UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
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☐ | Soliciting Material Pursuant §240.14a-12 |
INTEGER HOLDINGS CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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April 17, 201718, 2018
Dear Stockholder:
You are cordially invited to attend the 20172018 Annual Meeting of Stockholders of Integer Holdings Corporation, which will be held on Tuesday, May 23, 201722, 2018 at 9:00 a.m.2:45 p.m., Central Daylight Time, at the company’s offices located at 2595 Dallas5830 Granite Parkway, Granite Building V, Suite 310, Frisco,140, Plano, Texas 75034.75024.
Details of the business to be conducted at the Annual Meeting are given in the enclosed Notice of Annual Meeting and Proxy Statement. Included with the Proxy Statement is a copy of the company’s 20162017 Annual Report. We encourage you to read this document. It includes information on the company’s operations, markets and products, as well as the company’s audited financial statements.
Whether or not you attend the Annual Meeting, it is important that your shares be represented and voted. To make it easier for you to vote, we are offering Internet and telephone voting. The instructions included on your proxy card describe how to vote using these services. Of course, if you prefer, you can vote by mail by completing and signing your proxy card, and returning it in the enclosed postage-paid envelope.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Bill R. Sanford |
Bill R. Sanford |
Chairman of the Board |
/s/ Joseph W. Dziedzic |
Joseph W. Dziedzic |
INTEGER HOLDINGS CORPORATION
2595 DALLAS PARKWAY, SUITE 310
FRISCO, TEXAS 75034
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 20172018 Annual Meeting of Stockholders of Integer Holdings Corporation will be held at the company’s offices located at 2595 Dallas5830 Granite Parkway, Granite Building V, Suite 310, Frisco,140, Plano, Texas 7503475024 on Tuesday, May 23, 201722, 2018 at 9:00 a.m.2:45 p.m., Central Daylight Time, for the following purposes:
1. | To elect |
2. |
To ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for Integer Holdings Corporation for fiscal year |
To approve, on an advisory basis, the compensation of our named executive officers; |
To consider and act upon other matters that may properly come before the Annual Meeting and any adjournments thereof. |
Stockholders of record at 5:00 p.m., Eastern Daylight Time, on April 7, 20176, 2018 are entitled to vote at the Annual Meeting.
By Order of the Board of Directors, |
/s/ Timothy G. McEvoy |
Timothy G. McEvoy |
Senior Vice President, |
General Counsel & Secretary |
Frisco, Texas
April 17, 201718, 2018
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE ANNUAL MEETING. YOU CAN VOTE YOUR SHARES BY PROXY BY USING ONE OF THE FOLLOWING METHODS: MARK, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PAID ENVELOPE FURNISHED FOR THAT PURPOSE, OR VOTEORVOTE BY TELEPHONE OR THE INTERNET USING THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD. ANY PROXY MAY BE REVOKED IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT AT ANY TIME PRIOR TO ITS USE AT THE 20172018 ANNUAL MEETING OF STOCKHOLDERS. ANY STOCKHOLDER PRESENT AT THE MEETING MAY WITHDRAW HIS OR HER PROXY AND VOTE PERSONALLY ON ANY MATTER PROPERLY BROUGHT BEFORE THE MEETING.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE 20172018 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 23, 201722, 2018
INTEGER HOLDINGS CORPORATION’S 20172018 PROXY STATEMENT AND 20162017 ANNUAL REPORT ARE
ARE AVAILABLE ATinteger.net/proxyhttp://proxy.integer.net
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INTEGER HOLDINGS CORPORATION
PROXY STATEMENT
GENERAL INFORMATION – QUESTIONS AND ANSWERS
Why am I being provided this proxy statement?
Integer Holdings Corporation (“we” or the “Company”) is providing this proxy statement to you because the Board of Directors (the “Board”) is soliciting your proxy to vote your shares of the Company’s common stock at the 20172018 Annual Meeting of Stockholders (the “Annual Meeting”), or any adjournment or adjournments thereof. This proxy statement contains information about matters to be voted upon at the Annual Meeting and other information required by the U.S. Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”).
We are first sending this proxy statement and the accompanying form of proxy on or about April 18, 2018 to common stockholders of record on or aboutas of April 17, 2017.6, 2018. A copy of the Company’s Annual Report for 2016, including financial statements,2017 accompanies this proxy statement but is not part of the proxy solicitation materials.
Where and when will the Annual Meeting be held?
The Annual Meeting will be held at the Company’s offices located5830 Granite Parkway, Granite Building V, Suite 140, Plano, Texas 75024 at 2595 Dallas Parkway, Suite 310, Frisco, Texas 75034 at 9:00 a.m.2:45 p.m., Central Daylight Time, on Tuesday, May 23, 2017.22, 2018. The Company’s mailing address is 2595 Dallas Parkway, Suite 310, Frisco, Texas 75034, and its telephone number is (214)618-5243.
Who is entitled to vote at the Annual Meeting?
Common stockholders of record at 5:00 p.m., Eastern Daylight Time, on April 7, 20176, 2018 are entitled to vote at the Annual Meeting. At that time, the Company had outstanding 31,298,60632,011,286 shares of common stock, $0.001 par value per share (“common stock”). Each share of common stock is entitled to one vote. Shares may not be voted at the Annual Meeting unless the owner is present or represented by proxy, as more fully explained in this proxy statement. An individualIndividuals who holds shares of common stock under the Integer Holdings Corporation 401(k) Retirement Plan (the “Company 401(k) Plan”) isare entitled to vote those shares of common stock held in their account.accounts.
How can I give my proxy or vote?
You can give your proxy by completing, signing, dating and returning the physical proxy card accompanying this proxy statement or vote by utilizing the telephone or Internet voting procedures described on the proxy card. The telephone and Internet voting procedures are designed to authenticate that you are a stockholder by use of a control number and allow you to confirm that your instructions have been properly recorded. If you are a stockholder of record, the method by which you vote will not limit your right to vote at the Annual Meeting if you later decide to attend in person.
May I revoke my proxy?
Depending on howHow you hold your shares (stockholder of record or beneficial owner), determines how and when you may revoke your proxy. A stockholder of record may revoke a proxy that has been previously given at any time before it is exercised by giving written notice of such revocation or by delivering a later dated proxy, in either case, to the Corporate Secretary, at 10000 Wehrle Drive, Clarence, New York 14031, or by voting in person at the Annual Meeting. A beneficial owner must follow the instructions from his or her broker, bank or other intermediary to revoke his or her previously given proxy.
How will my proxy be voted?
Your proxy will be voted in accordance with the direction you provide, if any. If you sign, date and return your proxy card but do not specify how you want to vote your shares, your shares will be voted FOR the election as directors of the nineten persons named under the section titled “Nominees for Director”; FOR re-approving the Integer Holdings Corporation Executive Short Term Incentive Compensation Plan; FOR ratifying the appointment of Deloitte & Touche LLP (“Deloitte & Touche”) as the independent registered public accounting firm of the Company for fiscal year 2017;2018; and FOR approving, on an advisory basis, the compensation of the Company’s Named Executive Officers; and in favor of “one year” with respect to the frequency of future votes, on an advisory basis, on the compensation of the Company’s Named Executive Officers.Officers (as defined herein).
What is required for a quorum at the Annual Meeting?
The presence in person or by proxy of the holders of a majority of the issued and outstanding shares of common stock constitutes a quorum for the transaction of business at the Annual Meeting. Brokernon-votes will be counted as being present or represented at the Annual Meeting for purposes of establishing a quorum, but, under NYSE rules, brokers will not be permitted to vote in the election of directors on the proposal to approve the Company’s Executive Short Term Incentive Compensation Plan,or on the advisory vote to approve the compensation of the Company’s Named Executive Officers, or on the advisory vote on the frequency of future advisory votes on compensation of the Named Executive Officers unless specific voting instructions are provided to the broker. We therefore encourage beneficial owners of shares whose shares are held in street name to direct their vote for all agenda items on the form of proxy or instruction card sent by their broker, bank or other intermediary.
What vote is required to elect directors?
Directors will be elected by a plurality of votes cast. This means the ten nominees for election as directors who receive the highest number of “FOR” votes will be elected as directors. Withheld votes and brokernon-votes will have no effect on the outcome of the voting to elect directors.
What happens if an incumbent director nominee does not receive a majority of votes cast in favor of his or her election?
Under the Company’s Corporate Governance Guidelines, any nominee for director who receives a greater number of “withhold” votes than “for” votes is expected to tender his or her resignation to the Board for consideration in accordance with the Corporate Governance Guidelines.
What approvalvote is necessary to approve Proposals 2 3, 4 and 5?3?
For each of Proposals 2, 3 and 4, theThe affirmative vote of a majority of the votes cast at the Annual Meeting is required to: approve the Integer Holdings Corporation Executive Short Term Incentive Compensation Plan;to ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for fiscal year 2017;2018 and to approve, on an advisory basis, the compensation of the Company’s Named Executive Officers. For Proposal 5, the Company will treat the option selected by the affirmative vote of a plurality of the votes cast at the Annual Meeting as the option approved by stockholders. An abstention will not constitute a vote cast and therefore will not affect the outcome of the vote on the election of directors, the approval of the Integer Holdings Corporation Executive Short Term Incentive Compensation Plan, approval of the ratification of Deloitte & Touche as the independent registered public accounting firm for the Company for fiscal year 2017,2018 or the advisory vote to approve the compensation of the Company’s Named Executive Officers, or the advisory vote on the frequency of future advisory votes on compensation of the Company’s Named Executive Officers. Brokernon-votes will not constitute votes cast on the election of directors, approval of the Integer Holdings Corporation Executive Short Term Incentive Compensation Plan, the vote to approve, on an advisory basis, the compensation of the Company’s Named Executive Officers or the advisory vote on the frequency of future advisory votes on compensation of the Named Executive Officers and therefore will have no effect on the outcome of any of these proposals.that proposal.
Who is paying for the solicitation of proxies?
The Company will bear the cost of soliciting proxies in the accompanying form of proxy. We are making this solicitation by mail, by telephone and in person using the services of some employees of the Company or its subsidiaries at nominal cost. We will reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for expenses they incur in sending proxy materials to beneficial owners of the common stock.
What do I have to bring in order to attend the Annual Meeting in person?
In order to be admitted to the Annual Meeting, you will need to bring a valid photo ID or other satisfactory proof of identification. If you are a beneficial owner, you must also bring evidence of your share ownership that can include a notice from your broker, bank or other intermediary regarding the availability of these proxy materials or a recent account statement or letter from the bank, broker or other intermediary that holds your shares and confirms your beneficial ownership of those shares.
How do I propose actions for the 20182019 Annual Meeting of Stockholders?
In order for a shareholder proposal for the 20182019 Annual Meeting of Stockholders to be eligible for inclusion in the Company’s proxy statement, we must receive it, at our principal executive offices, no later than December 18, 2017.19, 2018. You must provide your proposal to us in writing and your notice must contain the information required by the Company’s bylaws.
The proposal should be submitted to the Company’s principal executive offices in Frisco, Texas and should be directed to the Senior Vice President, General Counsel & Secretary of the Company.
The Company’s bylaws provide that no business may be brought before an annual meeting of stockholders unless it is specified in the notice of the meeting or is otherwise brought before the meeting by the Board or by a stockholder entitled to vote who has delivered notice to the Company (containing the information specified in the bylaws) not later than 90 days nor more than 120 days in advance of the anniversary date of the prior year’s annual meeting of stockholders. These requirements are separate from and in addition to the SEC’s requirements that a stockholder must meet in order to have a shareholderstockholder proposal included in the Company’s proxy statement. A stockholder wishing to submit a proposal for consideration at the 20182019 Annual Meeting of Stockholders, which is not submitted for inclusion in the proxy statement, should do so between January 23, 201822, 2019 and February 22, 2018.21, 2019.
PROPOSAL 1 – Election of Directors
Shares represented by properly executed proxies will be voted, unless authority is withheld, for the election as directors of the Company of the following nineten persons nominated by the Board, to hold office until the 20182019 Annual Meeting of Stockholders and until their successors have been elected and qualified. Each of the nominees listed below was elected at the 20162017 Annual Meeting of Stockholders except for Mr. Spence,Hinrichs, who was appointed as a director on October 17, 2016February 12, 2018 upon the recommendation of the Corporate Governance and Nominating Committee. In 2016,2017, the Board determined that the Company would benefit by having an additional director with industryfinancial experience on its Board and it asked Mr. Spence, the former Chairman and Chief Executive Officer of Lake Region Medical,Hinrichs to serve on the Board.
If any nominee for any reason should become unavailable for election or if a vacancy should occur before the election (which events are not expected), the shares of common stock voted for such nominee and represented by the proxies will be voted for such other person, if any, as the Corporate Governance and Nominating Committee shall designate as a nominee. Information regarding the nominees standing for election as directors is set forth below:
Nominees for Director
Pamela G. Bailey is 68,69, is Chair of the Corporate Governance and Nominating Committee, a member of the Compensation and Organization Committee, and has been a director since 2002.
Ms. Bailey has been President and Chief Executive Officer of The Grocery Manufacturers Association (“GMA”), a Washington, D.C. based trade association, since January 2009. From April 2005 until January 2009, she was President and Chief Executive Officer of the Personal Care Products Council. Ms. Bailey served as President and Chief Executive Officer of the Advanced Medical Technology Association (“AdvaMed”), the world’s largest association representing the medical technology industry, from June 1999 to April 2005. From 1970 to 1999, she served in the White House, the Department of Health and Human Services and other public and private organizations with responsibilities for health care public policy. Ms. Bailey is a director of the Reagan-Udall Foundation, a 501(c)(3) organization created by Congress to advance the mission of the Food and Drug Administration by advancing regulatory science and research. She formerly served as a director of Albertsons, Inc., MedCath Corporation, and The National Food Laboratory, Inc.
Ms. Bailey’s 40 years of health care public policy experience with both public and private organizations, including service in the White House, the Department of Health and Human Services, and as President and Chief Executive Officer of AdvaMed, gives her a unique perspective on a variety of health care-related issues. With over 20 years of chief executive officer experience at GMA, the Personal Care Products Council, AdvaMed, and other Washington-based health care trade associations, Ms. Bailey brings to the Board demonstrated management ability at senior levels. This experience, together with her experience gained as a director of Albertsons and MedCath, supports her continued service as a member of the Board.
Joseph W. Dziedzic is 4849 andhas been a director since February 2013.
Mr. Dziedzic was appointed as Interim President and Chief Executive Officer of the Company on July 16, 2017, having serviced in an interim role in that position since March 27, 2017. Prior to being appointed as the Company’s Interim President and Chief Executive Officer, Mr. Dziedzic served as Chair of the Audit Committee and a member of the Compensation and Organization Committee. From 2009 to 2016, Mr. Dziedzic previously was the Executive Vice President and Chief Financial Officer of The Brink’s Company, a global leader in security-related services for banks, retailers and a variety of other commercial and governmental customers, from 2009 through July 2016, and served in an advisory capacity to that company through September 2016.customers. Prior to joining The Brink’s Company in 2009, he had a20-year career with General Electric, including leadership roles in six different businesses, including General Electric Medical Systems. He is a director of the YMCA of Greater Richmond.
Mr. Dziedzic has over 25 years of experience in global operations and financial and accounting matters. The depth and breadth of Mr. Dziedzic’s global operating and financial experience and his role as the Company’s Interim President and Chief Executive Officer support his continued service as a member of the Board.
James F. Hinrichs is 50, is a member of the Audit Committee and a member of the Compensation and Organization Committee, and has been a director since February 2018.
Mr. Hinrichs served as Executive Vice President and Chief Financial Officer of Alere, Inc. from April 2015 until its sale to Abbott Labs in October 2017. From December 2010 through March 2015, he served as Chief Financial Officer of CareFusion Corporation prior to its sale to Becton Dickinson. Mr. Hinrichs previously served as CareFusion’s Senior Vice President, Global Customer Support, and as its Senior Vice President, Controller. Prior to joining CareFusion upon its spin off from Cardinal Health, Inc., he worked for five years at Cardinal Health in various positions including Executive Vice President and Corporate Controller of Cardinal Health and as Executive Vice President and Chief Financial Officer of its Healthcare Supply Chain Services segment. He joined Cardinal Health following more than a decade of finance and marketing roles at Merck & Co. He is a director of Orthofix International N.V. and serves as chair of its Audit and Finance Committee and a member of its Nominating & Governance Committee.
Mr. Hinrichs has over 25 years of experience in financial and accounting matters at companies in the medical device and pharmaceutical industries. The depth and breadth of his financial experience support his continued service as a member of the Board.
Jean Hobby is 56,57, is Chair of the Audit Committee and a member of the Science and Technology Strategy Committee, and has been a director since July 2015.
Ms. Hobby served as a global strategy partner at PricewaterhouseCoopers, LLP from 2013 until she retired in June of 2015 following a 33 year career at that firm. Prior to 2013, Ms. Hobby served as PricewaterhouseCoopers’ Technology, Media and Telcom Sector Leader from 2008 to 2013, and as its Chief Financial Officer from 2005 to 2008. She joined PricewaterhouseCoopers in 1983 and became a partner in 1994. Ms. Hobby is also a director of Texas Instruments Incorporated and serves on its audit committee.Audit Committee, and CA, Inc. and serves on its Audit Committee.
The depth and breadth of Ms. Hobby’s 33 years of experience in global operations and financial and accounting matters support her continued service as a member of the Board.
M. Craig Maxwell is 58,59, is Chair of the Science and Technology Strategy Committee and a member of the Audit Committee, and has been a director since July 2015.
Mr. Maxwell is the Vice President and Chief Technology and Innovation Officer for Parker Hannifin Corporation, a Fortune 250 company located in Cleveland, Ohio that is one of the global leaders in motion and control technologies and systems, providing precision-engineered solutions for a variety of mobile, industrial, medical and aerospace markets. Mr. Maxwell’s responsibilities include leading Parker Hannifin in new and emerging markets and implementing Parker Hannifin’s new product development process. Additionally, Mr. Maxwell is responsible for Parker Hannifin’s technology incubator designed to facilitate cross group opportunities that leverage the company’s portfolio of products and technology to develop emerging opportunities.
As Vice President and Chief Technology and Innovation Officer for Parker Hannifin, Mr. Maxwell leads that company’s innovation research that commercializes new technologies. Through this service, he has gained management experience at senior levels. These attributes provide the Company valuable insight into developing new technologies to support future growth and support Mr. Maxwell’s continued service on the Board.
Filippo Passerini is 59,60, is a member of the Science and Technology Strategy Committee and a member of the Corporate Governance and Nominating Committee, and has been a director since July 2015.
Mr. Passerini is an Operating Executive in U.S. Buyouts for the Carlyle Group, a company he joined in July of 2015 following his retirement from a33-year career at the Procter & Gamble Company. He joined Procter & Gamble in 1981 and held executive positions in Italy, Turkey, United Kingdom, Greece, Latin America and the United States. Prior to his retirement, Mr. Passerini served as Procter & Gamble’s Group President, Global Business Services and Chief Information Officer, positions he held from 2004 and 2005, respectively. He oversaw over 170 distinct services in 70 countries and led the integration of Procter & Gamble’s IT and Business Services groups, one of the largest shared services organizations in the world. Mr. Passerini is a director of United Rentals, Inc. and serves on its auditAudit and compensation committees,Compensation Committees, and of ABM Industries Incorporated and serves as chairChair of its strategyStrategy & Enterprise Risk Committee and enterprise risk committee and is a member of its compensation committee, and of Poste Italiane and serves on its compensation and risk committees.Compensation Committee.
Mr. Passerini brings to the Company over three decades of global experience in operations, digital technology, and general management roles. He is globally recognized as an informationdigital technology and shared services thought leader, known for creating new, progressive business models and driving innovation. Mr. Passerini’s extensive background and experience supports his continued service as a member of the Board.
Bill R. Sanford is 73,74, is Chairman of the Board, is a member of the Corporate Governance and Nominating Committee, and has been a director since 2000.
Mr. Sanford is Chairman of Symark LLC, a company he founded in 1979 that focuses on the development and commercialization of medical devices, bioscience inventions, nanotechnology, and advanced technology systems, products and services. He has broad experience as a board member and advisor of numerous public and privatefor-profit companies,not-for-profit organizations, investment limited partnerships and venture capital firms. Mr. Sanford is Executive Founder and retired Chairman, President and Chief Executive Officer of Steris Corporation, retired director of KeyCorp and KeyBank N.A., trustee of Cleveland Clinic, trustee emeritus of Case Western Reserve University and Kansas State University, Foundation, former director of AdvaMed, and a Fellow of the American Institute for Medical and Biological Engineering (AIMBE).
Mr. Sanford has extensive public company, merger and acquisition, operations integration, marketing and sales, new venture, turnaround and market development experience. He has led public and private company financings, including initial and secondary public stock offerings, structured debt financings, public stock mergers, private equity and venture capital investments. Mr. Sanford’s background and expertise, including his substantial involvement in the medical device industry, support his continued service as a member of the Board.
Peter H. Soderberg is 70,71, is Chair of the Compensation and Organization Committee, a member of the Audit Committee, and has been a director since 2002.
Mr. Soderberg is managing partner of Worthy Ventures Resources, LLC, a private investment company he founded in February 2010. He retired in January 2010 as President and Chief Executive Officer ofHill-Rom Holdings, Inc. (formerly Hillenbrand Industries), a position he held since March 2006. From January 2000 to March 2006, he was President and Chief Executive Officer of Welch Allyn, Inc., and for the seven years prior to that, Chief Operating Officer of Welch Allyn’s medical products business. Mr. Soderberg also held a number of positions over a23-year career with Johnson & Johnson, where his final position was as president of one of its operating subsidiaries. Until his retirement, he also had served on the board of directors ofHill-Rom and AdvaMed. Mr. Soderberg currently serves as a director and senior advisor to the CEO of two privately-held medtech companies. He is a director and chairman of the board of Tactile Systems Technology, Inc., and as board executive committee member and senior advisor to the CEO of EarlySense, an Israeli privately-held medtech company. Mr. Soderberg is a former director of St. Vincent Health System (Indianapolis), Constellation Brands, Inc. and Welch Allyn.
