SURMODICS, INC.
9924 West 74^th Street
Eden Prairie, Minnesota 55344

Annual Meeting of Shareholders

February 21, 2018

PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 13, 2020
4:00 p.m. Central Standard Time

INTRODUCTION

This proxy statement is furnished to shareholders of the Company in connection with the solicitation of proxies by the Board of Directors of the Company to be voted at the virtual annual meeting of shareholders to be held on February 21, 201813, 2020 (the “Annual Meeting”), at 4:00 p.m. Central Standard Time, or any adjournments or postponements thereof. This proxy statement and the form of proxy, along with the annual report on Form10-K for the fiscal year ended September 30, 20172019 (the “Annual Report”), is being first sent or given to shareholders on or about January 4, 2018.December 23, 2019. The Company also expects that the Notice Regarding Availability of Proxy Materials (the “Notice”) will first be mailed to shareholders on or about January 4, 2018.December 23, 2019. The mailing address of the Company’s principal executive offices is 9924 West 74th74^th Street, Eden Prairie, Minnesota 55344.

Solicitation of Proxies

The Company will pay all solicitation expenses in connection with this proxy statement and related proxy soliciting material of the Board, including the preparation and assembly of the proxies and soliciting material. In addition to the use of the mails, proxies may be solicited personally or by mail, telephone, fax or by our directors, officers and regular employees who will not be additionally compensated for any such services.

If You Hold Your Shares in “Street Name”

If you hold your shares in “street name”, i.e., through a bank, broker or other holder of record (a “custodian”), your custodian is required to vote your shares on your behalf in accordance with your instructions. If you do not give instructions to your custodian, your custodian will not be permitted to vote your shares with respect to“non-routine” “non-routine” items. Please note that if you intend to vote your street name shares at the Annual Meeting, you must provide a “legal proxy” from your custodian at the Annual Meeting.

Revocation of a Proxy

Any shareholder giving a Proxy may revoke it at any time prior to its use at the meeting by giving written notice of the revocation to the Secretary of the Company, or by submitting a subsequent Proxy by internet or mail. Attendance at the virtual meeting is not, by itself, sufficient to revoke a Proxy unless written notice of the revocation or a subsequent Proxy is delivered to the Secretary of the Company before the revoked or superseded Proxy is used at the virtual meeting. Proxies not revoked will be voted in accordance with the choices specified by shareholders by means of the ballot provided on the Proxy for that purpose.

Requesting Paper Copies and Voting

Pursuant to Securities and Exchange Commission (the “SEC”) rules related to the availability of proxy materials, we have chosen to make our proxy statement and related materials, including our Annual Report, available online to our shareholders and, as permitted by the rules, paper copies of these materials will only be provided upon request. We are providing to our shareholders (other than those who previously requested electronic or paper delivery) the Notice which contains instructions on how to access this proxy statement and related materials online. If your shares are held in “street name”, the Notice will be forwarded to you by your custodian. If you received the Notice by mail, you will not automatically receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review all of the important information contained in the proxy materials. The Notice also instructs you on how you may vote your shares, including via the internet. If you previously requested electronic delivery, you will still receive ane-mail providing you the Notice, and if you previously requested paper delivery, you will still receive a paper copy of the proxy materials by mail.

OUTSTANDING SHARES AND VOTING RIGHTS

The Board of Directors of the Company has fixed December 26, 2017,16, 2019, as the record date for determining shareholders entitled to vote at the Annual Meeting. Persons who were not shareholders on such date will not be allowed to vote at the Annual Meeting. At the close of business on December 26, 2017, 13,195,95816, 2019, 13,588,229 shares of the Company’s common stock were issued and outstanding. Common stock is the only outstanding class of capital stock of the Company entitled to vote at the meeting. Each share of common stock is entitled to one vote on each matter to be voted upon at the meeting. Holders of common stock are not entitled to cumulative voting rights. If a shareholder votes, the shares will be counted as part of the quorum.

Vote Required

The affirmative vote of a plurality of the shares of common stock present, either online or by proxy, at the Annual Meeting (including by proxy) and entitled to vote is required for the election to the Board of each of the nominees for director. Shareholders do not have the right to cumulate their votes in the election of directors. “Plurality” means that the individuals who receive the greatest number of votes cast “For” are elected as directors. Accordingly, the threetwo nominees for director receiving the highest vote totals will be elected as directors of the Company.

The vote to approve our executive compensation is advisory and not binding on our Board of Directors. However, our Board will consider our shareholders to have approved our executive compensation if the number of votes “For” Proposal 4 exceeds the number of votes “Against” Proposal 4.

The affirmative vote of the holders of the greater of (1) a majority of the shares of our common stock present (including by proxy) and entitled to vote on the proposal or (2) a majority of the minimum number of shares entitled to vote that would constitute a quorum for the transaction of business at the meeting is required for approval of the other proposals presented in this Proxy Statement, except for ProposalProposals 1 and 4. A shareholder who abstains with respect to the election of directors, and the advisory vote on executive compensation will not have any effect on the outcome of these proposals. A shareholder who abstains with respect to any proposal other than the election of directors and the advisory vote on executive compensation will have the effect of casting a negative vote on that proposal. A shareholder who does not vote at the Annual Meeting on a proposal (including by proxy) is not deemed to be present for the purpose of determining whether a proposal has been approved.

Custodians cannot vote on their customers’ behalf on“non-routine” “non-routine” proposals such as Proposal 1 related to the election of directors, Proposal 2 related to board size, and Proposal 4 related to executive compensation. Because custodians require their customers’ direction to vote on suchnon-routine matters, it is critical that shareholders provide their custodians with voting instructions. On the other hand, Proposal 3, ratification of the appointment of our independent registered public accounting firm, is a “routine” matter for which custodians do not need voting instruction in order to vote shares.

For vote requirement purposes for Proposals 1, 2, and 4, brokernon-votes are considered to be shares present by proxy at the Annual Meeting but are not considered to be shares “entitled to vote” or “votes cast” on such items at the Annual Meeting.

How You Can Vote

You may vote in one of the following ways:

By Internet before the Annual Meeting:		You may access the website at www.proxyvote.com to cast your vote 24 hours a day, 7 days a week. You will need your control number found in the Notice or proxy card. Follow the instructions provided to obtain your records and create an electronic ballot.
By mail:		If you request a paper proxy card, mark, sign and date each proxy card you receive and return it in the postage-paid envelope provided or to the location indicated on the proxy card.
At the Annual Meeting:		If you are a shareholder of record, you may attend the Annual Meeting and vote your shares at www.virtualshareholdermeeting.com/SRDX20 during the meeting. You will need your control number found in the Notice of Internet Availability or proxy card. Follow the instructions provided to vote. On the day of our Annual Meeting, we recommend that you log into our virtual meeting at least 15 minutes prior to the scheduled start time to ensure that you can access the meeting. If you wish to submit a question, type your question into the “Ask a Question” field and within the virtual meeting and click “Submit.” Questions related directly to the Annual Meeting will be answered during our virtual meeting, subject to time constraints. Any questions pertinent to meeting matters that cannot be answered during the meeting due to time constraints will posted online and answered on our website at www.surmodics.com under the “Investors” tab. The questions and answers will be available as soon as practical after the meeting and will remain available until one week after the posting.

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PRINCIPAL SHAREHOLDERS

The following table provides information concerning persons known to the Company to be the beneficial owners of more than 5% of the Company’s outstanding common stock as of December 26, 2017.16, 2019. Unless otherwise indicated, the shareholders listed in the table have sole voting and investment power with respect to the shares indicated.

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MANAGEMENT SHAREHOLDINGS

The following table sets forth the number of shares of common stock beneficially owned as of December 26, 2017,16, 2019, by each executive officer of the Company named in the Summary Compensation Table, by each current director of the Company and by all directors and executive officers (including the NEOs)named executive officers) as a group. Unless otherwise indicated, the shareholders listed in the table have sole voting and investment power with respect to the shares indicated.

