Inspire Medical Systems, Inc. o☐ o☐ o☐ o☐ o☐ o☐ belowin exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
Inspire Medical Systems, Inc. o☐ o☐ o☐ o☐ o☐ o☐ belowin exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
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| | | | March 16, 2022 | ||
| | | | Dear Fellow Stockholders: | ||
| | | | On behalf of the Board of Directors, I cordially invite you to attend the 2022 annual meeting of stockholders (the “Annual Meeting”) of Inspire Medical Systems, Inc., which will be held on Thursday, April 28, 2022, beginning at 8:00 a.m. Central Time. The Annual Meeting will be a completely virtual meeting, which will be conducted via live webcast. | ||
| | | | In accordance with the Securities and Exchange Commission rules allowing companies to furnish proxy materials to their stockholders over the Internet, we have sent stockholders of record at the close of business on March 3, 2022 a Notice of Internet Availability of Proxy Materials. The notice contains instructions on how to access our Proxy Statement and Annual Report, and how to vote online. If you would like to receive a printed copy of our proxy materials from us instead of downloading a printable version from the Internet, please follow the instructions for requesting such materials included in the notice, as well as in the attached Proxy Statement. | ||
| | | | Attached to this letter are a Notice of Annual Meeting of Stockholders and Proxy Statement, which describe the business to be conducted at the meeting. | ||
| | | | Your vote is important to us. Please act as soon as possible to vote your shares. It is important that your shares be represented at the meeting whether or not you plan to attend the annual meeting via the Internet. Please vote electronically over the Internet, by telephone or if, you receive a paper copy of the proxy card by mail, by returning your signed proxy card in the envelope provided. You may also vote your shares online during the Annual Meeting. Instructions on how to vote while participating at the meeting live via the Internet are posted at www.virtualshareholdermeeting.com/INSP2022. | ||
| | | | On behalf of the Board of Directors and management, it is my pleasure to express our appreciation for your continued support. | ||
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Board |
Inspire Medical Systems, Inc.5500 Wayzata Blvd., Suite 1600Golden Valley, MN 55416
March 16, 2020
Dear Fellow Stockholders:
On behalf of the Board of Directors, I cordially invite you to attend the 2020 annual meeting of stockholders (the “Annual Meeting”) of Inspire Medical Systems, Inc., which will be held on Thursday, April 30, 2020, beginning at 8:00 a.m. Central Time. The Annual Meeting will be a completely virtual meeting, which will be conducted via live webcast.
In accordance with the Securities and Exchange Commission rules allowing companies to furnish proxy materials to their stockholders over the Internet, we have sent stockholders of record at the close of business on March 6, 2020 a Notice of Internet Availability of Proxy Materials. The notice contains instructions on how to access our Proxy Statement and Annual Report and vote online. If you would like to receive a printed copy of our proxy materials from us instead of downloading a printable version from the Internet, please follow the instructions for requesting such materials included in the notice, as well as in the attached Proxy Statement.
Attached to this letter are a Notice of Annual Meeting of Stockholders and Proxy Statement, which describe the business to be conducted at the meeting.
Your vote is important to us. Please act as soon as possible to vote your shares. It is important that your shares be represented at the meeting whether or not you plan to attend the annual meeting via the Internet. Please vote electronically over the Internet, by telephone or if, you receive a paper copy of the proxy card by mail, by returning your signed proxy card in the envelope provided. You may also vote your shares online during the Annual Meeting. Instructions on how to vote while participating at the meeting live via the Internet are posted at www.virtualshareholdermeeting.com/INSP2020.
On behalf of the Board of Directors and management, it is my pleasure to express our appreciation for your continued support.
![]() | | | | | ![]() Inspire Medical Systems, Inc. 5500 Wayzata Blvd., Suite 1600 | Golden Valley, MN 55416 | ||||
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 28, 2022 Date THURSDAY APRIL 28, 2022 Time 8:00 A.M. CENTRAL TIME Place www. virtualshareholdermeeting .com/INSP2022 | | | | | NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Inspire Medical Systems, Inc., a Delaware corporation, will be held on Thursday, April 28, 2022, at 8:00 a.m. Central Time. The Annual Meeting will be a completely virtual meeting, which will be conducted via live webcast. You will be able to attend the |
Inspire Medical Systems, Inc.5500 Wayzata Blvd., Suite 1600Golden Valley, MN 55416
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 30, 2020
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Inspire Medical Systems, Inc., a Delaware corporation, will be held on Thursday, April 30, 2020, at 8:00 a.m. Central Time. The Annual Meeting will be a completely virtual meeting, which will be conducted via live webcast. You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/INSP2020. For instructions on how to attend and vote your shares at the Annual Meeting, see the information in the accompanying Proxy Statement in the section titled “General Information about the Annual Meeting and Voting—How can I attend and vote at the Annual Meeting?”
The Annual Meeting is being held:
| | | The Annual Meeting is being held: | ||||
| | | 1. | | | to elect |
| | | 2. | | | to ratify, in a non-binding vote, the appointment of Ernst & Young LLP as our independent registered public accounting firm for |
| | | 3. | | | to approve, on an advisory (non-binding) basis, the compensation of our named executive officers; and |
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| 4. | | | to transact such other business as may properly come before the Annual Meeting or any continuation, postponement or adjournment thereof. |
These items of business are described in the Proxy Statement that follows this notice. Holders of record of our common stock as of the close of business on March 6, 2020 are entitled to notice of and to vote at the Annual Meeting, or any continuation, postponement or adjournment thereof.
Your vote is important. Voting your shares will ensure the presence of a quorum at the Annual Meeting and will save us the expense of further solicitation. Please promptly vote your shares by following the instructions for voting on the Notice Regarding the Availability of Proxy Materials or, if you received a paper or electronic copy of our proxy materials, by completing, signing, dating and returning your proxy card or by Internet or telephone voting as described on your proxy card.
| | | | These items of business are described in the Proxy Statement that follows this notice. Holders of record of our common stock as of the close of business on March 3, 2022 are entitled to notice of and to vote at the Annual Meeting, or any continuation, postponement or adjournment thereof. This Notice of Annual Meeting and Proxy Statement are first being distributed or made available, as the case may be, on or about March 16, 2022. | |||||
| | | | Your vote is important. Voting your shares will ensure the presence of a quorum at the Annual Meeting and will save us the expense of further solicitation. Please promptly vote your shares by following the instructions for voting on the Notice Regarding the Availability of Proxy Materials or, if you received a paper or electronic copy of our proxy materials, by completing, signing, dating, and returning your proxy card or by Internet or telephone voting as described on your proxy card. | |||||
| | | | By Order of the Board of Directors | |||||
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| | | | Bryan K. Phillips | |||||
| | | | Senior Vice President, Golden Valley, MN March 16, 2022 | |||||
| | | | Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting: This Proxy Statement and our Annual Report are available free of charge at www.proxyvote.com. |
Golden Valley, MNMarch 16, 2020
This Notice of Annual Meeting and Proxy Statement are first being distributed or made available, as the case may be, on or about March 16, 2020.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting: This Proxy Statement and our Annual Report are available free of charge at www.proxyvote.com.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS Date THURSDAY APRIL 28, 2022 Time 8:00 A.M. CENTRAL TIME | | | There are four ways to vote: | |||||||||
| ![]() | | | ![]() | | | ![]() | | | ![]() | ||
| • by Internet at www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. Eastern Time on April 27, 2022 (have your Notice or proxy card in hand when you visit the website); | | | • by toll-free telephone until 11:59 p.m. Eastern Time on April 27, 2022 at 1-800-690-6903 (be sure to have your Notice or proxy card in hand when you call); | | | • by completing and mailing your proxy card so it is received prior to the Annual Meeting (if you received printed proxy materials); or | | | • by attending and voting at the virtual Annual Meeting by visiting www.virtualsharehold ermeeting.com/ INSP2022, where stockholders may vote and submit questions (before and during) the Annual Meeting. Please have your proxy card or Notice and Access card in hand when you visit the website. |
| Proposal 1 | | | The election of Shelley G. Broader, Timothy P. Herbert, and Shawn T McCormick as Class I directors. | | | The three nominees receiving the largest number of affirmative “FOR” votes will be elected as Class I directors | | | FOR | |
| Proposal 2 | | | Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2022. | | | Majority of votes cast | | | FOR | |
| Proposal 3 | | | Approval, on an advisory (non-binding) basis, of the compensation of our named executive officers. | | | Majority of votes cast | | | FOR | |
Inspire Medical Systems, Inc. | | | 1 | | | 2022 Proxy Statement |
PROXY STATEMENTFOR THE ANNUAL MEETING OF STOCKHOLDERSTO BE HELD ON APRIL 30, 2020
2022.
General Information about the Annual Meeting and Voting
Inspire Medical Systems, Inc. | | | 2 | | | 2022 Proxy Statement |
![]() | QUESTIONS AND ANSWERS |
Are there any matters to be voted on at the Annual Meeting that are not included in this Proxy Statement?
1
Why did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a paper copy of proxy materials?
Inspire Medical Systems, Inc. | | | 3 | | | 2022 Proxy Statement |
![]() | QUESTIONS AND ANSWERS |
2
Inspire Medical Systems, Inc. | | | 4 | | | 2022 Proxy Statement |
![]() | QUESTIONS AND ANSWERS |
• | by Internet—You can vote over the Internet at www.proxyvote.com by following the instructions on the Internet Notice or proxy card; or |
Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m., Eastern Time, on April 29, 2020.
27, 2022. If your shares are held in the name of a bank, broker or other holder of record, you will receive instructions on how to vote from the bank, broker or holder of record. You must follow the instructions of such bank, broker or holder of record in order for your shares to be voted.
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• | Instructions on how to attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.virtualshareholdermeeting.com/INSP2022. |
• | Assistance with questions regarding how to attend and participate via the Internet will be provided at www.virtualshareholdermeeting.com/INSP2022 on the day of the Annual Meeting. |
To attend and participate in the Annual Meeting, you will need the 16-digit control number included in your Notice and Access Card, on your proxy card or on the instructions that accompanied your proxy materials. If your shares are held in “street name,” you should contact your bank or broker to obtain your 16-digit control number or otherwise vote through the bank or broker. If you lose your 16-digit control number, you may join the Annual Meeting as a “Guest” but you will not be able to vote, ask questions or access the list of stockholders as of the Record Date.