Having served in the roles of President and Chief Executive Officer ofHill-Rom and Welch Allyn, Mr. Soderberg has significant management experience and business understanding. Running a public company gave Mr. Soderberg front-line exposure to many of the issues facing public companies, particularly on the operational, financial and corporate governance fronts. His deep knowledge of health care policy and patient care delivery, gained through his long career in the health care industry, provides our Board with a valuable perspective on the priorities of and challenges facing our major customers. These attributes support Mr. Soderberg’s continued service as a member of the Board.
Donald J. Spence is 63,64, is a member of the Science and Technology Strategy Committee and has been a director since October 2016.
Donald J. Spence was appointed President and Chief Executive Officer of Cerêve, Inc.,Ebb Therapeutics, a company in the business of developing and marketing medical products for the treatment of insomnia, on March 1, 2017. He had been chairman and chief executive officer of Lake Region Medical from 2010 until its acquisition by the Company in October of 2015. From 2005 to 2008, Mr. Spence served as president of the Sleep and Home Respiratory Group for Philips Respironics, and from 2008 to 2010 as chief executive officer of Philips Home Healthcare Solutions. Prior to that, he spent eight years with GKN Sinter Metals, as senior vice president for global sales and marketing (1998-2001) and as president (2001-2005). Prior to 1998, Mr. Spence served in a number of roles at BOC Group, plc over a15-year career at that company including President, Ohmeda Medical Systems (1997-1998). Mr. Spence serves on the board of directors of a privately held medtech company.
Having served in the role of Chairman and Chief Executive Officer of Lake Region Medical and in senior management roles with other companies prior to that, Mr. Spence has significant management experience and business understanding of a medical technology and device company. Mr. Spence’s background and expertise in the medical device industry support his continued service as a member of the Board.
William B. Summers, Jr. is 66,67, is a member of the Compensation and Organization Committee, a member of the Corporate Governance and Nominating Committee, and has been a director since 2001.
Mr. Summers retired in June 2006 as Chairman of McDonald Investments Inc., a position he had held since 1998. He also held the additional positions of President (from 1989 through 1998) and Chief Executive Officer (from 1994 through 1998) of that investment company. Mr. Summers serves on the board of directors of RPM International, Inc. and is a member of its audit committee. He also serves on the advisory boards of Molded Fiberglass Companies and Citymark Capital, and on the board of The Rock and Roll Hall of Fame and Museum, Baldwin-Wallace University, United States Army War College Foundation, and the Convention and Visitors Bureau of Greater Cleveland, Inc. Mr. Summers previously served as chairman of the board of the National Association of Securities Dealers, as chairman of the board of the NASDAQ Stock Market, and as a director of NYSE. He is a former director of Developers Diversified Realty, Inc., McDonald Investments Inc., Cleveland Indians Baseball Company, and Penton Media Inc.
Through his positions with McDonald Investments, Mr. Summers gained leadership experience and extensive knowledge of complex financial and operational issues. In addition, through his service with the NASDAQ Stock Market and NYSE and on the boards of other public companies, Mr. Summers has gained valuable experience dealing with the capital markets, accounting principles and financial reporting rules and regulations, evaluating financial results and generally overseeing the financial reporting process of large public corporations. This experience supports Mr. Summers’ continued service as a member of the Board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR
PROPOSAL 2 – Approval of the Integer Holdings Corporation Executive Short Term Incentive Compensation Plan, as amended
The Company is seeking stockholder approval of the Integer Holdings Corporation Executive Short Term Incentive Compensation Plan, as amended (the “Executive STIC Plan”). The Executive STIC Plan was previously adopted by our Board and approved by our stockholders in 2007 and re-approved by our stockholders in 2012 as part of our continuing program to attract, retain and motivate qualified executives. The Executive STIC Plan was amended and re-adopted by the Board in February of 2017. The Executive STIC Plan permits the awarding of cash and equity bonuses to the Company’s Chief Executive Officer and other designated officers of the Company based on the achievement of pre-established performance goals. The Company is asking stockholders to approve the material terms of the performance goals under the Executive STIC Plan in accordance with the stockholder approval requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations and interpretations promulgated thereunder (“IRC”).
IRC §162(m) limits the deductibility of compensation in excess of $1 million paid to the Company’s Chief Executive Officer and to each of the other three most highly compensated officers of the Company (not including the Company’s Chief Financial Officer), unless, among other available exceptions, the compensation qualifies as “qualified performance-based compensation.” Compensation qualifies as qualified performance-based compensation if the following four criteria are met:
We are seeking stockholder approval of the Executive STIC Plan in order to meet the third requirement listed above.
However, notwithstanding whether or not such stockholder approval of the Executive STIC Plan is obtained, nothing precludes the Compensation and Organization Committee (the “Compensation Committee”) of the Board from exercising its discretion to make any payments or to grant any awards to any employee of the Company whether or not such payments or awards qualify for tax deductibility under IRC §162(m).
A summary of the material terms of the Executive STIC Plan follows below.
Purpose – The primary purpose of the Executive STIC Plan is to attract, motivate, and retain highly qualified executives on a competitive basis and to provide financial incentives to those executives in order to promote the success of the Company. Another purpose of the Executive STIC Plan is to preserve, for federal income tax purposes, the deductibility of bonus awards made under the Executive STIC Plan.
Administration – The Compensation Committee is responsible for administering the Executive STIC Plan. Each current member of the Compensation Committee is an “outside director” as defined for purposes of IRC §162(m). Pursuant to the terms of the Executive STIC Plan, the Compensation Committee has the sole discretion and authority to administer and interpret the terms and provision of the Executive STIC Plan. In addition, the Compensation Committee has the sole authority, in accordance with the limitations established by the Executive STIC Plan, to establish, adjust, pay or decline to pay bonus awards under the Executive STIC Plan.
Eligibility and Participation – The Chief Executive Officer and other officers designated by the Compensation Committee are eligible to participate in the Executive STIC Plan. With respect to each fiscal year, participants in the Executive STIC Plan are designated by the Compensation Committee within 90 days of the beginning of such fiscal year. For each fiscal year, the participants are expected to be the Chief Executive Officer, other officers of the Company who the Compensation Committee anticipates will be “covered employees” (as such term is defined in IRC §162(m)—generally the principal executive officer and the next three most highly-compensated officers other than the principal financial officer), and other officers designated by the Compensation Committee. The Company currently has approximately seven employees who it expects would be eligible to participate in the Executive STIC Plan.
Bonus Opportunity Determination – For each fiscal year, the objective performance goal(s) and terms and conditions for the determination and payment on the bonus opportunity for each participant will be set by the Compensation Committee within the first 90 days of such fiscal year. At the time that performance goals are set for each participant for the fiscal year, the Compensation Committee shall establish a maximum award opportunity for each such participant for that year, which maximum bonus opportunity shall be expressed as a percentage of that participant’s base salary and as a maximum dollar amount. Subject to the maximum bonus award limitation described below, actual award opportunities will be established by the Compensation Committee in its sole discretion and will be based on Company or individual performance and competitive pay levels.
Maximum Bonus Award – The maximum bonus award that a participant may be paid under the Executive STIC Plan for a fiscal year cannot exceed an amount equal to 250% of such participant’s base salary (determined as the greatest of (i) annualized salary as of the first day of the Company’s current fiscal year, (ii) annualized salary as of the date the performance goal(s) are established, or (iii) if the annualized salary is increased after the date the performance goals are established, the annualized salary paid for the fiscal year). Notwithstanding the foregoing, no participant may receive any bonus award under the Executive STIC Plan that is greater than $10 million for any fiscal year.
Share Denominated Awards – To the extent that all or a portion of a bonus for a fiscal year is to be made in restricted stock or restricted stock units (a “Share Denominated Award”), the maximum award that may be paid to a participant in respect of the fiscal year will be determined using the fair market value (as defined in the Executive STIC Plan) of the common stock underlying the Share Denominated Award as of the date of the award. Any Share Denominated Award will be made under, and be subject to the terms and conditions of, an equity plan that has been approved by the Company’s stockholders.
Performance Goals – Performance goals, which may be determined on a U.S. Generally Accepted Accounting Principles (“GAAP”), adjusted and/or non-GAAP basis by the Compensation Committee in accordance with IRC §162(m): (1) earnings or diluted earnings per share; (2) pro-forma earnings or diluted earnings per share; (3) net earnings (either before or after interest, taxes, depreciation and amortization); (4) economic value-added (as determined by the Compensation Committee); (5) sales or revenue; (6) net income (either before or after taxes); (7) operating earnings or income; (8) cash flow (including, but not limited to, operating cash flow and free cash flow); (9) cash flow return on capital; (10) return on investment; (11) return on stockholders’ equity; (12) return on assets or net assets; (13) return on capital; (14) stockholder returns; (15) return on sales; (16) improvements in capital structure; (17) capital expenditures; (18) gross or net profit margin; (19) productivity; (20) product quality; (21) expense; (22) margins; (23) operating efficiency; (24) cost or debt reduction or savings; (25) customer satisfaction; (26) working capital; (27) price per share of common stock; (28) market share; (29) credit rating; (30) improvements in workplace diversity, inclusion or culture; (31) employee retention; (32) business expansion or consolidation (acquisitions, divestiture and integration); and (33) strategic plan development and implementation, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group. The Compensation Committee, in its discretion, may, to the extent permitted by IRC §162(m), adjust or modify the calculation of performance goals for any period in order to prevent the dilution or enlargement of the rights of the participants to the Executive STIC Plan (i) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event, or development, or (ii) in recognition of, or in anticipation of, any other extraordinary, unusual or non-recurring items as described in applicable accounting standards or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s Forms 10-K or 10-Q for the applicable year, or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions.
Payment of Bonus Awards – After the end of each fiscal year, the Compensation Committee will determine and certify in writing whether the performance goal(s) for the fiscal year with respect to a participant was met and determine the amount of bonus to be paid or awarded to such participant in accordance with the limitations established by the Executive STIC Plan. In its discretion, the Compensation Committee may reduce, but not increase, the bonus payable to a participant based on such objective or subjective factors as it may determine. Following the Compensation Committee’s determination and certification, bonus awards will be paid in cash, except that Share Denominated Awards may be paid in cash or shares of common stock. Participants will be permitted to defer payment of all or a portion of their bonus awards in accordance with the terms of any deferred compensation plan the Company may adopt.
Death, Disability, Retirement or Other Termination of Employment – Except as otherwise set forth in any award agreement for any Share Denominated Award, in the event of the death, disability, retirement or other termination of employment of a participant during a fiscal year, the Compensation Committee shall, in its discretion, have the ability to award to such participant (or the representative of the participant’s estate) an equitably prorated portion of the bonus award opportunity amount, which otherwise would have been earned by such participant based on actual achievement of the performance goal(s) for the entire fiscal year. In the event of the death of a participant after the end of a fiscal year and prior to any payment required, such payment shall be made to the representative of the participant’s estate.
Amendment and Termination – The Board of Directors may, at any time, amend the Executive STIC Plan or terminate or suspend the Executive STIC Plan; provided that no amendment shall be made that would cause bonuses payable under the Executive STIC Plan to fail to qualify for the qualified performance-based compensation exemption. An amendment to the Executive STIC Plan does not require stockholder approval, unless such approval is required by IRC §162(m). Upon termination of the Executive STIC Plan, all rights of a participant with respect to any fiscal year that has not ended on or prior to the effective date of such termination shall become null and void.
The above summary of the Executive STIC Plan is qualified by reference to the full text of the Executive STIC Plan, which is set forth asExhibit A hereto.
Estimate of Benefits Payable under the Executive STIC Plan
The amount of the incentive compensation bonus awards to be paid under the Executive STIC Plan for future periods depends on Company performance, individual performance and the discretion of the Compensation Committee. Accordingly, the amount of the incentive compensation bonus awards to be paid to participants under the Executive STIC Plan for 2017 is not currently determinable. For executive officers (including the Named Executive Officers) of the Company, the individual target bonus award under the Executive STIC Plan for 2017 range from 45% to 100% of base salary, or approximately $112,500 to $800,000. The incentive compensation bonus awards paid under the Executive STIC Plan to the Named Executive Officers for 2016 are set forth in the 2016 Summary Compensation Table and are described in the Compensation Discussion and Analysis (“CD&A”) section of this proxy statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
THE APPROVAL OF THE INTEGER HOLDINGS CORPORATION EXECUTIVE SHORT TERM INCENTIVE COMPENSATION PLAN, AS AMENDED
PROPOSAL 3 – Ratification of the Appointment of Independent Registered Public Accounting Firm
On the recommendation of the Audit Committee, Deloitte & Touche has been appointed by the Board as the Company’s independent registered public accounting firm for fiscal year 2017, a capacity in which it2018. Deloitte & Touche has served as the Company’s auditor since 2000.1985. Although stockholder approval is not required, the Company has determined that it is desirable to request that the stockholders ratify the appointment of Deloitte & Touche as the Company’s independent registered public accounting firm for fiscal year 2017.2018. In the event the stockholders fail to ratify the appointment, the Board will reconsider this appointment and make such a determination as it believes to be in the Company’s best interests. Even if the appointment is ratified, the Board, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Board determines that such a change would be in the Company’s best interests. Representatives of Deloitte & Touche are expected to be present at the Annual Meeting. The representatives may, if they wish, make a statement and, it is expected, will be available to respond to appropriate questions.
The following table sets forth the aggregate fees billed by Deloitte & Touche for services provided to the Company during fiscal years 20162017 and 2015:2016:
2016 | 2015 | 2017 | 2016 | |||||||||||||
Audit Fees(1) | $ | 2,583,000 | $ | 2,527,000 | $ | 2,469,000 | $ | 2,583,000 | ||||||||
Audit-Related Fees(2) | 65,000 | 1,830,000 | — | 65,000 | ||||||||||||
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Total Audit and Audit-Related Fees | 2,648,000 | 4,357,000 | 2,469,000 | 2,648,000 | ||||||||||||
Tax Fees(3) | 168,000 | 76,000 | 61,000 | 168,000 | ||||||||||||
All Other Fees | — | 2,000 | 257,000 | — | ||||||||||||
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Total Fees | $ | 2,816,000 | $ | 4,435,000 | $ | 2,787,000 | $ | 2,816,000 | ||||||||
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(1) | Represents fees billed by Deloitte & Touche for services rendered for the audit of the Company’s annual consolidated financial statements and for review of the Company’s quarterly condensed consolidated financial statements. |
(2) | Represents fees billed by Deloitte & Touche for services rendered related to the performance of |
(3) | Represents fees billed by Deloitte & Touche for tax compliance, planning and consulting services. |
(4) |
Audit CommitteePre-Approval Policy on Audit andNon-Audit Services. As.As described in the Audit Committee charter, the Audit Committee must review andpre-approve both audit andnon-audit services to be provided by the Company’s independent registered public accounting firm (other than with respect tode minimis exceptions permitted by RegulationS-X, Rule2-01(c)(7)(i)(C)). This duty may be delegated to one or more designated members of the Audit Committee with any suchpre-approval reported to the Audit Committee at its next regularly scheduled meeting. None of the services described above were performed by Deloitte & Touche under thede minimis exception rule.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 20172018
PROPOSAL 43 – Advisory Vote on Compensation of the Named Executive Officers
As required pursuant to Section 14A of the Exchange Act of 1934, as amended (the “Exchange Act”), the Company seeks your advisory vote on a resolution to approve the compensation of our Named Executive Officersnamed executive officers as disclosed in this proxy statement. Our named executive officers are the Chief Executive Officer, the Chief Financial Officer, the next three highest paid executive officers, our former President & Chief Executive Officer, our former Executive Vice President & Chief Financial Officer, our former interim Chief Financial Officer, and our former Executive Vice President for Global Operations& Chief Human Resources Officer (“Named Executive Officers”). Although your vote is advisory and will not be binding on the Board or the Company, the Board will review the voting results and take them into consideration when making future decisions regarding executive compensation. Unless the Board modifies its policy on the frequency of future advisory votes in connection with the outcome of the stockholders vote from Proposal 5, theThe next advisory vote on the compensation of our Named Executive Officers will be held at the 20182019 Annual Meeting of Stockholders.
The Company’s executive compensation programs have played an important role in our ability to drive financial results and attract and retain a highly experienced, successful management team. We believe that our executive compensation programs are structured to support the Company’s business objectives. We closely monitor the compensation programs and pay levels of executives from companies of similar size and complexity to ensure that our compensation programs are within the norm of a range of market practices. As discussed below in the CD&A section, the Company’s compensation for its Named Executive Officers includes the following elements:
The text of the resolution in respect of Proposal 43 is as follows:
“Resolved, that the stockholders approve, on anon-binding basis, the compensation of the Company’s Named Executive Officers as disclosed in this Proxy Statement.”
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL, ON AN
ADVISORY BASIS, OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS
PROPOSAL 5 – Advisory Vote on the Frequency of Future Advisory Votes on Compensation of the Named Executive Officers
In accordance with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the related rules of the SEC, the Company seeks your advisory vote on the frequency of holding future stockholder advisory votes on the compensation of our Named Executive Officers. Currently, an advisory vote on the compensation of our Named Executive Officers is provided to the Company’s stockholders every year. In particular, we are asking whether future advisory votes should occur every one, two or three years.
The stockholder advisory vote on the compensation of our Named Executive Officers is very important to the Company. We believe an annual stockholder vote enhances stockholder communication by providing a clear, simple means for the Company to obtain information on investor sentiment about our executive compensation programs. The Company believes that an advisory vote every year will be the most effective timeframe for the Company to respond to stockholders’ feedback and provide the Company with an opportunity to engage with stockholders to understand and respond to voting results.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR A FREQUENCY OF
“ONE YEAR” FOR FUTURE ADVISORY STOCKHOLDER VOTES TO APPROVE THE COMPENSATION
OF OUR NAMED EXECUTIVE OFFICERS
PRINCIPAL BENEFICIAL OWNERS OF SHARES
The following table sets forth certain information with respect to all persons known to the Company to be the beneficial owner of more than 5% of its outstanding common stock as of April 7, 2017.6, 2018. We have based our calculation of the percentage of common stock owned based upon 32,011,286 shares outstanding as of April 6, 2018.
Name of Beneficial Owner | Number of Shares | Percent of Class | Number of Shares | Percent of Class | ||||||||||||
BlackRock, Inc.(1) | 3,325,141 | 10.6 | % | |||||||||||||
Accellent Holdings LLC(2) | 2,946,709 | 9.4 | % | |||||||||||||
BlackRock, Inc.(1) | 3,697,585 | 11.55 | % | |||||||||||||
Accellent Holdings LLC(2) | 2,946,709 | 9.21 | % | |||||||||||||
The Vanguard Group, Inc.(3) | 2,574,403 | 8.2 | % | 2,896,296 | 9.05 | % | ||||||||||
Dimensional Fund Advisors LP(4) | 2,192,865 | 7.0 | % | 2,669,301 | 8.34 | % | ||||||||||
LSV Asset Management(5) 155 N. Wacker Drive, Suite 4600 Chicago, IL 60606 | 1,689,257 | 5.28 | % |
(1) | BlackRock, Inc. filed a Schedule 13G/A on January |
(2) | Accellent Holdings LLC filed a Schedule 13G on October 29, 2015 reporting that it holds the shares and that each of KKR Millennium Fund L.P. (as the managing member of Accellent Holdings LLC), KKR Associates Millennium L.P. (as the general partner of KKR Millennium Fund L.P.), KKR Millennium GP LLC (as the general partner of KKR Associates Millennium L.P.), KKR Fund Holdings L.P. (as the designated member of KKR Millennium GP LLC), KKR Fund Holdings GP Limited (as a general partner of KKR Fund Holdings L.P.), KKR Group Holdings L.P. (as a general partner of KKR Fund Holdings L.P. and the sole shareholder of KKR Fund Holdings GP Limited), KKR Group Limited (as the sole general partner of KKR Group Holdings L.P.), KKR & Co. L.P. (as the sole shareholder of KKR Group Limited), KKR Management LLC (as the sole general partner of KKR & Co. L.P.), and Henry R. Kravis and George R. Roberts may be deemed to share voting and dispositive power with respect to the shares of common stock held by Accellent Holdings LLC, but each disclaims beneficial ownership of such shares. |
(3) | The Vanguard Group, Inc. filed a Schedule 13G/A on February |
(4) | Dimensional Fund Advisors LP (“Dimensional”) filed a Schedule 13G/A on February 9, |
(5) | LSV Asset Management filed a Schedule 13G on February 13, 2018. The beneficial ownership information presented is based solely on the Schedule 13G. The reported securities are owned by LSV Asset Management, and it reports sole investment power with respect to the reported shares and sole voting power with respect to 882,108 of the reported shares. |
STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The beneficial ownership of common stock by each of the directors, each of the Named Executive Officers, and by all directors and executive officers as a group is set forth in the following table as of April 7, 2017,6, 2018, together with the percentage of total shares outstanding represented by such ownership. For purposes of this table, beneficial ownership has been determined in accordance with the provisions of Rule13d-3 under the Exchange Act, under which, in general, a person is deemed to be the beneficial owner of a security if that person has or shares the power to vote or to direct the voting of the security or the power to dispose or to direct the disposition of the security, or if he or she has the right to acquire the beneficial ownership of the security within 60 days. We have based our calculation of the percentage of common stock owned based upon 32,011,286 shares outstanding as of April 6, 2018.
