greater of $1 million, or 2% of that company'scompany’s total annual revenue, and the related person is not involved in the decision-making process for such transaction;
![[MISSING IMAGE: tm2225010-px_01proxybw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-22-130273/tm2225010-px_01proxybw.jpg)
VAREX IMAGING CORPORATION2020 OMNIBUS STOCK PLAN
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A-iv
VAREX IMAGING CORPORATION2020 OMNIBUS STOCK PLAN
SECTION 1BACKGROUND AND PURPOSE
1.1 Effective Date. The Varex Imaging Corporation 2020 Omnibus Stock Plan was adopted by the Board on December 20, 2019 (the "Adoption Date"), and shall become effective on February 14, 2020 (the "Effective Date"), subject to approval by the Company's stockholders.
1.2 Purpose of the Plan. The Plan is intended to increase incentives and to encourage Share ownership on the part of (1) employees of the Company and its Affiliates, (2) consultants who provide significant services to the Company and its Affiliates, and (3) directors of the Company who are employees of neither the Company nor any Affiliate. The Plan also is intended to further the growth and profitability of the Company.
SECTION 2DEFINITIONS
The following words and phrases shall have the following meanings unless a different meaning is plainly required by the context:
2.1 "1934 Act"means the Securities Exchange Act of 1934, as amended. Reference to a specific section of the 1934 Act or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
2.2 "Adoption Date"shall have the meaning set forth in Section 1.1.
2.3 "Affiliate"means any corporation or any other entity (including, but not limited to, partnerships and joint ventures) controlling, controlled by, or under common control with the Company.
2.4 "Award"means, individually or collectively, a grant under the Plan of Non-qualified Stock Options, Incentive Stock Options, SARs, Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares.
2.5 "Award Agreement"means the written agreement, which may be electronic, setting forth the terms and provisions applicable to each Award granted under the Plan.
2.6 "Board"means the Board of Directors of the Company.
2.7 "Code"means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated thereunder, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
2.8 "Committee"means the committee appointed by the Board (pursuant to Section 3.1) to administer the Plan.
2.9 "Company"means Varex Imaging Corporation, a Delaware corporation, or any successor thereto.
2.10 "Consultant"means any consultant, independent contractor, or other person who provides significant services to the Company or its Affiliates that is a natural person, but who is neither an Employee nor a Director.
2.11 "Director" means any individual who is a member of the Board.
2.12 "Disability"means a permanent and total disability within the meaning of section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Committee in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Committee from time to time. Notwithstanding the foregoing, to the extent "Disability" is used to establish a payment event with respect to any Award subject to section 409A of the Code, "Disability" shall have the meaning set forth in section 409A of the Code and the applicable guidance issued by the Secretary of the Treasury thereunder.
2.13 "EBIT"means as to any Performance Period, the Company's or a business unit's income before reductions for interest and taxes, determined in accordance with generally accepted accounting principles.
2.14 "EBITDA"means as to any Performance Period, the Company's or a business unit's income before reductions for interest, taxes, depreciation and amortization, determined in accordance with generally accepted accounting principles.
2.15 "Earnings Per Share"means as to any Performance Period, the Company's or a business unit's Net Income, divided by a weighted average number of common shares outstanding and dilutive common equivalent shares deemed outstanding, determined in accordance with generally accepted accounting principles.
2.16 "Effective Date" shall have the meaning set forth in Section 1.1.
2.17 "Employee"means any employee of the Company or of an Affiliate, whether such employee is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan.
2.18 "Exercise Price"means the price at which a Share may be purchased by a Participant pursuant to the exercise of an Option.
2.19 "Fair Market Value"means the last quoted per share selling price for Shares on an established securities market on the relevant date, or if there were no sales on such date, the last quoted per share price for Shares on the preceding date on which there were sales of Shares. Notwithstanding the preceding, for federal, state and local income tax reporting purposes, fair market value shall be determined by the Committee in accordance with uniform and nondiscriminatory standards adopted by it from time to time.
2.20 "Fiscal Year"means the fiscal year of the Company.
2.21 "Grant Date"means, with respect to an Award, the date that the Award was granted.
2.22 "Incentive Stock Option"means an Option to purchase Shares which is designated as an Incentive Stock Option and is intended to meet the requirements of section 422 of the Code.
2.23 "Net Income"means as to any Performance Period, the Company's or a business unit's income after taxes, determined in accordance with generally accepted accounting principles.
2.24 "Net Orders"means as to any Performance Period, the Company's or a business unit's net orders calculated (and reviewed by the Company's external independent auditors in accordance with agreed standard procedures) for and reported in the Company's quarterly financial earnings press release filed by the Company on a Current Report on Form 8-K.
2.25 "Non-employee Director"means a Director who is an employee of neither the Company nor of any Affiliate.
2.26 "Non-qualified Stock Option"means an option to purchase Shares which is not intended to be an Incentive Stock Option.
2.27 "Operating Cash Flow"means as to any Performance Period, the Company's or a business unit's sum of Net Income plus depreciation and amortization less capital expenditures plus changes in working capital comprised of accounts receivable, inventories, other current assets, trade accounts payable, accrued expenses, product warranty, advance payments from customers and long-term accrued expenses, determined in accordance with generally acceptable accounting principles.
2.28 "Option"means an Incentive Stock Option or a Non-qualified Stock Option.
2.29 "Participant"means an Employee, Consultant, or Non-employee Director who has an outstanding Award.