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ELECTION OF DIRECTORS

(Proposals #1 and #2)

General Information

The Bylaws of the Company provide that the number of directors, which shall not be less than three, shall be determined annually by the shareholders. The Company’s Corporate Governance and Nominating Committee and Board of Directors have recommended that the number of directors be set at seven (7) at the Annual Meeting.

The Bylaws also provide for the election of three classes of directors with terms staggered so as to require the election of only one class of directors each year, and further that each class be equal in number, or as nearly as possible. Only directors who are members of Class IIII will be elected at the Annual Meeting. Each Class IIII director will be elected to a three-year term and, therefore, will hold office until the Company’s 20212023 annual meeting of shareholders and until his or her successor has been duly elected and qualified, or until his or her resignation or removal from office. The terms of Class III and IIIII directors continue until the 20192021 and 20202022 annual meetings, respectively.

The Corporate Governance and Nominating Committee has recommended, and the Board of Directors selected David R. Dantzker, M.D., Lisa W. Heine,José H. Bedoya and Gary R. MaharajSusan E. Knight as the Board’s nominees for election as Class IIII directors. Each of these nominees has indicated a willingness to serve as a director if elected and has consented to be named in the proxy statement. Brief biographical profiles of Dr. Dantzker,Mr. Bedoya and Ms. Heine, and Mr. MaharajKnight are provided below. The Proxy will be voted for any of such nominees unless the Proxy withholds a vote for one or more nominees. If, prior to the meeting, it should become known that either of the nominees will be unable to serve as a director after the meeting by reason of death, incapacity or other unexpected occurrence, the Proxies will be voted for such substitute nominee as is recommended or selected by the Corporate Governance and Nominating Committee and the Board of Directors or, alternatively, not voted for any nominee. The Board of Directors has no reason to believe that any nominee will be unable to serve.

Under the Company’s Corporate Governance Guidelines, it is a policy of the Board that eacha director be requiredshall offer to retire from the Board effective at the conclusion of the annual meetingAnnual Meeting following his or her seventy-second birthday, unless specialbirthday. In this circumstance, the Corporate Governance and Nominating Committee will review the appropriateness of such director’s continuation on the Board, and recommend to the Board whether, in light of all the circumstances, exist as determined by the Board. The Board believes, however, that any such exceptions should be rare.accept the director’s proposed retirement. Under this policy, Dr. Dantzker,Mr. Kalich, who attained the age ofseventy-two during following the conclusion of fiscal 2015, would normally have retired2019, offered to retire at the conclusion of the Company’s 2016 annual meeting. Given Dr. Dantzker’sAnnual Meeting. The Board, based upon the recommendation of the Corporate Governance and Nominating Committee, determined it appropriate for Mr. Kalich to continue his service on the Board given his substantial experience and familiarity with the Company and the Board, and his experience asexecutive and board leadership experience. As a physician and extensive knowledgemember of the healthcare industry, the Board determined, based upon the recommendation of the Corporate Governance and Nominating Committee, it appropriate for Dr. Dantzker to stand for reelection at the Annual Meeting and if he is reelected, this would allow him to continue his service on the Board as a Class I director whoseII, Mr. Kalich’s current term will expire at the conclusion of the Company’s 20212022 annual meeting.

A plurality of votes cast is required for the election of directors. However, under the Company’s Corporate Governance Guidelines, any nominee for director in an uncontested election (i.e., an election where the only nominees are those recommended by the Board of Directors) who receives a greater number of votes “withheld” from his or her election than votes “for” such election (a “Majority Withheld Vote”) will, within five business days of the certification of the shareholder vote by the inspector of elections, tender a written offer to resign from the Board of Directors.Board. The Corporate Governance and Nominating Committee will promptly consider the resignation offer and recommend to the Board of Directors whether to accept it. The NominatingCorporate Governance and Corporate GovernanceNominating Committee will consider all factors its members deem relevant in considering whether to recommend acceptance or rejection of the resignation offer, including, without limitation:

Any director who tenders his or her offer to resign from the Board pursuant to this provision shall not participate in the Corporate Governance and Nominating or Board deliberations regarding whether to accept the offer of resignation. The Board will

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act on the Corporate Governance and Nominating Committee’s recommendation within 90 days following the certification of the shareholder vote by the inspector of elections, which action may include, without limitation:

Thereafter, the Board will disclose its decision whether to accept the director’s resignation offer and the reasons for rejecting the offer, if applicable, in a Current Report on Form8-K to be filed with the Securities and Exchange Commission within four business days of the Board’s determination.

The following information is provided with respect to each director whose term will continue after the Annual Meeting and each director nominee:

					Committee Membership
Name and Position(1)	Age	Gender	Director Since	Class	Audit(2)	Organization and Compensation	Corporate Governance and Nominating
José H. Bedoya Director	63	M	2002	III		•
David R. Dantzker, M.D. Director	76	M	2011	I			•
Lisa W. Heine Director	56	F	2017	I		•	•
Ronald B. Kalich Director	72	M	2014	II		•
Susan E. Knight Chair of the Board	65	F	2008	III	•
Gary R. Maharaj Director, President and CEO	56	M	2010	I
Shawn T McCormick Director	55	M	2015	II	•		•

						Committee Chair
Name (1)		Age				Position The Board has determined that, with Company the exception of Mr. Maharaj, all of our directors are independent directors in accordance with rules of The Nasdaq Stock Market.
(2)	The Board of Directors has determined that all members of the committee qualify as an “audit committee financial expert” under federal securities laws.

Shawn T McCormick Age 55 Director since 2015 Class II Committees •  Audit •  Corporate Governance and    Nominating Committee, of which	Background
	Mr. BedoyaMcCormick is the Chair.former Chief Financial Officer of Tornier N.V., a public medical device company, a position that he held from 2012 to 2015 when Tornier was acquired by Wright Medical Group, Inc. From 2011 to 2012, Mr. McCormick was Chief Operating Officer of Lutonix, Inc., a medical device company acquired by C. R. Bard, Inc. From 2009 to 2010, Mr. McCormick served as Senior Vice President and Chief Financial Officer of ev3 Inc., a public endovascular device company acquired by Covidien plc in 2010. From 2008 to 2009, Mr. McCormick served as Vice President, Corporate Development at Medtronic, Inc., a public medical device company, where he was responsible for leading Medtronic’s worldwide business development activities. From 2007 to 2008, Mr. McCormick served as Vice President, Corporate Technology and New Ventures of Medtronic. From 2002 to 2007, Mr. McCormick was Vice President, Finance for Medtronic’s Spinal, Biologics and Navigation business. Prior to that, Mr. McCormick held various other positions with Medtronic. Prior to joining Medtronic, he spent four years with the public accounting firm KPMG Peat Marwick. He is a past director of Entellus Medical, Inc., a public medical device company (from 2014 to 2018) where he served as the chairman of its audit committee and as a member of its nominating and corporate governance committee. He serves as a director of Nevro Corp., a public medical device company, since 2014, and serves as the chairman of its audit committee. Since 2017, he has been a director of Inspire Medical Systems, Inc., and serves as the chair of its audit committee. Mr. McCormick earned his M.B.A. from the University of Minnesota’s Carlson School of Management and his B.S. in Accounting from Arizona State University. He is a Certified Public Accountant (inactive license) and a NACD Governance Fellow.
	Key Skills and Qualifications:
	Mr. McCormick is qualified to serve on our Board due to his financial expertise and extensive management experience in a variety of roles at companies in the medical device industry. He also brings to the Board experience as a director and member of the audit committee of other public companies in the medical device industry. Mr. McCormick qualifies as an “audit committee financial expert” as defined by SEC rules.

The Board of Directors unanimously recommends that the shareholders vote FOR the election of each of the Board’s nominees and to set the number of directors at seven.