Name of Beneficial Owner | Number of Shares | Percent of Class | ||||||
Pamela G. Bailey | (1) | * | ||||||
Joseph W. Dziedzic | 73,560 | (1) | * | |||||
James F. Hinrichs | 2,813 | (1) | * | |||||
Jean Hobby | (1) | * | ||||||
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M. Craig Maxwell | (1) | * | ||||||
Filippo Passerini | (1) | * | ||||||
Bill R. Sanford | (1) | * | ||||||
Peter H. Soderberg | (1) | * | ||||||
Donald J. Spence | (1) | * | ||||||
William B. Summers, Jr. | (1) | * | ||||||
Gary J. Haire | 13,452 | (1) | * | |||||
Jeremy Friedman | 44,359 | (1) | * | |||||
John Harris | 12,535 | (1)(2) | * | |||||
Declan Smyth | 31,361 | (1) | * | |||||
Thomas J. Hook | 110,352 | * | ||||||
Michael Dinkins | (1) | * | ||||||
Thomas J. Mazza | 22,597 | (1)(3) | * | |||||
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Kristin Trecker | * | |||||||
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All directors and executive officers as a group | (1) |
(1) | Includes the following shares subject to options granted under the Company’s stock incentive plans, all of which are currently exercisable or exercisable within 60 days after April |
(2) | Includes |
(3) | Includes the following shares under the Company 401(k) Plan: Mr. |
* | Less than 1% |
Section 16(a) Beneficial Ownership Reporting Compliance.Under Section 16(a) of the Exchange Act, the Company’s directors and Section 16 officers are required to report their beneficial ownership of the common stock and any changes in that beneficial ownership to the SEC and the NYSE. The Company believes that these filing requirements were satisfied during fiscal year 2016, except that Thomas J. Hook, the Company’s former President and Chief Executive Officer, filed one amended report to correct the over-reporting of a stock option grant, and Michael Dinkins, the Company’s former Chief Financial Officer, filed one amended report to correct the underreporting of a sale of shares.2017. In making the foregoing statement, the Company has relied on copies of the reporting forms received by it or on the written representations from the persons required to report.
COMPENSATION DISCUSSION AND ANALYSIS
2017 Management Transition. In July 2017, we completed a management transition with the appointment of Joseph W. Dziedzic as our President & Chief Executive Officer. His appointment followed the May 2017 appointment of Gary J. Haire as our Chief Financial Officer. These experienced executives, along with our other executive officers, have formed a strong, collaborative leadership team that is highly motivated to deliver on our strategic priorities to drive stockholder return over the long term and our commitment to our customers and associates.
Introduction. This CD&A describes the compensation of our named executive officers (“Named Executive Officers”)Officers during fiscal 2016.2017. Our Named Executive Officers for 20162017 were:
Fiscal 20162017 Performance. Financial results in 20162017 were disappointing, as westrong. We were not able to materially advance our financial objective of driving mid-single digit top line revenue and double digitgrowth. However, bottom line operating profit growth, inwhile improved over 2016 results, continues to be an area of emphasis as it did not grow at a rate our core business. Giving effect to the Lake Region Medical transaction and spin-off of Nuvectra Corporation, ourrevenue growth would have suggested. Our revenues decreasedincreased 5.4% from $1.443$1.387 billion in 20152016 to $1.386$1.462 billion in 2017, adjusted operating income increased 2.3% from $177 million in 2016 to $181 million in 2017, and our adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) decreasedper share increased from $304 million$2.68 in 20152016 to $280 million$2.81 in 2016.2017. See “Strategic and Financial Overview” in Part II, Item 7 of our 20162017 Form10-K and our Current Report on Form 8-K filed with the SEC on February 27, 2017, for a reconciliation of these adjusted amounts to those calculated in accordance with GAAP. Total stockholder return (“TSR”) of negative 42.7%52.5% for fiscal year 2016,2017, measured as the increase or decreasechange in our stock price, compared unfavorablyfavorably to the average TSR of 27.1% for our peer group which was 41.3%.for fiscal 2017.
No 2017 Short Term Incentive (“STI”) Program and Long Term Incentive (“LTI”) Award Designs Reflect our 2017 Transition. While we were still focused on growth in our financial results during 2017, given our concurrent focus on completing the integration of our two legacy companies and undertaking a strategic review of our customers, competitors and markets, we established our STI performance goals to reflect our Company’s expected continued transition during 2017. As a result, we also decided to decrease the maximum potential payout under the 2017 STI program to 150% of the target amount, down from 195% of the target amount under the 2016 STI program, while leaving the threshold payout at 50% of the target amount.
In addition, given our transition during 2017 and the associated difficulty in setting appropriate long-term performance goals, the Financial PSUs and TSR PSUs (each as defined below) equity incentive grants had performance measurement periods of one year and two years, respectively. Given the shorter performance measurement periods for the 2017 PSU grants, we decided to decrease the maximum potential vesting amount of these PSU awards to 150% of the target, down from 200% of the target under the PSU awards granted in 2016. Our PSU grants for 2018 transitioned back to our traditional three-year performance measurement period.
Annual Bonuses andPaid, but No Payouts ofon Previously Issued Performance-Based Equity. As a result of not achieving above target performance against our thresholdSTI program metrics for 2017 with respect to revenue and adjusted EBITDA, performance goal,all of our currently serving Named Executive Officers earned annual bonuses under our STI program. Those of our Named Executive Officers did not receive annual bonuses under our short-term incentive (“STI”) program for 2016. In addition, the Named Executive Officers’who also had been granted performance-based long-term equity incentive (“LTI”)LTI awards in 2015 that were granted in 2014 and eligible to vest in 2016 were2017 saw those awards forfeited as the Company did not meet its threshold TSR performance goal. We believe these outcomes highlight our commitment to apay-for-performance philosophy.
We Emphasize Performance-Based Compensation. As reflected in the charts below, performance-based equity continues to represent the majority of the total direct compensation earned by our former President & Chief Executive Officer and other Named Executive Officers. Total direct compensation refers to base salary, STI compensation (measured by target bonus opportunity for the fiscal year) and target LTI compensation.
The following graphs depict the mix of cash versus equity compensation as a percentage of total direct compensation awarded to our Named Executive Officers for 2016, excluding Mr. Friedman (whose 2016 compensation was negotiated as part of his offer of employment, as described in more detail later in this CD&A), assuming target performance levels for cash incentives and maximum performance levels for equity incentives are achieved:
The following graphs depict the mix of fixed (base salary) versus variable (at risk, all incentive-based) compensation as a percentage of total direct compensation awarded to our Named Executive Officers for 2016, excluding Mr. Friedman (as described above, whose 2016 compensation was set forth in his employment agreement), assuming target performance levels for cash incentives and maximum performance levels for equity incentives are achieved:
Corporate Governance “Best Practices.” Below is a summary of best practices that we havethe Compensation and Organization Committee (the “Compensation Committee”) has implemented with respect to the compensation of our Named Executive Officers because weOfficers. We believe these practices support our compensation philosophy and are in the best interests of our Company and our stockholders.
Say-on-Pay. At our 20162017 Annual Meeting of Stockholders, our stockholders had the opportunity to vote on the compensation paid to our Named Executive Officers. The result of this advisory “say-on-pay”“say-on-pay” vote was overwhelmingly supportive, with 98%96% of votes cast voting in favor of our compensation program for our Named Executive Officers.
Our compensation philosophy is to provide a competitive compensation package that will attract, retain and motivate our executives to drive the Company’s success through high performance and innovation, to link our executives’ compensation to short- and long-term performance of the Company and to align our executives’ compensation with the interests of our stockholders. The compensation programs for our Named Executive Officers are designed to be consistent with our compensation philosophy.
We have designed our executive compensation programs to include:
Total target compensation opportunities are set within the competitive ranges provided by our peers for comparable positions. However, due to the performance basedperformance-based nature of our program, our executives have the opportunity to earn significantly more than these target amounts if the Company achieves above market performance. This design allows us to attract and retain executives who have the appropriate skill set to develop and execute our strategic plans as we work towards attaining both our short- and long-term financial and strategic objectives. We believe that this approach properly incentivizes our executive officers and provides value to our stockholders. The executive compensation program for our Named Executive Officers allows for flexibility to respond to the evolving business environment, address individual performance and consider internal and external pay equity.
Compensation Committee Practices and Procedures
The Compensation Committee has direct oversight responsibility for the Company’s compensation practices with appropriate approval and general oversight from the Board. This responsibility includes the determination of compensation levels and awards provided to the Named Executive Officers. The Compensation Committee directly engages an independent compensation consulting firm to review the Company’s executive compensation programs and provide guidance on compensation matters and recommendations made by management. In 2016, Ernst2017, Frederick W. Cook & Young LLPCo. (“FW Cook”) advised the Compensation Committee on the Company’s executive compensation programs through August 2016, at which time the Compensation Committee retained Frederick W. Cook & Co. (“FW Cook”) to provide those services. A representativeand representatives of Ernst & Young or FW Cook waswere present in person or by telephonefrom time to time for all meetings held by the Compensation Committee during 2016.2017.
In accordance with SEC and NYSE rules regarding the independence of compensation consultants, the Compensation Committee has considered the other services the independent compensation consulting firms providefirm provides to the Company, the amount of fees paid to the independent compensation consulting firmsfirm by the Company, the independent compensation consulting firms’firm’s policies and procedures designed to prevent conflicts of interest, any business or personal relationship the independent compensation consulting firmsfirm may have with any member of the Compensation Committee, any stock of the Company owned by the independent compensation consulting firms,firm, and any business or personal relationships the independent compensation consulting firms havefirm has with any of the Named Executive Officers. Following that review, the Compensation Committee concluded that neither Ernst & Young’s nor FW Cook’s work for the Compensation Committee raisesdoes not raise a conflict of interest.
The Compensation Committee was also responsible for evaluatingrecommending to the full Board compensation based on the Board’s evaluation of the performance of Mr. Hook,Dziedzic, our former President & Chief Executive Officer. The performance reviews for Mr. HookDziedzic were based on his individual performance as well as on the Company’s performance during the year. The Compensation Committee provided a recommendation for the performance review and any compensation adjustments to the Board for approval. For the other Named Executive Officers, the Compensation Committee considered input and recommendations from Mr. HookDziedzic regarding performance, base salary adjustments and annual STI and LTI programs and award amounts. The Compensation Committee determined the final compensation for those executive officers. Grants of equity-based compensation are approved by the Compensation Committee in accordance with LTI programs established by the Compensation Committee with the assistance of its independent compensation consultant. Although not required by our LTIstock incentive plans, the Board has provided final approval on the equity-based compensation awards for our senior level executives.
During 2016,2017, Kristin Trecker (until her departure from the Company), the Company’s former Executive Vice President & Chief Human Resources Officer, and Timothy G. McEvoy, Senior Vice President, General Counsel & Secretary, attended meetings of the Compensation Committee to provide counsel and assistance to the Compensation Committee as needed. These executives were not present during executive sessions of the Compensation Committee or when items pertaining to their individual compensation were discussed.
The Compensation Committee compares Company performance and compensation programs against a peer group of companies. As a result ofFollowing the Company’s acquisition of Lake Region Medical in October 2015, the Compensation Committee reviewed and updated our peer group to include the seventeensixteen companies shown below to better reflect the changed profile of the Company. We believe that this is an appropriate size for a peer group to obtain a representative sample of our market, while still keeping the size of the peer group at a manageable level for analysis purposes. We believe the companies in our peer group (i) have relevant overlap with our industry, customers and products, (ii) are similar in size, and (iii) have key metrics that are consistent with our growth strategy. The key metrics considered included revenue size and growth rate, return on equity, net income, earnings per share growth, average gross margins and enterprise value. Additionally, the Compensation Committee took into consideration companies identified as peers of our peers, peers by our analysts and certain governance rating agencies. The companies comprising our current compensation peer group are as follows:
Analogic Corporation | Masimo Corporation | |
Merit Medical Systems, Inc. | ||
NuVasive, Inc. | ||
Plexus Corp. | ||
ResMed Inc. | ||
STERIS Corporation | ||
Teleflex Incorporated | ||
Integra LifeSciences Holdings Corporation | West Pharmaceutical Services, Inc. |
We provide our Named Executive Officers with a fixed level of cash compensation in the form of base salary that is consistent with their skill level, experience, knowledge, length of service with our Company and the level of responsibility and complexity of their position. The Compensation Committee does not use a specific formula when setting base salary for our Named Executive Officers, but our general practice is to target the competitive market median. In addition to the factors listed above, actual individual base salaries may differ from the competitive market median as a result of various other factors including relative depth of experience, prior individual performance and expected future contributions, internal pay equity considerations within our Company and the degree of difficulty in replacing the individual. Any such differences are approved by the Compensation Committee and, previously, with respect to Mr. Hook,Dziedzic, our former President and& Chief Executive Officer, by the Board.
The base salaries of our Named Executive Officers are reviewed by the Compensation Committee on an annual basis, as well as at the time of promotion or significant changes in responsibility. We expect the base salaries of our Named Executive Officers to generally increasein-line with any increases to the competitive median market rates. However, base salary increases are also reviewed on an individual basis and adjusted accordingly for performance.
In setting base salaries for our Named Executive Officers for 2016, the Compensation Committee reviewed and used an Ernst and Young LLP market study utilizing the peer group to reflect a competitive market increase for companies with similar size and profile as a result of the Company’s acquisition of Lake Region Medical. Two of our Named Executive Officers received a base salary increase for 2016 in order to better align them with the competitive median data from our peer group.
The annualized base salaries for our Named Executive Officers were as follows:
2016 | 2015 | |||||||
Thomas J. Hook(1) | $ | 800,000 | $ | 721,000 | ||||
Michael Dinkins(2) | 415,000 | 384,655 | ||||||
Jeremy Friedman | 476,000 | 476,000 | ||||||
Declan Smyth | 340,000 | 340,000 | ||||||
Kristin Trecker | 315,000 | 315,000 | ||||||
Mauricio Arellano(3) | 375,000 | 375,000 |
2017 | ||||
Joseph W. Dziedzic | $ | 850,000 | ||
Gary J. Haire | 420,000 | |||
Jeremy Friedman | 550,000 | |||
Declan Smyth | 340,000 | |||
John Harris(1) | 395,535 | |||
Thomas J. Hook(2) | 800,000 | |||
Michael Dinkins(3) | 415,000 | |||
Thomas J. Mazza(4) | 271,688 | |||
Kristin Trecker(5) | 315,000 |
(1) | Mr. Harris served as interim President, Cardio & Vascular until February 19, 2018. The 2017 salary amount presented for Mr. Harris represents his base salary for serving in that role and has been converted from Euros (€350,000) into U.S. dollars at the average daily exchange rate for the year. |
(2) | Mr. Hook served as President & Chief Executive Officer until March 25, 2017. |
Mr. Dinkins retired as Executive Vice President & Chief Financial Officer on March 3, 2017. |
Mr. |
(5) | Ms. Trecker served as Executive Vice President |
Annual Performance-Based Cash Incentives
The objective of our annual STI program is to provide a competitive level of performance-based annual cash compensation at the target achievement level, with the opportunity for significantly higher incentive compensation if stretch performance is achieved. Achievement at the 100% target level is deemed to be a “realistic” but challenging goal and any amount greater than the target is considered a “stretch” goal. Achievement at 150% of the target level was the maximum award that could have been earned.
The Compensation Committee sets the performance metrics and funding mechanics for the STI program generally at its first meeting each year based upon prior year performance, the Company’s plan for the current year, and the Board’s desire for continuous and meaningful performance improvement. The STI awards for our Named Executive Officers are based upon Company-wide performance metrics. Payment of STI awards are based upon the achievement of these performance metrics and can vary significantly from year to year.
For 2016,2017, the STI program was based upon two financial metrics: (1) total revenue, weighted 25% and (2) adjusted EBITDA (as defined below), weighted 75%. In addition, if the adjusted EBITDA threshold is not achieved, no portion of the STI program is funded. Once the adjusted EBITDA metric is achieved, funding begins at 50% of target. The Compensation Committee believes that these performance metrics are appropriate as they believe these are the relevant key metrics that drive stockholder value.
We did not achieve our 2016 threshold adjusted EBITDA goal. As a result, the Named Executive Officers did not receive annual bonus payments under the STI program for 2016 (with the exception of Mr. Friedman, as described below).
The 2016 STI program funding scale is set forth below:
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The Compensation Committee believes that the design of the funding and performance metrics is aligned with the Company’s strategic objective of growing revenue and profitability. The weighting between revenue and adjusted EBITDA puts more emphasis on profitability and is therefore directly aligned with the interest of stockholders. For 2017, the STI award was payable in the form performance-based restricted stock units (“PSUs”) up to the target amount and in cash for achievement in excess of target.
The goals and results under the 20162017 STI program funding are as follows:
2016 STI Performance Goals | 2016 Actual | 2017 STI Performance Goals | 2017 | |||||||||||||||||||||||||||||
Threshold | Target | Maximum | Performance | Threshold | Target | Maximum | Performance | |||||||||||||||||||||||||
Funding as % of Target | 50 | % | 100 | % | 195 | % | 0 | % | 50 | % | 100 | % | 150 | % | 101.6 | % | ||||||||||||||||
Revenue (25%) | $ | 1,412M | $ | 1,537M | $ | 1,675M | $ | 1,386M | $ | 1,380M | $ | 1,415M | $ | 1,450M | $ | 1,462M | ||||||||||||||||
Adjusted EBITDA (75%) | 297M | 326M | 369M | 280M | 281M | 298M | 311M | 293M |
Adjusted EBITDA for purposes of STI performance consists of GAAP net income (loss) plus adjustments for (i) acquisition-relatedacquisition and integration related charges and expenses, (ii) amortization of intangible assets including inventorystep-up amortization, (iii) facility consolidation, optimization, manufacturing transfer and system integration charges, (iv) asset write-down and disposition charges, (v) charges in connection with corporate realignments or a reduction in force, (vi) certain litigation expenses, charges and gains, (vii) unusual or infrequently occurring items, (viii) non-cash gain/loss on cost and equity method investments, (ix) GAAP stock-based compensation, interest expense, and depreciation, (x) GAAP provision (benefit) for income taxes, and (xi) cash gains received from cost and equity method investments during the period. The Compensation Committee approved the categories for adjustments at the beginning of the performance period, and all(xii) foreign exchange. All of the adjustments were reviewed and approved by the Compensation Committee at the end of the performance period. See “Strategic and Financial Overview” in Item 7, page 33 of our 2016 Form 10-K for a reconciliation of adjusted EBITDA to GAAP Net Income (loss).
Individual cash incentives are calculated by multiplying the funding percentage by the individual’s target bonus. The individual target STI program bonuses for our Named Executive Officers were determined by the Compensation Committee to provide targeted total cash compensation at the median of our competitive market. The target payout as a percentage of base salaryand actual payouts for our Named Executive Officers for 20162017 was as follows:
Executive Name(1) | Target STI ($) | STI PSUs Granted with Fair Value Equal to Target STI (#) | % of Target Earned (%) | STI PSUs Earned (#) | STI Paid in Cash ($) | Total STI Earned ($) | ||||||||||||||||||
Joseph W. Dziedzic(2) | 391,233 | 8,952 | 101.6 | 8,952 | 6,259 | 397,492 | ||||||||||||||||||
Gary J. Haire(2) | 182,000 | 4,808 | 101.6 | 4,808 | 2,912 | 184,912 | ||||||||||||||||||
Jeremy Friedman | 440,000 | 13,233 | 101.6 | 13,233 | 7,040 | 447,040 | ||||||||||||||||||
Declan Smyth | 204,000 | 6,135 | 101.6 | 6,135 | 3,264 | 207,264 | ||||||||||||||||||
John Harris(3) | 225,372 | 6,778 | N/A | 6,778 | 4,135 | 229,507 | ||||||||||||||||||
Thomas J. Hook | 800,000 | 24,060 | N/A | 9,523 | (4) | — | 316,640 | (4) | ||||||||||||||||
Thomas J. Mazza | 95,000 | 2,859 | 101.6 | 2,859 | 1,520 | 96,520 | ||||||||||||||||||
Kristin Trecker | 175,000 | 5,263 | 0 | (5) | 5,263 | — | — |
(1) | Mr. Dinkins, having announced in September 2016 his intention to retire in March of 2017, did not participate in the 2017 STI program. |
(2) | The 2017 target bonuses reported for Mr. Dziedzic and Mr. Haire are prorated amounts based on (i) with respect to Mr. Dziedzic, the date his interim designation was removed, and (ii) with respect to Mr. Haire, his employment commencement date. |
(3) | Mr. Harris’s target bonus was converted from Euros (€210,000) into U.S. dollars using the exchange rate on the date of the award. The STI paid in cash was converted from Euros (€3,360) into U.S. dollars using the exchange rate on the date of the paid. |
(4) | Represents the prorated amount Mr. Hook was eligible to receive under the terms of his employment agreement and executive departure agreement. |
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The chart below indicates annualOur Adjusted EBITDA achievement for 2017 was 85.5% of target and revenue achievement was at the 2017 maximum. Based on the these results, with the exception or Mr. Hook and Ms. Trecker, STI program bonuses earned underwere paid out at 101.6% of target levels. All of the STI program for 2016 performance byPSUs granted to each Named Executive Officer:
Name | 2016 Base Salary | x | 2016 Individual Target Bonus as % of Base Salary | x | 2016 Incentive Plan Funding Percentage | = | Actual 2016 Payout Amount | |||||||||||||||||||||
Thomas J. Hook | $ | 800,000 | 100 | % | 0 | % | $ | — | ||||||||||||||||||||
Michael Dinkins | $ | 415,000 | 75 | % | 0 | % | $ | — | ||||||||||||||||||||
Jeremy Friedman | $ | 476,000 | 75 | % | 0 | % | $ | — | ||||||||||||||||||||
Declan Smyth | $ | 340,000 | 75 | % | 0 | % | $ | — | ||||||||||||||||||||
Kristin Trecker | $ | 315,000 | 75 | % | 0 | % | $ | — | ||||||||||||||||||||
Mauricio Arellano | $ | 375,000 | 75 | % | 0 | % | $ | — |
None of ourOfficer in 2017 pursuant to the 2017 STI program vested on March 9, 2018 and the shares subject to the STI PSUs were then issued to the Named Executive Officers received cash incentive payments under ourOfficers. In addition, the remaining portion of each Named Executive Officer’s STI program for 2016. Mr. Friedman received a separate bonus for 2016 inthat exceeded the amountvalue of $357,000, per the terms of his employment offer with the Company. His offer letter provided him with a guarantee of a short-term incentive payment for 2016 equal to the greater of (i) 75% of his base salary or (ii) the amount earned under the STI program. AsPSUs (valued as of the Company did not meet its metrics under its 2016 STI program, Mr. Friedman was entitled to a cash payment equal to 75% of his base salary, or $357,000, whichrespective grant date) was paid to him in April 2017.cash in March 2018.