Meeting?
Inspire Medical Systems, Inc. | | | 5 | | | 2022 Proxy Statement |
![]() | QUESTIONS AND ANSWERS |
Inspire Medical Systems, Inc. | | | 6 | | | 2022 Proxy Statement |
![]() | QUESTIONS AND ANSWERS |
| Proposal | | | Votes Required | | | Voting Options | | | Impact of “Withhold” or “Abstain” Votes | | | Broker Discretionary Voting Allowed | |
| Proposal No. 1: Election of Directors | | | The plurality of the votes cast. This means that the three nominees receiving the highest number of affirmative FOR votes will be elected as Class | | | “FOR ALL” | | | None(1) | | | No(3) | |
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Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm | | | The affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions) at the Annual Meeting by the holders entitled to vote thereon. | | | “FOR” “AGAINST” | | | None(2) | | | Yes(4) | | |
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Proposal No. 3: Approval, on an advisory (non- binding) basis, of the compensation of our named executive officers | | | The affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions) at the Annual Meeting by the holders entitled to vote thereon. | | | “FOR” “AGAINST” | | | None(2) | |
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No(3) | |
(1) | Votes that are “withheld” will have the same effect as an abstention and will not count as a vote “FOR” or “AGAINST” a director, because directors are elected by plurality voting. |
(2) | A vote marked as an “Abstention” is not considered a vote cast and will, therefore, not affect the outcome of this proposal. |
(3) | As this proposal is not considered a discretionary matter, brokers lack authority to exercise their discretion to vote uninstructed shares on this proposal. |
(4) | As this proposal is considered a discretionary matter, brokers are permitted to exercise their discretion to vote uninstructed shares on this proposal. |
Inspire Medical Systems, Inc. | | | 7 | | | 2022 Proxy Statement |
![]() | QUESTIONS AND ANSWERS |
5
If you hold shares in street name, you may submit new voting instructions by contacting your bank, broker or other nominee. You may also change your vote or revoke your proxy at the Annual Meeting if you obtain a signed proxy from the record holder (broker, bank or other nominee) giving you the right to vote the shares.
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Inspire Medical Systems, Inc. | | | 8 | | | 2022 Proxy Statement |
| Class I Director – Current Term Ending at this Annual Meeting | | | Class II Director – Current Term Ending at 2023 Annual Meeting | | | Class III Director – Current Term Ending at 2024 Annual Meeting | |
| | | Gary L. Ellis | | | Marilyn Carlson Nelson | | |
| | | | | Jerry C. Griffin, M.D. | | ||
| Shawn T McCormick | | | Dana G. Mead, Jr. | | | Casey M. Tansey | |
Inspire Medical Systems, Inc. | | | 9 | | | 2022 Proxy Statement |
![]() | PROPOSAL NO. 1 |
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background; and the ability to represent the interests of all of our stockholders. The information presented below regarding each nominee and continuing director also sets forth specific experience, qualifications, attributes and skills that led our Boardboard of Directorsdirectors to the conclusion that such individual should serve as a director in light of our business and structure.
Inspire Medical Systems, Inc. | | | 10 | | | 2022 Proxy Statement |
![]() | PROPOSAL NO. 1 |
| Class I Directors | | | Age | | | Served as Director Since | | | Current Positions with Inspire | |
| Shelley G. Broader | | | 57 | | | October 2020 | | | Director | |
| Timothy P. Herbert | | | 59 | | | November 2007 | | | Chief Executive Officer, President, and Director | |
| Shawn T McCormick | | | 57 | | | January 2017 | | | Director | |
Inspire Medical Systems, Inc. | | | 11 | | | 2022 Proxy Statement |
![]() | PROPOSAL NO. 1 |
| Class II Directors | | | Age | | | Served as Director Since | | | Current Positions with Inspire | |
| Gary L. Ellis | | | | | July 2019 | |||||
Director | | ||||||||||
| Georgia Garinois-Melenikiotou | | | 62 | | | July 2020 | | | Director | |
| Dana G. Mead, Jr. | | | | | January 2008 | | | Director | |
Gary L. Ellis has served as a member of our Board since July 2019. Mr. Ellis was formerly with Medtronic plc and its subsidiary, Medtronic, Inc., a global medical technology company, until his retirement in December 2016. While at Medtronic, he served in various executive capacities, including: Executive Vice President, Global Operations, Information Technology and Facilities & Real Estate of Medtronic plc from June 2016 to December 2016; Executive Vice President and Chief Financial Officer of Medtronic, Inc. from April 2014 to June 2016; Senior Vice President and Chief Financial Officer of Medtronic, Inc. from May 2005 to April 2014; and Vice President, Corporate Controller and Treasurer of Medtronic, Inc. from 1999 to May 2005. Mr. Ellis currently serves on the board of directors of The Toro Company, a manufacturer of outdoor maintenance equipment, and previously served on the boards of directors of Hill-Rom Holdings, Inc., a medical equipment manufacturing company from 2017 to December 2021, and previously served on the board of directors of Itamar Medical Ltd., a maker of home medical equipment for sleep apnea.apnea from 2007 to 2017. Mr. Ellis holds a B.S. in Accounting from the University of South Dakota and is a Certified Public Accountant (Inactive)(inactive). We believe Mr. Ellis’ financial expertise and extensive experience in the medical device industry enable him to make valuable contributions to our Board.
Mudit K. Jain, Ph.D.
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Inspire Medical Systems, Inc. | | | 12 | | | 2022 Proxy Statement |
![]() | PROPOSAL NO. 1 |
| Class III Directors | | | Age | | | Served as Director Since | | | Current Positions with Inspire | |
| Marilyn Carlson Nelson | | ��� | | | November 2016 | | | Chair of the Board | | |
| Jerry C. Griffin, M.D. | | | | | January 2008 | | | Director | | |
| Casey M. Tansey | | | | | January 2008 | | | Director | |
Marilyn Carlson Nelson has served as a member of our Board and as its Chair since November 2016. Since 1999, Ms. Nelson has served as Co-Chair of the board of directors and Co-Chief Executive Officer of Carlson Holdings, Inc., an international holdings company.company, from 1999 until her retirement in June 2020. Ms. Nelson previously served as a member of the board of directors of Carlson, Inc., a hospitality and travel company, from 1989 to 2015, and as its Chief Executive Officer from 1998 to 2008. Ms. Nelson also served on the board of directors of ExxonMobil from 1991 to 2012. Ms. Nelson holds a B.A. in international economics from Smith College and honorary doctorates from Smith College, the University of Minnesota, Johnson & Wales University, Gustavus Adolphus College, and the College of St. Catherine. We believe Ms. Nelson’s extensive public and private board experience and her knowledge of the Company as one of our early investors enable her to make valuable contributions to our Board of Directors.
Board.
Timothy P. Herbert, our founder, has served as our Chief Executive Officer and President and as a member of our Board since November 2007. Prior to joining us, Mr. Herbert spent 11 years at Medtronic, a medical equipment development company, where he held management positions in product development, clinical research, sales, marketing, and healthcare reimbursement. Mr. Herbert holds a B.S. in electrical engineering from North Dakota State University and an M.B.A. from the University of St. Thomas. We believe Mr. Herbert's experience in the industry, his role as our Chief Executive Officer and President and his knowledge of the Company enable him to make valuable contributions to our Board.
Chau Khuong has served as a member of our Board since April 2014. Mr. Khuong is a Private Equity Partner at OrbiMed Advisors, L.L.C., a venture capital and asset management firm, which he joined in 2003. Mr. Khuong has served on the boards of directors of Aerpio Pharmaceuticals, Inc. since April 2014, Synlogic, Inc. since February 2016 and Bellus Health, Inc since December 2018. Mr. Khuong previously served as a member of the boards of directors of Otonomy, Inc. from 2013 to 2016, Pieris, Inc. from 2014 to 2017 and Nabriva Therapeutics plc (formerly Nabriva Therapeutics AG) from 2015 to 2017. Mr. Khuong holds a B.S. in molecular, cellular and development biology and an M.P.H. with concentration in infectious diseases, both from Yale University. We believe Mr. Khuong's extensive public and private board experience and his experience as a venture capital investor enable him to make valuable contributions to our Board.
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Shawn T McCormick has served as a member of our Board since January 2017. Mr. McCormick served as Chief Financial Officer of Tornier N.V., a global orthopedic company, from September 2012 until October 2015 when Tornier merged with Wright Medical Group, Inc. Before Tornier, Mr. McCormick served as Chief Operating Officer of Lutonix, Inc., a medical device company, from April 2011 to February 2012 and as Chief Financial Officer and Senior Vice President of ev3 Inc., a global endovascular company, from January 2009 to July 2010, when ev3 was acquired by Covidien plc. From 1992 to 2009, Mr. McCormick held various positions at Medtronic, including as its Vice President, Corporate Development, where he was responsible for leading Medtronic's worldwide business development activities and VP Finance for the Spinal, Biologics and Navigation business. In addition to serving on our Board, Mr. McCormick has served on the board of directors of Nevro Corp. since 2014, and Surmodics, Inc. since 2015. Mr. McCormick also served on the board of directors of Entellus Medical, Inc. from 2014 to February 2018. Mr. McCormick holds a B.S. in Accounting from Arizona State University and an M.B.A. from the University of Minnesota's Carlson School of Management and is a certified public accountant (inactive). He is also a National Association of Corporate Directors Fellow. We believe Mr. McCormick's financial expertise and extensive experience in the medical device industry enable him to make valuable contributions to our Board.
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Inspire Medical Systems, Inc. | | | 13 | | | 2022 Proxy Statement |
2022.