José H. Bedoya (Class III) has been a director of the Company since 2002. Mr. Bedoya served as President and Chief Executive Officer of Otologics, LLC, a Colorado-based technology company he founded in 1996, until 2015. Otologics filed for Chapter

David Dantzker, M.D. (Class I) has been a director of the Company since January 2011. Dr. Dantzker has been a Partner at Wheatley MedTech Partners L.P., a venture capital fund, since 2001. He manages Wheatley’s Life Science and Healthcare investments. From 1997 to 2000, Dr. Dantzker was President of NorthShore-LIJ Health System, a large academic health care system. He alsoco-founded the NorthShore-LIJ Research Institute to direct and coordinate basic science research for the NorthShore-LIJ Health System. He is a former Chair of the American Board of Internal Medicine, the largest physician-certifying board in the United States. Dr. Dantzker served on the board of directors of Datascope Corp. from January 2008 until its sale in January 2009. Dr. Dantzker holds a B.A. in Biology from New York University, and received his M.D. from the State University of New York at Buffalo School of Medicine. He sits on the board of directors of Oligomerix, Inc., a Wheatley MedTech portfolio company. Dr. Dantzker is Vice Chair and Chief Medical Officer of Origin, Inc., and a senior advisor to Valience Health in Mumbai, India. He served on the board of Comprehensive Clinical Development, an entity that filed for Chapter 11 bankruptcy protection in March 2013. Dr. Dantzker has also served on the faculty and in leadership positions of four major research-oriented medical schools, has authored orco-authored 130 research papers and five textbooks and is an internationally recognized expert in the area of pulmonary medicine and critical care.

His extensive management experience in a variety of roles, and board leadership experience, as well as his extensive knowledge of the medical industry, enable Dr. Dantzker to provide the Company with valuable general management and executive insights.

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Lisa Wipperman Heine (Class I) has been a director of the Company since April 2017. Since 2015, Ms. Heine has been Chief Operating Officer at Mitralign, Inc., a venture backed medtech company focused on transcatheter heart valve annuloplasty where she is responsible for providing operational business leadership as well as driving strategy execution. From 2014 to 2015, Ms. Heine was Founder and Principal at deArca Strategic Solutions, LLC, a consulting firm focused on helping medtech companies assess, develop and execute strategies related to market opportunities and technology adoption. From 2007 to 2014, Ms. Heine served in various executive and management positions with Covidien plc, which was a global health care products company and manufactuere of medical devices and supplies, last serving as Global Vice President of Medical Affairs, Vascular Therapies from 2013 to 2014, and Global Vice President of Clinical Affairs, Vascular Therapies from 2011 to 2012.

We believe that Ms. Heine is qualified to serve on our Board due to her extensive management experience in a variety of roles at medical device companies, and her expertise relating to clinical affairs strategy and operations, healthcare economics, policy and reimbursement.

Ronald B. Kalich (Class II) has been a director of the Company since February 2014. He has been a private investor since 2007. Mr. Kalich served as a Director and as President and Chief Executive Officer of FastenTech, Inc. from 2000 to 2007. He was President and Chief Executive Officer of National-Standard Company from 1999 to 2000 and President and Chief Executive Officer of Getz Bros. & Co., Inc. from 1994 to 1999. He is also a past Chairman and Director of Arizant, Inc.

His qualifications to serve on our Board include more than 40 years of business, operational and management experience. Mr. Kalich’s extensive experience in multiple industries together with his management experience in a variety of roles enables him to provide the Board with valuable general management and executive insights.

Susan E. Knight (Class III) has been a director of the Company since 2008. From 2001 until 2014, she served in a variety of senior leadership positions at MTS Systems Corporation (“MTS”), a leading global supplier of test systems and industrial position sensors. From 2011 to 2014, she served as Senior Vice President and Chief Financial Officer of MTS. From 2001 to 2011, she served as Vice President and Chief Financial Officer of MTS. Prior to her positions with MTS, from 1977 to 2001, Ms. Knight served in various executive and management positions with Honeywell Inc., last serving as the Chief Financial Officer of the global Home and Building Controls division. Since December 2017, she has served on the Children’s Minnesota Hospital Board Finance Committee, and Ms. Knight has been appointed to the Mairs & Power Funds Trust Board of Trustees, effective January 2018. Ms. Knight served on the board of the Greater Metropolitan Housing Corporation from 2000 to 2016, where she was the Chair of the Board from 2012 to 2015, and Chair of the Audit Committee from 2003 to 2012. Ms. Knight also served on the board of Plato Learning, Inc., from 2006 to 2010, where she served on the Audit Committee, including as Chair from 2009 to 2010, and on the Governance and Nominating and a Special Committee from 2009 to 2010.

As a former Chief Financial Officer of a publicly traded company, Ms. Knight brings significant audit, financial reporting, corporate finance and risk management experience to the board. She has extensive understanding of the board’s role and responsibilities based on her prior service on the board of another public company. Ms. Knight qualifies as an “audit committee financial expert” as defined by SEC rules.

Gary R. Maharaj (Class I) has served as a director and our President and Chief Executive Officer since December 2010. Prior to joining the Company, Mr. Maharaj served as President and Chief Executive Officer of Arizant Inc., a provider of patient temperature management systems in hospital operating rooms, from 2006 to 2010. Previously, Mr. Maharaj served in several senior level management positions for Augustine Medical, Inc. (predecessor to Arizant Inc.) from 1996 to 2006, including Vice President of Marketing, and Vice President of Research and Development. During his 29 years in the medical device industry, Mr. Maharaj has also served in various management and research positions for the orthopedic implant and rehabilitation divisions of Smith & Nephew, PLC. He has been a director of NVE Corporation, a public technology company since 2014, and serves as a member of the audit committee and as a member of the nominating and corporate governance committee. Mr. Maharaj holds an M.B.A. from the University of Minnesota’s Carlson School of Management, an M.S. in biomedical engineering from the University of Texas at Arlington and the University of Texas Southwestern Medical Center at Dallas, and a B.Sc. in Physics from the University of the West Indies.

Mr. Maharaj brings to the board strong experience in the medical technology industry, as well as leadership, strategic planning, and operating experience gained as a chief executive officer of a medical technology company.

Shawn T McCormick (Class II) has been a director of the Company since December 2015. From 2012 to 2015, Mr. McCormick served as Chief Financial Officer of Tornier N.V., a public medical device company acquired by Wright Medical Group, Inc. From 2011 to 2012, Mr. McCormick was Chief Operating Officer of Lutonix, Inc., a medical device company acquired by C. R. Bard, Inc. From 2009 to 2010, Mr. McCormick served as Senior Vice President and Chief Financial Officer of ev3 Inc., a public endovascular device company acquired by Covidien plc in 2010. From 2008 to 2009, Mr. McCormick served as Vice President, Corporate Development at

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Medtronic, Inc., a public medical device company, where he was responsible for leading Medtronic’s worldwide business development activities. From 2007 to 2008, Mr. McCormick served as Vice President, Corporate Technology and New Ventures of Medtronic. From 2002 to 2007, Mr. McCormick was Vice President, Finance for Medtronic’s Spinal, Biologics and Navigation business. Prior to that, Mr. McCormick held various other positions with Medtronic. Prior to joining Medtronic, he spent four years with the public accounting firm KPMG Peat Marwick. He has been a director of Entellus Medical, Inc., a public medical device company, since 2014, and serves as the chairman of its audit committee and as a member of its nominating and corporate governance committee. He also serves as a director of Nevro Corp., a public medical device company, since 2014, and serves as the chairman of its audit committee. Mr. McCormick earned his M.B.A. from the University of Minnesota’s Carlson School of Management and his B.S. in Accounting from Arizona State University. He is a Certified Public Accountant (inactive license).