In addition to cashannual performance-based incentives, we also compensate our Named Executive Officers with annual LTI grants. LTI awards are a key component of our program, and are designed to align management’s performance incentives with the interests of our stockholders by linking executive pay to stockholder value creation.
In 2017, the structure of the LTI awards to senior executives changed from the structure used in recent years. Since 2010, LTI awards to senior executives havehad been weighted 25% time-based stock options and 75% performance-basedPSUs that used a relative Total Shareholder Return (“TSR”) metric. The 2017 LTI awards were weighted one third time-based restricted stock units (“RSUs”), one third PSUs based on a financial performance metric (“Financial PSUs”) and one third PSUs based on a TSR metric (“TSR PSUs”). Stock options generally
The Financial PSUs are earned and subsequently vest in three equal annual installmentsbased on the last dayCompany’s 2017 Adjusted Operating Income as follows:
Adjusted Operating Income | Vesting Amount | |
$200 million and above | Maximum - 150% of Target(1) | |
Between $187 million and $200 million | Calculation between Target and 150% of Target | |
$187 million | Target | |
Between $173 million and $187 million | Calculation between 50% of Target and Target | |
$173 million | Threshold – 50% of Target | |
Below $173 million | No award is paid |
(1) | Pursuant to the terms of his employment agreement, Mr. Dziedzic’s maximum opportunity is capped at 123% of target. |
Adjusted Operating Income (“AOI”) for purposes of each fiscal year,the Financial PSU performance metric consists of GAAP operating income (loss) plus adjustments for (i) acquisition and integration related charges and expenses, (ii) amortization of intangible assets including inventorystep-up amortization, (iii) facility consolidation, optimization, manufacturing transfer and system integration charges, (iv) asset write-down and disposition charges, (v) charges in connection with corporate realignments or a reduction in force, (vi) certain litigation expenses, charges and gains, and (vii) unusual or infrequently occurring items. The Compensation Committee approved the categories for adjustments at the beginning inof the yearperformance period, and all of grant,the adjustments were reviewed and have ten-year maximum terms.approved by the Compensation Committee at the end of the performance period.
The TSR PSUs are earned and subsequently vest based on the Company’s relative TSR rank versus our peer group over a three-yeartwo-year period as follows:
Versus Peer Group | Vesting Amount | |
75th Percentile and above | ||
Calculation between | ||
50th Percentile | Target | |
25th Percentile - 50th Percentile | Calculation between 50% of Target and Target | |
25th Percentile | ||
Below 25th Percentile | No award is paid |
Relative
(1) | Pursuant to the terms of his employment agreement, Mr. Dziedzic’s maximum opportunity is capped at 123% of target. |
AOI and relative TSR waswere selected as the PSU performance measuremeasures because the Compensation Committee believes itthey most closely alignsalign the interests of our executive officers with those of stockholders and since this is a long-term measure, drivesdrive appropriate risk taking. Further, the Compensation Committee believes that our mixture of award types provides an appropriate balance between stock optionsCompany performance, and full-value shares, and between rewarding increases in absolute stock price and relative performance versus our peers.
Annual LTI award values are intended to be consistent with those provided by our peer companies for comparable executive positions. Grant values for each individual are based on a specified percentage of base salary assuming the maximum number of PSUs is earned. This LTI award percentage is reviewed on an individual basis and can be adjusted based on individual performance and expected future contributions. The individual award opportunities under the LTI program for our Named Executive Officers for 20162017 are as a percentage of his or her base salaryfollows:
Executive Name(1) | Time-Based RSUs Grant Value ($) | Financial PSUs Grant Value at Target Achievement ($) | TSR PSUs Grant Value at Target Achievement ($) | 2017 LTI Grant Value Assuming Target PSU Achievement ($) | ||||||||||||
Joseph W. Dziedzic | 508,603 | 508,603 | 508,603 | 1,525,809 | ||||||||||||
Declan Smyth | 166,668 | 166,666 | 166,666 | 500,000 | ||||||||||||
John Harris | 33,334 | 33,333 | 33,333 | 100,000 | ||||||||||||
Thomas J. Hook | 1,146,668 | 1,146,666 | 1,146,666 | 3,440,000 | ||||||||||||
Thomas J. Mazza | 16,668 | 16,666 | 16,666 | 50,000 | ||||||||||||
Kristin Trecker | 133,334 | 133,333 | 133,333 | 400,000 |
(1) | Under the terms of their offer letters entered into with the Company in February 2017 and October 2016, Mr. Haire and Mr. Friedman, respectively, were not eligible to participate in the 2017 LTI program. Mr. Dinkins, having announced in September 2016 his intention to retire in March of 2017, did not participate in the 2017 LTI program. |
The time based RSUs granted to our Named Executive Officers in 2017 were as follows:
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Executive Name | Time-Based RSUs Grant Value ($) | Shares Underlying RSU Grant (#) | ||||||
Joseph W. Dziedzic | 508,603 | 11,638 | ||||||
Declan Smyth | 166,668 | 5,012 | ||||||
John Harris | 33,334 | 1,002 | ||||||
Thomas J. Hook(1) | 1,146,668 | 34,486 | ||||||
Thomas J. Mazza(2) | 16,668 | 501 | ||||||
Kristin Trecker(3) | 133,334 | 4,010 |
(1) |
(2) | Mr. |
(3) |
The time-based RSUs vest in three equal annual installments beginning on the last day of the Company’s 2017 fiscal year, or December 29, 2017.
The following table includes the details of the performance-based LTI PSU grants made to Named Executive Officers in February 2017 and the shares earned on the portion of the Financial PSUs that were subject to theone-year AOI performance goal. The shares earned based on 2017 AOI performance remain subject to time vesting as described below and continued employment through the date of vesting.
Executive Name | Award Type | Shares Granted at Maximum (#) | Shares Granted at Target (#) | FY 2017 AOI | PSU Earned Subject to Vesting | |||||||||||
Joseph W. Dziedzic | Financial PSUs | 14,324 | 11,638 | 67% | 9,194 | |||||||||||
TSR PSUs | 14,347 | 11,657 | Determined as of December 28, 2018 | |||||||||||||
Declan Smyth | Financial PSUs | 7,518 | 5,012 | 67% | 3,961 | |||||||||||
TSR PSUs | 6,910 | 4,607 | Determined as of December 28, 2018 | |||||||||||||
John Harris | Financial PSUs | 1,503 | 1,002 | 67% | 792 | |||||||||||
TSR PSUs | 1,381 | 921 | Determined as of December 28, 2018 | |||||||||||||
Thomas J. Hook(1) | Financial PSUs | 51,729 | 34,486 | 67% | 10,790 | |||||||||||
TSR PSUs | 47,553 | 31,702 | Determined as of December 28, 2018 | |||||||||||||
Thomas J. Mazza(2) | Financial PSUs | 751 | 501 | 67% | 395 | |||||||||||
TSR PSUs | 690 | 460 | Determined as of December 28, 2018 | |||||||||||||
Kristin Trecker(3) | Financial PSUs | 6,015 | 4,010 | 67% | — | |||||||||||
TSR PSUs | 5,529 | 3,686 | Determined as of December 28, 2018 |
Mr. |
(3) | Ms. Trecker served as Executive Vice President |
The Company’s AOI for purposes of the Financial PSU performance metric criteria over the period from December 31, 2016 Annual LTI Grants
Into December 29, 2017 was $181 million and, as a result, the Financial PSUs were paid out at 67% of target. Except as noted above, the actual awards earned are also subject to time-based vesting, with 50% of the earned shares vesting on December 31, 2018 and the remaining 50% vesting on January 2016,3, 2020, subject to continuous employment of the Named Executive Officers received LTI grants as described above that were split 25% in stock options and 75% in relative TSR PSUs,Officer with the actual number of shares granted for each Named Executive Officer determined as shown below. Company through such dates.
The relative TSR PSUs will vest based on the Company’s relative TSR rank versus its peer group over the period January 1, 20162017 through December 31, 2018.
Stock Options | Relative TSR PSUs | |||||||||||||||||||||||||||||||||||
Name | 2016 Base Salary | x | 2016 LTI Grant Value as Percent of Base Salary Assuming Maximum PSU Achievement | = | 2016 LTI Grant Value Assuming Maximum PSU Achievement | 2016 Option Grant Value (25%) | Options Granted(1) | 2016 PSU Grant Value Assuming Maximum Achievement (75%) | PSUs Granted Assuming Maximum Achievement(2) | |||||||||||||||||||||||||||
Thomas J. Hook | $ | 800,000 | 430 | % | $ | 3,440,000 | $ | 860,000 | 65,215 | $ | 2,580,000 | 49,691 | ||||||||||||||||||||||||
Michael Dinkins | $ | 415,000 | 230 | % | $ | 954,500 | $ | 238,625 | 18,095 | $ | 715,875 | 13,788 | ||||||||||||||||||||||||
Jeremy Friedman | $ | 476,000 | N/A | N/A | (3) | N/A | N/A | |||||||||||||||||||||||||||||
Declan Smyth | $ | 340,000 | 190 | % | $ | 646,000 | $ | 161,500 | 12,246 | $ | 484,500 | 9,331 | ||||||||||||||||||||||||
Kristin Trecker | $ | 315,000 | 175 | % | $ | 551,250 | $ | 137,813 | 10,450 | $ | 413,438 | 7,962 | ||||||||||||||||||||||||
Mauricio Arellano | $ | 375,000 | 260 | % | $ | 975,000 | $ | 243,750 | 18,484 | $ | 731,250 | 14,084 |
Achievement With the exception of PSUs GrantedMr. Hook and Mr. Mazza, whose awards will vest when earned, the actual awards earned will be subject to time-based vesting, with 50% of the earned shares vesting when the Compensation Committee determines our level of achievement of the performance goals, which would occur in 2014
Inthe first quarter of 2019, and the remaining 50% vesting on January 2014, several3, 2020, subject to continuous employment of the Named Executive OfficersOfficer with the Company through such dates.
Additional Equity-Based Compensation
In January 2015, Mr. Hook, Mr. Dinkins and Mr. Mazza were granted relative TSR PSUs under the Company’s 2015 LTI program with a performance period of January 1, 20142015 through December 31, 2016.2017. The TSR PSUs were eligible to vest based on the Company’s relative TSR ranking versus the peer group in place at the time of grant, according to the same payout schedule as used for the 20162017 PSUs described above. The 20142015 LTI program matured on December 30, 2016,31, 2017, and the Compensation Committee confirmed that the Company’s TSR achievement of negative 23%0.58% was below the 25th percentile TSR of our peer group of negative 2.97%21.04%. Consequently, none of the 20142015 PSU vested and the entire award was forfeited. The chart below shows the number of PSUs that were granted in 2014 to each Named Executive Officer.
Name | 2014 Maximum Potential PSUs | x | 2014 PSUs Earned as % of Maximum Shares | = | 2014 PSUs Earned for 2014 – 2016 Performance | |||||||||||||||
Thomas J. Hook | 51,564 | 0 | % | — | ||||||||||||||||
Michael Dinkins | 16,307 | 0 | % | — | ||||||||||||||||
Jeremy Friedman | N/A | N/A | N/A | |||||||||||||||||
Declan Smyth | N/A | N/A | N/A | |||||||||||||||||
Kristin Trecker | N/A | N/A | N/A | |||||||||||||||||
Mauricio Arellano | 14,620 | 0 | % | — |
In addition to the annual LTI Program, our executive officers may receive additional equity-based compensation at the date of hire, upon promotion, for special recognition or upon a significant change in responsibility. These awards are used as a recruiting and retention tool. These grants are typically made in the form of restricted stock units.RSUs. In 2016,2017, Mr. SmythDziedzic received an award of 6,299 RSUs in connection with his service as interim President & Chief Executive Officer. In addition to receiving a 2017 LTI award, he also received aone-time award in connection with his acceptance of his position as President Advanced Surgical & OrthopedicsChief Executive Officer having an aggregate value at grant date of $390,000$2,000,000 and consisting of restrictednon-qualified stock options and restricted stock units.RSUs. In 2017, Mr. Harris received an award of 3,411 RSUs in connection with his service as interim President, Cardio & Vascular. Also in 2016,2017, Mr. FriedmanHaire received an equity grantaone-time award in connection with his acceptance of 50,000 stock options,his position as Executive Vice President & Chief Financial Officer having an aggregate value at grant date of $301,500, in connection with his appointment$600,000 and consisting ofnon-qualified stock options and RSUs. On a going forward basis, equity award grants to be provided to Mr. Haire are expected to be granted primarily under our yearly LTI award grant program, which awards are expected to be subject to the same performance-based vesting criteria as Chief Operating Officer.awards granted to our other executive officers.
Our LTI plans and awards are designed and administered by the Compensation Committee in collaboration with management and subject to general oversight by the Board. Annual LTI awards are approved in December, and are effective on the first day of the new fiscal year. The Compensation Committee and Board typically meets at least five times per year based upon a schedule determined several months in advance, which provides a safeguard against awards being granted in proximity to earnings announcements or the release of materialnon-public information. All stock options are issued with strike prices that are equal to the value of our closing price for our common stock on the grant date.
Other Features of ourOur Executive Compensation Program
Compensation Recoupment Policy
The Company has adopted a compensation recoupment, or “clawback,” policy intended to be consistent with the requirements of the Dodd-Frank Act. This policy provides that, in the event we are required to restate our financial statements as a result of “material noncompliance” with financial reporting requirements under the securities laws, we will recover from our current and former executive officers any incentive-based compensation (including equity awards) that is (i) based on erroneous data, (ii) received during the three-year period preceding the date on which the Company becomes required to prepare an accounting restatement, and (iii) in excess of what would have been paid if calculated under the restatement.
In order to align the interests of our executive officers with the interests of our stockholders and to promote our commitment to sound corporate governance, we maintain stock ownership guidelines under which our executive officers are required to hold a meaningful dollar value of common stock of the Company for the duration of their employment.
For purposes of measuring compliance with these guidelines, shares of common stock owned directly or indirectly by the executive officer or his or her immediate family members, as well as 75 percent of unvested time-based restricted stock and restricted stock units issued under our LTI programs are considered shares “owned.” Shares underlying unexercised stock options and unvested performance-based awards do not count toward satisfying the guidelines. The Compensation Committee reviews stock ownership levels of our executive officers on an annual basis with the expectation of seeing meaningful progress toward the achievement of the guideline.
The following table provides the status of our current Named Executive Officers, as of April 7, 2017,6, 2018, toward meeting the ownership guidelines, which are calculated as a multiple of base salary:
Executive Name | Multiple of Base | % of Ownership Guideline Achieved | ||||||||
| 5x | % | ||||||||
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| 2.5x | 67 | % | |||||||
| 2.5x | % | ||||||||
| 2.5x | % | ||||||||
| 1.0x | % |
(1) | Mr. |
(2) | Mr. |
The ownership guidelines also contain a holding period requirement for equity awards. Our executive officers are required to hold vested stock options, vested shares of restricted stock and shares issued on vesting of restricted stock units, net of shares sold or surrendered to pay applicable taxes, for one year following the vesting date.
The Company considers it improper and inappropriate for any director, executive officer or associateOur policy is to engage in short-term or speculative transactions involving our common stock. We therefore prohibitdiscourage directors, executive officers and other associates from engaging in pledging, short sales or other short-position transactions in Company securities. We also strongly discourage directors, executive officers and other associates from engaging in certain forms of hedging or monetization transactions, such aszero-cost collars and forward sale contracts, that allow a person to continue to own the covered securities, but without the full risks and rewards of ownership. Any director or executive officer wishing to enter into such a pledging or hedging arrangement must firstpre-clear the proposed transaction with the Company’s Chief Financial Officer or General Counsel.
In addition to the elements of compensation discussed above, we also provide senior level executives (including the Named Executive Officers) with variouslimited other benefitsperquisites as follows:
We provide these benefits in order to remain competitive with the market and believe that these benefits help us to attract and retain high caliber executives. These benefits also reduce the amount of time and attention that our executive officers must spend on personal matters and allow them to dedicate more time to the Company. We believe that these benefits are reasonable in nature, are not excessive and are in the best interest of the Company and its stockholders.
Other Benefits. Our executive officers also participate in other benefit plans that we fully or partially subsidize. Their participation is on the same terms as other associates of the Company. Some of these benefits include medical, dental and vision insurance, wellness incentives and paid time off.
All of our U.S. based associates, including our Named Executive Officers, are eligible to participate in a defined contribution Company 401(k) Plan. The Company 401(k) Plan provides for the deferral of associate compensation up to the maximum IRC limit and a discretionary Company match. In 2016,2017, this match for the Company 401(k) Plan was $0.35 per dollar of participant deferral, up to 6% of the base salary for each participant, or $0.50 per dollar, up to 6% of the associate’s base salary, for each participant in the Lake Region MedicalCompany 401(k) Plan. In January 2017, the Lake Region Medical 401(k) Plan was merged into the Company 401(k) Plan, and for 2017 the match will be $0.50 per dollar of participant deferral, up to 6% of the base salary, for each participant.
In addition to the discretionary Company match described above, U.S. based associates covered by the Company plan in 2016 were eligible to receive an additional contribution to the Company 401(k) Plan under our STI program of up to 4% of their base salary if certain performance metrics are achieved, as described in the Annual Performance-Based Cash Incentives section above. As the Company did not meet its performance measurements for the 2016 STI program, no additional contributions were made to the Company 401(k) Plan for any participant.
Change in Control Agreements and Severance Benefits
We maintain change in control agreements for a very limited number of key executives, including our Named Executive Officers, in order to retain our leadership in the event of a change in control and also to provide these executives with appropriate financial security in case of a loss of employment. These agreements only provide benefits to participants if there is both a change in control of the Company and a qualifying termination of employment. We believe that it is in the best interest of our Company and stockholders to have the dedication of our executive officers, without the distraction of personal uncertainties that can result uponon a change in control. We believe these agreements allow for a smooth transition in the event of a change in control without providing “windfall” benefits. We also believe that these benefits are competitive with those of comparable companies, including our peer group.
Our LTI awards provide for specified vesting terms upon qualifying terminations of employment, and the offer letters for Messrs. DinkinsMr. Haire, Friedman and Friedman eachMr. Smyth provide for potential severance payments and benefits also in the event of certain qualifying terminations of employment. For more information on these benefits, as well as those provided under our change in control agreements, see the “Potential Payments Upon Termination of Employment or Change in Control” section of this proxy statement.
Employment AgreementAgreements
In general, we do not offer employment agreements to our associates, and none of our Named Executive Officers, other than Mr. Hook,Dziedzic, our former President and& Chief Executive Officer, was covered by an employment agreement. On August 5, 2016, theand John Harris, who had served as interim President of our Cardio & Vascular product category, have them.
The Company entered into a newan employment agreement with Mr. Hook.Dziedzic on July 16, 2017. In addition to the perquisites discussed in this section, theMr. Dziedzic’s employment agreement includedincludes the following terms:
In connection with stepping down as the Company’s President and Chief Executive Officer, on March 25, 2017, Mr. Hook and theThe Company entered into an Executive Departure Agreementemployment agreement with Mr. Harris on September 1, 2016 under which he served as vice president of operations for Cardio & Vascular. Mr. Hook will continueHarris resumed that role when his service as interim President, Cardio & Vascular ended on February 19, 2018. His employment agreement includes the following terms:
Tax and Accounting Implications
UnderThe Tax Cuts and Job Act has eliminated the IRC §162(m), a limitation is placed on the tax deductibility ofdeduction for performance-based compensation paid to certain named executive officers (other than the chief financial officer) of a publicly-held corporation that exceeds $1,000,000 in any taxable year, unless the compensation meets certain requirements. Performance-based compensation is exempt from the deduction limit, however, if certain requirements are met.year. Historically, our deductions for executive compensation have not been materially impacted by IRC §162(m).
The, as while the Compensation Committee seekssought to structure compensation to take advantage of thisthe exemption under IRC §162(m), it reserved the authority to the extent practicable, while satisfying the Company’sapprovenon-deductible compensation policies and objectives. Because the Compensation Committee also recognizes the need to retain flexibility to make compensation decisions that may not meet the standards or requirements of IRC §162(m) when necessary to enable the Company to continuein appropriate circumstances in order to attract, retain, and motivate highly-qualified executives, it reserves the authorityexecutives. The Compensation Committee expects that performance-based compensation will continue to approve non-deductiblebe an important component of our Named Executive Officers’ total compensation in appropriate circumstances.regardless of its tax deductibility.
Compensation and Organization Committee Report
The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis, or CD&A, with management and based upon this review and discussion, recommended to the Board that the CD&A be included in this proxy statement for filing with the SEC.
Respectively submitted, |
COMPENSATION AND ORGANIZATION COMMITTEE |
Peter H. Soderberg (Chair) |
Pamela G. Bailey James F. Hinrichs William B. Summers, Jr. |
The preceding CD&A generally describes our compensation policies, plans and practices that are applicable for executives and senior executives of the Company. The Company uses a combination of fixed and variable and short and long-term compensation programs with a significant focus on corporate and business financial performance as generally described in this proxy statement. The Company does not believe that risks arising from its compensation policies, plans or practices are reasonably likely to have a material adverse effect on the Company.
20162017 Summary Compensation Table
The following table summarizes the total compensation paid or earned by each of the Named Executive Officers for fiscal years 2017, 2016 2015 and 2014.2015.