2.30 "Performance Goals"means the goal(s) (or combined goal(s)) determined by the Committee (in its discretion) to be applicable to a Participant with respect to an Award. As determined by the Committee, the Performance Goals applicable to an Award may provide for a targeted level or levels of achievement using one or more of the following measures: (a) EBIT, (b) EBITDA, (c) Earnings Per Share, (d) Net Income, (e) Operating Cash Flow, (f) Return on Assets, (g) Return on Equity, (h) Return on Sales, (i) Revenue, (j) Shareholder Return, (k) orders or Net Orders, (l) expenses, (m) cost of goods sold, (n) profit/loss or profit margin, (o) working capital, (p) operating income, (q) cash flow, (r) market share, (s) economic value add, (t) stock price of the Company's stock, (u) price/earning ratio, (v) debt or debt-to-equity ratio, (w) accounts receivable, (x) cash, (y) write-off, (z) assets, (aa) liquidity, (bb) operations, (cc) intellectual property (e.g., patents), (dd) product development, (ee) regulatory activities, (ff) manufacturing, production or inventory, (gg) mergers, acquisitions or divestitures, (hh) financings, (ii) days sales outstanding, (jj) backlog, (kk) deferred revenue, (ll) employee headcount and (mm) other financial or strategic goals. The Performance Goals may differ from Participant to Participant and from Award to Award. The Committee shall determine whether any significant element(s) shall be included in or excluded from the calculation of any Performance Goal with respect to any Participant. Notwithstanding the previous sentence, for Awards not intended to qualify as performance-based compensation, "Determination Date" shall mean such date as the Committee may determine in its discretion.
2.31 "Performance Period"means any fiscal period, as determined by the Committee in its sole discretion.
2.32 "Performance Share"means a Performance Share granted to a Participant pursuant to Section 8.
2.33 "Performance Unit"means a Performance Unit granted to a Participant pursuant to Section 8.
2.34 "Period of Restriction"means the period during which shares of Restricted Stock are subject to forfeiture and/or restrictions on transferability.
2.35 "Plan"means the Varex Imaging Corporation 2020 Omnibus Stock Plan, as set forth in this instrument and as hereafter amended from time to time.
2.36 "Prior Plan"means the Varex Imaging Corporation 2017 Omnibus Stock Plan.
2.37 "Restricted Stock"means an Award granted to a Participant pursuant to Section 7.
2.38 "Restricted Stock Units"means a Restricted Stock Unit granted to a Participant pursuant to Section 7, which may be settled to the Participant in Shares or cash as determined by the Committee in its sole discretion.
2.39 "Retirement"means, in the case of an Employee or a Non-employee Director, "Retirement" as defined pursuant to the Company's or the Board's Retirement Policies, as they may be established
from time to time. With respect to a Consultant, no Termination of Service shall be deemed to be on account of "Retirement."
2.40 "Return on Assets"means as to any Performance Period, the percentage equal to the Company's or a business unit's EBIT before incentive compensation, divided by average net Company or business unit, as applicable, assets, determined in accordance with generally accepted accounting principles.
2.41 "Return on Equity"means as to any Performance Period, the percentage equal to the Company's Net Income divided by average stockholder's equity, determined in accordance with generally accepted accounting principles.
2.42 "Return on Sales"means as to any Performance Period, the percentage equal to the Company's or a business unit's EBIT before incentive compensation, divided by the Company's or the business unit's, as applicable, Revenue, determined in accordance with generally accepted accounting principles.
2.43 "Revenue"means as to any Performance Period, the Company's or a business unit's net sales, determined in accordance with generally accepted accounting principles.
2.44 "Rule 16b-3"means Rule 16b-3 promulgated under the 1934 Act, as amended, and any future regulation amending, supplementing or superseding such regulation.
2.45 "Section 16 Person"means a person who, with respect to the Shares, is subject to section 16 of the 1934 Act.
2.46 "Shareholder Return"means as to any Performance Period, the total return (change in share price plus reinvestment of any dividends) of a Share.
2.47 "Shares"means shares of the Company's common stock.
2.48 "Stock Appreciation Right"or"SAR"means an Award, granted alone, in connection or in tandem with a related Option, that pursuant to Section 6 is designated as a SAR.
2.49 "Subsidiary"means any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
2.50 "Substitute Awards"means any Award granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.
2.51 "Termination of Service"means (a) in the case of an Employee, a cessation of the employee-employer relationship between an Employee and the Company or an Affiliate for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, Retirement, or the disaffiliation of an Affiliate, but excluding any such termination where there is a simultaneous reemployment by the Company or an Affiliate or where there is a change in status from Employee to Non-employee Director; (b) in the case of a Consultant, a cessation of the service relationship between a Consultant and the Company or an Affiliate for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, or the disaffiliation of an Affiliate, but excluding any such termination where there is a simultaneous re-engagement of the consultant by the Company or an Affiliate or where there is a change in status from Consultant to Employee or Non-employee Director; and (c) in the case of a Non-employee Director, a cessation of the Non-employee Director's service on the Board for any reason but excluding any such termination where there is a change in status from Non-employee Director to Employee. Notwithstanding the foregoing,
to the extent that "Termination of Service" is used to establish a payment event with respect to any Award subject to section 409A of the Code, "Termination of Service" shall have the same meaning as "separation from service" as that term is defined in section 409A of the Code and the applicable guidance issued by the Secretary of the Treasury thereunder.
3.1 The Committee. The Plan shall be administered by the Committee. The Committee shall consist of not less than two (2) Directors. The members of the Committee shall be appointed from time to time by, and serve at the pleasure of, the Board. Each member of the Committee shall qualify as (a) a "non-employee director" under Rule 16b-3, and (b) an "independent director" under Nasdaq Listing Rule 5605(a)(2). If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee prior to such determination shall be valid to the extent permitted by law despite such failure to qualify.