We believe that Mr. McCormick is qualified to serve on our Board due to his financial expertise and extensive management experience in a variety of roles at companies in the medical device industry. He also brings to the Board experience as a director and member of the audit committee of other public companies in the medical device industry. Mr. McCormick qualifies as an “audit committee financial expert” as defined by SEC rules.

The Board of Directors unanimously recommends that the shareholders vote FOR the election of each of the Board’s nominees and to set the Board at seven directors.

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DIRECTOR COMPENSATION

The Company’s Board Compensation Policy (the “Policy”) provides cash and equity compensation to ournon-employee directors for their service on the Board and its committees as discussed below. On a periodic basis, the Organization and Compensation Committee reviews the Policy to ensure that the level of compensation is appropriate to attract and retain a diverse group of directors with the breadth of experience necessary to perform our Board’s duties and to compensate our directors fairly for their services. The review includes the consideration of qualitative and comparative factors. To ensure directors are compensated relative to the scope of their responsibilities, the Organization and Compensation Committee considers: (1) the time and effort involved in preparing for Board and committee meetings and the additional duties assumed by committee chairs and our Chair; (2) the risks associated with fulfilling fiduciary duties; and (3) the compensation paid to directors at the same peer group of companies used to assess the competitiveness of our executive compensation programs (as discussed below). The Policy was last reviewed and amended (as discussed below) in July 2017.

Cash Compensation.   During fiscal 2017,2019, each of ournon-employee directors was paid an annual retainer of $35,000.$40,000. Ournon-employee directors were also eligible to receive additional annual retainers as follows:

The cash retainers are paid quarterly following the completion of each calendar quarter. Furthermore, the cash retainers are reduced by 25% if anon-employee director does not attend at least 75% of the total meetings of the Board and board committees on which such director served during the year.

Equity Compensation.   In addition to the cash compensation described above, each of ournon-employee directors also receivereceives stock awards as compensation for their service on the Board. Upon a director’s initial election or appointment to the Board, such director will receive an equity award having a grant date value of $60,000,$95,000, one-half of such award will be in the form of a nonqualified stock option to purchase shares of the Company’s common stock (as estimated using the Black-Scholes option pricing model as of the date of the grant) and the other half will be in the form of restricted stock units (“RSUs”). On an annual basis thereafter, eachnon-employee director will receive an equity award having a grant value of $60,000$95,000 (on apro-rata basis for directors who served on the Board for less than the entire preceding fiscal year),one-half of such award will be in the form of stock options and the other half will be in the form of RSUs. Equity awards granted to ournon-employee directors (a) are granted on the date of the Company’s annual meeting of shareholders, (b) vest ratably on a monthly basis, and (c) become fully vested on the earlier of the12-month anniversary of the grant date, or the date of the next year’s annual meeting. Stock options (i) have a seven-year term, and (ii) have an exercise price equal to the fair market value of the Company’s common stock on the date of grant. In recognition of the increased time commitment required as the Company executes its whole-products solutions strategy, the value of the equity awards granted to the Company’s non-executive board chair in fiscal 2019 was $132,500.

Market-Based Adjustments to Director Compensation.   In July 2017,May 2019, following a review of the compensation practices fornon-employee directors at our peer group, the Board approved market-based increases to the compensation paid to ournon-employee directors under the Policy as follows, which increases became effective at the beginning of our fiscal 2018:2020: (a) the annual cash retainer paid to eachnon-employee directorthe board chair will be $40,000,$85,000, and all other non-employee directors will be $45,000; (b) the additional annual cash retainer paid to the chair of the BoardAudit Committee will be $40,000;$20,000, and (b)the non-chair members of that committee will be $10,000; (c) the annual cash retainer paid to the chair of the Organization and Compensation Committee will be $15,000, and the non-chair members of that committee will be $6,500; (d) the annual cash retainer paid to the chair of the Corporate Governance and Nominating Committee will be $10,000,

and the non-chair members of that committee will be $5,000; (e) the initial equity award granted to a newly appointednon-employee director will be $95,000$95,000; and (f) the annual equity award to be granted to eachnon-employee directorthe board chair will be $95,000,$124,000, and all other non-employee directors will be $115,000, one-half of each such award will be in the form of a nonqualified stock options and the other half will be in the form of RSUs. In recognitionThe adjustments made to the compensation of the increased time commitment required of the Company’sour board chair are intended to supportmaintain total compensation for fiscal 2020 at the Company’s whole-product solutions strategy, the equity award to be granted to the Company’snon-executive board chair insame level as fiscal 2018 will be $132,500.2019.

Stock in Lieu of Cash Compensation.   A director may elect annually to receive all or a portion of their cash retainers in the form of deferred stock units (“DSUs”) that are vested upon issuance (“DSUs”).issuance. Each DSU award will be granted on the date any regular annual cash retainer would have otherwise been paid and the number of units covered by such award will be determined using the fair market value of the Company’s common stock on such date. Each such DSU award would be settled in shares of the Company’s common stock after thenon-employee director leaves the Board.

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Dividend Equivalents.   RSU and DSU awards granted prior to fiscal 2015 include dividend equivalent rights. To the extent the Company pays a dividend,non-employee directors with RSU or DSU awards granted prior to fiscal 20142015 will have the right to receive dividend equivalents for each RSU and DSU held by such director on the record date for the payment of such dividend. The dividend equivalents will be treated as reinvested in an additional number of RSUs and DSUs which will be determined by dividing (a) the cash amount of any such dividend that would have been paid if the RSUs held by the director were outstanding shares of Company stock by (b) the fair market value of the Company’s common stock (i.e., the closing price) on the applicable dividend payment date. Beginning with fiscal 2015, RSU and DSU awards didgranted after October 1, 2014 do not include dividend equivalent rights.

Non-Employee Director Stock Ownership.   The Board of Directors has established equity ownership guidelines for allnon-employee directors. For a description of the equity ownership guidelines, see “Corporate Governance — Equity Ownership Guidelines.”

Other Compensation.   Allnon-employee directors are reimbursed for their reasonable travel-related expenses incurred in attending board and committee meetings.

Summary of Fiscal 20172019 Director Compensation

The Director Compensation table below reflects all compensation awarded to, earned by or paid to the Company’snon-employee directors during fiscal 2017.2019. Compensation for Gary R. Maharaj, our President and Chief Executive Officer, is set forth below under the heading “Executive Compensation and Other Information.Compensation.”

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CORPORATE GOVERNANCE

The Company’s business affairs are conducted under the direction of the Board of Directors in accordance with the Minnesota Business Corporation Act and the Company’s Articles of Incorporation and Bylaws. Certain corporate governance practices that the Company follows are summarized below.

Code of Ethics and Business Conduct

We have adopted the Surmodics Code of Ethics and Business Conduct (the “Code of Conduct”), which applies to our directors, officers and employees. The Code of Conduct is publicly available on our website at www.surmodics.com under the caption Investors/Corporate Governance. If we make any substantive amendments to the Code of Conduct or grant any waiver, including any implicit waiver from a provision of the Code of Conduct, to our directors or executive officers, we will disclose the nature of such amendment or waiver on a Current Report on Form8-K.

Corporate Governance Guidelines

The Board has adopted a set of Corporate Governance Guidelines (the “Guidelines”). The Corporate Governance and Nominating Committee is responsible for overseeing the Guidelines and annually reviews them and makes recommendations to the Board concerning corporate governance matters. The Board may amend, waive, suspend, or repeal any of the Guidelines at any time, with or without public notice, as it determines necessary or appropriate in the exercise of the Board’s judgment or fiduciary duties. We have posted the Guidelines on our web site at www.surmodics.com under the caption Investors/Corporate Governance.