Name and Principal Position | Year | Salary(1) | Bonus(2) | Stock Awards(3) | Option Awards(4) | Non-Equity Incentive Plan Comp.(5) | All Other Comp.(9) | Total | ||||||||||||||||||||||||
Thomas J. Hook(6) | 2016 | $ | 800,000 | $ | — | $ | 1,569,739 | $ | 860,186 | $ | — | $ | 192,522 | $ | 3,422,447 | |||||||||||||||||
President & | 2015 | 719,192 | — | 1,526,632 | 752,490 | — | 140,486 | 3,138,800 | ||||||||||||||||||||||||
Chief Executive Officer | 2014 | 700,000 | — | 1,612,922 | 752,492 | 505,604 | 138,943 | 3,709,961 | ||||||||||||||||||||||||
Michael Dinkins(7) | 2016 | 415,000 | — | 435,563 | 238,673 | — | 34,946 | 1,124,182 | ||||||||||||||||||||||||
Executive Vice President & | 2015 | 383,657 | — | 494,853 | 243,919 | — | 38,388 | 1,160,817 | ||||||||||||||||||||||||
Chief Financial Officer | 2014 | 375,661 | — | 510,083 | 237,965 | 221,429 | 28,289 | 1,373,427 | ||||||||||||||||||||||||
Jeremy Friedman | 2016 | 491,417 | 1,592,000 | — | 301,500 | — | 55,625 | 2,440,542 | ||||||||||||||||||||||||
Chief Operations Officer | ||||||||||||||||||||||||||||||||
Declan Smyth | 2016 | 338,375 | 130,000 | 684,724 | 161,525 | — | 10,522 | 1,325,146 | ||||||||||||||||||||||||
President, Advanced Surgical and Orthopedics | ||||||||||||||||||||||||||||||||
Kristin Trecker | 2016 | 315,000 | — | 251,520 | 137,835 | — | 170,731 | 875,086 | ||||||||||||||||||||||||
Executive Vice President & | ||||||||||||||||||||||||||||||||
Chief Human Resources Officer | ||||||||||||||||||||||||||||||||
Mauricio Arellano(8) | 2016 | 259,615 | — | 444,914 | 243,804 | — | 131,948 | 1,080,281 | ||||||||||||||||||||||||
Executive Vice President, | 2015 | 350,375 | — | 447,119 | 220,402 | — | 27,007 | 1,044,903 | ||||||||||||||||||||||||
Global Operations | 2014 | 336,583 | — | 457,314 | 213,360 | 197,512 | 23,755 | 1,228,524 |
Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(4) | All Other Compensation ($)(5) | Total ($) | |||||||||||||||||||||
Joseph W. Dziedzic(6) | 2017 | 571,115 | 166,154 | 3,086,165 | 1,008,113 | 57,225 | 4,888,772 | |||||||||||||||||||||
President & Chief | ||||||||||||||||||||||||||||
Executive Officer | ||||||||||||||||||||||||||||
Gary J. Haire | 2017 | 274,615 | — | 481,982 | 299,990 | 11,224 | 1,067,811 | |||||||||||||||||||||
Executive Vice President & | ||||||||||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||||
Jeremy Friedman | 2017 | 539,423 | — | 2,539,968 | — | 77,269 | 3,156,660 | |||||||||||||||||||||
Executive Vice President & | 2016 | 491,417 | 1,592,000 | — | 301,500 | 55,625 | 2,440,542 | |||||||||||||||||||||
Chief Operating Officer | ||||||||||||||||||||||||||||
Declan Smyth | 2017 | 333,461 | — | 648,223 | — | 15,821 | 997,505 | |||||||||||||||||||||
President, Advanced | 2016 | 338,375 | 130,000 | 684,724 | 161,525 | 10,522 | 1,325,146 | |||||||||||||||||||||
Surgical & Orthopedics | ||||||||||||||||||||||||||||
John Harris(6) | 2017 | 395,535 | 45,000 | 559,286 | — | 80,648 | 1,080,469 | |||||||||||||||||||||
Former interim President, | ||||||||||||||||||||||||||||
Cardio & Vascular | ||||||||||||||||||||||||||||
Thomas J. Hook(7) | 2017 | 329,231 | — | 3,856,698 | — | 1,761,386 | 5,947,315 | |||||||||||||||||||||
Former President & Chief | 2016 | 800,000 | — | 1,569,739 | 860,186 | 192,522 | 3,422,447 | |||||||||||||||||||||
Executive Officer | 2015 | 719,192 | — | 1,526,632 | 752,490 | 140,486 | 3,138,800 | |||||||||||||||||||||
Michael Dinkins(8) | 2017 | 79,808 | — | — | — | 455,762 | 535,570 | |||||||||||||||||||||
Former EVP & | 2016 | 415,000 | — | 435,563 | 238,673 | 34,946 | 1,124,182 | |||||||||||||||||||||
Chief Financial Officer | 2015 | 383,657 | — | 494,853 | 243,919 | 38,388 | 1,160,817 | |||||||||||||||||||||
Thomas J. Mazza(9) | 2017 | 275,203 | 30,000 | 139,455 | — | 10,500 | 455,158 | |||||||||||||||||||||
Former interim Chief | ||||||||||||||||||||||||||||
Financial Officer | ||||||||||||||||||||||||||||
Kristin Trecker(10) | 2017 | 133,269 | — | 530,419 | — | 448,649 | 1,112,337 | |||||||||||||||||||||
Former EVP & Chief | 2016 | 315,000 | — | 251,520 | 137,835 | 170,731 | 875,086 | |||||||||||||||||||||
Human Resources Officer |
(1) |
(2) |
(3) |
(4) | Amounts represent the aggregate grant date fair value of stock options granted. The valuation of stock options is based on the assumptions and methodology set forth in notes 1 and |
(5) | Amounts |
(6) | Mr. Harris served as interim President, Cardio & Vascular until February 19, 2018. |
(7) | Mr. Hook served as President and Chief Executive Officer until March 25, 2017. |
Mr. Dinkins retired as Executive Vice President & Chief Financial Officer on March 3, 2017. |
Mr. |
(10) | Ms. Trecker served as Executive Vice President |
Year | 401(k) Contribution | Term Life Insurance Premiums | Long-Term Disability Insurance Premiums | Tax Gross-Up | Perquisites | Excess Vacation | Other | Total | ||||||||||||||||||||||||||||
Thomas J. Hook | 2016 | $ | 5,250 | $ | 39,153 | $ | 20,239 | $ | 42,920 | $ | 83,760 | $ | — | $ | 1,200 | $ | 192,522 | |||||||||||||||||||
2015 | 5,250 | 14,127 | 5,716 | 21,217 | 75,044 | 18,007 | 1,125 | 140,486 | ||||||||||||||||||||||||||||
2014 | 13,725 | 16,300 | 12,574 | 20,866 | 74,428 | — | 1,050 | 138,943 | ||||||||||||||||||||||||||||
Michael Dinkins | 2016 | 4,795 | 8,757 | 5,345 | 10,191 | 5,258 | — | 600 | 34,946 | |||||||||||||||||||||||||||
2015 | 5,250 | 8,500 | 9,755 | 13,192 | — | 1,141 | 550 | 38,388 | ||||||||||||||||||||||||||||
2014 | 13,726 | 4,468 | 6,039 | 3,956 | — | — | 100 | 28,289 | ||||||||||||||||||||||||||||
Jeremy Friedman | 2016 | 7,950 | 13,195 | 6,154 | 17,193 | 11,133 | — | — | 55,625 | |||||||||||||||||||||||||||
Declan Smyth | 2016 | 7,950 | 1,737 | — | 835 | — | — | — | 10,522 | |||||||||||||||||||||||||||
Kristin Trecker | 2016 | 4,410 | 3,518 | — | 1,324 | 160,029 | — | 1,450 | 170,731 | |||||||||||||||||||||||||||
Mauricio Arellano | 2016 | 5,040 | 4,219 | 3,468 | 5,555 | 91,634 | 21,382 | 650 | 131,948 | |||||||||||||||||||||||||||
2015 | 3,780 | 4,890 | 8,593 | 9,744 | — | — | — | 27,007 | ||||||||||||||||||||||||||||
2014 | 12,151 | 1,740 | 4,996 | 4,868 | — | — | — | 23,755 |
Perquisites for the Named Executive Officers are included inThe following table sets forth details of “All Other Compensation” if the aggregate value is equal to or greater than $10,000. The perquisites included are set forthCompensation,” as presented in the table below. No perquisite exceeded the greater of $25,000 or 10% of the total perquisites provided to the respective executive, except to the extent of the dollar values described below:Summary Compensation Table for 2017.
Year | Executive Physical | Dependent Education Reimbursement(1) | Relocation | Service Awards/ Gifts | Personal Travel | Tax Preparation / Planning | ||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Name | 401(k) Contribution ($) | Term Life Insurance Premiums ($) | Long-Term Disability Insurance Premiums ($) | Tax Gross-Up ($) | Separation Compensation ($) | Perquisites ($)(1) | Total ($) | |||||||||||||||||||||||||||||||||||||||||||||||||
Joseph W. Dziedzic | 8,100 | 758 | 7,735 | 3,197 | — | 37,435 | 57,225 | |||||||||||||||||||||||||||||||||||||||||||||||||
Gary J. Haire | — | 2,245 | — | 845 | — | 8,134 | 11,224 | |||||||||||||||||||||||||||||||||||||||||||||||||
Jeremy Friedman | 8,100 | 16,100 | 6,423 | 8,479 | — | 38,167 | 77,269 | |||||||||||||||||||||||||||||||||||||||||||||||||
Declan Smyth | 8,100 | 5,215 | — | 2,505 | — | — | 15,820 | |||||||||||||||||||||||||||||||||||||||||||||||||
John Harris | — | 5,000 | — | — | — | 75,648 | 80,648 | |||||||||||||||||||||||||||||||||||||||||||||||||
Thomas J. Hook | 2016 | X | $ | 80,000 | 8,100 | 4,830 | — | 3,490 | 1,664,065 | (2) | 80,900 | 1,761,385 | ||||||||||||||||||||||||||||||||||||||||||||
2015 | X | 70,951 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2014 | X | 70,000 | X | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael Dinkins | 3,113 | 2,676 | — | 1,007 | 448,967 | (3) | — | 455,763 | ||||||||||||||||||||||||||||||||||||||||||||||||
Thomas J. Mazza | 8,100 | — | — | — | — | 2,400 | 10,500 | |||||||||||||||||||||||||||||||||||||||||||||||||
Kristin Trecker | 2016 | X | 154,335 | 3,450 | 2,254 | — | 1,141 | 398,318 | (4) | 43,486 | 448,649 | |||||||||||||||||||||||||||||||||||||||||||||
Mauricio Arellano | 2016 | X | 85,930 | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | X | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2014 | X | X | X |
(1) |
(2) | In connection with stepping down as the |
(3) | Mr. Dinkins retired as the Company’s Executive Vice President and Chief Financial Officer on March 3, 2017. In connection with his retirement, Mr. Dinkins and the Company entered into a separation agreement under which he received a lump sum cash severance payment in the amount of $425,024 and accrued but unused vacation in the amount of $24,943. |
(4) | Ms. Trecker served as the Company’s Executive Vice President & Chief Human Resources Officer until her separation on May 23, 2017. In connection with her separation, the Company and Ms. Trecker entered into a definitive separation agreement under which she received a lump sum payment in the amount of $376,616 and accrued but unused vacation in the amount of $21,702. |
20162017 Grants of Plan-Based Awards
The following table summarizes the grants of plan-based awards to each of the Named Executive Officers during fiscal year 2016. The 2016 stock-based awards for the Named Executive Officers were approved on December 14, 2015 and had a grant date of January 4, 2016. All stock-based awards in 2016 were granted either from our 2009 Stock Incentive Plan, our 2011 Stock Incentive Plan or our 2016 Stock Incentive Plan. Under these plans, all stock options expire 10 years from the date of grant. Based upon our stock incentive plans and change in control agreements in place with our Named Executive Officers, acceleration of vesting occurs for all time-based awards and a partial vesting for all performance-based awards upon death, disability, retirement or a change of control. Prior to vesting, associates who receive a grant of restricted stock are eligible to participate in the rights or privileges of a stockholder of the Company with respect to those shares, including the right to receive dividends and vote.2017.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units | All Other Option Awards: Number of Securities Underlying Options(3) | Exercise Price of Option Awards | Grant Date Fair Value of Stock and Option Awards(4) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant-Date Fair Value of Stock and Option Awards ($)(1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(#) | (#) | (#) | (#) | (#) | ($/Sh) | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas J. Hook | $ | 400,000 | $ | 800,000 | $ | 1,560,000 | — | — | — | — | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant-Date Fair Value of Stock and Option Awards ($)(1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joseph W. Dziedzic | 01/03/17 | (2) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
01/04/16 | — | — | — | 2,650 | 24,845 | 49,691 | — | 65,215 | 48.43 | 2,429,925 | 03/27/17 | (3) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael Dinkins | 155,625 | 311,250 | 606,938 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
07/17/17 | (4) | — | — | — | — | — | — | 22,883 | 67,613 | 43.70 | 1,999,983 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
07/17/17 | (5) | — | — | 195,617 | — | 8,952 | — | — | — | — | 391,202 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
07/17/17 | (6) | — | — | — | — | — | — | 11,638 | — | — | 508,581 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
07/17/17 | (7) | — | — | — | 5,819 | 11,638 | 14,324 | — | — | — | 508,581 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
07/17/17 | (7) | — | — | — | 5,829 | 11,657 | 14,347 | — | — | — | 413,474 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gary J. Haire | 05/01/17 | (8) | — | — | — | — | — | — | — | 23,771 | 37.85 | 299,990 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
01/04/16 | — | — | — | 731 | 6,894 | 13,788 | — | 18,095 | 48.43 | 674,236 | 05/01/17 | (5) | — | — | 91,000 | — | 4,808 | — | — | — | — | 181,983 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeremy Friedman | 178,500 | 357,000 | 696,150 | — | — | — | — | — | — | — | 01/03/17 | (9) | — | — | — | — | — | — | 71,065 | — | 29.55 | 2,099,971 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10/17/16 | — | — | — | — | — | — | — | 50,000 | 19.54 | 301,500 | 02/06/17 | (5) | — | — | 220,000 | — | 13,233 | — | — | — | — | 439,997 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Declan Smyth | 127,500 | 255,000 | 497,250 | — | — | — | — | — | — | — | 02/06/17 | (5) | — | — | 102,000 | — | 6,135 | — | — | — | — | 203,989 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
01/04/16 | — | — | — | 495 | 4,665 | 9,331 | — | 12,246 | 48.43 | 456,291 | 02/06/17 | (6) | — | — | — | — | — | — | 5,012 | — | — | 166,649 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
01/08/16 | — | — | — | — | — | — | 7,725 | — | — | 389,958 | 02/06/17 | (7) | — | — | — | 2,506 | 5,012 | 7,518 | — | — | — | 166,649 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
02/06/17 | (7) | — | — | — | 2,304 | 4,607 | 6,910 | — | — | — | 110,937 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John Harris | 02/06/17 | (5) | — | — | 112,686 | — | 6,778 | — | — | — | — | 225,372 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
02/06/17 | (6) | — | — | — | — | — | — | 1,002 | — | — | 33,317 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
02/06/17 | (7) | — | — | — | 501 | 1,002 | 1,503 | — | — | — | 33,317 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
02/06/17 | (7) | — | — | — | 461 | 921 | 1,381 | — | — | — | 22,178 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
05/15/17 | (10) | — | — | — | — | — | — | 3,411 | — | — | 134,735 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12/06/17 | (10) | — | — | — | — | — | — | 2,483 | — | — | 110,369 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas J. Hook | 02/06/17 | (5) | — | — | 400,000 | — | 24,060 | — | — | — | — | 799,995 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
02/06/17 | (6) | — | — | — | — | — | — | 34,486 | — | — | 1,146,660 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
02/06/17 | (7) | — | — | — | 17,243 | 34,486 | 51,729 | — | — | — | 1,146,660 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
02/06/17 | (7) | — | — | — | 15,851 | 31,702 | 47,553 | — | — | — | 763,384 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas J. Mazza | 02/06/17 | (5) | — | — | 47,500 | — | 2,859 | — | — | — | — | 95,062 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
02/06/17 | (6) | — | — | — | — | — | — | 501 | — | — | 16,658 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
02/06/17 | (7) | — | — | — | 251 | 501 | 752 | — | — | — | 16,658 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
02/06/17 | (7) | — | — | — | 230 | 460 | 690 | — | — | — | 11,077 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kristin Trecker | 118,125 | 236,250 | 460,688 | — | — | — | — | — | — | — | 02/06/17 | (5) | — | — | 87,500 | — | 5,263 | — | — | — | — | 174,995 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
01/04/16 | — | — | — | 422 | 3,981 | 7,962 | — | 10,450 | 48.43 | 389,355 | 02/06/17 | (6) | — | — | — | — | — | — | 4,010 | — | — | 133,333 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mauricio Arellano | 140,625 | 281,250 | 548,438 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
01/06/16 | — | — | — | 746 | 7,042 | 14,084 | — | 18,484 | 48.43 | 688,718 | 02/06/17 | (7) | — | — | — | 2,005 | 4,010 | 6,015 | — | — | — | 133,333 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
02/06/17 | (7) | — | — | — | 1,843 | 3,686 | 5,529 | — | — | — | 88,759 |
(1) |
The valuation of |
(2) | Represents the equity-based portion of Mr. Dziedzic’snon-employee director’s annual retainer, of which 2,475 stock options and 2,667 shares of restricted stock were cancelled on March 27, 2017, the date his service as the interim President & Chief Executive Officer commenced. |
(3) | Mr. Dziedzic received RSUs as part of his compensation as the interim President & Chief Executive Officer. Of these awards, 12,598 RSUs were cancelled on July 17, 2017, the date Mr. Dziedzic was appointed as the President & Chief Executive Officer. |
(4) | Represent equity awards received in conjunction with Mr. Dziedzic’s appointment as President & Chief Executive Officer. |
(5) | As described in the “Annual Performance-Based Incentives” section of the CD&A, each Named Executive Officer could earn an annual bonus of up to 150% of their target STI amount. Achievement of up to 100% of the target bonus is payable by the vesting of the PSUs included in this row under “Estimated Future Payouts under Equity Incentive Plan Awards.” Bonus awards in excess of 100% of target were to be paid in cash. Maximum amounts reported in this row under “Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards” represent 50% of the Named Executive Officer’s target bonus, which is the maximum possible amount of cash that could be paid to the Named Executive Officer under the 2017 STI program. As described above, each eligible Named Executive Officer earned 101.6% of their target bonus amount, as a result of which 100% of the shares reported under the “Target” column vested, and the remainder was paid in cash. |
(6) | Time-based RSUs granted under the 2017 LTI program. See the “Long-Term Incentives” section of the CD&A for further detail regarding the 2017 LTI awards. |
(7) | Share amounts in this row represent threshold, target and maximum payouts for Financial and TSR PSUs under our 2017 LTI program. See the “Long-Term Incentives” section of the CD&A for further detail regarding the 2017 LTI awards. |
(8) | Represent equity awards received in conjunction with Mr. Haire’s appointment as Executive Vice President & Chief Financial Officer. |
(9) | Represent equity awards received in conjunction with Mr. Freidman’s appointment as Executive Vice President & Chief Operating Officer. |
(10) | Represent equity awards received in conjunction with Mr. Harris’ appointment as Interim President, Cardio & Vascular. |
Outstanding Equity Awards at 20162017 FiscalYear-End
The following table summarizessets forth the stock option, restricted stock and restricted stock unitoutstanding equity awards outstanding for each of the Named Executive Officers as of December 30, 2016.29, 2017.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||
Name | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration Date | Stock Award Grant Date | Number of Shares of Stock That Have Not Vested | Market Value of Shares of Stock That Have Not Vested | 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(4) | |||||||||||||||||||||||||||||||||
(#)(1) | (#)(1) | (#)(2) | (#)(3) | (#)(5) | ||||||||||||||||||||||||||||||||||||||||
Thomas J. | 03/06/07 | 31,481 | — | — | $ | 25.50 | 03/05/17 | 01/05/15 | — | — | 46,374 | $ | 1,365,714 | |||||||||||||||||||||||||||||||
Hook | 03/04/08 | 43,417 | — | — | 20.14 | 03/04/18 | 01/04/16 | — | — | 49,691 | 1,463,400 | |||||||||||||||||||||||||||||||||
10/13/08 | 26,449 | — | — | 21.88 | 10/12/18 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
01/05/09 | 33,874 | — | — | 26.53 | 01/04/19 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
05/15/09 | 17,548 | — | — | 26.53 | 05/14/19 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
03/10/10 | 34,337 | — | — | 20.84 | 03/09/20 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
04/11/10 | 50,000 | — | — | 21.37 | 04/10/20 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
01/01/11 | 62,658 | — | — | 24.15 | 12/31/20 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
01/02/12 | 72,253 | — | — | 22.10 | 01/01/22 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
12/31/12 | 72,860 | — | — | 23.24 | 12/30/22 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
01/06/14 | 46,149 | — | — | 43.78 | 01/05/24 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
01/05/15 | 41,085 | 20,544 | — | 48.68 | 01/04/25 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
01/04/16 | 21,738 | 43,477 | — | 48.43 | 01/03/26 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Michael | 11/07/08 | 9,293 | — | — | $ | 25.07 | 11/06/18 | 01/05/15 | — | — | 15,032 | $ | 442,692 | |||||||||||||||||||||||||||||||
Dinkins | 11/07/08 | 1,041 | — | — | 25.07 | 11/06/18 | 01/04/16 | — | — | 13,788 | 406,057 | |||||||||||||||||||||||||||||||||
01/05/09 | 5,767 | — | — | 26.53 | 01/04/19 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
01/04/10 | 7,446 | — | — | 19.55 | 01/03/20 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
01/01/11 | 6,217 | — | — | 24.15 | 12/31/20 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
01/02/12 | 3,615 | — | — | 22.10 | 01/01/22 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
05/07/12 | 27,985 | — | — | 22.79 | 05/03/22 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
12/31/12 | 28,820 | — | — | 23.24 | 12/30/22 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
01/06/14 | 14,594 | — | — | 43.78 | 01/05/24 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
01/05/15 | 13,317 | 6,660 | — | 48.68 | 01/04/25 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
01/04/16 | 6,031 | 12,064 | — | 48.43 | 01/03/26 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Jeremy | 10/27/15 | 17,752 | — | — | $ | 11.58 | 10/26/25 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Friedman | 10/27/15 | 7,070 | — | — | 11.58 | 10/26/25 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
10/18/16 | — | 50,000 | — | 19.54 | 10/17/26 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Declan | 10/27/15 | 9,815 | — | — | $ | 11.58 | 10/26/25 | 01/04/16 | — | $ | — | 9,331 | $ | 274,798 | ||||||||||||||||||||||||||||||
Smyth | 10/27/15 | 3,704 | — | — | 11.58 | 10/26/25 | 01/08/16 | 3,434 | 101,131 | — | $ | — | ||||||||||||||||||||||||||||||||
01/04/16 | 4,081 | 8,165 | — | 48.43 | 01/03/26 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Kristin | 01/04/16 | 3,483 | 6,967 | — | $ | 48.43 | 01/03/26 | 12/14/15 | — | $ | — | 711 | $ | 20,939 | ||||||||||||||||||||||||||||||
Trecker | — | — | — | — | — | — | 01/04/16 | — | — | 7,962 | 234,481 |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Executive Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested (1) ($) | 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 (1) ($) | ||||||||||||||||||||||||
Joseph W. Dziedzic | 14,530 | — | 25.25 | 02/28/23 | 23,015 | (4) | 1,042,580 | 14,347 | (9) | 649,919 | ||||||||||||||||||||||
1,722 | — | 40.86 | 01/03/24 | 8,952 | (5) | 405,526 | ||||||||||||||||||||||||||
2,877 | — | 45.39 | 01/04/25 | 9,194 | (6) | 416,488 | ||||||||||||||||||||||||||
2,883 | — | 48.43 | 01/04/26 | |||||||||||||||||||||||||||||
888 | — | 29.55 | 01/03/27 | |||||||||||||||||||||||||||||
22,537 | 45,076 | (2) | 43.70 | 07/17/27 | ||||||||||||||||||||||||||||
Gary J. Haire | 7,923 | 15,848 | (2) | 37.85 | 05/01/27 | 5,284 | (4) | 239,365 | — | — | ||||||||||||||||||||||
4,808 | (5) | 217,802 | ||||||||||||||||||||||||||||||
Jeremy Friedman | 16,666 | 33,334 | (2) | 19.54 | 10/18/26 | 47,377 | (4) | 2,146,178 | — | — | ||||||||||||||||||||||
13,233 | (5) | 599,455 | ||||||||||||||||||||||||||||||
Declan Smyth | 9,815 | — | 11.58 | 05/08/25 | 5,059 | (7) | 229,173 | 6,910 | (9) | 313,023 | ||||||||||||||||||||||
3,704 | — | 11.58 | 09/10/23 | 6,135 | (5) | 277,916 | 466 | (10) | 21,110 | |||||||||||||||||||||||
8,163 | 4,083 | (3) | 48.43 | 01/04/26 | 3,961 | (6) | 179,433 | |||||||||||||||||||||||||
John Harris | 1,981 | — | 11.58 | 07/23/24 | 6,563 | (8) | 297,304 | 1,381 | (9) | 62,559 | ||||||||||||||||||||||
506 | — | 11.58 | 04/30/24 | 792 | (6) | 35,878 | ||||||||||||||||||||||||||
Thomas J. Hook | 9,523 | (5) | 431,392 | 9,410 | (9) | 426,273 | ||||||||||||||||||||||||||
10,790 | (6) | 488,787 | 1,156 | (10) | 52,367 | |||||||||||||||||||||||||||
Michael Dinkins | 7,446 | — | 18.24 | 01/03/20 | — | — | 689 | (9) | 31,212 | |||||||||||||||||||||||
6,217 | — | 22.53 | 03/03/20 | |||||||||||||||||||||||||||||
3,615 | — | 20.62 | 03/03/20 | |||||||||||||||||||||||||||||
28,820 | — | 21.68 | 03/03/20 | |||||||||||||||||||||||||||||
14,594 | — | 40.84 | 03/03/20 | |||||||||||||||||||||||||||||
19,977 | — | 45.41 | 03/03/20 | |||||||||||||||||||||||||||||
18,095 | — | 48.43 | 03/03/20 | |||||||||||||||||||||||||||||
Thomas J. Mazza | 4,161 | — | 40.84 | 01/06/24 | 335 | (4) | 15,176 | 690 | (9) | 31,257 | ||||||||||||||||||||||
4,606 | — | 45.41 | 01/05/25 | 2,859 | (5) | 129,513 | 168 | (10) | 7,610 | |||||||||||||||||||||||
2,942 | 1,472 | (3) | 48.43 | 01/04/26 | 395 | (6) | 17,894 | |||||||||||||||||||||||||
Kristin Trecker | — | — | 398 | (9) | 18,029 |
(1) |
(2) | Options vest in two equal installments on December 28, 2018 and January 3, 2020. |
(3) | Options vest on December 28, 2018. |
| Time-based RSUs, which vest in two approximately equal parts on December 28, 2018 and January 3, 2020. |
(5) |
|
| ||
|
| |
(8) | Time-based RSUs, of which 5,894 vest on June 2, 2018, 334 vest on December 28, 2018 and 335 vest on January 3, 2020. |
(9) | TSR PSUs issued on February 6, 2017 under the 2017 LTI program. Actual awards earned ranging from 0% to 150% of target will be determined based upon the Company’s relative TSR performance against designated peer groups over atwo-year period ending December 28, 2018. The number of shares earned will vest in two equal parts on the date in the first quarter of 2019 that achievement of the TSR performance is determined by the Compensation Committee and January 3, 2020. Performance for the 2017 period was above the maximum; therefore the maximum amounts are |
(10) | TSR PSUs issued on January 4, 2016 under the 2016 LTI program. Actual awards |
|
| |
2016 Stock2017 Option Exercises and Stock Vested
The following table summarizes the number of stock option awards exercised and the number of stock awards vesting during 20162017 for the Named Executive Officers, including the value realized.