Inspire Medical Systems, Inc. | | | 14 | | | 2022 Proxy Statement |
![]() | PROPOSAL NO. 2 |
Year Ended December 31, | ||||||
2019 | 2018 | |||||
Audit Fees(1) | $ | 462,155 | $ | 605,061 | ||
Audit-Related Fees(2) | — | — | ||||
Tax Fees(3) | 62,514 | 55,711 | ||||
All Other Fees(4) | 3,325 | 2,000 | ||||
Total | $ | 527,994 | $ | 662,772 |
| | | Year Ended December 31, | | ||||
| | | 2021 | | | 2020 | | |
| Audit Fees(1) | | | $400,000 | | | $473,528 | |
| Audit-Related Fees(2) | | | 20,000 | | | 25,800 | |
| Tax Fees(3) | | | 119,496 | | | 116,393 | |
| All Other Fees(4) | | | 2,545 | | | 3,325 | |
| Total | | | 542,041 | | | 619,046 | |
(1) | Audit Fees for both years presented consist of fees billed for professional services by Ernst & Young LLP for the audit of our annual financial statements, related services that are normally provided in connection with statutory and regulatory filings or engagements, and, in |
(2) | Audit-Related Fees for both years consist of fees billed by Ernst & Young LLP for |
(3) | Tax Fees consist of fees for professional services, including tax consulting and compliance performed by Ernst & Young LLP. |
(4) | All Other Fees consist of an online accounting research tool subscription. |
11
The audit committee has adopted a pre-approval policy that sets forth the procedures and conditions pursuant to which audit and non-audit services proposed to be performed by our independent registered public accounting firm may be pre-approved. This pre-approval policy generally provides that the audit committee will not engage an independent registered public accounting firm to render any audit, audit-related, tax or permissible non-audit service unless the service is either (i) explicitly approved by the audit committee or (ii) entered into pursuant to the pre-approval policies and procedures described in the pre-approval policy. Unless a type of service to be provided by our independent registered public accounting firm has received this latter general pre-approval under the pre-approval policy, it requires specific pre-approval by the audit committee.
Inspire Medical Systems, Inc. | | | 15 | | | 2022 Proxy Statement |
![]() | PROPOSAL NO. 2 |
Inspire Medical Systems, Inc. | | | 16 | | | 2022 Proxy Statement |
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Inspire Medical Systems, Inc. | | | 17 | | | 2022 Proxy Statement |
The table below identifies and sets forth certain biographical and other information regarding our executive officers as of March 6, 2020.3, 2022. There are no family relationships among any of our executive officers or directors.
Executive Officer | Age | Position | In Current Position Since |
Timothy P. Herbert | 57 | Chief Executive Officer, President and Director | 2007 |
Richard J. Buchholz | 52 | Chief Financial Officer | 2014 |
Randall A. Ban | 55 | Chief Commercial Officer | 2009 |
Steven L. Jandrich | 53 | Chief Compliance Officer and Vice President, Human Resources | 2017 |
| Executive Officer | | | Age | | | Position | | | In Current Position Since | |
| Timothy P. Herbert | | | 59 | | | Chief Executive Officer, President, and Director | | | 2007 | |
| Richard J. Buchholz | | | 54 | | | Chief Financial Officer | | | 2014 | |
| Randall A. Ban | | | 57 | | | Chief Commercial Officer | | | 2009 | |
| Philip J. Ebeling | | | 51 | | | Chief Operating Officer | | | 2020 | |
| Steven L. Jandrich | | | 55 | | | Vice President, Human Resources | | | 2017 | |
| Bryan K. Phillips | | | 50 | | | Senior Vice President, General Counsel, Secretary, and Chief Compliance Officer | | | 2021 | |
See page 911 of this Proxy Statement for Timothy P. Herbert’s biography.
Steven L. Jandrich
Inspire Medical Systems, Inc. | | | 18 | | | 2022 Proxy Statement |
![]() | EXECUTIVE OFFICERS |
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Inspire Medical Systems, Inc. | | | 19 | | | 2022 Proxy Statement |
| • | | | Board size, independence and qualifications | | | • | | | Stock ownership | |
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| • | | | Executive sessions of independent directors | | | • | | | Board access to senior management | |
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| • | | | Board leadership structure | | | • | | | Board access to independent advisors | |
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| • | | | Selection of new directors | | | • | | | Board self-evaluations | |
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| • | | | Director orientation and continuing education | | | • | | | Board meetings | |
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| • | | | Limits on board service | | | • | | | Meeting attendance by directors and non-directors | |
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| • | | | Change of principal occupation | | | • | | | Meeting materials | |
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| • | | | Term limits | | | • | | | Board committees, responsibilities and independence | |
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| • | | | Director responsibilities | | | • | | | Succession planning | |
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| • | | | Director compensation | | | | | |
Inspire Medical Systems, Inc. | | | 20 | | | 2022 Proxy Statement |
![]() | CORPORATE GOVERNANCE |
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Inspire Medical Systems, Inc. | | | 21 | | | 2022 Proxy Statement |
![]() | CORPORATE GOVERNANCE |
| Director | | | Audit Committee | | | Organization and Compensation Committee(1) | | | Nominating and Corporate Governance Committee | |
| Shelley G. Broader | | | — | | | X | | | — | |
| Gary L. Ellis | | — | | | — | | | Chair | | |
| Georgia Garinois-Melenikiotou | | | X | | | — | | | — | |
| Jerry C. Griffin, M.D. | | | — | | | X | | | X | |
| Timothy P. Herbert | | — | ||||||||
— | |||||||||||
— | |||||||||||
| Dana G. Mead, Jr. | | | X | | | — | | | — | |
| Shawn | | | Chair | | — | | | — | | |
| Marilyn Carlson Nelson | | — | | | — | | | X | | |
| Casey M. Tansey | | | — | | | Chair | | | — | |
(1) | In early 2022, the Board of Directors approved revisions to the compensation committee’s charter which, among other things, changed the name of that committee to the organization and compensation committee. |
Inspire Medical Systems, Inc. | | | 22 | | | 2022 Proxy Statement |
![]() | CORPORATE GOVERNANCE |
15
The audit committee may delegate its authority under its charter to one or more subcommittees as it deems appropriate from time to time. The audit committee has the authority to engage independent legal, accounting, and other advisors as it deems necessary or appropriate to assist in carrying out its responsibilities, and we must pay the compensation of such advisors.
Inspire Medical Systems, Inc. | | | 23 | | | 2022 Proxy Statement |
![]() | CORPORATE GOVERNANCE |
The organization and compensation committee may delegate its authority under its charter to one or more subcommittees as it deems appropriate from time to time.
Compensation Consultants
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All executive compensation services provided by RadfordAon during 2019fiscal 2021 were conducted under the direction or authority of the organization and compensation committee, and all work performed by RadfordAon was pre-approved by the organization and compensation committee. Radford’sAon’s services during 2019fiscal 2021 included, among other things, reviewing the Company’s executive compensation policy, evaluating the Company’s peer group used to set executive compensation, providing benchmark data as well as broad market data regarding compensation for executives serving in similar capacities, and providing information on current trends and developments in executive and director compensation. Neither RadfordAon nor any of its affiliates maintains any other direct or indirect business relationships with us or any of our subsidiaries. The organization and compensation committee evaluated whether any work provided by RadfordAon raised any conflict of interest for services performed during 2019fiscal 2021 and determined that it did not.
Inspire Medical Systems, Inc. | | | 24 | | | 2022 Proxy Statement |
![]() | CORPORATE GOVERNANCE |
Compensation Committee Interlocks and Insider Participation
The nominating and corporate governance committee may delegate its authority under its charter to one or more subcommittees as it deems appropriate from time to time. The nominating and corporate governance committee has the authority to retain any search firm to be used to identify director nominees and independent legal and other advisors as it deems necessary or appropriate to carry out its responsibilities and we will pay the compensation of any such firm or advisor engaged.
During fiscal 2021, the nominating and governance committee retained Russell Reynolds Associates Inc. (“Russell Reynolds”), a global executive search firm to assist in the identification and assessment of potential director candidates.
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Inspire Medical Systems, Inc. | | | 25 | | | 2022 Proxy Statement |
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fiscal 2021.
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Prior to our initial public offering
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When considering whether the directors and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of our business and structure, the Board focused primarily on the information discussed in each of the board member’s biographical information set forth above. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business. This process resulted in the Board’s nomination of the incumbent directors named in this Proxy Statement and proposed for election by you at the Annual Meeting.