Board Evaluation

The Board and each of its committees follow a process, overseen by the Corporate Governance and Nominating Committee, to determine their effectiveness and opportunities for improvement. Our Guidelines provide that the Board will annually evaluate its performance to determine whether the Board, its committees and its individual members are functioning effectively. Typically, the evaluation process involves each director completing an assessment questionnaire soliciting feedback regarding the effectiveness of the Board and any committee on which the director serves, and opportunities for improvement. Alternatively, the Board or any of its committees may, without the use of questionnaires, engage in discussions concerning their effectiveness. In any event, for both the Board and the relevant committee, the evaluation process is intended to solicit feedback from directors across several areas, including:

The Board and each committee, as the case may be, review the results of the assessments and identify areas of focus for future years and any necessaryfollow-up actions.

Board Role in Risk Oversight

Our Board of Directors, in exercising its overall responsibility to oversee the management of our business, has an active and ongoing role in the management of the risks of our business and considers risks when reviewing the Company’s strategic plan, financial results, corporate development activities, legal and regulatory matters. The Board satisfies this responsibility through regular reports directly from officers responsible for oversight of particular risks within the Company. The Board’s risk management oversight also includes full and open communications with management to review the adequacy and functionality of the risk management processes used by management. In addition, the Board of Directors uses its committees to assist in its risk oversight responsibility as follows:

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Periodically, the Organization and Compensation Committee reviews the Company’s compensation policies, programs and procedures, including the incentives they create and mitigating factors that may reduce the likelihood of excessive risk taking, to determine whether they present a significant risk to the Company. Management assessed risk factors associated with specific compensation programs, as well as enterprise-level compensation risk factors. The program-specific risk factors assessed included payout potential, payout as a percentage of total compensation, risk of manipulation, overall plan design and market appropriateness. Enterprise-level risk factors evaluated included the overall compensation mix, consistency between annual and long-term objectives as well as metrics, achievability of performance goals without undue risk-taking, the relationship of long-term awards to the Company’s pay philosophy, stock ownership requirements, the weighting and duration of performance metrics, and the interaction of compensation plans with the Company’s financial performance and strategy. Based on this review, the Organization and Compensation Committee concluded that the Company’s compensation policies, programs and procedures are not reasonably likely to have a material adverse effect on the Company.

Board Leadership Structure

Our Board currently separates the offices of Chair of our Board and CEO by appointing an independent,non-executive chair. While we do not have a written policy with respect to separation of these roles, our Board believes that an independent Board chair permits our CEO to focus on managing hisday-to-day responsibilities toof our company and facilitates our Board’s independent oversight of our executive officers’ management of strategic direction, operational execution, and business risk, thereby better protecting shareholder value. Ms. Knight serves as ournon-executive Board chair. Ms. Knight (a) manages and provides leadership to the Board of Directors, (b) through the Chief Executive Officer, acts as a direct liaison between the Board and the management of the Company, and (c) presides at all meetings of the shareholders and of the Board, including executive sessions of our independent directors.

Related Person Transaction Approval Policy

Our Board of Directors has adopted a written policy for transactions with related persons, as defined in Item 404 of SEC RegulationS-K, which sets forth our policies and procedures for the review, approval or ratification of transactions with related persons which are subject to the policy. Our policy applies to any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which we are a participant and a related person has a direct or indirect interest. Our policy, however, exempts the following:

We consider the following persons to be related persons under the policy:

The Audit Committee of our Board of Directors must approve any related person transaction subject to this policy before commencement of the related person transaction. The Audit Committee will analyze the following factors, in addition to any other factors the Audit Committee deems appropriate, in determining whether to approve a related person transaction:

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The Audit Committee may, in its sole discretion, approve or deny any related person transaction. Approval of a related person transaction may be conditioned upon the Company and the related person taking any actions that the Audit Committee deems appropriate.

If one of our executive officers becomes aware of a related person transaction that has not previously been approved under the policy:

Transactions with Related Persons. On November 20, 2015, we entered into a Share Purchase Agreementvarious agreements (the “Purchase AgreementCreagh transaction documents”) with the shareholders of Creagh Medical Limited (“Creagh Medical”) named therein.to acquire all of the shares of Creagh Medical. The consideration for the transaction was up to€30.0 €30.0 million, including an upfront payment of€18.0 €18.0 million (approximately $19.3 million as of the acquisition date), and up to€12.0 €12.0 million (approximately $12.8 million as of the acquisition date) based on the achievement of revenue and value-creating operationalstrategic milestones through September 30, 2018. Thomas A. Greaney, our Chief Operating Officer, Medical Devices, served as the Chief Executive Officer of Creagh Medical and held anowned approximately 65% ownership stake inof the shares of Creagh Medical at the time of our acquisition. As a shareholder of Creagh Medical, he is entitled to a proportionate amount of any contingent consideration that we may pay to the shareholders of Creagh Medical. As of September 30, 2017, we have recorded a liability of€9.2 million (approximately $10.8 million) associated with these contingent consideration obligations which will be paid in the quarter ending December 31, 2018. Prior to our acquisition of Creagh Medical, Mr. Greaney was not a “related person” as defined in Item 404 of Regulation S-K. In February 2018, we entered into a letter agreement with the sellers agent (acting on behalf of the shareholders of Creagh Medical), which agreement clarified certain terms and provisions relating to the contingent consideration obligations in the Creagh transaction documents. As a result of this agreement, in the quarter ended March 31, 2018, we recorded an increase of $0.9 million to the contingent consideration liabilities associated with the Creagh transaction documents. In September 2018, in connection with determining the final achievement of the revenue and strategic milestones, we committed to paying 20% of the original contingent consideration associated with one of the strategic milestones that was not expected to be fully achieved by September 30, 2018. This decision was made in recognition of the innovative nature of the product underlying the milestone and its potential for significant value creation. In the first fiscal quarter of fiscal year 2019, we paid a total of €9.3 million (approximately $11.0 million) associated with the achievement of these contingent consideration obligations. As a former shareholder of Creagh Medical, Mr. Greaney was entitled to a proportionate amount (based on his

ownership percentage of shares of Creagh Medical) of the contingent consideration that we paid to the former shareholders of Creagh Medical, or approximately €6.1 million (approximately $6.9 million).

On January 8, 2016, we entered into an agreement (the “NorMedix Agreement”) with the shareholders of NorMedix, Inc. (“NorMedix”) to acquire all of the shares of NorMedix. The consideration for the transaction was up to $14.0 million, including an upfront payment of $7.0 million, and up to $7.0 million to be paid based on the achievement of revenue and strategic milestones through September 30, 2019. Gregg S. Sutton, our Vice-President, Research and Development, served as the Chief Executive Officer of NorMedix and owned approximately 45% of the shares of NorMedix at the time of our acquisition. Prior to our acquisition of NorMedix, Mr. Sutton was not a “related person” as defined in Item 404 of Regulation S-K. In November 2018, we entered into a letter agreement with the sellers agent (acting on behalf of the former shareholders of NorMedix), which agreement clarified certain terms and provisions relating to the contingent consideration obligations in the NorMedix Agreement. As a result of this agreement, in the quarter ended September 30, 2018, we recorded an increase of $1.4 million to the contingent consideration liabilities associated with the NorMedix Agreement. As of September 30, 2019, we have recorded a liability of $3.2 million associated with these contingent consideration obligations. As a former shareholder of NorMedix, Mr. Sutton is entitled to a proportionate amount of any contingent consideration that we may pay to the former shareholders of NorMedix (based on his ownership percentage of shares of NorMedix), or approximately $1.4 million (based on current estimates regarding the completion of the revenue and strategic milestones).

Each of the transactions with the related persons described above entered into since the beginning of our last fiscal year, or any currently proposed transactions, were approved by the Audit Committee of the Board in accordance with the Related Person Transaction Approval Policy.