Stock Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting(1) | ||||||||||||||||||||||||||||
Executive Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting(1) ($) | ||||||||||||||||||||||||||||
Joseph W. Dziedzic | — | — | 18,629 | 820,837 | ||||||||||||||||||||||||||||
Gary J. Haire | — | — | 2,642 | 119,683 | ||||||||||||||||||||||||||||
Jeremy Friedman | 24,762 | 850,729 | 23,688 | 1,073,066 | ||||||||||||||||||||||||||||
Declan Smyth | — | — | 3,387 | 153,431 | ||||||||||||||||||||||||||||
John Harris | 1,261 | 42,647 | 333 | 15,085 | ||||||||||||||||||||||||||||
Thomas J. Hook | 2,221 | $ | 4,095 | 77,662 | $ | 3,219,090 | 552,655 | 7,959,314 | 34,486 | 1,362,197 | ||||||||||||||||||||||
Michael Dinkins | — | — | 30,720 | 1,273,344 | 44,086 | 851,887 | — | — | ||||||||||||||||||||||||
Declan Smyth | — | — | 3,432 | 94,081 | ||||||||||||||||||||||||||||
Kristin Trecker | — | — | 355 | 10,739 | ||||||||||||||||||||||||||||
Mauricio Arellano | 25,896 | 154,079 | 27,542 | 1,141,616 | ||||||||||||||||||||||||||||
Thomas J. Mazza | 5,175 | 125,856 | 200 | 9,060 |
(1) | Based |
Equity Compensation Plan Information
The following table provides information regarding the Company’s equity compensation plans as of December 30, 2016:29, 2017:
Plan Category (As of December 30, 2016) | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted- average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||||||||||||||
Plan Category (As of December 29, 2017) | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||||||||||||||
( a )(1) | ( b ) | ( c )(2) | ( a )(1) | ( b ) | ( c )(2) | |||||||||||||||||||
Equity compensation plans approved by security holders | 2,135,952 | $ | 28.26 | 1,503,276 | 1,564,673 | $ | 30.89 | 1,005,456 | ||||||||||||||||
Equity compensation plans not approved by security holders | — | — | — | — | — | — | ||||||||||||||||||
Total | 2,135,952 | $ | 28.26 | 1,503,276 | 1,564,673 | $ | 30.89 | 1,005,456 |
(1) | Consists of shares of common stock underlying stock options issued under |
(2) | As of December |
Potential Payments Upon Termination of Employment or Change in Control
We do not offer our Named Executive Officers pension or nonqualified deferred compensation benefits. Upon the death or disability of an associate, all outstanding stock option awards immediately vest and all outstanding performance-based restricted stock units immediately vest at the target level applicable to such performance-based awards. All vested stock options expire at various times following the event, no later than one year, based upon the terms of the plan from which they were awarded. In the event that an associate’s employment is terminated by the Company without cause, apro-rata portion of such associate’s PSUs that were awarded more than one year before the date of termination will remain outstanding. These PSUs will continue to be eligible for vesting based on the Company’s attainment of the performance goals applicable to such awards. All unvested time-based awards are forfeited.
The following table presents the benefits that would have been received by Mr. HookDziedzic under his employment agreement in the event of a hypothetical termination as of December 30, 2016. Mr. Hook stepped down as our President and Chief Executive Officer on March 25, 2017.29, 2017:
Salary | Severance | Acceleration of Stock-Based Awards(1) | Continuance of Benefits(2) | Total | Salary & Bonus ($) | Severance ($) | Acceleration of Stock-Based Awards ($)(1) | Continuance of Benefits ($)(2) | Total ($) | |||||||||||||||||||||||||||||||
Permanent Disability | $ | 800,000 | $ | — | $ | 1,418,548 | $ | 145,287 | $ | 2,363,835 | 850,000 | — | 2,586,634 | 30,000 | 3,466,634 | |||||||||||||||||||||||||
Death | 800,000 | — | 1,418,548 | 15,818 | 2,234,366 | 850,000 | — | 2,586,634 | 30,000 | 3,466,634 | ||||||||||||||||||||||||||||||
Termination Without Cause | 800,000 | 800,000 | — | — | 1,600,000 | — | 1,700,000 | 2,261,674 | — | 3,961,674 | ||||||||||||||||||||||||||||||
Termination With Good Reason | 800,000 | 800,000 | — | — | 1,600,000 | — | 1,700,000 | 2,261,674 | — | 3,961,674 | ||||||||||||||||||||||||||||||
Termination for Cause | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Termination Without Good Reason | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Retirement | — | — | — | — | — | — | — | — | — | — |
(1) | Based upon our closing stock price of |
(2) |
The following table presents the benefits that would have been received by Mr. Haire under his employment offer letter in the event of a hypothetical termination as of December 29, 2017:
Salary & Bonus ($) | Severance ($) | Acceleration of Stock-Based Awards ($)(1) | Continuance of Benefits ($)(2) | Total ($) | ||||||||||||||||
Permanent Disability | — | — | 792,984 | — | 792,984 | |||||||||||||||
Death | — | — | 792,984 | — | 792,984 | |||||||||||||||
Termination Without Cause | — | 420,000 | — | 30,000 | 450,000 | |||||||||||||||
Termination With Good Reason | — | — | — | — | — | |||||||||||||||
Termination for Cause | — | — | — | — | — | |||||||||||||||
Termination Without Good Reason | — | — | — | — | — | |||||||||||||||
Retirement | — | — | — | — | — |
(1) | Based upon our closing stock price of $45.30 on December 29, 2017 (the last trading day of our 2017 fiscal year). Termination due to death or permanent disability includes the |
(2) | Payment equal to the assumed amount of the Company’s contributions toward health insurance benefits |
The following table presents the benefits that would behave been received by Mr. Friedman under his employment offer letter in the event of a hypothetical termination as of December 30, 2016:29, 2017:
Salary | Severance | Acceleration of Stock-Based Awards(1) | Continuance of Benefits(2) | Total | Salary & Bonus ($) | Severance ($) | Acceleration of Stock-Based Awards ($)(1) | Continuance of Benefits ($)(2) | Total ($) | |||||||||||||||||||||||||||||||
Permanent Disability | $ | — | $ | — | $ | 495,500 | $ | — | $ | 495,500 | — | — | 3,604,317 | — | 3,604,317 | |||||||||||||||||||||||||
Death | — | — | 495,500 | — | 495,500 | — | — | 3,604,317 | — | 3,604,317 | ||||||||||||||||||||||||||||||
Termination Without Cause | 825,000 | — | — | 23,716 | 848,716 | — | 825,000 | 3,604,317 | 45,000 | 4,474,317 | ||||||||||||||||||||||||||||||
Termination With Good Reason | 825,000 | — | — | 23,716 | 848,716 | — | 825,000 | 3,604,317 | 45,000 | 4,474,317 | ||||||||||||||||||||||||||||||
Termination for Cause | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Termination Without Good Reason | — | — | — | 23,716 | 23,716 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Retirement | — | — | 495,500 | — | 495,500 | — | — | 3,604,317 | — | 3,604,317 |
(1) | Based upon our closing stock price of |
(2) |
The following table presents the value of the acceleration of outstanding equity awards pursuant to the terms of our 2005 Stock Incentive Plan, 2009 Stock Incentive Plan, 2011 Stock Incentive Plan and 2016 Stock Incentive Planbenefits that would behave been received by our Named Executive Officers, other than Mr. Hook and Mr. Friedman,Harris under his employment agreement in the event of a hypothetical termination as of December 30, 2016:29, 2017:
Michael Dinkins(1,2) | Declan Smyth(2) | Kristin Trecker(2) | Salary & Bonus ($) | Severance ($) | Acceleration of Stock-Based Awards ($)(1) | Continuance of Benefits ($) | Total ($) | |||||||||||||||||||||||||
Permanent Disability | $ | 424,375 | $ | 238,545 | $ | 127,725 | — | — | 374,888 | — | 374,888 | |||||||||||||||||||||
Death | 424,375 | 238,545 | 127,725 | — | — | 374,888 | — | 374,888 | ||||||||||||||||||||||||
Termination Without Cause | — | 101,131 | — | — | 395,414 | 364,461 | — | 759,875 | ||||||||||||||||||||||||
Termination With Good Reason | — | 101,131 | — | — | — | — | — | — | ||||||||||||||||||||||||
Termination for Cause | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Termination Without Good Reason | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Retirement | — | — | — | — | — | 364,461 | — | 364,461 |
(1) |
Based upon our closing stock price of |
The following table presents the benefits that would have been received by Mr. Smyth under his employment offer letter in the event of a hypothetical termination as of December 29, 2017:
Salary & Bonus ($) | Severance ($) | Acceleration of Stock-Based Awards ($)(1) | Continuance of Benefits ($)(2) | Total ($) | ||||||||||||||||
Permanent Disability | — | — | 1,106,528 | — | 1,106,528 | |||||||||||||||
Death | — | — | 1,106,528 | — | 1,106,528 | |||||||||||||||
Termination Without Cause | — | 340,000 | — | 30,000 | 370,000 | |||||||||||||||
Termination With Good Reason | — | — | — | — | — | |||||||||||||||
Termination for Cause | — | — | — | — | — | |||||||||||||||
Termination Without Good Reason | — | — | — | — | — | |||||||||||||||
Retirement | — | — | — | — | — |
(1) | Based upon our closing stock price of $45.30 on December 29, 2017 (the last trading day of our 2017 fiscal year). Termination due to death or permanent disability includes the value of his time-based awards, the value of the 2017 Financial PSUs at actual payout levels, and the value of the 2017 TSR PSUs at target. Unvested time-based awards includes RSUs granted under the 2017 STI program that vested on March 9, 2018. |
(2) | Payment equal to the assumed amount of the Company’s contributions toward health insurance benefits for 12 months. |
The following table presents the benefits that would have been received by Mr. Mazza in the event of a hypothetical termination as of December 29, 2017:
Salary & Bonus ($) | Severance ($) | Acceleration of Stock-Based Awards ($)(1) | Continuance of Benefits ($)(2) | Total ($) | ||||||||||||||||
Permanent Disability | — | — | 335,764 | — | 335,764 | |||||||||||||||
Death | — | — | 335,764 | — | 335,764 | |||||||||||||||
Termination Without Cause | — | 278,479 | 178,210 | 30,000 | 486,689 | |||||||||||||||
Termination With Good Reason | — | — | — | — | — | |||||||||||||||
Termination for Cause | — | — | — | — | — | |||||||||||||||
Termination Without Good Reason | — | — | — | — | — | |||||||||||||||
Retirement | — | — | 178,210 | — | 178,210 |
(1) | Based upon our closing stock price of $45.30 on December 29, 2017 (the last trading day of our 2017 fiscal year). Termination due to death or permanent disability includes the value of his time-based awards, the value of the 2017 Financial PSUs at actual payout levels, and the value of the 2017 TSR PSUs at target. Termination without cause and retirement includes the value of all unvested time-based awards, the value of the 2017 Financial PSUs at actual payout levels, and a prorated portion of the 2017 TSR PSUs based on actual performance as of the assumed termination date. Unvested time-based awards includes RSUs granted under the 2017 STI program that vested on March 9, 2018. |
(2) | Payment equal to the assumed amount of the Company’s contributions toward health insurance benefits for 12 months. |
The following table summarizes the value of the benefits received by Mr. Hook upon the termination of his employment with the Company in accordance with the terms of his employment agreement and the executive departure agreement that he entered into with the Company. Under the terms of the executive departure agreement, it was agreed that Mr. Hook was entitled to the cash severance and equity acceleration benefits to which he would have been entitled under the terms of his employment agreement in the case of resignation for good reason.
Mr. Hook received (i) a severance payment equal to two times his annual base salary, and (ii) accelerated vesting of any outstanding time-based awards held by him and continued vesting of a prorated portion of any outstanding PSUs held by him. The values of the equity awards set forth in the table below are based upon our closing stock price of $39.50 on May 23, 2017.
Severance ($) | Acceleration of Stock-Based Awards ($) | Total ($) | ||||||||||
Thomas J. Hook | 1,600,000 | 1,362,197 | 2,962,197 |
The following table summarizes the value of the benefits received by Mr. Dinkins and Ms. Trecker upon the termination of their employment with the Company. The values of the equity awards set forth in the table below are based upon our closing stock price on their respective termination dates.
Severance ($) | Acceleration of Stock-Based Awards ($) | Total ($) | ||||||||||
Michael Dinkins | 425,024 | — | 425,024 | |||||||||
Kristin Trecker | 376,616 | — | 376,616 |
All associates, including the Named Executive Officers, who are at least 59 1⁄2 years of age with a combination of age and length of service equal to at least 69 1⁄2 years are eligible to receive the following benefits under our stock incentive plans on retirement:
None of the Named Executive Officers, other than Mr. DinkinsFriedman, Mr. Harris and Mr. Friedman,Mazza, would have been eligible for the accelerated vesting of equity upon a retirement as of December 30, 2016.29, 2017.
As discussed under “Other Features of ourOur Executive Compensation Program” our change in control agreements provide for continued employment with the same base salary, annual cash incentive and benefits for two years following a change in control. Our change in control agreements only provide benefits if there is both a change in control of the Company and qualifying termination of employment. If the executive is terminated after the change in control, other than for death, disability or cause, or the executive terminates employment for good reason, then the executive will be entitled to certain payments and benefits. The most significant components of those benefits are as follows:
Our change in control agreements entered into prior to 2011 provide that the Company will make the executive whole for any golden parachute excise tax imposed on a change in control payment, unless the payments are less than 110% of the safe harbor amount. An executive is not entitled to this gross-up if the present value of payments does not exceed 110% of the safe harbor threshold. Instead, the payment due to the executive would be reduced to the safe harbor threshold. This form of change in control agreement was applicable to Mr. Hook prior to stepping down as President and Chief Executive Officer on March 25, 2017.
During 2011, the Compensation Committee amended the form of change in control agreement, which is provided to prospective executives joining the Company after 2011, to eliminate the gross-up provision and replace it with a bestafter-tax provision (i.e., the executive’s payment will be scaled back to the golden parachute safe harbor if the executive is better off on anafter-tax basis) and to include a 24 month post-employmentnon-compete covenant. This new form of change in control agreement is applicable to Mr. Friedman, Mr. Smyth and Ms. Trecker and was applicable to Mr. Dinkins prior to his retirement on March 3, 2017.
In the event of a change in control, as defined in the applicable award plan or agreement, unless determined otherwise by the Compensation Committee, all unvested stock option awards granted will immediately vest, but only the portion of unvested performance-based restricted stock unitsRSUs that would have vested under the original plan design will immediately vest. While our plans provide for single trigger vesting, our Changechange in Controlcontrol agreements with our Named Executive Officers require both a Change in Control and termination of employment for our Named Executive Officers to receive the cash payments and other benefits provided under those agreements.