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1. | providing safeguard practices to ensure the security of personal information, |
2. | protecting the information against loss or theft, and |
3. | safeguarding the information from unauthorized access, disclosure, copying, use, or modification. |
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Inspire Medical Systems, Inc. | | | 31 | | | 2022 Proxy Statement |
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Inspire Medical Systems, Inc. | | | 32 | | | 2022 Proxy Statement |
– | we activated 259 new U.S. implanting centers (bringing the total to 684 U.S. medical centers implanting Inspire therapy) and created 50 new U.S. sales territories (bringing the total to 157 U.S. sales territories); and |
– | We signed an exclusive distribution agreement for the commercialization of Inspire therapy in Japan. |
– | an improved surgical procedure for Inspire therapy that only requires two incisions, which reduces average procedure time by approximately 30%; |
– | a new Inspire physician programmer platform; and |
– | the Inspire Bluetooth®-enabled patient remote control. |
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![]() | EXECUTIVE COMPENSATION |
* | TSR was calculated assuming 1-trading day averaging periods and reinvested dividends. |
** | The Company completed its initial public offering in May 2018. |
Inspire Medical Systems, Inc. | | | 34 | | | 2022 Proxy Statement |
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(1) | The total direct compensation of our executive officers as reflected in the above graphic differs from the total in the “Summary Compensation Table” because it only includes cash incentive opportunity at-goal, rather than actual payout, and the aggregate grant date fair value of stock options and PSUs granted in February 2022 as discussed in the section entitled “Long-term Incentives” below, and excludes all other amounts. The February 2022 PSU awards are used in the target total direct compensation this year because there were no annual LTI awards granted in fiscal 2021 due to the grant-timing shift as discussed in the section entitled “Long-term Incentives” below. The organization and compensation committee views target total direct compensation as a useful measure of pay because it reflects the intended aggregate value of key elements of pay at the time the pay decision is made. |
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| What We Do | | | What We Do Not Do | | ||||||
| ✔ | | | We emphasize performance-based, at-risk compensation. | | | ✘ | | | We do not provide any compensation-related tax gross-ups. | |
| ✔ | | | We deliver rewards that are based on the achievement of long-term objectives and the creation of stockholder value. | | | ✘ | | | We do not provide significant perquisites. | |
| ✔ | | | We provide a mix of short-term and long-term incentive compensation to promote executive retention and reward exceptional performance. | | | ✘ | | | We do not encourage unnecessary risk-taking as a result of our compensation policies. | |
| ✔ | | | We engage an independent compensation consultant to advise our organization and compensation committee and management. | | | ✘ | | | We do not guarantee annual salary increases or bonuses. | |
| ✔ | | | We consider stockholder input in evaluating the design of our executive compensation and the compensation decisions for each of the named executive officers. | | | ✘ | | | We do not have contracts that guarantee employment with any executives (all employment is terminable at will). | |
| ✔ | | | We develop a peer group of companies based on industry, revenue, stage, and market capitalization to reference for compensation decisions. | | | ✘ | | | We prohibit employees and non-employee directors from engaging in hedging, pledging or short sale transactions in Company securities. | |
| ✔ | | | We have double trigger vesting on equity and severance in the event of a change of control. | | | | | |
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Inspire Medical Systems, Inc. | | | 37 | | | 2022 Proxy Statement |
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| Accelerate Diagnostics, Inc. | | | Glaukos Corporation | | | OraSure Technologies, Inc. | |
| AtriCure, Inc. | | | Globus Medical, Inc. | | | Penumbra, Inc. | |
| Atrion Corporation | | | Intersect ENT, Inc. | | | STAAR Surgical Company | |
| AxoGen, Inc. | | | iRhythm Technologies, Inc. | | | Surmodics, Inc. | |
| Cardiovascular Systems, Inc. | | | LeMaitre Vascular, Inc. | | | Tactile Systems Technology, Inc. | |
| CareDx, Inc. | | | Mesa Laboratories, Inc. | | | Tandem Diabetes Care, Inc. | |
| Cerus Corporation | | | Nevro Corp. | | | |
Inspire Medical Systems, Inc. | | | 38 | | | 2022 Proxy Statement |
![]() | EXECUTIVE COMPENSATION |
| | | 2021 Peer Group Comparison | | |||||||
| | | Revenue | | | Market Cap | | | Employees | | |
| 25th Percentile | | | $147.4 | | | $1,339.4 | | | 441 | |
| Median | | | $225.7 | | | $2,758.1 | | | 614 | |
| 75th Percentile | | | $314.0 | | | $4,767.4 | | | 867 | |
(1) | All dollar amounts in millions. |
(2) | Data source: S&P Capital IQ. |
Inspire Medical Systems, Inc. | | | 39 | | | 2022 Proxy Statement |
![]() | EXECUTIVE COMPENSATION |
| Named Executive Officer | | | 2020 Base Salary ($)(1) | | | 2021 Base Salary ($)(1) | | | % Change | |
| Timothy P. Herbert | | | 505,856 | | | 620,700 | | | 23% | |
| Randall A. Ban | | | 327,782 | | | 339,254 | | | 3% | |
| Richard J. Buchholz | | | 383,379 | | | 411,100 | | | 7% | |
| Philip J. Ebeling | | | 370,000 | | | 407,000 | | | 10% | |
| Bryan K. Phillips(2) | | | N/A | | | 375,000 | | | N/A | |
(1) | Reflects the base salaries approved by the committee prior to start of each applicable year. The amount of base salary actually received during fiscal 2021 is shown in the Summary Compensation Table below. |
(2) | Mr. Phillips’ employment with the Company began on January 19, 2021. |
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| Named Executive Officer | | | Target Incentive Opportunity (as a % of Base Salary) | |
| Timothy P. Herbert | | | 90% | |
| Richard J. Buchholz | | | 50% | |
| Philip J. Ebeling | | | 50% | |
| Bryan K. Phillips | | | 50% | |
i. | Global Revenue: the organization and compensation committee emphasized revenue growth as the highest priority, given the Company’s stage of development and market opportunity. |
ii. | Adjusted Operating Income (Loss): the organization and compensation committee selected this metric to focus management on improving profitability and managing expenses. |
iii. | Global Insurance Reimbursement Approvals: the organization and compensation committee included this metric because securing reimbursement from payors is critical to the Company’s strategy and financial performance. |
iv. | Specified Product Development and Regulatory Approvals: the organization and compensation committee used these metrics to emphasize continuing product development as a key component of the execution of the Company’s overall strategy. |
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| Performance Metric | | | Weight | | | Threshold | | | Target | | | Above- Target | | | Actual Achievement | | | Weighted Achievement | |
| Global Revenue (in millions) | | | 50% | | | $176.0 | | | $198.0 | | | $220.0 | | | $233.4 | | | 66.0% | |
| Adjusted Operating Income (Loss)(1) (in millions) | | | 20% | | | N/A | | | $(25.4) | | | $(21.6) | | | $(13.2)(2) | | | 24.0% | |
| Global Insurance Reimbursement Approvals | | | 10% | | | 5,500 | | | 6,000 | | | 6,500 | | | 7,152 | | | 12.0% | |
| Regulatory and Product Development Metrics | | | 10% | | | At least one metric | | | Complete all metrics | | | N/A | | | Completed all metrics | | | 10.0% | |
| Quality and Operations Metrics | | | 10% | | | At least one metric | | | Complete all metrics | | | N/A | | | Completed 50% of the metrics | | | 5.0% | |
| | | | | | | | | | | Overall Achievement: | | | 117.0% | |
(1) | For purposes of 2021 MIP, adjusted operating income (loss) was defined as income (loss) from operations, calculated in accordance with generally accepted accounting principles, excluding expenses associated with non-cash stock-based compensation and commercial launch activities in Japan. |
(2) | Reflects the Company’s fiscal 2021 reported operating loss of $39.9 million adjusted to exclude $26.2 million in stock-based compensation expense and $0.4 million in expenses associated with commercial launch activities in Japan. |
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| Executive | | | Base Salary ($)(1) | | | Target Opportunity (%) | | | Target Opportunity ($)(2) | | | MIP Achievement Percentage (%) | | | Actual MIP Payout ($)(3) | |
| Timothy P. Herbert | | | 620,028 | | | 90% | | | 558,025 | | | 117.0% | | | 652,889 | |
| Richard J. Buchholz | | | 411,020 | | | 50% | | | 205,510 | | | 117.0% | | | 240,447 | |
| Philip J. Ebeling | | | 407,000 | | | 50% | | | 203,500 | | | 117.0% | | | 238,095 | |
| Bryan K. Phillips(4) | | | 375,000 | | | 50% | | | 187,500 | | | 117.0% | | | 208,170 | |
(1) | Reflects the base salaries approved by the organization and compensation committee prior to the start of fiscal 2021. |
(2) | Amounts shown are calculated as a percentage of the base salary approved by the committee for fiscal 2021. |
(3) | The actual payout under the MIP is based on the base salary actually earned by each named executive in fiscal 2021 as shown in the Summary Compensation Table. |
(4) | Mr. Phillips’ employment with the Company began on January 19, 2021. His base salary and actual payout under the MIP were pro-rated based on the period in which he was employed by the Company during fiscal 2021. |
| Component | | | Quarterly Target Opportunity ($) | | | Annual Target Opportunity ($) | |
| Quarterly Global Sales Bonus | | | 16,000 | | | 64,000 | |
| Quarterly Global Sales Plan Achievement | | | 12,500 | | | 50,000 | |
| Quarterly U.S. Procedure Readiness Bonus | | | 4,250 | | | 17,000 | |
| Quarterly U.S. Implant Productivity Bonus | | | 4,500 | | | 18,000 | |
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Inspire Medical Systems, Inc. | | | 44 | | | 2022 Proxy Statement |
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| Name | | | Stock Options ($) | | | Performance Share Units ($) | | | Target Total LTI Compensation ($) | |
| Timothy P. Herbert | | | 2,100,000 | | | 2,100,000 | | | 4,200,000 | |
| Randall A. Ban | | | 700,000 | | | 700,000 | | | 1,400,000 | |
| Richard J. Buchholz | | | 700,000 | | | 700,000 | | | 1,400,000 | |
| Philip J. Ebeling | | | 700,000 | | | 700,000 | | | 1,400,000 | |
| Bryan K. Phillips | | | 700,000 | | | 700,000 | | | 1,400,000 | |
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Any stockholder or any other interested party who desires to communicate with our Board of Directors, our non-management directors or any specified individual director, may do so by directing such correspondence to the attention
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Inspire Medical Systems, Inc. | | | 46 | | | 2022 Proxy Statement |
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Stockholder Input on Executive Compensation
This year,these discussions, we are holding the first stockholder votes to approve the compensation of our named executive officers on an advisory basis as well as the frequency of such stockholder advisory votes on our executive compensation program. We have recommended to the Board of Directors that the stockholders approve a frequency of every one year.
We are committed to ongoing engagement with its investorsCompensation Discussion and Analysis be included in the Company’s Annual Report on all appropriate matters, including executive compensation and governance. Following the advisory votes at the Annual Meeting, we expect that the compensation committee will consider stockholder input in evaluating the design of our executive compensationForm 10-K and the compensation decisions for eachCompany’s proxy statement.