Equity Ownership Guidelines

Our Board believes that ownership of significant amounts of our stock by our executive officers and directors will help align their interests with those of our shareholders. To that end, our Board has adopted equity ownership guidelines for our directors and executive officers. Under the guidelines, the value of our common stock held by an executive officer ornon-employee director is required to be at least:

Until the applicable ownership requirement set forth above is attained, (a) our executive officers (other than the CEO) shall be required to retain ownership of 50% of the “net shares” (as defined below) received, and (b) our CEO and eachnon-employee director shall be required to retain ownership of 75% of the net shares received. Following attainment of the applicable ownership requirement (and so long as it remains so), (i) our executive officers (other than the CEO) shall be required to hold 50% of the net shares received, and (ii) our CEO and eachnon-employee director shall be required to hold 75% of the net shares received, in each case, for a period of one year from the date of receipt of such shares. “Net shares” is defined as the number of shares of the Company’s common stock that remain after the exercise of stock options or the vesting of restricted or performance shares less the number of shares that are sold or netted against the award to pay any applicable exercise price or withholding taxes. Shares that count toward meeting the ownership requirements include shares owned outright (directly or indirectly), vested RSUs or DSUs. Shares that do not count toward meeting the stock ownership requirements include unexercised stock options. As of September 30, 2017,2019, all of ournon-employee directors with the exceptionand all of Ms. Heine (who joined our Board in April 2017) and Mr. McCormick (who joined our Board in December 2015)executive officers have attained the minimum level of ownership set forth in the guidelines. With respect toguidelines, with the exception of Mr. Greaney (who joined our executive officers, Messrs. Maharaj (whose holdings as of September 30, 2017, were approximately 8.6 times his base salary)company in November 2016),

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Arens, Olson, Ms. Sides (who joined our company in November 2018), and Stich have attained the minimum level of ownership set forthMr. Sutton (who joined our company in the guidelines.January 2016). We believe that our executives are continuing to make satisfactory progress towards the minimum level of ownership set forth in the guidelines.

The Company does not have a hedging policy at this time.

Majority of Independent Directors; Committees of Independent Directors

Our Board of Directors has determined that Mss. Heine and Knight, and Messrs. Bedoya, Kalich, and McCormick, and Dr. Dantzker, whichwho constitute all of our current directors other than Mr. Maharaj, are independent directors in accordance with rules of The Nasdaq Stock Market since none of them is believed to have any relationships that, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Mr. Maharaj is not considered independent under the applicable rules of The Nasdaq Stock Market since he serves as an executive officer of the Company.

Each member of the Company’s Audit Committee, Organization and Compensation Committee and Corporate Governance and Nominating Committee has been determined, in the opinion of the Board of Directors, to be independent in accordance with the applicable rules of The Nasdaq Stock Market.

Committee and Board Meetings

The Company’s Board of Directors has three standing committees: the Audit Committee, the Organization and Compensation Committee, and the Corporate Governance and Nominating Committee. Each committee is comprised entirely of independent directors, as currently required under the SEC’s rules and regulations and the Nasdaq listing standards, and each committee is governed by a written charter approved by the Board. These charters form an integral part of our corporate governance policies, and a copy of each charter is available on our website at www.surmodics.com. Ms. Knight is a member of our Audit Committee and anex-officio member of the Organization and Compensation Committee, and Corporate Governance and Nominating Committee, attending and participating at the meetings of those committees. The table below provides the composition of each committee of the Board (an asterisk indicates the committee chair):

During fiscal 2017,2019, the Board of Directors held sixfive meetings and the standing committees had the number of meetings noted below. Each director attended (in person or by telephone) 75% or more100% of the total number of meetings of the Board and of the committee(s) on which he or she served in fiscal year 2017, except Mr. Kalich who, as a result of health matters, attended 69% of the meetings of the Board and of the committees on which he served.2019. The principal functions of our standing committees are described below.

Audit Committee

The Audit Committee is responsible for reviewing the quality and integrity of the Company’s financial reports, the Company’s compliance with legal and regulatory requirements, the independence, qualifications and performance of the Company’s independent auditor, oversight of the Company’s related person transaction policy, and the performance of the Company’s internal audit function and its accounting and reporting processes. The Audit Committee held five meetings during fiscal 2017.2019. The Board of Directors and the Audit Committee believe that the Audit Committee’s composition satisfies the rules of The Nasdaq Stock Market that governs audit committee composition, including the requirement that audit committee members all be “independent directors” as that term is defined by the rules of The Nasdaq Stock Market. Additionally, the Board of Directors has determined that Ronald B. Kalich, Susan E. Knight, and Shawn T McCormick each qualify as an “audit committee financial expert” under federal securities laws.

Pursuant to its written charter, the Audit Committee is required topre-approve the audit andnon-audit services performed by the Company’s independent auditors in order to ensure that the provision of such services does not impair the auditor’s independence. The Audit Committee also has apre-approval policy which requires that unless a particular service to be performed by the Company’s independent auditors has received generalpre-approval by the Audit Committee, each service provided must be specificallypre-approved. Any proposed services exceedingpre-approved cost levels will require specificpre-approval by the Audit Committee. In addition, the Audit Committee may delegatepre-approval authority to the Chair of the Audit Committee, who will then report anypre-approval decisions to the Audit Committee at its next scheduled meeting.

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Organization and Compensation Committee

The Organization and Compensation Committee is responsible for matters relating to executive compensation, organizational planning, succession planning at the executive level, key employee compensation programs, director compensation, and corporate culture programs.board-level oversight of programs intended to improve the Company’s culture. The Organization and Compensation Committee held fivefour meetings during fiscal 2017.2019.

Under the terms of its charter, the Organization and Compensation Committee has the authority to engage the services of outside advisors and experts to assist the Committee. The Committee engaged Pay Governance LLC, an independent compensation consulting firm, to advise it on matters related to executive and director compensation. A description of the Committee’s use of the independent compensation consultant is set forth in “Compensation Discussion and Analysis — Establishing Executive Compensation; Independent Compensation Consultant.” In connection with their engagement, the Committee determined that Pay Governance was independent taking into consideration the factors required by the Nasdaq listing standards and applicable SEC rules.

Corporate Governance and Nominating Committee; Procedures and Policy

The Corporate Governance and Nominating Committee is responsible for identifying individuals qualified to become Board members, recommending to the Board the director nominees for election to the Board, recommending to the Board corporate governance guidelines applicable to the Company, and leading the Board and its committees in their annual performance review process. The Corporate Governance and Nominating Committee held four meetings during fiscal 2017.2019.

The Corporate Governance and Nominating Committee will consider candidates recommended from a variety of sources, including nominees recommended by the Board, management, shareholders, and others. Moreover, while we do not have a formal diversity policy, to ensure that the Board benefits from diverse perspectives, the Committee seeks qualified nominees from a variety of backgrounds, including candidates of gender and ethnic diversity. Four of the Board’s seven directors are diverse — two women and two individuals with diverse ethnic backgrounds. Moreover, our directors have diverse business and professional backgrounds, including experience in academic administration, public company, and private company settings.organizations. In general, the Corporate Governance and Nominating Committee considers the following factors and qualifications:

The Corporate Governance and Nominating Committee will consider the attributes of the candidates and the needs of the Board and will review all candidates in the same manner, regardless of the source of the recommendation. A shareholder wishing to recommend a candidate for our Board of Directors should send their recommendation in writing to the address specified under “Procedures for Shareholder Communications to Directors” below.

A shareholder who wishes to nominate one or more directors must provide a written nomination to the Corporate Secretary at the address set forth below. Notice of a nomination must include:

with respect to the shareholder:

with respect to the nominee:

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The nomination must be accompanied by a written consent of the nominee to stand for election and to serve if elected by the shareholders. The Company may require any nominee to furnish additional information that may be needed to determine the qualifications of the nominee. Such nomination must be submitted to the Corporate Secretary no later than ninety (90) days prior to the first anniversary of the date of the preceding years’ annual meeting of shareholders.

The Corporate Governance and Nominating Committee believes that candidates for directors should have certain minimum qualifications, including being able to read and understand basic financial statements, having familiarity with the Company’s business and industry, having high moral character and mature judgment, being able to work collegially with others, and not currently serving on more than three boards of directors of public companies. The Corporate Governance and Nominating Committee may modify these minimum qualifications from time to time.