Based upon the hypothetical termination date of December 30, 2016,29, 2017, the change in control termination benefits for our Named Executive Officers would be as follows:
Salary & Bonus | Acceleration of Stock-Based Awards(3,4) | Continuance of Benefits | Outplacement Services | Total(4) | ||||||||||||||||
Thomas J. Hook(1) | $ | 3,200,000 | $ | — | $ | 290,573 | $ | 25,000 | $ | 3,515,573 | ||||||||||
Michael Dinkins(2) | $ | 1,452,500 | $ | — | $ | 42,902 | $ | 25,000 | 1,520,402 | |||||||||||
Jeremy Friedman | $ | 1,312,500 | $ | 495,500 | $ | 57,522 | $ | 25,000 | 1,890,522 | |||||||||||
Declan Smyth | $ | 990,000 | $ | 101,131 | $ | 71,800 | $ | 25,000 | 1,187,931 | |||||||||||
Kristin Trecker | $ | 1,102,500 | $ | — | $ | 42,132 | $ | 25,000 | 1,169,632 |
Salary & Bonus ($) | Acceleration of Stock-Based Awards ($)(1)(2) | Continuance of Benefits ($) | Outplacement Services ($) | Total ($)(2) | ||||||||||||||||
Joseph W. Dziedzic | 3,400,000 | 2,586,634 | 60,000 | 25,000 | 6,071,634 | |||||||||||||||
Gary J. Haire | 1,204,000 | 792,984 | 60,000 | 25,000 | 2,081,984 | |||||||||||||||
Jeremy Friedman | 1,980,000 | 3,604,317 | 60,000 | 25,000 | 5,669,317 | |||||||||||||||
Declan Smyth | 1,088,000 | 999,545 | 60,000 | 25,000 | 2,172,545 | |||||||||||||||
John Harris | 1,265,712 | 395,741 | 60,000 | 25,000 | 1,746,453 | |||||||||||||||
Thomas J. Mazza | 746,958 | 193,839 | 60,000 | 25,000 | 1,025,797 |
(1) |
Based upon our closing stock price of |
The calculations above do not take into consideration the value of the non-compete and non-solicitation provisions which are valuable to the Company.
CORPORATE GOVERNANCE AND BOARD MATTERS
The business of the Company is managed under the direction of the Board. The Board has adopted Corporate Governance Guidelines (the “Guidelines”) that reflect the Company’s commitment to good corporate governance. The full text of the Guidelines can be accessed under the Investor Relations drop-down menu of the Company’s website atwww.integer.net under “Governance.”
The Company has historically provided all of its new associates with a copy of an associate handbook that has included a summary of the Company’s Code of Conduct. In addition, the Company has required new associates to certify that they are responsible for reading and familiarizing themselves with the Code of Conduct, and adhering to such policies and procedures.
The Company’s Code of Conduct applies to its directors, officers, associates and consultants. The Code of Conduct requires that individuals avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner and otherwise act with integrity and in the best interests of the Company. In addition, the Code of Conduct encourages individuals to report any illegal or unethical behavior that they observe. The Code of Conduct is a guide to help ensure that all such individuals live up to the highest ethical standards. The Company provides all of its associates with a copy of the Company’s Code of Conduct and requires all associates to certify that they are responsible for reading and familiarizing themselves with the Code of Conduct, and adhering to such policies and procedures.
The Company also maintains a Code of Ethics for CEO and Senior Financial Officers that applies to our Chief Executive Officer, Chief Financial Officer, Controller and all other senior financial officers designated by the Chief Financial Officer from time to time. This Code of Ethics supplements our Code of Conduct and is intended to promote honest and ethical conduct, full and accurate financial reporting and compliance with laws, as well as other matters.
Our Code of Conduct and the Code of Ethics for CEO and Senior Financial Officers can be accessed under the Investor Relations drop-down menu of the Company’s website atwww.integer.net. The Company intends to post on its website any amendment to or waiver from any provision in the Code of Conduct or the Code of Ethics for CEO and Senior Financial Officers that requires disclosure under applicable SEC rules.
Copies of the Guidelines and the Code of Conduct and the Code of Ethics for CEO and Senior Financial Officers also may be obtained without charge by written request made to the Corporate Secretary, Integer Holdings Corporation, 10000 Wehrle Drive, Clarence, New York 14031.
Leadership Structure of the Board
The positions of Chairman of the Board and Chief Executive Officer have been separate since August 2006. The Board believes this structure continues to be in the best interests of the Company and its stockholders. The Chairman organizes Board activities to enable the Board to effectively provide guidance to and have oversight of and accountability for management. To fulfill that role, the Chairman, among other things, creates and maintains an effective working relationship with the Chief Executive Officer and other members of management and with the other members of the Board, provides the Chief Executive Officer ongoing direction as to Board needs, interests and opinions, and assures that the Board agenda is appropriately directed to the matters of greatest importance to the Company. In carrying out his responsibilities, the Chairman preserves the distinction between management and oversight, maintaining the responsibility of management to develop corporate strategy and the responsibility of the Board to review and express its views on corporate strategy. The functions of the Chairman include:
With respect to the directors who served on our Board during 2016, theThe Board has determined that each of thoseour directors, other than Mr. Dziedzic, who is serving as the InterimCompany’s President and& Chief Executive Officer, of the Company,and Mr. Spence, who is a former employee of the Company, and Mr. Hook, the Company’s former President and Chief Executive Officer (who is not standing for re-election at the Annual Meeting) is independent under the NYSE’s Corporate Governance Listing Standards. In accordance with the NYSE Corporate Governance Listing Standards, the Board undertook its annual review of director independence with respect to the directors standing forre-election at the Annual Meeting. During this review, the Board considered the materiality of any relationships with the Company from the director’s perspective and the perspective of any persons or organizations with which the director is affiliated. Material relationships may include commercial, industrial, banking, consulting, legal, accounting, charitable or familial relationships and can also be indirect, such that serving as a partner or officer, or holding shares, of an organization that has a relationship with the Company may cause the director not to be independent. The purpose of this review was to determine whether any such relationships or transactions existed that were inconsistent with a determination that the director is independent.
Following the review described above, the Board has affirmatively determined that except for Mr. Dziedzic and Mr. Spence, no current director has a material relationship with the Company that is inconsistent with a determination of independence. Therefore, the Board affirmatively determined that all of the current directors who are standing forre-election at the Annual Meeting, with the exception of Mr. Dziedzic and Mr. Spence, are independent.
The Company has an enterprise risk management program implemented by members of the Company’s senior management. The enterprise risk management program as a whole is reviewed annually with the Board. Enterprise risks are identified and prioritized by management, and individual prioritized risks may be overseen by the full Board or a committee, as appropriate. For example, strategic risks are overseen by the full Board;Board and financial risks are overseen by the Audit Committee; and scientific and technology risks are overseen by the Science and Technology Committee. Management regularly reports on each such risk to the relevant committee or the Board. Additional review or reporting on enterprise risks is conducted as needed or as requested by the Board or a committee.
Committees and Meetings of the Board
The Board has standing Audit, Compensation and Organization, Corporate Governance and Nominating, and Science and Technology Strategy Committees. Each committee has a written charter that can be accessed under the Investor Relations drop-down menu of the Company’s website atwww.integer.net under “Governance.” Copies of the charters may be obtained without charge by written request made to the Corporate Secretary, Integer Holdings Corporation, 10000 Wehrle Drive, Clarence, New York 14031.
The Board held seveneight meetings in 2016.2017. Each director attended at least 75% of the meetings of the Board and meetings of the committees of the Board on which that director served. The Company encourages, but has no formal policy regarding, director attendance at its annual meeting of stockholders. Each of the Company’s directors then serving on the Board, other than Peter H. Soderberg, attended the 20162017 Annual Meeting of Stockholders.
Audit Committee. The Audit Committee consists of Ms. Hobby (Chair) and Messrs. Hinrichs, Maxwell and Soderberg. Mr. Dziedzic served as chair and a member of the Audit Committee prior to being appointed as Interim President and& Chief Executive Officer on March 27, 2017. The Audit Committee’s primary purpose is assisting the Board in overseeing the (i) integrity of the Company’s financial statements, (ii) Company’s compliance with legal and regulatory requirements, (iii) Company’s independent registered public accounting firm qualifications and independence, (iv) performance of the Company’s internal audit function and independent registered public accounting firm, (v) Company’s system of disclosure controls and procedures, and (vi) the Company’s system of internal controls regarding finance, accounting, legal compliance, related person transactions and ethics that management and the Board have established. The Audit Committee had eighteentwelve meetings in 2016.2017.
Compensation and Organization Committee. The Compensation and Organization Committee consists of Ms. Bailey and Messrs. Soderberg (Chair), Hinrichs and Summers. Mr. Dziedzic served as a member of the Compensation and Organization Committee prior to being appointed as Interim President and& Chief Executive Officer on March 27, 2017. The Board has determined that each member of the committee is independent as defined under the NYSE’s Corporate Governance Listing Standards applicable to compensation committee members. The Compensation and Organization Committee’s primary purpose is establishing the Company’s executive compensation programs so as to attract, retain and motivate superior executives and ensuring that senior executives of the Company and its wholly owned subsidiaries are compensated appropriately and in a manner consistent with the Company’s compensation philosophy. The Compensation and Organization Committee also administers the Company’s stock incentive plans. The Compensation and Organization Committee had six meetings in 2016.2017.
Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee consists of Ms. Bailey (Chair), and Messrs. Passerini, Sanford and Summers. Each member of the Corporate Governance and Nominating Committee is independent under the NYSE Corporate Governance Listing Standards. Working closely with the full Board, the Corporate Governance and Nominating Committee reviews, on an annual basis, the composition of the Board and whether the Company is being well served by the directors taking into account such factors as it deems appropriate, which may include the current composition of the Board, the range of talents, experiences and skills that would best complement those already represented on the Board, the balance of management and independent directors, and the need for financial or other specialized expertise. Applying these criteria, but without any formal policy regarding diversity, the Corporate Governance and Nominating Committee considers candidates for Board membership suggested by its members and other directors, as well as by management and stockholders, and recommends director nominees to the Board. The Corporate Governance and Nominating Committee uses the same process for evaluating candidates for director regardless of the source of the recommendation, and also has sole authority to retain a search firm to assist in identifying qualified director candidates. Stockholders wishing to submit recommendations for candidates to the Board must supply information in writing regarding the candidate to the Corporate Governance and Nominating Committee at the Company’s offices at 10000 Wehrle Drive, Clarence, New York 14031. The information should include, at a minimum, the candidate’s name, biographical information, qualifications and availability for service. The written submission should comply with the substantive and timing requirements set forth in the Company’s bylaws.
The Corporate Governance and Nominating Committee also develops and recommends to the Board corporate governance guidelines applicable to the Company and evaluates the effectiveness of the Board. The Corporate Governance and Nominating Committee had sixfive meetings in 2016.2017.
Science and Technology Strategy Committee. The Science and Technology Committee, formerly known as the Technology Strategy and Investment Committee consists of Ms. Hobby, and Messrs. Maxwell (Chair), Passerini and Spence. The Science and Technology Strategy Committee periodically examines and provides oversight to management’s direction and investment in the Company’s research and development activities and to its technology and commercialization initiatives, it advises the Board on scientific matters that include major internal projects, interaction with academic and other outside research organizations and the acquisition of technologies and products, and it advises the Board on the Company’s integration activities. The Science and Technology Strategy Committee had fivethree meetings in 2016.2017.
Executive Sessions of the Board
The independentnon-management directors meet without management in executive session at the conclusion of each regularly scheduled Board meeting and at such other times as they deem appropriate. Mr. Sanford, Board Chairman, presides at the meetings of thenon-management directors when they meet in executive session.
Board/Committee/Director Evaluations
The Board has a three-part annual evaluation process that is coordinated by the Chairman and the Chair of the Corporate Governance and Nominating Committee: committee self-evaluations; a full board evaluation; and the evaluation of the individual directors. The committee self-evaluations consider whether and how well each committee has performed the responsibilities in its charter, whether the committee members possess the right skills and experience to perform their responsibilities or whether additional education or training is required, whether there are sufficient meetings covering the right topics, whether the meeting materials are effective, and other matters. The full board evaluation considers the following factors, among others, in light of the committee self-assessments: (i) the effectiveness of the board organization and committee structure; (ii) the quality of meetings, agendas, presentations and meeting materials; (iii) the effectiveness of director preparation and participation in discussions; (iv) the effectiveness of director selection, orientation and continuing education processes; (v) the effectiveness of the process for establishing the Chief Executive Officer’s performance criteria and evaluating his performance; and (vi) the quality of administrative planning and logistical support.
Individual director performance assessments are conducted informally as needed and involve a discussion among the Chairman and other directors, including members of the Corporate Governance and Nominating Committee. In addition, the Chairman and the Chair of the Corporate Governance and Nominating Committee provide individual feedback, as necessary.
Any stockholder or interested party who wishes to communicate with Mr. Sanford, thenon-management directors of the Board as a group or the entire Board may do so by writing to them in care of the following address: Integer Holdings Corporation, 10000 Wehrle Drive, Clarence, NY 14031. In addition, Mr. Sanford receives a copy of each communication submitted by stockholders or other interested parties via the Direct Line page which can be accessed under the Investor Relations drop-down menu of the Company’s website (www.integer.net) under “Governance.”
Compensation Committee Interlocks and Insider Participation
In fiscal year 2016,2017, Ms. Bailey and Messrs. Dziedzic (until his appointment as Interim President & Chief Executive Officer on March 27, 2017), Soderberg and Summers served on the Compensation and Organization Committee. No person who served as a member of the Compensation and Organization Committee during fiscal year 20162017 was (i) an officer or employee of the Company or any of its subsidiaries during such fiscal year, (ii) formerly an officer of the Company or any of its subsidiaries or (iii) had any relationship requiring disclosure by the Company under Item 404 of RegulationS-K under the Securities Act of 1933, as amended.
20162017 Director Compensation
Consistent with current best practices and with the assistance of information provided by an outside compensation consultant, the Board reviews director compensation every 2 to 3 years. In 2015, the Corporate Governance and Nominating Committee engaged Ernst and Young LLP to perform a market study related to the compensation of the non-employee directors and onOn December 14, 2015, the Board approved a new compensation program fornon-employee directors that was effective on January 1, 20162016.
The Company uses a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on our Board. For 2016,In 2017, eachnon-employee director was paid a retainer of $190,000 ($310,000 for the Chairman) in a combination of cash and equity awards. In setting director compensation, the Company considers the significant amount of time that directors expend in fulfilling their duties to the Company as well as the skill-level required for members of the Board. Directors who are also employees of the Company receive no additional remuneration for services as a director. All awards and changes to directors’ compensation are approved by the Board.
Cash Compensation – For 2016,. In 2017, the cash portion of eachnon-employee director’s annual retainer was $60,000. Directors also received additional cash payments as follows:
Chairman of the Board | $ | 60,000 | $ | 60,000 | ||||||
Audit Committee Chair | 20,000 | 20,000 | ||||||||
Compensation and Organization Committee Chair | 15,000 | 15,000 | ||||||||
Corporate Governance and Nominating Committee Chair | 10,000 | 10,000 | ||||||||
Science and Technology Committee Chair | 10,000 | |||||||||
Technology Strategy Committee Chair | 10,000 | |||||||||
Committee Meeting Fees for each meeting attended in excess of ten | 1,000 | per meeting attended | 1,000 per meeting attended | |||||||
Board Meeting Fees for each meeting attended in excess of five | 1,000 | per meeting attended | 1,000 per meeting attended |
Equity Compensation – For 2016,. In 2017, the equity-based portion of eachnon-employee director’s annual retainer was equal in value to $130,000 ($190,000 for the Chairman) consisting of 75 percent in value in restricted shares of common stock (based on the closing price of the common stock on the date of grant) and 25 percent in value in stock options (computed using the Black-Scholes method). The stock options have an exercise price equal to the closing price of the common stock on the date of grant. The number of shares of restricted stock granted is calculated using the closing price of the Company’s common stock on the date of grant. All equity-based awards vest in equal quarterly installments of 25% on the first day of each quarter of the Company’s fiscal year in which they were granted. For 2016,2017, the equity awards were granted on January 4, 2016.2, 2017.
On the date anon-employee director first becomes a member of the Board, that director is granted a stock option award equal in value to $120,000. The number of stock options awarded is determined using the Black-Scholes value of those options on the date of grant. The stock options have an exercise price equal to the closing price of the common stock on the date of grant and become exercisable in three equal annual installments beginning on the first Company fiscalyear-end date which is at least six months after the date of grant.
In order to align the interests of our directors with the interests of our stockholders and to promote our commitment to sound corporate governance, the Compensation and Organization Committee designed and the Board approved stock ownership guidelines fornon-employee directors. These ownership guidelines call fornon-employee directors to own at least 6,000 shares of the Company’s common stock within five years of election as a director. In addition,non-employee directors may not sell shares of the Company’s Common Stockcommon stock unless the value of anon-employee director’s holdings exceeds five times the amount of the annual cash retainer paid to thenon-employee director. EachExcept for Mr. Hinrichs, who was just elected to the Board in February 2018, each of our directors has achieved these ownership guidelines.
The following table contains information concerning the total compensation earned by eachnon-employee director of the Company during 2016:2017:
Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | Option Awards(2) | Total | ||||||||||||||||||||||||||||
Director Name(1) | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3) | Option Awards ($)(3) | Total ($) | ||||||||||||||||||||||||||||
Pamela G. Bailey | $ | 70,000 | $ | 97,454 | $ | 32,491 | $ | 199,945 | 78,000 | 97,485 | 32,493 | 207,978 | ||||||||||||||||||||
Anthony P. Bihl III(3) | 15,000 | 97,454 | 32,491 | 144,945 | ||||||||||||||||||||||||||||
Joseph W. Dziedzic | 87,000 | 97,454 | 32,491 | 216,945 | ||||||||||||||||||||||||||||
Jean Hobby | 82,000 | 97,454 | 32,491 | 211,945 | 88,500 | 97,485 | 32,493 | 218,478 | ||||||||||||||||||||||||
M. Craig Maxwell | 72,000 | 97,454 | 32,491 | 201,945 | 80,500 | 97,485 | 32,493 | 210,478 | ||||||||||||||||||||||||
Dr. Joseph A. Miller, Jr.(3) | 15,000 | 97,454 | 32,491 | 144,945 | ||||||||||||||||||||||||||||
Filippo Passerini | 63,000 | 97,454 | 32,491 | 192,945 | 67,000 | 97,485 | 32,493 | 196,978 | ||||||||||||||||||||||||
Bill R. Sanford | 120,000 | 142,468 | 47,492 | 309,960 | 126,000 | 142,490 | 47,491 | 315,981 | ||||||||||||||||||||||||
Peter H. Soderberg | 80,000 | 97,454 | 32,491 | 209,945 | 86,000 | 97,485 | 32,493 | 215,978 | ||||||||||||||||||||||||
Donald J. Spence(4) | 15,000 | 20,304 | 126,763 | 162,067 | ||||||||||||||||||||||||||||
Donald J. Spence | 64,000 | 97,485 | 32,493 | 193,978 | ||||||||||||||||||||||||||||
William B. Summers, Jr. | 60,000 | 97,454 | 32,491 | 189,945 | 68,000 | 97,485 | 32,493 | 197,978 |
(1) | Mr. Dziedzic is omitted from this table as he was also a Named Executive Officer in 2017. See “2017 Summary Compensation Table” on page 7 for Mr. Dziedzic’s compensation for services provided as a director and Named Executive Officer in 2017. |
(2) | The amounts indicated represent the amount earned for retainers and Board or committee meeting fees. |
The amounts represent the aggregate fair value of awards granted. The valuation is based on the assumptions and methodology set forth in Notes 1 and 11 to our financial statements included in our Annual Report on Form10-K, which was filed with the SEC on February |
The following table contains information concerning the unvested stock awards andsets forth eachnon-employee director’s outstanding stock options for each non-employee directoras of the Company:December 29, 2017.
Director Name | ||||||||
Pamela G. Bailey | ||||||||
| ||||||||
Jean Hobby | ||||||||
M. Craig Maxwell | ||||||||
Filippo Passerini | ||||||||
Bill R. Sanford | ||||||||
Peter H. Soderberg | ||||||||
Donald J. Spence | ||||||||
William B. Summers, Jr. |
The Board has adopted a written policy setting forth procedures for the review, approval and monitoring of transactions involving the Company and related persons of the Company. A copy of the Company’s policy on related person transactions can be accessed under the Investor Relations drop-down menu of the Company’s website (www.integer.net) under “Governance.” Under this policy, every proposed transaction between the Company and a director, executive officer, a director nominee, stockholder owning in excess of 5% of the common stock or any immediate family member or entity of the foregoing persons involving an amount in excess of $120,000 and in which the related person will have a direct or indirect material interest, must be approved or ratified by the Audit Committee. If the transaction involves a related person who is a director or an immediate family member of a director, such director may not participate in the deliberations or vote regarding such approval. All related person transactions are reported by the Audit Committee to the Board. The Board has determined that there were no related person transactions, as defined above, that occurred in 2016.2017.
The Audit Committee consists of Ms. Hobby (Chair) and Messrs. Hinrichs, Maxwell and Soderberg, each of whom the Board has determined is “independent” in accordance with applicable securities laws and the listing standards of the NYSE. Mr. Dziedzic, who served as Chair of the Audit Committee prior to March 27, 2017, was also determined to be “independent” in accordance with applicable laws and the listing standards of the NYSE during his service on the Audit Committee. The Board also has also determined that Ms. Hobby, Mr. Soderberg and Mr. SoderbergHinrichs each also qualify as an “audit committee financial expert” under the applicable rules of the SEC.
The Audit Committee reviewed and discussed the information contained in the Company’s 20162017 quarterly earnings announcements with management and the independent registered public accounting firm prior to public release. They also reviewed and discussed the information contained in the Company’s 20162017 Quarterly Reports on Form10-Q and Annual Report on Form10-K with management and the independent registered public accounting firm prior to filing with the SEC. In addition, the Audit Committee met regularly with management, internal auditors and the independent registered public accounting firm on various financial and operational matters, including to review plans and scope of audits and audit reports and to discuss necessary action.
In connection with the Company’s fiscal year 20162017 consolidated financial statements, the Audit Committee has:
• | discussed with the Company’s independent registered public accounting firm the matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 1301,Communications with Audit Committees, |
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, that the audited consolidated financial statements referred to above be included in the Company’s Annual Report on Form10-K for fiscal year 2016.2017.
Respectfully submitted,
AUDIT COMMITTEE
Jean Hobby (Chair)
James F. Hinrichs
M. Craig Maxwell
Peter H. Soderberg
Management does not know of any matters to be presented at this Annual Meeting other than those set forth in this proxy statement and in the notice accompanying this proxy statement. If other matters should properly come before the Annual Meeting, it is intended that the proxy holders will vote on such matters in accordance with their best judgment.