3.2 Authority of the Committee. It shall be the duty of the Committee to administer the Plan in accordance with the Plan's provisions. The Committee shall have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (a) determine which Employees and Consultants shall be granted Awards, (b) prescribe the terms and conditions of the Awards, including the authority to accelerate the vesting of Awards (other than the terms and conditions of Awards granted to Non-employee Directors pursuant to Section 9), (c) interpret the Plan and the Awards, (d) adopt such procedures, agreements, arrangements, sub plans and terms as are necessary or appropriate to permit participation in the Plan by Employees, Consultants and Directors who are foreign nationals or employed outside of the United States, (e) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and (f) interpret, amend or revoke any such rules.
3.3 Delegation by the Committee. The Committee, in its sole discretion and on such terms and conditions as comply with applicable law, may delegate all or any part of its authority and powers under the Plan to a committee of one or more directors and/or to officers of the Company; provided, however, that the Committee may not delegate its authority and powers (a) with respect to Section 16 Persons, or (b) in any way which would jeopardize the Plan's qualification under Rule 16b-3.
3.4 Non-employee Directors. Notwithstanding any contrary provision of this Section 3, the Board shall administer Section 9 of the Plan, and the Committee shall exercise no discretion with respect to Section 9. In the Board's administration of Section 9 and the Awards and any Shares granted to Non-employee Directors, the Board shall have all of the authority and discretion otherwise granted to the Committee with respect to the administration of the Plan.
3.5 Decisions Binding. All determinations and decisions made by the Committee, the Board, and any delegate of the Committee pursuant to the provisions of the Plan shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law.
SECTION 4SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.5 and the share counting provisions provided in this Section 4, a total of 6,300,000 Shares shall be initially authorized for Awards granted under the Plan, which amount is equal to 5,097,488 new shares plus 1,202,512 shares that are available for issuance under the Prior Plan as of September 27, 2019, less one (1) Share for every one (1) Share that was subject to an option or stock appreciation right granted after September 27, 2019 and prior to the Effective Date under the Prior Plan and two (2) Shares for every one (1) Share that was subject to an award other than an option or stock appreciation right granted after
September 27, 2019 and prior to the Effective Date under the Prior Plan. Any Shares that are subject to Options or Stock Appreciation Rights shall be counted against this limit as one (1) Share for every one (1) Share granted, and any Shares that are subject to Awards other than Options or Stock Appreciation Rights shall be counted against this limit as two (2) Shares for every one (1) Share granted. On and after the Effective Date, no awards may be granted under the Prior Plan. A total of 6,300,000 Shares may be issued as Incentive Stock Options.
4.2 Lapsed Awards. If (i) any Shares subject to an Award are forfeited, an Award expires, is forfeited or is settled for cash (in whole or in part), or (ii) after September 27, 2019 any Shares subject to an award under the Prior Plan are forfeited, an award under the Prior Plan expires, is forfeited or is settled for cash (in whole or in part), then in each such case the Shares subject to such Award or award under the Prior Plan shall, to the extent of such forfeiture, expiration or cash settlement, be added to the Shares available for Awards under the Plan, in accordance with this Section 4.2. Any Shares that again become available for Awards under the Plan pursuant to this Section shall be added as (i) one (1) Share for every one (1) Share subject to Options or Stock Appreciation Rights granted under the Plan or options or stock appreciation rights granted under the Prior Plan, and (ii) as two (2) Shares for every one (1) Share subject to Awards other than Options or Stock Appreciation Rights granted under the Plan or awards other than options or stock appreciation rights granted under the Prior Plan.
4.3 Shares Not Available for Subsequent Issuance. Notwithstanding anything to the contrary contained herein, the following Shares shall not be added to the Shares authorized for grant under Section 4.1: (i) Shares tendered by the Participant or withheld by the Company in payment of the purchase price of an Option (or, after September 27, 2019, an option under the Prior Plan), (ii) Shares tendered by the Participant or withheld by the Company to satisfy any tax withholding obligation with respect to Awards (or, after September 27, 2019, awards under the Prior Plan), (iii) Shares subject to a Stock Appreciation Right (or, after September 27, 2019, a stock appreciation right under the Prior Plan) that in each case are not issued in connection with its stock settlement on exercise thereof, and (iv) Shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of Options (or, after September 27, 2019, options under the Prior Plan).
4.4 Substitute Awards. Substitute Awards shall not reduce the Shares authorized for grant under the Plan or the limitations on grants to a Participant contained in the Plan, nor shall Shares subject to a substitute Award be added to the Shares available for Awards under the Plan as provided in paragraph (b) above. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan (and Shares subject to such Awards shall not be added to the Shares available for Awards under the Plan as provided in paragraphs (b) above); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees, Consultants or Directors prior to such acquisition or combination.
4.5 Adjustments in Awards and Authorized Shares. In the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, split-up, Share combination, or other change in the corporate structure of the Company affecting the Shares, the Committee shall adjust the number and class of Shares which may be delivered under the Plan, the number, class, and price of Shares subject to outstanding Awards, and the numerical limit in Sections 5.1, 6.1., 7.1, and 8.1
in such manner as the Committee (in its sole discretion) shall determine to be appropriate to prevent the dilution or diminution of such Awards. In the case of Awards granted to Non-employee Directors, the foregoing adjustments shall be made by the Board. Notwithstanding the preceding, the number of Shares subject to any Award always shall be a whole number.
5.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to Employees and Consultants at any time and from time to time as determined by the Committee in its sole discretion. The Committee, in its sole discretion, shall determine the number of Shares subject to each Option, provided that during any Fiscal Year, no Participant shall be granted Options covering more than 500,000 Shares. The Committee may grant Incentive Stock Options, Non-qualified Stock Options, or a combination thereof. Non-Qualified Stock Options may be granted under the Plan pursuant to Section 9 to Non-employee Directors by the Board, which shall determine the terms of such Options.
5.2 Award Agreement. Each Option shall be evidenced by an Award Agreement that shall specify the Exercise Price, the expiration date of the Option, the number of Shares to which the Option pertains, any conditions to exercise of the Option, and such other terms and conditions as the Committee, in its discretion, shall determine. The Award Agreement shall specify whether the Option is intended to be an Incentive Stock Option or a Non-qualified Stock Option.
5.3 Exercise Price. Subject to the provisions of this Section 5.3, the Exercise Price for each Option shall be determined by the Committee in its sole discretion.
5.3.1 Non-qualified Stock Options. In the case of a Non-qualified Stock Option, the Exercise Price shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date.
5.3.2 Incentive Stock Options. In the case of an Incentive Stock Option, the Exercise Price shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date; provided, however, that if on the Grant Date, the Employee (together with persons whose stock ownership is attributed to the Employee pursuant to section 424(d) of the Code) owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries, the Exercise Price shall be not less than one hundred and ten percent (110%) of the Fair Market Value of a Share on the Grant Date.
5.3.3 Substitute Options. Notwithstanding the provisions of Sections 5.3.1 and 5.3.2, in the event that the Company or an Affiliate consummates a transaction described in section 424(a) of the Code (e.g., the acquisition of property or stock from an unrelated corporation), persons who become Employees or Consultants on account of such transaction may be granted Options in substitution for options granted by their former employer. If such substitute Options are granted, the Committee, in its sole discretion and consistent with section 424(a) of the Code, shall determine the exercise price of such substitute Options.
5.4 Expiration of Options. The term of each Option shall be stated in the Award Agreement; provided, however, that the maximum term shall not exceed ten (10) years from the Grant Date (subject to Section 5.8.4 regarding Incentive Stock Options). The Committee, in its sole discretion, may, after an Option is granted and before such Option expires, extend the term of the Option but in no event shall the term of the Option exceed ten (10) years from the Grant Date.
5.5 Exercisability of Options. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall determine in its sole discretion. After an Option is granted, the Committee, in its sole discretion, may accelerate the exercisability of the Option.
5.6 Payment. Options shall be exercised by the Participant's delivery of a written notice of exercise to the Secretary of the Company (or its designee), setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.
Upon the exercise of any Option, the Exercise Price shall be payable to the Company by any means which the Committee, in its sole discretion, determines both to provide legal consideration for the Shares and to be consistent with the purposes of the Plan, including, but not limited to: (a) cash or its equivalent, (b) previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Exercise Price, (c) a "same day sale" pursuant to a program developed under Regulation T, or (d) having the Company withhold otherwise deliverable Shares.
As soon as practicable after receipt of a written notification of exercise and full payment for the Shares purchased, the Company shall deliver to the Participant (or the Participant's designated broker) Share certificates (which may be in book entry form) representing such Shares.
5.7 Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option as it may deem advisable, including, but not limited to, restrictions related to applicable Federal securities laws, the requirements of any national securities exchange or system upon which Shares are then listed or traded, or any blue sky or state securities laws.
5.8 Certain Additional Provisions for Incentive Stock Options.
5.8.1 Exercisability. The aggregate Fair Market Value (determined on the Grant Date(s)) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Employee during any calendar year (under all plans of the Company and its Subsidiaries) shall not exceed $100,000.
5.8.2 Termination of Service. If any portion of an Incentive Stock Option is exercised more than three (3) months after the Participant's Termination of Service for any reason other than Disability or death (unless (a) the Participant dies during such three-month period, and (b) the Award Agreement or the Committee permits later exercise), the portion so exercised shall be deemed a Non-qualified Stock Option.
5.8.3 Company and Subsidiaries Only. Incentive Stock Options may be granted only to persons who are employees of the Company or a Subsidiary on the Grant Date.
5.8.4 Expiration. No Incentive Stock Option may be exercised after the expiration of ten (10) years from the Grant Date; provided, however, that if the Option is granted to an Employee who, together with persons whose stock ownership is attributed to the Employee pursuant to section 424(d) of the Code, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of the stock of the Company or any of its Subsidiaries, the Option may not be exercised after the expiration of five (5) years from the Grant Date.
SECTION 6STOCK APPRECIATION RIGHTS
6.1 Grant of SARs. Subject to the terms and conditions of the Plan, SARs may be granted to Employees and Consultants at any time and from time to time as shall be determined by the Committee, in its sole discretion. The Committee shall have complete discretion to determine the number of SARs granted to any Participant, provided that during any Fiscal Year, no Participant shall be granted SARs covering more than 500,000 Shares.
6.2 Exercise Price and Other Terms. The Committee, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of SARs granted under the Plan.
However, the exercise price of a SAR shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date.
6.3 SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement that shall specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Committee, in its sole discretion, shall determine.
6.4 Expiration of SARs. A SAR granted under the Plan shall expire upon the date determined by the Committee, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 5.4 and 10.13 also shall apply to SARs.
6.5 Payment of SAR Amount. Upon exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:
(a) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times
(b) The number of Shares with respect to which the SAR is exercised.
6.6 Payment Upon Exercise of SAR. At the discretion of the Committee, payment for a SAR may be in cash, Shares or a combination thereof.
SECTION 7RESTRICTED STOCK AND RESTRICTED STOCK UNITS
7.1 Grant of Restricted Stock and Restricted Stock Units. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock or Restricted Stock Units to Employees and Consultants in such amounts as the Committee, in its sole discretion, shall determine. The Committee, in its sole discretion, shall determine the number of Shares to be granted to each Participant, provided that during any Fiscal Year, no Participant shall be granted more than 500,000 Shares of Restricted Stock or Restricted Stock Units.
7.2 Restricted Stock and Restricted Stock Units Agreement. Each Award of Restricted Stock or Restricted Stock Units shall be evidenced by an Award Agreement that shall specify the Period of Restriction, the number of Shares granted, any price to be paid for the Shares, and such other terms and conditions as the Committee, in its sole discretion, shall determine. Unless the Committee determines otherwise, Shares of Restricted Stock shall be held by the Company as escrow agent until the restrictions on such Shares have lapsed.
7.3 Transferability. Shares of Restricted Stock or Restricted Stock Units may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.
7.4 Other Restrictions. The Committee, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock or Restricted Stock Units as it may deem advisable or appropriate, in accordance with this Section 7.4.
7.4.1 General Restrictions. The Committee may set restrictions based upon the achievement of specific performance objectives (Company-wide, business unit or individual), applicable federal or state securities laws, or any other basis determined by the Committee in its discretion.
7.4.2 Legend on Certificates. The Committee, in its discretion, may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions. For example, the
Committee may determine that some or all certificates representing Shares of Restricted Stock shall bear the following legend:
"The sale or other transfer of the shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth in the Varex Imaging Corporation 2020 Omnibus Stock Plan, and in a Restricted Stock Agreement. A copy of the Plan and such Restricted Stock Agreement may be obtained from the Secretary of Varex Imaging Corporation"
7.5 Removal of Restrictions. Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall be released from escrow as soon as practicable after the last day of the Period of Restriction. The Committee, in its discretion, may accelerate the time at which any restrictions shall lapse, and remove any restrictions. After the restrictions have lapsed, the Participant shall be entitled to have any legend or legends under Section 7.4 removed from his or her Share certificate, and the Shares shall be freely transferable by the Participant.
7.6 Voting Rights. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless otherwise provided in the Award Agreement.
7.7 Dividends and Other Distributions. Participants holding Shares of Restricted Stock granted on or after the Effective Date shall not be entitled to receive dividends and other distributions on any Shares that are subject to restrictions. Notwithstanding the foregoing, at the Committee's sole discretion, Participants holding Shares of Restricted Stock may be credited with dividends and other distributions while such Shares are subject to restrictions provided that such dividends and other distributions shall be paid or distributed to Participants only if, when and to the extent such restrictions on such Shares lapse. The value of dividends and other distributions payable or distributable with respect to any Shares for which such restrictions do not lapse during the applicable Period of Restriction shall be forfeited.
7.8 Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed shall revert to the Company and again shall become available for grant under the Plan.
SECTION 8PERFORMANCE UNITS AND PERFORMANCE SHARES
8.1 Grant of Performance Units and Shares. Performance Units and Performance Shares may be granted to Employees and Consultants at any time and from time to time, as shall be determined by the Committee, in its sole discretion. The Committee shall have complete discretion in determining the number of Performance Units and Performance Shares granted to any Participant, provided that during any Fiscal Year, no more than 500,000 Performance Shares or Performance Units may be granted to any Participant.
8.2 Performance Objectives and Other Terms. The Committee shall set performance objectives in its discretion, which, depending on the extent to which they are met, will determine the number or value of Performance Units or Shares that will be paid out to the Participants. The Committee may set performance objectives based upon the achievement of Company-wide, business unit, or individual goals, or any other basis determined by the Committee in its discretion. The time period during which the performance objectives must be met shall be called the "Performance Period." Each Award of Performance Units or Shares shall be evidenced by an Award Agreement that shall specify the Performance Period, and such other terms and conditions as the Committee, in its sole discretion, shall determine.
8.2.1 General Performance Objectives. The Committee may set performance objectives based upon the achievement of Company-wide, business unit or individual goals, or any other basis determined by the Committee in its discretion.
8.2.2 Performance Objectives. The Committee, in its discretion, may determine that the performance objectives applicable to Performance Units or Shares shall be based on the achievement of Performance Goals.
8.3 Earning of Performance Units and Performance Shares. After the applicable Performance Period has ended, the Participant shall be entitled to receive a payout of the number of Performance Units or Shares earned during the Performance Period, depending upon the extent to which the applicable performance objectives have been achieved. After the grant of a Performance Unit or Share, the Committee, in its sole discretion, may reduce or waive any performance objectives for Award.
8.4 Form and Timing of Payment. Payment of earned Performance Units or Performance Shares shall be made as soon as practicable after the expiration of the applicable Performance Period. The Committee, in its sole discretion, may pay such earned Awards in cash, Shares or a combination thereof.
8.5 Cancellation. On the date set forth in the Award Agreement, all unearned or unvested Performance Units or Performance Shares shall be forfeited to the Company, and again shall be available for grant under the Plan.
SECTION 9NON-EMPLOYEE DIRECTORS
9.1 Limitation on Grants to Non-Employee Directors. Awards granted during a single fiscal year under the Plan or otherwise, taken together with any cash fees paid during such fiscal year for services on the Board, shall not exceed $625,000 in total value for any Non-employee Director serving as the lead director of the Board or chair of the Board and $525,000 in total value for any other Non-employee Director (calculating the value of any such stock awards based on the grant date fair value of such stock awards for financial reporting purposes). Such applicable limit shall include the value of any stock awards that are received in lieu of all or a portion of any annual committee cash retainers or other similar cash based payments.
9.2 Non-Employee Director Options. Subject to the terms and provisions of the Plan, Non-qualified Stock Options may be issued to Non-employee Directors at any time and from time to time, as determined by the Board in its sole discretion, including the number of Shares subject to each Option, and the terms and conditions of such Awards.
9.3.1 Option Agreement. Each Option granted pursuant to this Section 9 shall be evidenced by a written stock option agreement, which shall be executed by the Non-employee Director and the Company.
9.3.2 Exercise Price. The Exercise Price for the Shares subject to each Option granted pursuant to this Section 9 shall be one hundred percent (100%) of the Fair Market Value of such Shares on the Grant Date.
9.3.3 Exercisability. Unless provided otherwise in an Award Agreement, each Option granted pursuant to this Section 9 shall be fully exercisable on the Grant Date.
9.3.4 Expiration of Options. The term of each Option shall be stated in the Award Agreement; provided, however, that the maximum term shall not exceed ten (10) years from the Grant Date.
9.3.5 Not Incentive Stock Options. Options granted pursuant to this Section 9 shall not be designated as Incentive Stock Options.
9.3.6 Other Terms. Unless provided otherwise in an Award Agreement, all provisions of the Plan not inconsistent with this Section 9 shall apply to Options granted to Non-employee Directors; provided, however, that Section 5.2 (relating to the Committee's discretion to set the terms and conditions of Options) shall be inapplicable with respect to Non-employee Directors.
9.4 Substitute Options. Notwithstanding the provisions of Section 9.3.2, in the event that the Company or an Affiliate consummates a transaction described in section 424(a) of the Code (e.g., the acquisition of property or stock from an unrelated corporation), persons who become Non-employee Directors on account of such transaction may be granted Options in substitution for options granted by their former employer. If such substitute Options are granted, the Committee, in its sole discretion and consistent with section 424(a) of the Code, shall determine the exercise price of such substitute Options.
9.5 Elections by Non-employee Directors. Pursuant to such procedures as the Board (in its discretion) may adopt from time to time, each Non-employee Director may elect to forego receipt of all or a portion of the annual retainer, committee chair fees, meeting attendance fees and other cash compensation otherwise due to the Non-employee Director in exchange for Shares. The number of Shares received by any Non-employee Director shall equal the amount of foregone compensation divided by the Fair Market Value of a Share on the date that the compensation otherwise would have been paid to the Non-employee Director, rounded up to the nearest whole number of Shares. In addition, pursuant to such procedures as the Board (in its discretion) may adopt from time to time, each Non-employee Director may elect to forego receipt of all or a portion of the annual retainer, committee chair and meeting attendance fees and other cash compensation otherwise due to the Non-employee Director in exchange for an Option to purchase Shares.
9.6 Restricted Stock Units. Subject to the terms and provisions of the Plan, Awards of Restricted Stock Units may be granted to Non-employee Directors at any time and from time to time, as determined by the Board in its sole discretion, including the number of Restricted Stock Units subject to each Award and the terms and conditions of such Awards.
9.7 Terms of Restricted Stock Units.
9.8 Restricted Stock Unit Agreement. Restricted Stock Units granted pursuant to Section 9.6 shall be evidenced by a written Award Agreement, which shall be executed by the Non-employee Director and the Company.
9.8.1 Vesting. Awards of Restricted Stock Units shall vest over a period provided in the Award Agreement, and may vest pro rata over such time.
9.8.2 Payment. Except as may be provided in an Award Agreement, Restricted Stock Unit Awards will be paid in Shares. Awards of Restricted Stock Units may be paid in a lump sum or in installments following vesting or, in accordance with procedures established by the Committee, on a deferred basis subject to the requirements of Section 409A of the Code.
9.8.3 Other Terms. Unless provided otherwise in an Award Agreement, all provisions of the Plan applicable to Restricted Stock Units not inconsistent with Section 9.6 and this Section 9.7 shall apply to Restricted Stock Units granted to Non-employee Directors.
10.1 No Effect on Employment or Service. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment or service at any time, with or without cause. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Affiliates (or between Affiliates) shall not be deemed a Termination of Service. Employment with the Company and its Affiliates is on an at-will basis only.
10.2 Participation. No Employee or Consultant shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.
10.3 Indemnification. Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from (a) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any Award Agreement, and (b) from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Certificate of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.
10.4 Successors. All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business or assets of the Company.
10.5 Beneficiary Designations. If permitted by the Committee, a Participant under the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid Award shall be paid in the event of the Participant's death. Each such designation shall revoke all prior designations by the Participant and shall be effective only if given in a form and manner acceptable to the Committee. In the absence of any such designation, any vested benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate and, subject to the terms of the Plan and of the applicable Award Agreement, any unexercised vested Award may be exercised by the administrator or executor of the Participant's estate.
10.6 Nontransferability of Awards. Except as provided below, no Award granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution, or to the limited extent provided in Section 10.5. All rights with respect to an Award granted to a Participant shall be available during his or her lifetime only to the Participant. Notwithstanding the foregoing, the Committee, or the Board in the case of Awards to Non-Employee Directors, may, in its sole discretion and to the extent permitted by applicable law, permit the transfer of an Award to an individual or entity other than the Company (each transferee thereof a "Permitted Assignee"), subject to such restrictions as the Committee, or the Board, in its sole discretion may impose; provided, however, that in no event may any Award be transferred for consideration to a third party financial institution.
10.7 No Rights as Stockholder. Except to the limited extent provided in Sections 7.6 and 7.7, no Participant (nor any beneficiary) shall have any of the rights or privileges of a stockholder of the Company with respect to any Shares issuable pursuant to an Award (or exercise thereof), unless and
until certificates representing such Shares shall have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Participant (or beneficiary).
10.8 Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant's FICA obligation) required to be withheld with respect to such Award (or exercise thereof). Notwithstanding any contrary provision of the Plan, if a Participant fails to remit to the Company such withholding amount within the time period specified by the Committee (in its discretion), the Participant's Award may, in the Committee's discretion, be forfeited and in such case the Participant shall not receive any of the Shares subject to such Award.