The Guidelines state that eacha director be requiredshall offer to retire from the Board effective at the conclusion of the annual meetingAnnual Meeting following his or her seventy-second birthday, unless specialbirthday. The Corporate Governance and Nominating Committee reviews the appropriateness of such director’s continuation on the Board, and recommends to the Board whether, in light of all the circumstances, exist as determined by the Board. The Board believes, however, that anyshould accept such exceptions should be rare.proposed retirement. Under this policy, Dr. Dantzker, who attained the age ofseventy-two during fiscal 2015, would normally have retiredoffered to retire at the conclusion of the Company’s 2016 annual meeting. As noted above,Dr. Dantzker’s current term on the Board will expire at the conclusion of the Company’s 2021 annual meeting. Similarly, under this policy, Mr. Kalich, who attained the age of seventy-two following the conclusion of fiscal 2019, offered to retire at the conclusion of the Annual Meeting. The Board, based upon the recommendation of the Corporate Governance and Nominating Committee, determined it appropriate for Dr. DantzkerMr. Kalich to continue his service on the Board given his substantial experience and familiarity with the Company and the Board, and his experience asexecutive and board leadership experience. As a physician and extensive knowledgemember of the healthcare industry. If reelected, Dr. Dantzker would serve on the Board as a Class I director whoseII, Mr. Kalich’s current term will expire at the conclusion of the Company’s 20212022 annual meeting.

It is also the policy of the Board that every director should notify the Chair of his or her retirement, of any change in employer, and of any other significant change in the director’s principal professional occupation, and in connection with any such change, offer to submit his or her resignation from the Board for consideration by the Corporate Governance and Nominating Committee. The Board, upon recommendation from the Corporate Governance and Nominating Committee, then may consider the continued appropriateness of board membership of such director under the new circumstances and the action, if any, to be taken with respect to the offer to submit his or her resignation.

Procedures for Shareholder Communications to Directors

Shareholders may communicate directly with the Board of Directors. All communications should be directed to our Corporate Secretary at the address below and should prominently indicate on the outside of the envelope that it is intended for the Board of Directors or fornon-management directors. If no director is specified, the communication will be forwarded to the entire Board. Shareholder communications to the Board should be sent to:

Corporate Secretary

Attention: Board of Directors

Surmodics, Inc.

9924 West 74th74^th Street

Eden Prairie, MN 55344-3523

Director Attendance Policy

Directors’ attendance at our annual meetings of shareholders can provide our shareholders with an opportunity to communicate with directors about issues affecting the Company. Accordingly, all directors are expected to attend annual meetings of shareholders. All of the Company’s then serving directors attendedparticipated in the last annual meeting of shareholders, which was held on February 14, 2017.13, 2019. The Board has nodoes not have a formal policy regarding attendance at the Company’s annual meetings of shareholders.

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COMPENSATION DISCUSSION AND ANALYSIS

Overview

Our Organization and Compensation Committee, or the Committee, reviews and approves our executive compensation programs. The following discussion and analysis describes the material elements of compensation awarded to, earned by, or paid to our executive officers, including our named executive officers (our “NEOs”), during fiscal 2017.2019. Our NEOs are determined in accordance with SEC rules. For fiscal 2017,2019, our NEOs were:

Executive Transitions. Teryl M. Sides joined our organization on November 1, 2018 as the Company’s Senior Vice President and Chief Marketing Officer. Mr. Arens served as our interim Vice President, Finance and Chief Financial Officer from May 2018 until his appointment as our permanent Vice President, Finance and Chief Financial Officer in February 2019. Mr. Phillips’ employment with the Company ended on December 20, 2019. Effective upon the end of Mr. Phillips’ employment with the Company, Mr. Arens assumed responsibility for the Company’s legal and information technology functions on an interim basis, and Joseph J. Stich, Vice President and General Manager, In Vitro Diagnostics assumed responsibility for the Company’s human resources function on an interim basis.

Executive Summary

The Committee believes our executive compensation program reflects a strongpay-for-performance philosophy and is well-aligned with the short- and long-term interests of shareholders.

Fiscal 20172019 Performance Highlights.We believe that our executive compensation programs are aligned with our performance and the objectives of our compensation philosophy (discussed below), as highlighted by the following factors:

For a more detailed discussion of our fiscal 20172019 results, please refer to the financial statements for the fiscal year ended September 30, 20172019 included in our Annual Report.Report on Form 10-K.

Fiscal 20172019 Executive Compensation Highlights.Highlights of our fiscal 20172019 executive compensation program include the following:

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Executive Compensation Governance Highlights.We believe that the following executive compensation-related practices, which were in effect during fiscal 2017,2019, serve our shareholders’ long-term interests:

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Compensation Philosophy and Objectives

Our compensation philosophy is performance-based, and focuses on aligning the financial interests of our executive officers with those of our shareholders. Generally, this is accomplished by placing a substantial portion of our executive officers’ total compensation “at risk,” while providing overall compensation opportunities that are comparable to market levels. We provide our executive officers with a total compensation opportunity, including cash and equity elements, at levels competitive with those provided by comparable companies and within the middle range of comparative pay at peer companies when the Company achieves the targeted performance levels. Together, these elements provide a balanced focus on both short- and long-term goals while reinforcing ourpay-for-performance philosophy. Specifically, our executive compensation programs are designed to:

SignificantAt-Risk Compensation.   The charts below illustrate the fiscal 20172019 target total compensation pay mix, comprised of base salary, target incentive opportunity under the fiscal 20172019 cash incentive plan and fiscal 20172019 long-term incentive awards (presented using their grant date fair values) for the Chief Executive Officer and other NEOs. As illustrated below, approximately 69%76% of our Chief Executive Officer’s and 60%57% of our other NEOs’ compensation was variable andat-risk.

CEO Pay Mix at Target		Other NEO Pay Mix at Target

A key aspect of the design of our incentive plans is the requirement that, in order for incentive compensation to be paid, our actual performance must achieve at least the threshold level of performance established for the applicable objectives. In years where our actual performance does not achieve the threshold level for the applicable objectives, no incentive compensation is paid. We believe this design reinforces ourpay-for-performance philosophy. The table below provides the payouts under our incentive plans for each of our past five fiscal years and under our performance share programs for each of the last five three-year performance periods (reflecting corporate financial and strategic objectives).

A description of our fiscal 20172019 annual incentive plan is provided below under the heading “Cash Incentive Compensation.” A description of the performance share program that ended in fiscal 20172019 is provided below under the heading “Long-term Incentive Compensation.”

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Establishing Executive Compensation

The Committee evaluates our executive compensation programs annually and considers a number of factors when determining the compensation for the Company’s executive officers. In particular, the Committee considers the executive’s experience and qualifications, the scope of the executive’s responsibilities and ability to influence our performance, the competitiveness of the Company’s executive compensation programs, individual performance, and the executive’s current and historical compensation levels. The Committee receives input from our Chief Executive Officer concerning each officer’s individual performance. Additionally, to assist it in its review of executive compensation, the Committee has retained an independent compensation consultant.

Independent Compensation Consultant.   Since May 2016, the Committee has engaged Pay Governance LLC (the “Independent Consultant”), an independent compensation consulting firm, to provide consulting services on matters related to executive compensation, including consultation regarding (i) the competitiveness of our executive compensation programs relative to market practices and peer group data, (ii) the design and structure of our short- and long-term incentive programs, (iii) management recommended levels of compensation for NEOs other than the CEO, and (iv) consultation regarding proxy statement preparation and other executive compensation services as requested by the Committee. During its engagement, the Independent Consultant attended all of the regularly-scheduledregularly scheduled meetings of the Committee, reported directly to the Committee, and, as necessary, communicated directly with the Committee without management present.