A copy of the Company’s Annual Report on Form10-K for fiscal year 20162017 may be obtained without charge by any stockholder by written request made to Mark Zawodzinski, SEC Reporting Manager,Tom P. Thomas, Corporate Controller, Integer Holdings Corporation, 10000 Wehrle Drive, Clarence, New York 14031. Additionally, the Company’s Annual Report on Form10-K for fiscal year 20162017 can be accessed under the Investor Relations drop-down menu of the Company’s website (www.integer.net) under “Financial Information.”
By Order of the Board of Directors, |
/s/ Timothy G. McEvoy |
Timothy G. McEvoy |
Senior Vice President, General Counsel & Secretary |
Frisco, Texas
April 17, 201718, 2018
EXHIBIT A
EXECUTIVE SHORT TERM INCENTIVE COMPENSATION PLAN
PURPOSE: This Executive Short Term Incentive Compensation Plan (the “Plan”) is intended to enable Integer Holdings Corporation (the “Company”) to attract, motivate and retain highly qualified executives on a competitive basis and to provide financial incentives to those executives in order to promote the success of the Company. The Plan is for the benefit of Participants. The Plan is designed to ensure that the short term incentive compensation paid under the Plan to Participants are deductible without limit under Section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations and interpretations promulgated thereunder.
SECTION 1. DEFINITIONS.
The following terms have the meanings indicated unless a different meaning is clearly required by the context:
(a) “Base Salary” means the greatest of (i) the Participant’s annualized salary as of the first day of the Company’s fiscal year, (ii) the Participant’s annualized salary as of the date the performance goal is established under Section 4, or (iii) if the Participant’s annual salary is increased after the date the performance goal is established under Section 4, the annual salary paid to the Participant for the fiscal year. Base Salary shall be before both (i) deductions for taxes or benefits; and (ii) deferrals of compensation pursuant to Company-sponsored plans.
(b) “Board of Directors” means the Board of Directors of the Company.
(c) “Chief Executive Officer” has the meaning set forth in Rule 3b-7 promulgated under the Securities Exchange Act of 1934, as amended.
(d) “Code” means the Internal Revenue Code of 1986, as amended.
(e) “Committee” means the Compensation and Organization Committee of the Board of Directors or a subcommittee thereof. The Committee at all times shall be composed of at least two directors of the Company, each of whom shall be “outside directors” within the meaning of Section 162(m) of the Code.
(f) “Company” means Integer Holdings Corporation and its affiliated group of corporations as defined in Section 1504 of the Code (determined without regard to Section 1504(b) of the Code).
(g) “Company Stock” shall mean the common stock, par value $0.001 per share, of Integer Holdings Corporation.
(h) “Fair Market Value” means, for any particular date, (i) for any period during which the Company Stock shall be (A) listed for trading on a national securities exchange, including, without limitation, the New York Stock Exchange or the NASDAQ Stock Market, (B) listed for trading on a national market system, or (C) listed, quoted or traded on any automated quotation system, the closing price per share of Company Stock on such exchange or system as of the close of such trading day, as reported in the Wall Street Journal or such other source as the Committee deems reliable, or (ii) the market price per share of Company Stock as determined in good faith by the Committee in the event (i) above shall not be applicable. If the Fair Market Value is to be determined as of a day when the securities markets are not open, the Fair Market Value on that day shall be the Fair Market Value on the first prior preceding day when the markets were open
(i) “Participant” means an individual who participates in the Plan pursuant to Section 2.
SECTION 2. ELIGIBLE EXECUTIVES AND PARTICIPANTS.
“Eligible Executives” for a fiscal year are defined as (i) the Chief Executive Officer of the Company on the first day of such year or a person who becomes the Chief Executive Officer during such year by virtue of being hired or promoted and (ii) any other officer of the Company designated by the Committee. Within the first ninety (90) days of each fiscal year (or such other period as may be permitted by Section 162(m) of the Code), the Committee will designate those Eligible Executives who are to be “Participants” in the Plan for that fiscal year.
SECTION 3. ADMINISTRATION.
The Committee shall have the sole discretion and authority to administer the Plan, interpret the terms and provisions of the Plan and to establish, adjust, pay or decline to pay bonuses under the Plan.
SECTION 4. PERFORMANCE GOALS.
Within the first ninety (90) days of each fiscal year of the Company, the Committee shall set one or more objective performance goals for each Participant for such year. Such goals, which may be determined on a U.S. Generally Accepted Accounting Principles (“GAAP”), adjusted and/or non-GAAP basis by the Committee in accordance with Section 162(m) of the Code, shall be expressed in terms of: (1) earnings or diluted earnings per share; (2) pro-forma earnings or diluted earnings per share; (3) net earnings (either before or after interest, taxes, depreciation and amortization); (4) economic value-added (as determined by the Committee); (5) sales or revenue; (6) net income (either before or after taxes); (7) operating earnings or income; (8) cash flow (including, but not limited to, operating cash flow and free cash flow); (9) cash flow return on capital; (10) return on investment; (11) return on stockholders’ equity; (12) return on assets or net assets; (13) return on capital; (14) stockholder returns; (15), return on sales; (16) improvements in capital structure; (17) capital expenditures; (18) gross or net profit margin; (19) productivity; (20) product quality; (21) expense; (22) margins; (23) operating efficiency; (24) cost or debt reduction or savings; (25) customer satisfaction; (26) working capital; (27) price per share of Company Stock; (28) market share; (29) credit rating; (30) improvements in workplace diversity, inclusion or culture; (31) employee retention; (32) business expansion or consolidation (acquisitions, divestiture and integration); and (33) strategic plan development and implementation, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group. The Committee, in its discretion, may, to the extent permitted by Section 162(m) of the Code, adjust or modify the calculation of performance goals for such period in order to prevent the dilution or enlargement of the rights of Participants (a) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event, or development, or (b) in recognition of, or in anticipation of, any other extraordinary, unusual or non-recurring items as described in applicable accounting standards or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s Forms 10-K or 10-Q for the applicable year, or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions.
SECTION 5. BONUS DETERMINATIONS.
(a) Within the first ninety (90) days of each fiscal year of the Company, the Committee will specify the objective terms and conditions for the determination and payment of a bonus for each Participant. At the time that annual performance goals are set for Participants, the Committee shall establish a maximum award opportunity for each Participant for the year. The maximum award opportunity shall be expressed as a percentage of the Participant’s Base Salary and will be based on a formula that takes account of the degree of achievement of the goals set for the Participant; provided, however, that (i) the Committee shall have absolute discretion to reduce the actual bonus payment that would otherwise be payable to any Participant on the basis of achievement of performance goals, and (ii) the maximum dollar amount of the award opportunity for the Participant must be fixed at the time that the performance goal is set. The maximum award paid to a Participant in respect of a particular fiscal year shall in no event exceed an amount equal to 250% of a Participant’s Base Salary or, if less, $10,000,000. To the extent that all or a portion of a bonus for a fiscal year is made in restricted stock or restricted stock units (a “Share Denominated Award”), the maximum award that may be paid to a Participant in respect of the fiscal year will be determined by using the Fair Market Value of the Company’s Stock underlying the Share Denominated Award as of the date of such Award. Any Share Denominated Award will be made under, and subject to the terms and conditions of, a shareholder approved equity plan, with vesting of any Share Denominated Award deemed to occur as of the date of certification by the Committee pursuant to Section 5(b) or pursuant to a shareholder approved equity plan that complies with Section 162(m) of the Code. In the event of a change in the Company’s fiscal year, the Plan shall apply, with appropriate pro-rata adjustments, to any fiscal period not consisting of twelve months.
(b) No bonuses shall be paid to a Participant unless and until the Committee makes a certification in writing with respect to the attainment of the performance goals as required by Section 162(m) of the Code. Although the Committee may in its sole discretion reduce a bonus payable to a Participant based on such objective and/or subjective factors as it may determine, the Committee shall have no discretion to increase the amount of a Participant’s bonus as determined under the applicable objective terms and conditions established for such bonus amount.
(c) Following the Committee’s determination and certification of the amount of any bonus payable, such amount will be paid in cash or, in the case of a Share Denominated Award, cash or Company Stock (subject to any election made by a Participant with respect to the deferral of all or a portion of his or her bonus). Payment of any bonus amount or any Share Denominated Award will be made as soon as feasible after the Committee’s certification of the amount payable but not later than two and one-half months following the end of the fiscal year to which the bonus relates.
(d) In the event of the death of a Participant after the end of a fiscal year and prior to any payment otherwise required pursuant to Section 5.3, such payment shall be made to the representative of the Participant’s estate.
(e) Except as otherwise set forth in the award agreement for any Share Denominated Award, in the event of the death, disability, retirement or other termination of employment of a Participant during a fiscal year, the Committee shall, in its discretion, have the power to award to such Participant (or the representative of the Participant’s estate) an equitably prorated portion of the bonus which otherwise would have been earned by such Participant based on actual achievement of the performance goal for the entire fiscal year.
(f) The right of a Participant or of any other person to any payment under the Plan shall not be assigned, transferred, pledged or encumbered in any manner and any attempted assignment, transfer, pledge or encumbrance shall be null and void and of no force or effect.
SECTION 6. AMENDMENT AND TERMINATION.
The Board of Directors may at any time amend the Plan in any fashion or terminate or suspend the Plan; provided that no amendment shall be made which would cause bonuses payable under the Plan to fail to qualify for the exemption from the limitations of Section 162(m) of the Code provided in Section 162(m)(4)(C) of the Code. Upon any such termination, all rights of a Participant with respect to any fiscal year that has not ended on or prior to the effective date of such termination shall become null and void. Any amendments to the Plan shall require shareholder approval only to the extent required by Section 162(m) of the Code.
SECTION 7. SHAREHOLDER APPROVAL.
No bonuses shall be paid under the Plan unless and until the Company’s shareholders shall have approved the Plan and the performance goals as required by Section 162(m) of the Code. If the Plan is amended in any way that changes the material terms of the Plan’s performance goals, including by materially modifying the performance goals, increasing the maximum bonus payable under the Plan or changing the Plan’s eligibility requirements, the Plan shall be resubmitted to the Company’s shareholders for approval as required by Section 162(m) of the Code.
SECTION 8. MISCELLANEOUS.
(a) The Plan shall be governed by and construed in accordance with the internal laws of the State of New York applicable to contracts made, and to be wholly performed, within such State, without regard to principles of choice of laws.
(b) All amounts required to be paid under the Plan shall be subject to any required Federal, state, local and other applicable withholdings or deductions.
(c) Nothing contained in the Plan shall confer upon any Participant or any other person any right with respect to the continuation of employment by the Company or interfere in any way with the right of the Company at any time to terminate such employment or to increase or decrease the compensation payable to the Participant from the rate in effect at the commencement of a fiscal year or to otherwise modify the terms of such Participant’s employment. No person shall have any claim or right to participate in or receive any award under the Plan for any particular fiscal year.
C123456789 integer IMPORTANT ANNUAL MEETING INFORMATION 000004 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINESACKPACK000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext MR A SAMPLE
Using ablack ink pen, mark your votes with anX as shown in this example. Please do not write outside the designated areas. | ☒ |
Electronic Voting Instructions DESIGNATION (IF ANY)
Available 24 hours a day, 7 days a week! ADD 1 ADD 2
Instead of mailing your proxy, you may choose one of the voting ADD 3 methods outlined below to vote your proxy. ADD 4
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. ADD 5
Proxies submitted by the Internet or telephone must be received by ADD 6 11:59 p.m.1:00 a.m., EasternCentral Daylight Time, on May 22, 2017. Vote by Internet Go to www.investorvote.com/ITGR Or scan the QR code with your smartphone Follow the steps outlined on the secure website 2018.
Vote by Internet • Go towww.investorvote.com/ITGR • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website |
Vote by telephone
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals THE BOARD OF DIRECTORS RECOMMENDS A VOTE ���FOR” PROPOSALS 1, 2, 3 AND 4, AND A VOTE FOR “1 YR” ON PROPOSAL 5. 1. Election of Directors: For Withhold For Withhold For Withhold + 01 Pamela G. Bailey 02 Joseph W. Dziedzic 03 Jean Hobby 04 M. Craig Maxwell 05 Filippo Passerini 06 Bill R. Sanford 07 Peter H. Soderberg 08 Donald J. Spence 09 William B. Summers, Jr. For Against Abstain 3. RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP For Against Abstain 2. APPROVAL OF THE INTEGER HOLDINGS CORPORATION AS THE INDEPENDENT REGISTERED PUBLIC EXECUTIVE SHORT TERM INCENTIVE COMPENSATION PLAN ACCOUNTING FIRM FOR INTEGER HOLDINGS CORPORATION FOR FISCAL YEAR 2017. 1 YR 2 YRS 3 YRS Abstain 4. APPROVE BY NON-BINDING ADVISORY VOTE THE COMPENSATION OF INTEGER HOLDINGS CORPORATION 5. APPROVE BY NON-BINDING ADVISORY VOTE NAMED EXECUTIVE OFFICERS. THE FREQUENCY OF THE NON-BINDING VOTE ON EXECUTIVE COMPENSATION 6. IN THEIR DISCRETION, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS. B Non-Voting Items Change of Address Please print your new address below. Comments Please print your comments below. Meeting Attendance Mark the box to the right if you plan to attend the Annual Meeting. C Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. Date (mm/dd/yyyy) Please print date below. Signature 1 Please keep signature within the box. Signature 2 Please keep signature within the box. C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 1UPX 3260881 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 02KUUB
A | Proposals — THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS 1, 2 AND 3. | |||
1. | Election of Directors: | For | Withhold | For | Withhold | For | Withhold | + | ||||||||||||||||
01 - Pamela G. Bailey | ☐ | ☐ | 02 - Joseph W. Dziedzic | ☐ | ☐ | 03 - James F. Hinrichs | ☐ | ☐ | ||||||||||||||||
04 - Jean Hobby | ☐ | ☐ | 05 - M. Craig Maxwell | ☐ | ☐ | 06 - Filippo Passerini | ☐ | ☐ | ||||||||||||||||
07 - Bill R. Sanford | ☐ | ☐ | 08 - Peter H. Soderberg | ☐ | ☐ | 09 - Donald J. Spence | ☐ | ☐ | ||||||||||||||||
10 - William B. Summers, Jr. | ☐ | ☐ |
For | Against | Abstain | For | Against | Abstain | |||||||||||||||
2. | RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR INTEGER HOLDINGS CORPORATION FOR FISCAL YEAR 2018. | ☐ | ☐ | ☐ | 3. | APPROVE BY NON-BINDING ADVISORY VOTE THE COMPENSATION OF INTEGER HOLDINGS CORPORATION NAMED EXECUTIVE OFFICERS. | ☐ | ☐ | ☐ | |||||||||||
4. IN THEIR DISCRETION, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS. |
B | Non-Voting Items |
Change of Address — Please print your new address below. | Comments — Please print your comments below. | Meeting Attendance |
Mark the box to the right if you plan to attend the Annual Meeting. | ☐ |
C | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below |
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. |
Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. |
/ / |
qIF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Proxy ——— INTEGER HOLDINGS CORPORATION 2595 DALLAS
5830 GRANITE PARKWAY, GRANITE BUILDING V, SUITE 310 FRISCO,140
PLANO, TEXAS 75034 75024
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON MAY 23, 2017 22, 2018
The undersigned hereby appoint(s) Jeremy Friedman and Timothy G. McEvoy,Kirk Thor, and each of them, proxies with the powers the undersigned would possess if personally present and with full power of substitution, to vote all shares of common stock of the undersigned at the Annual Meeting of Stockholders of Integer Holdings Corporation to be held at 9:00 a.m.2:45 p.m. Central Daylight Time on May 23, 201722, 2018 at 2595 Dallas5830 Granite Parkway, Granite Building V, Suite 310, Frisco,140, Plano, Texas 75034,75024, and at any adjournment, upon matters described in the Proxy Statement furnished with this proxy card and all other subjects that may properly come before the meeting.
IF NO DIRECTIONS ARE GIVEN, THE INDIVIDUALS DESIGNATED ABOVE WILL VOTE FOR THE NOMINEES FOR DIRECTOR LISTED IN THE PROXY STATEMENT FURNISHED WITH THIS PROXY CARD, FOR THE APPROVAL OF THE INTEGER HOLDINGS CORPORATION EXECUTIVE SHORT TERM INCENTIVE COMPENSATION PLAN, FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP, FOR THE APPROVAL OF THE COMPENSATION OF INTEGER HOLDINGS CORPORATION’S NAMED EXECUTIVE OFFICERS FOR APPROVAL OF 1YR AS THE FREQUENCY OF THE NON-BINDING VOTE ON EXECUTIVE COMPENSATION, AND AT THEIR DISCRETION ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” PROPOSALS 1, 2 3 AND 4, AND A VOTE FOR “1 YR” ON PROPOSAL 5. (Continued3.
(Continued and to be marked, dated and signed, on the other side)
Using ablack ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. | ☒ |
INTEGERtm. IMPORTANT ANNUAL MEETING INFORMATION Using a black ink pen, mark your votes with an X as shown in X this example. Please do not write outside the designated areas. Annual Meeting Proxy Card q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS 1, 2, 3 AND 4, AND A VOTE FOR “1 YR” ON PROPOSAL 5. 1. Election of Directors: For Withhold For Withhold For Withhold + 01 Pamela G. Bailey 02 Joseph W. Dziedzic 03 Jean Hobby 04 M. Craig Maxwell 05 Filippo Passerini 06 Bill R. Sanford 07 Peter H. Soderberg 08 Donald J. Spence 09 William B. Summers, Jr. For Against Abstain 3. RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP For Against Abstain 2. APPROVAL OF THE INTEGER HOLDINGS CORPORATION AS THE INDEPENDENT REGISTERED PUBLIC EXECUTIVE SHORT TERM INCENTIVE COMPENSATION PLAN ACCOUNTING FIRM FOR INTEGER HOLDINGS CORPORATION FOR FISCAL YEAR 2017. 1 YR 2 YRS 3 YRS Abstain 4. APPROVE BY NON-BINDING ADVISORY VOTE THE COMPENSATION OF INTEGER HOLDINGS CORPORATION 5. APPROVE BY NON-BINDING ADVISORY VOTE NAMED EXECUTIVE OFFICERS. THE FREQUENCY OF THE NON-BINDING VOTE ON EXECUTIVE COMPENSATION 6. IN THEIR DISCRETION, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS. B Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. Date (mm/dd/yyyy) Please print date below. Signature 1 Please keep signature within the box. Signature 2 Please keep signature within the box. 1UPX 3260882 + 02KUVB
A | Proposals — THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS 1, 2 AND 3. | |||
1. | Election of Directors: | For | Withhold | For | Withhold | For | Withhold | + | ||||||||||||||||
01 - Pamela G. Bailey | ☐ | ☐ | 02 - Joseph W. Dziedzic | ☐ | ☐ | 03 - James F. Hinrichs | ☐ | ☐ | ||||||||||||||||
04 - Jean Hobby | ☐ | ☐ | 05 - M. Craig Maxwell | ☐ | ☐ | 06 - Filippo Passerini | ☐ | ☐ | ||||||||||||||||
07 - Bill R. Sanford | ☐ | ☐ | 08 - Peter H. Soderberg | ☐ | ☐ | 09 - Donald J. Spence | ☐ | ☐ | ||||||||||||||||
10 - William B. Summers, Jr. | ☐ | ☐ |
For | Against | Abstain | For | Against | Abstain | |||||||||||||||
2. | RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR INTEGER HOLDINGS CORPORATION FOR FISCAL YEAR 2018. | ☐ | ☐ | ☐ | 3. | APPROVE BY NON-BINDING ADVISORY VOTE THE COMPENSATION OF INTEGER HOLDINGS CORPORATION NAMED EXECUTIVE OFFICERS. | ☐ | ☐ | ☐ | |||||||||||
4. IN THEIR DISCRETION, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS. |
B | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below |
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. |
Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. |
/ / |
qPLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Proxy — INTEGER HOLDINGS CORPORATION 2595 DALLAS
5830 GRANITE PARKWAY, GRANITE BUILDING V, SUITE 310 FRISCO,140
PLANO, TEXAS 75034 75024
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON MAY 23, 2017 22, 2018
The undersigned hereby appoint(s) Jeremy Friedman and Timothy G. McEvoy,Kirk Thor, and each of them, proxies with the powers the undersigned would possess if personally present and with full power of substitution, to vote all shares of common stock of the undersigned at the Annual Meeting of Stockholders of Integer Holdings Corporation to be held at 9:00 a.m.2:45 p.m. Central Daylight Time on May 23, 201722, 2018 at 2595 Dallas5830 Granite Parkway, Granite Building V, Suite 310, Frisco,140, Plano, Texas 75034,75024, and at any adjournment, upon matters described in the Proxy Statement furnished with this proxy card and all other subjects that may properly come before the meeting.
IF NO DIRECTIONS ARE GIVEN, THE INDIVIDUALS DESIGNATED ABOVE WILL VOTE FOR THE NOMINEES FOR DIRECTOR LISTED IN THE PROXY STATEMENT FURNISHED WITH THIS PROXY CARD, FOR THE APPROVAL OF THE INTEGER HOLDINGS CORPORATION EXECUTIVE SHORT TERM INCENTIVE COMPENSATION PLAN, FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP, FOR THE APPROVAL OF THE COMPENSATION OF INTEGER HOLDINGS CORPORATION’S NAMED EXECUTIVE OFFICERS FOR APPROVAL OF 1YR AS THE FREQUENCY OF THE NON-BINDING VOTE ON EXECUTIVE COMPENSATION, AND AT THEIR DISCRETION ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” PROPOSALS 1, 2 3 AND 4, AND A VOTE FOR “1 YR” ON PROPOSAL 5. (Continued3.
(Continued and to be marked, dated and signed, on the other side)