10.9 Withholding Arrangements. The Committee, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit or require a Participant to satisfy all or part of the required tax withholding obligations in connection with an Award by any means which the Committee, in its sole discretion, determines both to satisfy the required tax withholding obligations and to be consistent with the purposes of the Plan, including, but not limited to: (a) having the Company withhold otherwise deliverable Shares, (b) delivering to the Company already-owned Shares having a Fair Market Value equal to the amount required to be withheld, or (c) a "same day sale" pursuant to a program developed under Regulation T provided, however, that the amount of tax withholding to be satisfied by any such method will be limited to the extent necessary to avoid adverse accounting consequences, including but not limited to the Award being classified as a liability award. The Fair Market Value of the Shares to be withheld, delivered or sold shall be determined as of the date that the taxes are required to be withheld.
10.10 Deferrals. The Committee, in its sole discretion, may permit a Participant to defer receipt of the payment of cash or the delivery of Shares that would otherwise be delivered to a Participant under the Plan. Any such deferral elections shall be subject to such rules and procedures as shall be determined by the Committee in its sole discretion. Notwithstanding the foregoing, any deferral under this Section 10.10 shall be made in accordance with the provisions of section 409A of the Code and the applicable guidance issued by the Secretary of the Treasury thereunder.
10.11 Dividend Equivalents. The recipient of an Award other than Options or SARs (including, without limitation, any deferred Award) may, at the Committee, or if applicable, the Board's sole discretion, receive dividend equivalents. Such dividend equivalents entitle the Participant to be credited with an amount equal to all dividends and other distributions (whether in cash or other property) paid on an equivalent number of Shares while the Award is outstanding. Dividend equivalents may be converted into additional Awards (for example, additional restricted stock units). Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or a combination of both. Any dividend equivalents credited with respect to Awards shall be settled only if, when and to the extent such Awards vest and are settled. The value of amounts payable with respect to Awards that do not vest shall be forfeited.
10.12 Prohibition on Repricings. Options and SARs may not be repriced without the approval of the Company's stockholders. For this purpose, "reprice" means that that the Company has: (a) lowered or reduced the Exercise Price of outstanding Options and/or outstanding SARs after they have been granted, (b) canceled an Option and/or a SAR when the applicable Exercise Price exceeds the Fair Market Value of the underlying Shares in exchange for cash or another Award and (c) taken any other action with respect to an Option and/or a SAR that would be treated as a repricing under the rules and regulations of the principal securities market on which the Shares are traded. An adjustment pursuant to Section 4.5 shall not be treated as a repricing.
10.13 Maximum Term of Options and SARs. Notwithstanding anything in Sections 5, 6 and 9 to the contrary, no Option or SAR shall have a term that exceeds ten (10) years from the Grant Date.
10.14 Restatement of Financial Results. All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company's securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In the event that the Company has not adopted such required policy and notwithstanding anything to the contrary set forth in the Plan or any Award Agreement, in the event of a restatement of incorrect financial results, the Board shall review the conduct of executive officers in relation to the restatement and if the Board determines that an executive officer has engaged in misconduct or other violations of the Company's code of ethics in connection with the restatement, the Board would, in its discretion, take appropriate action to remedy the misconduct, including, without limitation, seeking reimbursement of any portion of performance-based or incentive compensation paid or awarded to the executive under the Plan that is greater than would have been paid or awarded if calculated based on the restated financial results, to the extent not prohibited by governing law. For this purpose, the term "executive officer" means executive officers as defined by the Securities Exchange Act of 1934, as amended. Such action by the Board would be in addition to any other actions the Board or the Company may take under the Company's policies, as modified from time to time, or any actions imposed by law enforcement, regulators or other authorities.
10.15 Compliance with Section 409A of the Code. This Plan is intended to comply and shall be administered in a manner that is intended to comply with Section 409A of the Code and shall be construed and interpreted in accordance with such intent. Any provision of this Plan that would cause the grant of an Award or the payment, settlement or deferral thereof to fail to satisfy Section 409A of the Code shall be amended to comply with Section 409A of the Code on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Section 409A of the Code. Should any payments made in accordance with the Plan to a "specified employee" (as defined under Section 409A of the Code) be determined to be payments from a nonqualified deferred compensation plan and are payable in connection with a Participant's "separation from service" (as defined under Section 409A of the Code), that are not exempt from Section 409A of the Code as a short-term deferral or otherwise, these payments, to the extent otherwise payable within six (6) months after the Participant's separation from service, and to the extent necessary to avoid the imposition of taxes under Section 409A of the Code, will be paid in a lump sum on the earlier of the date that is six (6) months and one day after the Participant's date of separation from service or the date of the Participant's death. For purposes of Section 409A of the Code, the payments to be made to a Participant in accordance with this Plan shall be treated as a right to a series of separate payments.
SECTION 11CORPORATE TRANSACTIONS
11.1 Effect of Corporate Transaction on Awards. Except as set forth in an Award Agreement, upon the occurrence of (a) a merger, combination, consolidation, reorganization or other corporate transaction; (b) an exchange of Shares or other securities of the Company; (c) a sale of all or substantially all the business, stock or assets of the Company; (d) a dissolution of the Company; or (e) any event in which the Company does not survive (or does not survive as a public company in respect of its Shares), then any surviving corporation or acquiring corporation (or the surviving or acquiring corporation's parent company) may assume or continue any or all Awards outstanding under the Plan or may substitute similar stock awards for Awards outstanding under the Plan (including but not limited to, awards to acquire the same consideration paid to the stockholders of the Company pursuant to the transaction), and any reacquisition or repurchase rights held by the Company in respect of Shares issued pursuant to Awards may be assigned by the Company to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation's parent company) in connection with such transaction. Except as set forth in an Award Agreement, if the Committee does not provide for the assumption, continuation or substitution of Awards, each Award shall fully vest and terminate upon
the related event, provided that holders of Options or SARs be given reasonable advance notice of the impending termination and a reasonable opportunity to exercise their outstanding vested Options and SARs before the termination of such Awards; provided, however, that any payout in connection with a terminated award shall comply with Section 409A of the Code to the extent necessary to avoid taxation thereunder.
11.2 Authority of the Committee. Notwithstanding the foregoing, except as set forth in an Award Agreement, in the event that an Award would otherwise terminate upon the effective time of any transaction described in 11.1, the Committee may provide for a payment in such form as may be determined by the Committee, equal in value to the excess, if any, of (A) the value of the property the Participant would have received upon the exercise or vesting of the Award immediately prior to the effective time of the transaction, over (B) any exercise price payable by such holder in connection with such exercise, and provided further, that at the discretion of the Committee, such payment may be subject to the same conditions that apply to the consideration that will be paid to holders of Shares in connection with the transaction; provided, however, that any payout in connection with a terminated award shall comply with Section 409A of the Code to the extent necessary to avoid taxation thereunder. Without limiting the generality of Section 3, any good faith determination by the Committee pursuant to its authority under this Section 11.2 shall be conclusive and binding on all persons.
SECTION 12AMENDMENT, TERMINATION AND DURATION
12.1 Amendment, Suspension or Termination. Subject to Section 10.12, the Board, in its sole discretion, may amend or terminate the Plan, or any part thereof, at any time and for any reason. The amendment, suspension or termination of the Plan shall not, without the consent of the Participant, alter or impair any rights or obligations under any Award theretofore issued to such Participant. Any amendment shall also, to the extent required by applicable law or regulation, be subject to stockholder approval. No Award may be granted during any period of suspension or after termination of the Plan.
12.2 Duration of the Plan. Without further stockholder approval, no Incentive Stock Option may be granted under the Plan after ten (10) years from the Adoption Date.
13.1 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.
13.2 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
13.3 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
13.4 Governing Law. The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State of Delaware, but without regard to its conflict of law provisions.
13.5 Captions. Captions are provided herein for convenience only, and shall not serve as a basis for interpretation or construction of the Plan.
IN WITNESS WHEREOF, Varex Imaging Corporation, by its duly authorized officer, has executed the Plan on the date indicated below.
1678 S. PIONEER ROADSALT LAKE CITY, UT 84104 VOTE BY INTERNETINTERNETBefore The Meeting - Go to www.proxyvote.com Useor scan the QR Barcode aboveUse the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date.on February 8, 2023. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. VAREX IMAGING CORPORATION 1678 S. PIONEER ROAD SALT LAKE CITY, UT 84104 ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would likeform.During The Meeting - Go to reducewww.virtualshareholdermeeting.com/VREX2023You may attend the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronicallymeeting via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and when prompted, indicatevote during the meeting. Have the information that you agree to receive or access proxy materials electronicallyis printed in future years. VOTEthe box marked by the arrow available and follow the instructions.VOTE BY PHONE - 1-800-690-6903 Use1-800-690-6903Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date.on February 8, 2023. Have your proxy card in hand when you call and then follow the instructions. VOTEinstructions.VOTE BY MAIL Mark,MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO11717.TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E88258-P31308 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THISRECORDSTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. VAREXDETACH AND RETURN THIS PORTION ONLYD93598-P83194VAREX IMAGING CORPORATION TheCORPORATIONThe Board of Directors recommends you vote FOR theFORthe following:1. To elect threeseven directors to serve until the 2022 Annual2024Annual Meeting of Stockholders. Nominees: For Withhold Abstain ! ! ! For ! ! ! Against ! ! ! Abstain Stockholders.Nominees:1a. Kathleen L. Bardwell1b. Jocelyn D. Chertoff, M.D. 1b. Ruediger Naumann-Etienne TheM.D.1c. Timothy E. Guertin1d. Jay K. Kunkel1e. Walter M Rosebrough, Jr.1f. Sunny S. Sanyal1g. Christine A. TsingosFor Withhold AbstainThe Board of Directors recommends you vote FOR theFORthe following proposal: For Against Abstain ! ! ! 1c. Sunny S. Sanyal 4. To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2020. The Board of Directors recommends you vote FOR the following proposal: NOTE: The proxyholders are authorized to vote on any other business as is properly brought before the Annual Meeting for action in accordance with their judgment as to the best interests of Varex Imaging Corporation. ! ! ! 2. To approve, on an advisory basis, our executive compensationexecutivecompensation as described in the accompanying Proxy Statement. TheaccompanyingProxy Statement.The Board of Directors recommends you vote FOR theFORthe following proposal: ! ! ! 3. To approveratify the appointment of Deloitte & Touche LLPas our independent registered public accountingfirm for fiscal year 2023.NOTE: The proxyholders are authorized to vote on anyother business as is properly brought before the AnnualMeeting for action in accordance with their judgmentas to the best interests of Varex Imaging Corporation 2020 Omnibus Stock Plan. ! For address changes and/or comments, please check this box and write them on the back where indicated. PleaseCorporation.For Against AbstainPlease sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor,administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally.signpersonally. All holders must sign. If a corporation or partnership, please sign in full corporate orcorporateor partnership name by authorized officer. Signatureofficer.Signature [PLEASE SIGN WITHIN BOX] Date SignatureDateSignature (Joint Owners) Date
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