Inspire Medical Systems, Inc. | | | 47 | | | 2022 Proxy Statement |
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Name and Principal Position | Year | Salary ($) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | Total ($) | ||||||||
Timothy P. Herbert President and Chief Executive Officer | 2019 | 439,875 | 2,047,305 | 412,383 | 2,899,563 | ||||||||
2018 | 417,606 | 2,424,007 | 419,156 | 3,260,769 | |||||||||
2017 | 380,000 | 83,901 | 135,660 | 599,561 | |||||||||
Richard J. Buchholz Chief Financial Officer | 2019 | 333,373 | 629,940 | 187,523 | 1,150,836 | ||||||||
2018 | 311,269 | 656,960 | 190,603 | 1,158,832 | |||||||||
2017 | 255,748 | 8,708 | 65,216 | 329,672 | |||||||||
Randall A. Ban Chief Commercial Officer | 2019 | 297,984 | 1,438,640 | 240,040 | 1,976,664 | ||||||||
2018 | 287,907 | 538,000 | 237,444 | 1,063,351 | |||||||||
2017 | 278,168 | 19,818 | 215,225 | 513,211 |
| | | Year | | | Salary ($)(1) | | | Bonus ($) | | | Stock Awards ($)(2) | | | Option Awards ($)(2) | | | Non-Equity Incentive Plan Compensation ($)(3) | | | Total ($) | | |
| Timothy P. Herbert President and Chief Executive Officer | | | 2021 | | | 620,028 | | | — | | | — | | | — | | | 652,889 | | | 1,272,917 | |
| 2020 | | | 505,856 | | | — | | | — | | | 3,918,240 | | | 441,511 | | | 4,865,607 | | |||
| 2019 | | | 439,875 | | | — | | | — | | | 2,047,305 | | | 412,383 | | | 2,899,563 | | |||
| Richard J. Buchholz Chief Financial Officer | | | 2021 | | | 411,020 | | | — | | | — | | | — | | | 240,447 | | | 651,467 | |
| 2020 | | | 383,379 | | | — | | | — | | | 1,569,110 | | | 209,133 | | | 2,161,622 | | |||
| 2019 | | | 333,373 | | | — | | | — | | | 629,940 | | | 187,523 | | | 1,150,836 | | |||
| Randall A. Ban Chief Commercial Officer | | | 2021 | | | 339,254 | | | — | | | — | | | — | | | 270,470 | | | 609,724 | |
| 2020 | | | 327,782 | | | — | | | — | | | 1,569,110 | | | 250,860 | | | 2,147,752 | | |||
| 2019 | | | 297,984 | | | — | | | — | | | 1,438,640 | | | 240,040 | | | 1,976,664 | | |||
| Philip J. Ebeling(4) Chief Operating Officer | | | 2021 | | | 407,000 | | | — | | | — | | | — | | | 238,095 | | | 645,095 | |
| 2020 | | | 215,833 | | | — | | | — | | | 3,206,830 | | | 117,737 | | | 3,540,400 | | |||
| Bryan K. Phillips(5) Senior Vice President, General Counsel, Secretary, and Chief Compliance Officer | | | 2021 | | | 356,730 | | | 75,000(6) | | | 458,435 | | | 1,589,100 | | | 208,170 | | | 2,687,436 | |
(1) |
(2) | Amounts reflect the full grant date fair value of stock options and restricted stock units granted computed in accordance with |
(3) |
(4) | Mr. Ebeling’s employment with the Company began on June 1, 2020. |
(5) | Mr. Phillips’ employment with the Company began on January 19, 2021. |
(6) | Amount reflects a sign-on bonus paid to Mr. Phillips in connection with his hiring in January 2021. |
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| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | All Other Stock Awards: Number of Shares or Units (#)(2) | | | All Other Option Awards: Number of Securities Underlying Options (#)(2) | | | Exercise or Base Price of Option Awards ($/sh) | | | Grant Date Fair Value of Stock and Option Awards ($)(3) | | |||||
| | | Grant Date | | | Threshold ($) | | | Target ($) | | |||||||||||||
| Timothy P. Herbert | | | | | 446,420 | | | 558,025 | | | — | | | — | | | — | | | — | | |
| Richard J. Buchholz | | | | | 164,408 | | | 205,510 | | | — | | | — | | | — | | | — | | |
| Randall A. Ban | | | | | — | | | 149,000 | | | — | | | — | | | — | | | — | | |
| Philip J. Ebeling | | | | | 162,800 | | | 203,500 | | | — | | | — | | | — | | | — | | |
| Bryan K. Phillips | | | | | 150,000 | | | 187,500 | | | — | | | — | | | — | | | — | | |
| 01/29/21 | | | — | | | — | | | 2,275 | | | — | | | — | | | 458,435 | | |||
| 01/29/21 | | | — | | | — | | | — | | | 15,000 | | | 201.51 | | | 1,589,100 | |
(1) | Amounts shown in this column represent the potential cash payout amounts under the fiscal 2021 MIP. The actual cash payout amounts are disclosed in the Summary Compensation Table in the “Non-Equity Incentive Plan Compensation” column. |
(2) | Amounts represent the number of restricted stock units and stock options, respectively, granted to Mr. Phillips in connection with his hiring in January 2021. |
(3) | Amounts represent the grant date fair value of the awards determined in accordance with ASC 718. For a discussion of assumptions made in determining the grant date fair value of stock options granted by the Company, see Note 7 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. |
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The compensation committee determined to increase the 2020 base salaries of Messrs. Herbert, Buchholz and Ban to $505,856, $383,379 and $327,782, respectively.
2019 Bonuses and Commissions
certain notice requirements, described below. We pay cash incentive awards tohave entered into new employment agreements with each of our named executive officers. Such awardsThe written descriptions and material terms of such new employment agreements are designed to incentivize our named executive officers with a variable level of compensation that is based on performance measures evaluated by our compensation committee in consultation with management and as approved by the board. These cash incentives are intended to link a substantial portion of executive compensation to our performance and provide executive officers with a competitive level of compensation if they achieve their objectives.
Management Incentive Program
Each of Messrs. Herbert and Buchholz are eligible to participate in our MIP, under which eligible participants may receive cash bonuses based on our achievement of certain company financial operating performance metrics. For 2019, the annual target bonus amounts under the MIP expressed as a percentage of base salary for Messrs. Herbert and Buchholz were equal to 75% and 45%, respectively.
Based on the achievement of the 2019 performance measures under the MIP, the compensation committee recommended, and the board approved, payment of cash bonuses under the MIP equal to 125% of Messrs. Herbert and Buchholz's respective target bonus amounts for 2019, totaling $412,383 and $187,523, respectively.
Effective for fiscal year 2020 and thereafter, Messrs. Herbert and Buchholz’s annual target bonus amounts under the MIP, expressed as a percentage of base salary, were increased to 80% and 50%, respectively.
Ban Commissions
Mr. Ban is eligible to receive commissions based on achievement of certain performance metrics, which are determined and paid on a quarterly basis. The compensation committee determined that Mr. Ban would have an annual target commission amount of $149,000 for 2019. Based on the achievement of the applicable performance components, Mr. Ban received quarterly commission payments of $35,280, $38,600, $38,120 and $128,040, respectively for 2019. As a result, Mr. Ban earned cash commissions totaling an aggregate $240,040, representing 161% of his annual target commission amount.
The actual cash bonuses and commissions earned by each named executive officer for 2019 performance are set forth above in the Summary Compensation Table in the column entitled “Non-Equity Incentive Plan Compensation.”
Equity Compensation
Prior to our IPO, we maintained two equity incentive plans, the 2007 Stock Incentive Plan, as amended (the “2007 Plan”) and the 2017 Stock Incentive Plan, as amended (the “2017 Plan”), which have provided our employees (including the named executive officers), non-employee directors, consultants and independent contractors the opportunity to participate in the equity appreciation of our business through the receipt of stock options to purchase shares of our common stock. We believe that such stock options function as a compelling retention tool. The 2007 Plan terminated in accordance with its terms on November 28, 2017. Accordingly, we may no longer grant stock options under the 2007 Plan; however, outstanding stock options may continue to be exercised in accordance with their terms. Immediately following the termination of the 2007 Plan, we adopted the 2017 Plan, which contains substantially similar terms and conditions as the 2007 Plan. In connection with the
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IPO we adopted, and our stockholders approved, the 2018 Incentive Award Plan (the “2018 Plan”) in order to facilitate the grant of cash and equity incentives to directors, employees (including our named executive officers) and consultants of us and certain of our affiliates and to enable us and certain of its affiliates to obtain and retain services of these individuals, which is essential to our long-term success.
In addition, eligible employees of us or our designated subsidiaries (including our named executive officers), may participate in the Inspire Medical Systems, Inc. 2018 Employee Stock Purchase Plan (the “ESPP”). The ESPP provides eligible employees with the opportunity to acquire our common stock through periodic payroll deductions, at a discounted price. The ESPP is structured as a qualified employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”).
Under the 2018 Plan, we granted Mr. Ban an incentive stock option to purchase 25,000 shares of our common stock at an exercise price of $67.63 per share on July 31, 2019 in connection with his promotion to Chief Commercial Officer.
In addition, on December 16, 2019, we granted incentive stock options to purchase 65,000 shares of our common stock, 20,000 shares of our common stock and 25,000 shares of our common stock to Messrs. Herbert, Ban and Buchholz, respectively. Each such stock option has a $71.00 per share exercise price.
The foregoing stock options have the same vesting schedule, which provides for 25% to vest on the first anniversary of the grant date and the remaining 75% to vest in 36 equal monthly installments thereafter (such that the stock option would fully vest on the fourth anniversary of the grant date), subject to the recipient’s continuous employment through the relevant vesting dates; provided that a stock option award will fully accelerate in vesting in the event of a termination of the recipient’s employment by us without “Cause” (as defined in the named executive officer’s employment agreement) within one year following a “Change in Control” (as defined in the 2018 Plan).
Other Elements of Compensation
Retirement Plans
We currently maintain a 401(k) retirement savings plan for our employees, including our named executive officers, who satisfy certain eligibility requirements. Our named executive officers are eligible to participate in the 401(k) plan on the same terms as other full-time employees. The Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) plan. We believe that providing a vehicle for tax-deferred retirement savings though our 401(k) plan adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our named executive officers, in accordance with our compensation policies.
Employee Benefits and Perquisites
Health/Welfare Plans. All of our full-time employees, including our named executive officers, are eligible to participate in our health and welfare plans, including:
No Tax Gross-Ups
We do not make gross-up payments to cover our named executive officers’ personal income taxes that may pertain to any of the compensation or perquisites paid or provided by our company.
Employment Agreements
Timothy P. Herbert
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Employment Agreement provides for an indefinite term and is terminable at will by us or Mr. Herbert, provided that one month’s advance notice must be provided by the terminating party in the event of a termination of employment without “Cause” by us or a resignation without “Good Reason” by Mr. Herbert.
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although business travel shall not be deemed to be a move of his place of employment; or (iv) our material breach of the Herbert Employment Agreement, provided Mr. Herbert has provided us detailed written notice of such alleged breach and we have not, within thirty (30) days of receipt of such notice, cured such alleged breach.
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The Ban Employment Agreement provides for Mr. Ban’s eligibility to receive discretionary annual bonuses and/or long term incentive compensation, as well as Mr. Ban’s current participation in a commission program in lieu of the foregoing. The Ban Employment Agreement provides that Mr. Ban will be eligible for an annual target commission amount as determined at the beginning of each calendar year. Pursuant to the Ban Employment Agreement, upon termination of employment by us without Cause, Mr. Ban will receive the sum of (x) 9nine months of his then current annual base salary and (y) a pro rata portion of his target annual commission, with such amount payable in installments over the 9-month period following such termination, as well as subsidized COBRA premiums for 9nine months following his termination of employment. Notwithstanding the foregoing, in the event such a termination of employment occurs on or within the twelve-month period following a Change of Control, Mr. Ban will be entitled to receive: the sum of (x) twelve(A) 12 months of his then current base salary and (y)(B) target annual commission, payable in substantially equal installments for twelve12 months following his termination of employment, (B)(C) subsidized COBRA premiums for twelve12 months following his termination of employment and (C)(D) acceleration in full of the vesting of his outstanding equity awards. Mr. Ban will be required to execute a release of claims in favor of us in order to receive his severance benefits.
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such condition and the Company failing to cure the basis for such claimed Good Reason within thirty (30) days following such notice.
On July 1, 2019, Mr. Ban was promoted to the role of Chief Commercial Officer.
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Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(2) | Number of Securities Underlying Unexercised Options (#) Unexercisable(2) | Option Exercise Price ($)(2) | Option Expiration Date | ||||||||||
Timothy P. Herbert | 5/1/2012 | 9,221 | — | 1.47 | 5/1/2022 | ||||||||||
9/12/2013 | 39,272 | — | 1.14 | 9/12/2023 | |||||||||||
3/31/2014 | 176,691 | — | 2.07 | 3/31/2024 | |||||||||||
1/1/2017 | 42,214 | 15,680 | 0.94 | 1/1/2027 | |||||||||||
4/1/2017 | 101,453 | 50,727 | 0.94 | 4/1/2027 | |||||||||||
4/9/2018 | 46,991 | 65,790 | 10.38 | 4/9/2028 | |||||||||||
12/18/2018 | 21,250 | 63,750 | 42.15 | 12/18/2028 | |||||||||||
12/16/2019 | — | 65,000 | 71.00 | 12/16/2029 | |||||||||||
Richard J. Buchholz | 6/1/2014 | 37,706 | — | 2.07 | 6/1/2024 | ||||||||||
1/1/2017 | 585 | 1,630 | 0.94 | 1/1/2027 | |||||||||||
4/1/2017 | 1,325 | 5,264 | 0.94 | 4/1/2027 | |||||||||||
4/9/2018 | 9,398 | 13,158 | 10.38 | 4/9/2028 | |||||||||||
12/18/2018 | 6,250 | 18,750 | 42.15 | 12/18/2028 | |||||||||||
12/16/2019 | — | 20,000 | 71.00 | 12/16/2029 | |||||||||||
Randall A. Ban | 9/12/2013 | 75,187 | — | 1.14 | 9/12/2023 | ||||||||||
3/31/2014 | 27,067 | — | 2.07 | 3/31/2024 | |||||||||||
1/1/2017 | 9,867 | 3,666 | 0.94 | 1/1/2027 | |||||||||||
4/1/2017 | 24,059 | 12,031 | 0.94 | 4/1/2027 | |||||||||||
12/18/2018 | 6,250 | 18,750 | 42.15 | 12/18/2028 | |||||||||||
7/31/2019 | — | 25,000 | 67.63 | 7/31/2029 | |||||||||||
12/16/2019 | — | 20,000 | 71.00 | 12/16/2029 |
| | | Option Awards(1) | | | Stock Awards | | |||||||||||||||||||
| | | | | No. of Securities Underlying Unexercised Options | | | Option Exercise Price(2) | | | Option Expiration Date | | | Award Grant Date | | | Shares or Unites of Stock That Have Not Vested | | ||||||||
| Executive | | | Grant Date | | | Exercisable (#)(2) | | | Unexercisable (#)(2) | | | Number (#)(3) | | | Market Value ($)(4) | | |||||||||
| Timothy P. Herbert | | | 05/01/12 | | | 9,221 | | | — | | | 1.47 | | | 05/01/22 | | | | | | | | |||
| 09/12/13 | | | 8,196 | | | — | | | 1.14 | | | 09/12/23 | | | | | | | | ||||||
| 03/31/14 | | | 176,691 | | | — | | | 2.07 | | | 03/31/24 | | | | | | | | ||||||
| 01/01/17 | | | 12,062 | | | — | | | 0.94 | | | 01/01/27 | | | | | | | | ||||||
| 04/01/17 | | | 50,302 | | | — | | | 0.94 | | | 04/01/27 | | | | | | | | ||||||
| 04/09/18 | | | 103,382 | | | 9,399 | | | 10.38 | | | 04/09/28 | | | | | | | | ||||||
| 12/18/18 | | | 63,750 | | | 21,250 | | | 42.15 | | | 12/18/28 | | | | | | | | ||||||
| 12/16/19 | | | 32,500 | | | 32,500 | | | 71.00 | | | 12/16/29 | | | | | | | | ||||||
| 12/14/20 | | | 10,800 | | | 32,400 | | | 194.82 | | | 12/14/30 | | | | | | | | ||||||
| Richard J. Buchholz | | | 04/09/18 | | | 1,410 | | | 1,880 | | | 10.38 | | | 04/09/28 | | | | | | | | |||
| 12/18/18 | | | 3,602 | | | 6,250 | | | 42.15 | | | 12/18/28 | | | | | | | | ||||||
| 12/16/19 | | | 7,966 | | | 10,000 | | | 71.00 | | | 12/16/29 | | | | | | | | ||||||
| 12/14/20 | | | 4,325 | | | 12,975 | | | 194.82 | | | 12/14/30 | | | | | | | | ||||||
| Randall A. Ban | | | 03/31/14 | | | 8,567 | | | — | | | 2.07 | | | 03/31/24 | | | | | | | | |||
| 01/01/17 | | | 7,273 | | | — | | | 0.94 | | | 01/01/27 | | | | | | | | ||||||
| 04/01/17 | | | 36,090 | | | — | | | 0.94 | | | 04/01/27 | | | | | | | | ||||||
| 12/18/18 | | | 18,750 | | | 6,250 | | | 42.15 | | | 12/18/28 | | | | | | | | ||||||
| 07/31/19 | | | 15,104 | | | 9,896 | | | 67.63 | | | 07/31/29 | | | | | | | | ||||||
| 12/16/19 | | | 10,000 | | | 10,000 | | | 71.00 | | | 12/16/29 | | | | | | | | ||||||
| 12/14/20 | | | 4,325 | | | 12,975 | | | 194.82 | | | 12/14/30 | | | | | | | |
Inspire Medical Systems, Inc. | | | 55 | | | 2022 Proxy Statement |
![]() | EXECUTIVE COMPENSATION |
| | | Option Awards(1) | | | Stock Awards | | |||||||||||||||||||
| | | | | No. of Securities Underlying Unexercised Options | | | Option Exercise Price(2) | | | Option Expiration Date | | | Award Grant Date | | | Shares or Unites of Stock That Have Not Vested | | ||||||||
| Executive | | | Grant Date | | | Exercisable (#)(2) | | | Unexercisable (#)(2) | | | Number (#)(3) | | | Market Value ($)(4) | | |||||||||
| Philip J. Ebeling | | | 06/30/20 | | | 15,000 | | | 25,000 | | | 87.02 | | | 06/30/30 | | | | | | | | |||
| 12/14/20 | | | 4,325 | | | 12,975 | | | 194.82 | | | 12/14/30 | | | | | | | | ||||||
| Bryan K. Phillips | | | 01/29/21 | | | 0 | | | 15,000 | | | 201.51 | | | 01/29/31 | | | 01/29/21 | | | 2,275 | | | 523,387 | |
(1) | Each stock option award has the same vesting schedule, which provides for 25% of the award to vest on the first anniversary of the grant date and the remaining 75% of the award to vest in 36 equal monthly installments thereafter (such that the award would fully vest on the fourth anniversary of the grant date), subject to the recipient’s continuous employment with us through the relevant vesting dates; provided that a stock option award will fully accelerate in vesting in the event of a termination of the recipient’s employment by us without “Cause” (as defined in the named executive officer’s employment agreement) within one year following a “Change in Control”. For additional details, please refer to the section titled “Executive Compensation—Narrative to Summary Compensation Table—Equity Compensation” above. |
(2) | Pursuant to provisions in the 2007 Plan and 2017 Plan, the exercise price and number of shares subject to the options granted under the 2007 Plan and 2017 Plan were adjusted in connection with the 1-for-6.650 reverse stock split of our common stock effected on April 20, 2018. Accordingly, the share totals and exercise prices shown in the table above |
(3) | Represents restricted stock units that vest in four equal installments beginning on the first anniversary of the date of grant. |
(4) | The market value of restricted share units that have not vested equals the number of such units multiplied by $230.06, which was the closing price per share of the Company’s common stock as listed on the New York Stock Exchange on December 31, 2021. |
| | | Option Awards | | ||||
| | | Number of Shares Acquired on Exercise(#) | | | Value Realized on Exercise ($)(1) | | |
| Timothy P. Herbert | | | — | | | — | |
| Richard J. Buchholz | | | 17,255 | | | 3,283,565 | |
| Randall A. Ban | | | 39,947 | | | 7,779,376 | |
| Philip J. Ebeling | | | — | | | — | |
| Bryan K. Phillips | | | — | | | — | |
(1) | Represents the difference between the option exercise price and the closing price of our common stock, as reported on the New York Stock Exchange, on the date of exercise, multiplied by the number of shares of our common stock underlying the stock options that were exercised. |
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Inspire Medical Systems, Inc. | | | 56 | | | 2022 Proxy Statement |
![]() | EXECUTIVE COMPENSATION |
| Name | | | Benefit | | | Death ($) | | | Disability ($) | | | Termination Without Cause or for Good Reason / Cause (no Change in Control) ($) | | | Change in Control (no Termination) ($) | | | Termination Without Cause or for Good Reason / Cause in Connection with a Change in Control ($) | |
| Timothy P. Herbert | | | Cash | | | — | | | — | | | 1,178,052 | | | — | | | 1,488,066 | |
| Equity Acceleration(1) | | | — | | | — | | | — | | | — | | | 28,737,084 | | |||
| All Other Payments or Benefits | | | — | | | — | | | 23,930 | | | — | | | 35,895 | | |||
| Total | | | — | | | — | | | 1,201,982 | | | — | | | 30,261,045 | | |||
| Richard J. Buchholz | | | Cash | | | — | | | — | | | 513,776 | | | — | | | 616,531 | |
| Equity Acceleration(1) | | | — | | | — | | | — | | | — | | | 7,336,269 | | |||
| All Other Payments or Benefits | | | — | | | — | | | 17,948 | | | — | | | 23,930 | | |||
| Total | | | — | | | — | | | 531,723 | | | — | | | 7,976,730 | | |||
| Randall A. Ban | | | Cash | | | — | | | — | | | 403,441 | | | — | | | 488,254 | |
| Equity Acceleration(1) | | | — | | | — | | | — | | | — | | | 8,732,389 | | |||
| All Other Payments or Benefits | | | — | | | — | | | 17,948 | | | — | | | 23,930 | | |||
| Total | | | — | | | — | | | 421,388 | | | — | | | 9,244,574 | |
Inspire Medical Systems, Inc. | | | 57 | | | 2022 Proxy Statement |
TABLE OF CONTENTSDIRECTOR COMPENSATION
![]() | EXECUTIVE COMPENSATION |
| Name | | | Benefit | | | Death ($) | | | Disability ($) | | | Termination Without Cause or for Good Reason / Cause (no Change in Control) ($) | | | Change in Control (no Termination) ($) | | | Termination Without Cause or for Good Reason / Cause in Connection with a Change in Control ($) | |
| Philip J. Ebeling | | | Cash | | | — | | | — | | | 508,750 | | | — | | | 610,500 | |
| Equity Acceleration(1) | | | — | | | — | | | — | | | — | | | 6,341,566 | | |||
| All Other Payments or Benefits | | | — | | | — | | | 17,948 | | | — | | | 23,930 | | |||
| Total | | | — | | | — | | | 526,698 | | | — | | | 6,975,996 | | |||
| Bryan K. Phillips | | | Cash | | | — | | | — | | | 468,750 | | | — | | | 562,500 | |
| Equity Acceleration(1) | | | — | | | — | | | — | | | — | | | 954,746 | | |||
| All Other Payments or Benefits | | | — | | | — | | | — | | | — | | | — | | |||
| Total | | | — | | | — | | | 468,750 | | | — | | | 1,517,246 | |
(1) | The value of the accelerated stock options is calculated based on the number of shares of our common stock subject to accelerated unvested stock options multiplied by the difference between $230.24, the closing price for a share of our common stock on the New York Stock Exchange on December 31, 2021, and the per share exercise price. The value of the accelerated restricted stock units is calculated based on the number of unvested restricted stock units multiplied by $230.24, the closing price for a share of our common stock on the New York Stock Exchange on December 31, 2021. |
Inspire Medical Systems, Inc. | | | 58 | | | 2022 Proxy Statement |
1. | We selected October 1, 2021, which is within the last three months of fiscal 2021, as the date upon which we would identify the median employee. |
2. | We determined that, as of October 1, 2021, our employee population consisted of 455 individuals working at the Company. |
3. | For purposes of measuring the compensation of our employee population, we selected a “consistently applied compensation measure” (“CACM”). We chose a CACM that closely approximates the annual target total direct compensation of our employees. Specifically, we identified the median employee by aggregating, for each employee as of October 1, 2021: (1) annual base pay, (2) the actual cash incentive opportunity using the payout under the 2021 MIP, and (3) the grant date fair value for equity awards granted through December 31, 2021. In identifying the median employee, we annualized the compensation values of permanent employees that joined our Company during fiscal 2021. Amounts paid in foreign currencies were converted to U.S. Dollars based on the average annual exchange rate as of October 1, 2021. |
4. | After applying our CACM methodology, we identified the median employee. Once the median employee was identified, we calculated the median employee's annual target total direct compensation in accordance with the requirements of the Summary Compensation Table. |
5. | Once we identified the median employee, we identified and calculated the elements of such employee’s compensation for fiscal 2021 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $205,859. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our Summary Compensation Table included elsewhere in this document. |
Inspire Medical Systems, Inc. | | | 59 | | | 2022 Proxy Statement |
Inspire Medical Systems, Inc. | | | 60 | | | 2022 Proxy Statement |
![]() | DIRECTOR COMPENSATION |
Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(4)(5) | Total ($) | ||||||
Gary L. Ellis | 23,750 | (1)(2) | 165,000 | 188,750 | |||||
Joyce Erony | 35,833 | (3) | — | 35,833 | |||||
Jerry C. Griffin, M.D. | 54,167 | — | 54,167 | ||||||
Mudit K. Jain, Ph.D. | 50,000 | (1) | — | 50,000 | |||||
Chau Khuong | 47,500 | (1) | — | 47,500 | |||||
Dana G. Mead, Jr. | 50,000 | — | 50,000 | ||||||
Shawn T McCormick | 60,000 | — | 60,000 | ||||||
Marilyn Carlson Nelson | 81,667 | (1) | — | 81,667 | |||||
Casey M. Tansey | 55,000 | (1) | — | 55,000 |
| Name | | | Fees Earned or Paid in Cash ($) | | | Option Awards ($)(2)(3) | | | Total ($) | |
| Shelley G. Broader | | | 50,865(1) | | | 140,000 | | | 190,865 | |
| Gary L. Ellis | | | 58,365(1) | | | 140,000 | | | 198,365 | |
| Georgia Garinois-Melenikiotou | | | 53,365(1) | | | 140,000 | | | 193,365 | |
| Jerry C. Griffin, M.D. | | | 58,365 | | | 140,000 | | | 198,365 | |
| Dana G. Mead, Jr. | | | 53,365 | | | 140,000 | | | 193,365 | |
| Shawn T McCormick | | | 63,365 | | | 140,000 | | | 203,365 | |
| Marilyn Carlson Nelson | | | 89,231(1) | | | 140,000 | | | 229,231 | |
| Casey M. Tansey | | | 58,365(1) | | | 140,000 | | | 198,365 | |
(1) | Each of Ms. Broader, Mr. Ellis, |
(2) |
The table below shows the aggregate numbers of stock option awards (exercisable and unexercisable) held as of December 31, |
| | 61 | | | 2022 Proxy Statement |
![]() | DIRECTOR COMPENSATION |
| Name | | | Number of Shares of Common Stock Underlying Options Outstanding at Fiscal Year End | | |
| Shelley G. Broader | | | 4,288 | | |
| Gary L. Ellis | | | 9,937 | | |
| | | 3,731 | | ||
| Jerry C. Griffin, M.D. | | | 37,818 | | |
Dana G. Mead, Jr. | | | 26,541 | | ||
| Shawn T McCormick | | | 41,578 | | |
| Marilyn Carlson Nelson | | | 49,096 | | |
| Casey M. Tansey | | | 26,541 | |
Inspire Medical Systems, Inc. | | | 62 | | | 2022 Proxy Statement |
Non-Employee Director Compensation Policy
In connection with the IPO, we adopted, and our stockholders approved, a compensation policy for our non-employee directors that consists of annual retainer fees and long-term equity awards.
Pursuant to this policy, as was subsequently amended effective May 1, 2019, each eligible non-employee director receives an annual cash retainer of $40,000. The chairperson of the board of directors receives an additional annual cash retainer of $35,000. Further, the chairperson of the audit committee receives an additional annual cash retainer of $20,000 and each other member of the audit committee receives an additional annual cash retainer of $10,000, the chairperson of the compensation committee receives an additional annual cash retainer of $15,000 and each other member of the compensation committee receives an additional annual cash retainer of $7,500, and the chairperson of the nominating and governance committee receives an additional annual cash retainer of $15,000 and each other member of the nominating and governance committee receives an additional annual cash retainer of $7,500. Each annual cash retainer will be paid quarterly in arrears. The Board of Directors may, in its discretion, permit a non-employee director to elect to receive any portion of the annual cash retainer in the form of fully vested and unrestricted shares of common stock in lieu of cash. Also, pursuant to this policy, on the date of any annual meeting of our stockholders, we intend to grant each eligible non-employee
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director an award of an option to purchase a number of shares of our common stock (at a per-share exercise price equal to the closing price per share of the common stock on the date of such annual meeting (or on the last preceding trading day)) that has a grant date fair value of $110,000. The terms of each such award will be set forth in a written award agreement between each non-employee director and us, which will generally provide for vesting after one year of continued service as a director. Each such award will vest in full immediately prior to the occurrence of a Change in Control (as defined in the 2018 Plan).
Also, pursuant to this policy, we intend to grant any eligible non-employee director who is elected or appointed mid-year an award of an option to purchase a number of shares of our common stock (at a per-share exercise price equal to the closing price per share of the common stock on the date of such director’s election or appointment (or on the last preceding trading day)) that has a grant date fair value of $165,000. The terms of each such award will be set forth in a written award agreement between the non-employee director and us, which will generally provide for vesting in three equal installments following the date of grant (such that such award will vest in full on the third anniversary of the date of grant). Each such award will vest in full immediately prior to the occurrence of a Change in Control.
All cash and equity awards granted under the non-employee director compensation policy will be granted under, and subject to the limits of, the 2018 Plan.
In connection with his appointment to the board on July 25, 2019, Mr. Ellis received an initial award of 5,261 options with an exercise price of $67.75 per share pursuant to the non-employee director compensation policy.
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The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Under these rules, a person is deemed to be a “beneficial” owner of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. Except as indicated in the footnotes below, we believe, based on the information furnished to us, that the individuals and entities named in the table below have sole voting and investment power with respect to all shares of common stock beneficially owned by them, subject to any applicable community property laws.
Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Owned | ||||
Holders of More than 5%: | ||||||
BlackRock, Inc.(1) | 1,834,219 | 7.6 | % | |||
Named executive officers and directors: | ||||||
Timothy P. Herbert(2) | 773,655 | 3.1 | % | |||
Randall A. Ban(3) | 140,158 | * | ||||
Richard J. Buchholz(4) | 94,170 | * | ||||
Marilyn Carlson Nelson(5) | 258,426 | 1.1 | % | |||
Gary L. Ellis | 1,170 | * | ||||
Jerry C. Griffin, M.D.(6) | 61,942 | * | ||||
Mudit K. Jain, Ph.D.(7) | 22,840 | * | ||||
Chau Khuong(8) | 23,338 | * | ||||
Dana G. Mead, Jr.(9) | 41,865 | * | ||||
Shawn T McCormick(10) | 47,420 | * | ||||
Casey M. Tansey(11) | 152,334 | * | ||||
All executive officers and directors as a group (12 individuals)(12) | 1,651,337 | 6.6 | % |
Inspire Medical Systems, Inc. | | | 63 | | | 2022 Proxy Statement |
![]() | STOCK OWNERSHIP |
| Name of Beneficial Owner | | | Number of Shares Beneficially Owned | | | Percentage of Shares Beneficially Owned | |
| Holders of More than 5%: | | | | | | ||
| The Vanguard Group(1) | | | 2,559,739 | | | 9.0% | |
| BlackRock, Inc.(2) | | | 1,846,227 | | | 6.5% | |
| FMR LLC(3) | | | 1,538,454 | | | 5.4% | |
| Named executive officers and directors: | | | | | | ||
| Timothy P. Herbert(4) | | | 790,513 | | | 2.8% | |
| Marilyn Carlson Nelson(5) | | | 153,936 | | | * | |
| Randall A. Ban(6) | | | 97,508 | | | * | |
| Richard J. Buchholz(7) | | | 90,049 | | | * | |
| Shawn T McCormick(8) | | | 52,096 | | | * | |
| Dana G. Mead, Jr.(9) | | | 46,541 | | | * | |
| Casey M. Tansey(10) | | | 45,815 | | | * | |
| Jerry C. Griffin, M.D.(11) | | | 37,818 | | | * | |
| Philip J. Ebeling(12) | | | 24,398 | | | * | |
| Gary L. Ellis(13) | | | 10,159 | | | * | |
| Bryan K. Phillips(14) | | | 5,096 | | | * | |
| Shelley G. Broader(15) | | | 2,495 | | | * | |
| Georgia Garinois-Melenikiotou(16) | | | 1,294 | | | * | |
| All executive officers and directors as a group (14 individuals)(17) | | | 1,417,781 | | | 5.0% | |
* | Represents less than 1%. |
(1) | Based on a Schedule 13G filed with the SEC on February |
(2) | Based on a Schedule 13G filed with the SEC on February 3, 2022 by BlackRock, Inc. has sole voting power with respect to |
(3) |
Inspire Medical Systems, Inc. | | | 64 | | | 2022 Proxy Statement |
![]() | STOCK OWNERSHIP |
(4) | Includes for Mr. Herbert, (i) |
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(5) | Includes for Ms. Nelson, (i) |
(6) | Includes for |
(7) | Includes for |
Includes for Mr. McCormick, (i) 3,000 shares of common stock held by a trust as to which Mr. McCormick serves as trustee and (ii) |
Includes for Mr. |
Includes for |
(11) | Includes for Dr. Griffin, 37,818 shares of common stock underlying stock options currently exercisable or exercisable within 60 days of March 3, 2022. |
(12) | Includes for Mr. Ebeling, 24,099 shares of common stock underlying stock options currently exercisable or exercisable within 60 days of March 3, 2022. |
(13) | Includes for Mr. Ellis, 8,184 shares of common stock underlying stock options currently exercisable or exercisable within 60 days of March 3, 2022. |
(14) | Includes for Mr. Phillips, 4,687 shares of common stock underlying stock options currently exercisable or exercisable within 60 days of March 3, 2022. |
(15) | Includes for Ms. Broader, 2,213 shares of common stock underlying stock options currently exercisable or exercisable within 60 days of March 3, 2022. |
(16) | Includes for Ms. Garinois-Melenikiotou, 1,175 shares of common stock underlying stock options currently exercisable or exercisable within 60 days of March 3, 2022. |
(17) | Includes for all executive officers and directors as a group, 807,364 shares of common stock underlying stock options currently exercisable or exercisable within 60 days of March 3, 2022. |
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Inspire Medical Systems, Inc. | | | 65 | | | 2022 Proxy Statement |
Policies and Procedures on Transactions with Related Persons
In connection with our IPO consummated in May 2018, certain of our existing stockholders and members of our Board of Directors purchased shares of our common stock from the underwriters at the public offering price of $16.00 per share, and on the same terms as other investors in our IPO. The following table summarizes purchases of shares of our common stock in our IPO by holders of more than 5% of our capital stock, certain members of our Board of Directors and an entity affiliated with a member of our Board of Directors.
Participants | Shares Purchased | Aggregate Purchase Price | ||||
(in thousands) | ||||||
Greater than 5% Stockholders | ||||||
Orbimed Private Investments V, L.P.(1) | 312,500 | $ | 5,000 | |||
Amzak Health Investors, LLC(2) | 125,000 | $ | 2,000 | |||
Directors and Affiliates | ||||||
GDN Holdings, LLC(3) | 62,500 | $ | 1,000 | |||
Dana G. Mead, Jr. | 20,000 | $ | 320 | |||
Casey M. Tansey | 187,500 | $ | 3,000 |
We are party to a fifth amended and restated investor rights agreement (as amended, the “Investor Rights Agreement”) with each holder of our formerly outstanding convertible preferred stock, including each holder of more than 5% of our common stock and certain of our directors (or, in some cases, entities affiliated therewith). The Investor Rights Agreement imposes certain affirmative obligations on us, and also grants certain rights to the holders, including certain registration rights with respect to the registrable securities held by them. In connection with our IPO, we entered into an amendment to the Investor Rights Agreement which provided for the termination of all rights and covenants thereunder, other than the registration rights described above, immediately prior to the consummation of our IPO.
We were party to that certain fifth amended and restated voting agreement, as amended, or the Voting Agreement, pursuant to which each of U.S. Venture Partners IX, L.P., Kleiner Perkins Caufield & Byers, Synergy Life Science Partners, LP, OrbiMed Private Investments V, L.P. and Amzak Health Investors, LLC had the right
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to designate one member to be elected to our Board of Directors. The Voting Agreement terminated by its terms in connection with the closing of our IPO, and none of our stockholders currently have any continuing rights regarding the election or designation of members of our Board of Directors.
Right of First Refusal and Co-Sale Agreement
We were party to a fifth amended and restated right of first refusal and co-sale agreement with the Timothy P. Herbert 2013 Family Irrevocable GST Trust U/A/D November 27, 2013 and each holder of our convertible preferred stock, which included each holder of more than 5% of our capital stock and certain of our directors (or, in some cases, entities affiliated therewith), pursuant to which we had a right of first refusal in respect of certain sales of securities by the Timothy P. Herbert 2013 Family Irrevocable GST Trust U/A/D November 27, 2013. The right of first refusal and co-sale agreement terminated in connection with the closing of our IPO.
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Inspire Medical Systems, Inc. | | | 66 | | | 2022 Proxy Statement |
At our 2020 Annual Meeting of Stockholders held on April 30, 2020, our stockholders recommended, on an advisory basis, that the stockholder vote on the compensation of our named executive officers occur every year. In light of the foregoing recommendation, the Board determined to hold a “say-on-pay” advisory vote every year. Accordingly, our next advisory say-on-pay vote (following the non-binding advisory vote at this Annual Meeting) is expected to occur at our 2023 Annual Meeting of Stockholders. At our 2021 Annual Meeting of Stockholders, approximately 90.3% of the votes cast on the say-on-pay proposal were voted “FOR” the proposal.
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Inspire Medical Systems, Inc. | | | 67 | | | 2022 Proxy Statement |
PROPOSAL NO. 4 — APPROVAL, ON AN ADVISORY (NON-BINDING) BASIS, OF THE FREQUENCY OF FUTURE ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
In accordance with Section 14A of the Exchange Act, we are requesting your advisory, non-binding vote regarding the frequency with which stockholders should have an opportunity to provide a say-on-pay vote. We are providing stockholders the option of selecting a frequency of every ONE YEAR, TWO YEARS, THREE YEARS or abstaining. Stockholders are not voting to approve or disapprove of the Board’s recommendation. Rather, stockholders are being asked to express their preference regarding the frequency of future say-on-pay votes.
We recommend that our stockholders select a frequency of every ONE YEAR. We believe that this frequency is appropriate because it will enable our stockholders to vote, on an advisory basis, on the most recent executive compensation information that is presented in our proxy statement, leading to a more meaningful and coherent communication between us and our stockholders on the compensation of our named executive officers. An annual advisory vote on executive compensation is consistent with our goal of seeking input from, and engaging in discussions with, our stockholders on corporate governance matters and our executive compensation philosophy, policies and practices.
Our Board of Directors unanimously recommends that you vote for every ONE YEAR as the frequency of future say-on-pay votes.
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2022.
Inspire Medical Systems, Inc. | | | 68 | | | 2022 Proxy Statement |
TABLE OF CONTENTS2019 ANNUAL REPORT
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Your vote is important. Please promptly vote your shares by following the instructions for voting on the Notice Regarding the Availability of Proxy Materials or, if you received a paper or electronic copy of our proxy materials, by completing, signing, dating and returning your proxy card or by Internet or telephone voting as described on your proxy card.
By Order of the Board of Directors | |
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Senior Vice President, Golden Valley, Minnesota March 16, 2022 |
Golden Valley, MinnesotaMarch 16, 2020
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Inspire Medical Systems, Inc. | | | 69 | | | 2022 Proxy Statement |