Executive Compensation Peer Companies and Competitive Market.   The Committee assesses the competitiveness of our executive compensation programs relative to market practices and peer group data. It does not, however, base its decisions solely on such data. For fiscal 2017,2019, the Committee selected the companies that constitute the peer group of companies (the “Peer Group”) after discussing various recommendations from the Independent Consultant. The Peer Group was selected using criteria designed to identify companies that reflect our size (measured by revenue, market capitalization, and other size measures) and business profile (generally medical device and equipment manufacturers and suppliers). During fiscal 2017,2019, the Independent Consultant recommended the following changes to the Peer Group: (a) removal of Vascular Solutions,Cogentix Medical, Inc., Derma Sciences, and Entellus Medical, Inc., and Hansen Medical because each of thosethese companies were recently acquired, and (b) removaladdition of Utah Medical Products Inc.IntriCon Corporation because it no longer met the criteria for inclusion within the peer group, and (c) addition of ConforMIS, Inc. and Tactile Systems Technology, Inc., because both of those companies generally met the criteria for inclusion within the peer group.Peer Group. Based on this review, the Committee approved the following Peer Group:

With the assistance of the Independent Consultant, the Committee uses data from the Peer Group to establish a competitive market range (+/- 15% of the market 50th50^th percentile) within which individual pay can be positioned. The Independent Consultant presents to the Committee an analysis that identifies the competitive market median range for each NEO based on their respective, or substantially similar, positions at companies within the Peer Group. In cases where the data from the Peer Group was unavailable or insufficient, a competitive market median range was derived from survey data reflecting companies of comparative size and business profile. Additionally, for certain of our NEOs, the competitive market position was adjusted to account for individual factors, such as, scope of responsibility.

Role of Executive Officers.   Our executive officers have no role in recommending or setting their own compensation. Our Chief Executive Officer makes recommendations for compensation for his direct reports (including base salary and target incentive levels), and provides input on their performance. He also provides input regarding financial and operating goals and metrics. Our Chief Financial Officer certifies the financial results used to determine the payouts for our annual incentive plan and performance-based equity grants. The Committee considers, discusses, modifies as appropriate, and takes action on the management recommendations that are presented for review.

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Overview of Executive Compensation Components

The principal components of our executive compensation programs for fiscal 20172019 consisted of annual cash compensation and long-term incentive compensation, and are generally shown in the diagram below. We also provide our executive officers with change of control benefits, and offer them participation in our 401(k) plan, health and welfare insurance programs, flexible spending accounts and certain other benefits available generally to all full-time employees.

Annual Cash Compensation

Annual cash compensation includes base salary and compensation available under our annual incentive plan. All of our cash compensation represents short-term compensation that is earned within a single fiscal year and paid in that fiscal year or shortly thereafter.

Base Salary. Base salaries provide a level of cash compensation to each executive intended to provide stability and reduce the incentive for excessive risk-taking. The Committee generally sets base salaries within a competitive range (i.e., +/- 15% of the market 50th50^th percentile) of base salary levels for executives in comparable positions within the Peer Group. The range allows for pay decisions to take into account individual factors such as performance, potential, expertise, and experience. At the beginning of fiscal 2017,2019, the Independent Consultant presented to the Committee an analysis that identifies the median base salary ranges for each of our NEOs compared to their respective, or substantially similar, positions in the Peer Group. Using this approach, the Committee approved base pay increases for each of our NEOs. The following table shows the annualized base salaries for each of our executive officers for each of the past two fiscal years:

Cash Incentive Compensation.   Cash incentive compensation for all of our employees, including our NEOs, was provided through a cash-based annual incentive plan. The annual incentive plan is designed to motivate our employees, including our executive officers, to achieve both short- and long-term goals that if achieved, would have the potential to significantly enhance shareholder value.

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Target Incentive Opportunity.   Consistent with our compensation philosophy and objectives, the committeeCommittee generally sets the target incentive opportunity within the median range for annual cash incentive target pay at our peer group. For fiscal 2017,2019, based on its review of the market data, the Committee established a target incentive opportunity of 60%75% of base salary for our Chief Executive Officer, and 40%45% of base salary for our executive officers that report directly to the CEO, and 40% for all other executive officers. The following table shows the fiscal 2019 target incentive opportunity for each of our executive officers:NEOs:

Fiscal Year 20162019 Performance Objectives.   Performance under the annual incentive plan was based upon the achievement of financial objectives (weighted 60%) and strategic objectives.objectives (weighted 40%). The financial objectives for Messrs. Greaney, LaFrence,Arens, Maharaj, and Phillips, (our “corporate executives”)and Ms. Sides were based entirely on corporate financial objectives (as described below). The financial objectives for Mr. OlsonGreaney were a combination of the same corporate financial objectives and business unit revenue, each weighted as provided below. The strategic objectives (as described below) reflected our fiscal 20172019 corporate priorities. The Committee approved the targets for the financial objectives and the strategic objectives based on the board-approved annual operating plan for fiscal 2017.2019.

The corporate financial objectives were specified levels of revenue (weighted approximately 66.7% of the financial objectives) and adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) (disclosed in(weighted approximately 33.3% of the table below under the column titled “Actual Performance”), each weighted equally. The business unit financial objective for Mr. Olson was a specified level of revenue for our Medical Device business unit.objectives). The Committee determined that these objectives were appropriate because they are financial metrics that are widely used by management, our Board, investors, and analysts to evaluate our performance. In addition, each executive officer can contribute (directly or indirectly) to the achievement of these objectives. The business unit financial objective for Mr. Greaney was a specified level of revenue for our Medical Device business unit. The following table shows the weighting of the financial objectives and strategic objectives as a percentage of the total incentive opportunity for each of our NEOs:

For all of our executive officers, including our Chief Executive Officer, payouts associated with the corporate financial objectives (if any) could range between 50% (at threshold) and 150% (at maximum) of the target opportunity based upon the actual performance against each measure. No payout would be available under the plan unless at least the threshold level of corporate EBITDA was achieved.

The strategic objectives (described below) were associated with theSurVeil DCB and our strategic acquisitionswhole-product solutions strategy reflecting separate milestones generally within the followsfollowing areas: (1) milestones associated with our drug-coated balloon programs and related clinical research programs, including the TRANSCEND clinical studytrials (constituting approximately 53.3% of the incentive opportunity associated with the strategic objectives); (2) milestones associated with the development of proprietary products (constituting approximately 26.7%80% of the incentive opportunity associated with the strategic objectives); and (3)(2) milestones associated with operational enhancements that supportthe development of our whole-product solutions strategyother proprietary products (constituting approximately 20.0%20% of the incentive opportunity associated with the strategic objectives). The Committee determined that these objectives were appropriate because their achievement would have the potential to advance our whole-product solutions strategy and significantly enhance shareholder value. For all of our executive officers, including our Chief Executive Officer, payouts associated with the strategic objectives could range between 0% (if none of the objectives were achieved) and 150% (if all of the objectives were achieved) of the target incentive opportunity based upon which of the objectives were achieved, and their respective value.

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Actual Performance.   At the Committee’s November 20172019 meeting, the Committee confirmed the Company’s performance against the financial objectives and the strategic objectives. The achievement percentage associated with each financial objective was determined by interpolating actual performance within the applicable performance range. The achievement percentage associated with the strategic objectives was determined by multiplying a target value for each milestone by a performance factor based on exceeded, full, partial or no achievement of the milestone relative to a specified target completion date. Based on the Company’s performance, the Committee determined the payouts associated with the corporate financial objectives, business unit financial objectives, and strategic objectives as follows (all dollar values are in millions):

The overall achievement percentage for each executive was determined by adding the products of the assigned weighting and achievement percentage for each component. Using this methodology, the Committee approved the following overall achievement percentages:

The actual incentive payouts were determined by multiplying the named executive officer’s eligible earnings by his target incentive opportunity, and then by the applicable overall achievement percentage. The following table summarizes the compensation earned by our NEOs under the plan: