SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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THE COOPER COMPANIES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
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February 4, 20205, 2021
Dear Stockholder:
You are cordially invited to join us at the 20202021 Annual Meeting of Stockholders (the “Annual Meeting”) of The Cooper Companies, Inc. (the “Company” or “Cooper”), which will be held at 8:00 a.m. (Pacific time) on March 18, 202017, 2021 at our corporate headquarters at 6101 Bollinger Canyon Road, Suite 500, San Ramon, California. Please refer to the proxy statement for information about COVID-19 measures that will be in place for the meeting.
At the Annual Meeting we will ask our stockholders to vote on the proposals detailed in our Proxy Statement and related materials. We will be providing access to our proxy materials electronically under the U.S. Securities and Exchange Commission’s “notice and access” rules. As a result, beginning on or about February 6, 2020,5, 2021, we are mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) to many of our stockholders instead of a paper copy of this Proxy Statement and of our 20192020 Annual Report on Form10-K (the “Annual Report”). This approach conserves natural resources and reduces our printing and distribution costs, while providing a timely and convenient method of accessing the materials and voting.
The Notice contains instructions on how to access our materials through the internet and also contains instructions on how to receive a paper copy of our proxy materials, including the Proxy Statement, our 20192020 Annual Report, and a form of proxy card or voting instruction card. All stockholders who do not receive a Notice, including stockholders who have previously requested to receive paper copies of proxy materials, will receive a paper copy of the proxy materials by mail.
Your vote is important. Regardless of whether you plan to attend the Annual Meeting, we hope you will vote as soon as possible. You may vote by proxy by following the instructions on the proxy card or voting instruction card. Voting may be done over the internet, by telephone, or by mail (if you received paper copies of the proxy materials). Voting by proxy will ensure your representation at the Annual Meeting regardless of whether you attend.
We look forward to seeing you at the Annual Meeting.
Sincerely,
A. Thomas Bender
Chairman of the Board of Directors
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
THE COOPER COMPANIES, INC.
6101 Bollinger Canyon Road, Suite 500
San Ramon, CA 94583
Meeting Date: | Wednesday, March | |
Meeting Time: | 8:00 a.m. (Pacific time) | |
Location: | CooperCompanies 6101 Bollinger Canyon Road, Suite 500 San Ramon, California | |
Admission: | All stockholders are cordially invited to attend the Annual Meeting in person. | |
Agenda: | 1. Elect 2. Ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending October 31, 3.
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Stockholders of record at the close of business on Thursday, January 23, 2020,21, 2021, or their legal proxy holders, will be entitled to vote at the Annual Meeting.
On or about February 6, 2020,5, 2021, we will mail either (1) a Notice of Internet Availability of Proxy Materials (the “Notice”) or (2) a copy of this Proxy Statement and our Annual Report for the fiscal year ended October 31, 2019.2020. The Notice will also contain instructions on how to request a paper copy of our proxy materials.
You may vote by following the instructions on the Notice or by using the proxy card accompanying the paper copy of materials. If phone or internet voting is available to you, instructions will be included on your proxy card.
YOUR VOTE IS IMPORTANT TO US. Regardless of whether you plan to attend the Annual Meeting, we encourage you to vote your shares as soon as possible to ensure that your vote is recorded. We look forward to your participation.
By Order of the Board of Directors
Randal L. GoldenMark J. Drury
Secretary
Dated: February 4, 20205, 2021
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Date and Time: | Wednesday, March 17, 2021 at 8:00 a.m. (Pacific time) | |||
Location: | 6101 Bollinger Canyon Road, Suite 500 | |||
San Ramon, California 94583 | ||||
Notice Mailing Date: | February 5, 2021 | |||
Record Date: | January 21, 2021 | |||
We intend to hold our Annual Meeting in person. We are actively monitoring the situation with regard to COVID-19 and are sensitive to health and travel concerns, as well as the requirements of state and local health authorities. We will have social distancing arrangements in place and face coverings will be required for all attendees. Additionally, there will be a mandatory health screening and temperature check required for entry to the building. If you have a fever or other symptoms of COVID-19, you will not be permitted to attend the meeting in person. | ||||
PROPOSALS TO BE PRESENTED AT THE ANNUAL MEETING
Our 2020 Annual Meeting will be held at 8:00 a.m. (Pacific time) on Wednesday, March 18, 2020 at our corporate headquarters at 6101 Bollinger Canyon Road, Suite 500, San Ramon, California.
This Proxy Statement was provided to all stockholders of record at Thursday, January 23, 2020 and is presented on our behalf by order of the Board of Directors. It contains information about our Company and the proposals to be presented at the Annual Meeting.
Throughout this Proxy Statement, we may also refer to various documents that are available on our website. The content posted on, or accessible through, our website is not incorporated by reference into this Proxy Statement or any of our filings with the SEC and may be revised by us (in whole or in part) at any time and from time to time.
We have also furnished our Annual Report to all stockholders of record. The Annual Report contains our financial statements for the fiscal year ended October 31, 20192020 and other useful information, but it is not part of the materials for the solicitation of proxies.
Proposals
WE STRONGLY ENCOURAGE YOU TO VOTE. | ||||
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PROPOSALSTO BE PRESENTEDATTHE ANNUAL MEETING
Proposal 1 – Election of Seven Directors | PAGE 50 | |||
BOARDRECOMMENDATION: ✓For Each Director | ||||
VOTE REQUIREMENT: MAJORITYOF VOTES CAST | ||||
You are being asked to vote on the election of the seven directors listed below. Each director nominee is elected annually. We have two directors who will not be standing for reelection in March 2021. Additional information about all current directors and selection of nominees can be found beginning on page 3. |
Committee Memberships | ||||||||||||||||||
Name | Director
Since | Age | Audit | Corp.Gov. &
Nom. | Org. & Comp. | Indep. | Other Public
Boards | |||||||||||
Colleen E. Jay | 2016 | 58 | ¨ | ❖ | I | 1 | ||||||||||||
William A. Kozy | 2016 | 68 | ¨ | ❖ | ¨ | I | 1 | |||||||||||
Jody S. Lindell | 2006 | 69 | ❖ | ¨ | I | 1 | ||||||||||||
Teresa S. Madden | 2020 | 64 | ¨ | I | 1 | |||||||||||||
Gary S. Petersmeyer | 2013 | 73 | ¨ | ¨ | I | -- | ||||||||||||
Robert S. Weiss | 1996 | 74 | -- | |||||||||||||||
Albert G. White III (CEO) | 2018 | 51 | -- | |||||||||||||||
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Proposal 2 – Ratification of KPMG LLP | PAGE 58 | |||
BOARDRECOMMENDATION: ✓For | ||||
VOTE REQUIREMENT: MAJORITYOF VOTES CAST | ||||
The Audit Committee has appointed the firm of KPMG LLP to act as our independent registered public accounting firm and to audit our consolidated financial statements for the fiscal year ending October 31, 2021. You are being asked to ratify this appointment. | ||||
Proposal 3 – Advisory Vote on Executive Compensation | PAGE 60 | |||
BOARDRECOMMENDATION: ✓For | ||||
VOTE REQUIREMENT: MAJORITYOF VOTES CAST | ||||
You are being asked to vote, on an advisory basis, on the compensation of the following Named Executive Officers (“NEOs”). Information regarding our compensation practices and the compensation of our NEOs in the 2020 fiscal year can be found below in our Compensation Discussion & Analysis starting on page 19. |
| Title | |||||
Albert G. White III | President & Chief Executive Officer | |||||
Brian G. Andrews | Executive Vice President, Chief Financial Officer & Treasurer | |||||
Daniel G. McBride | Executive Vice President & Chief Operating Officer / President, CooperVision, Inc. | |||||
Holly R. Sheffield | President, CooperSurgical, Inc. | |||||
Robert D. Auerbach, M.D. | Former President, CooperSurgical, Inc. / Former Special Advisor to the CEO | |||||
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We are not aware of any other business to be brought before the meeting. If any additional business is properly brought before the meeting, the designated officers serving as proxies will vote in accordance with their best judgment.
Other Company Information
Corporate Governance – page 2
Compensation Discussion & Analysis – page 17
Executive Compensation Tables – page 34
Director Compensation – page 45
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About Our Board of DirectorsABOUT OUR BOARD OF DIRECTORS
Our Board of Directors currently has nine members eachas of whom stands for election annually.the date of this Proxy Statement. All directors are elected annually by a majority of votes cast.
Committee Memberships | ||||||||||||||||||||||||||
Current Directors | Since | Age | Audit
| Corporate
| Organization &
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Since | Age | Audit | Corp.
Gov. &
Nom. | Org. & Comp. | Indep. | Other
Public
Boards | ||||||||||||||
A. Thomas Bender(Chairman) | I | 1994 | 80 | |||||||||||||||||||||||
A. Thomas Bender* (Chairman) | 1994 | 81 | I | -- | ||||||||||||||||||||||
Allan E. Rubenstein, M.D.(Lead Director) | I | 1992 | 75 | ¨ | ||||||||||||||||||||||
Allan E. Rubenstein, M.D.* (Lead Director) | 1992 | 76 | ¨ | I | -- | |||||||||||||||||||||
Colleen E. Jay | I | 2016 | 57 | ¨ | ❖ | 2016 | 58 | ¨ | ❖ | I | 1 | |||||||||||||||
Michael H. Kalkstein* | I | 1992 | 77 | |||||||||||||||||||||||
William A. Kozy | I | 2016 | 67 | ¨ | ❖ | ¨ | 2016 | 68 | ¨ | ❖ | ¨ | I | 1 | |||||||||||||
Jody S. Lindell | 2006 | 69 | ❖ | ¨ | I | 1 | ||||||||||||||||||||
Jody S. Lindell | I | 2006 | 68 | ❖ | ¨ | |||||||||||||||||||||
Teresa S. Madden | 2020 | 64 | ¨ | I | 1 | |||||||||||||||||||||
Gary S. Petersmeyer | I | 2013 | 72 | ¨ | ¨ | 2013 | 73 | ¨ | ¨ | I | -- | |||||||||||||||
Robert S. Weiss | 1996 | 73 | 1996 | 74 | -- | |||||||||||||||||||||
Albert G. White III(CEO) | 2018 | 50 | 2018 | 51 | -- |
I –Independent ❖ - Committee Chair ¨ –Committee Member
* Mr. KalksteinBender and Dr. Rubenstein will not stand forre-election in 2020.2021.
Current Director Statistics
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Board Leadership
We maintain separate positions for the Chairman and Chief Executive Officer (CEO). We also maintain an independent Lead Director position. We feel this division provides a balance between the independence of our directors and the experience of our officers. Our current Chairman has significant business experience with the Company but has also been affirmatively determined to be independent by our Board. We feel that maintaining an independenta separation between the Chair and the CEO provides for strong, knowledgeable leadership of the Board separate from the CEO’s immediate,day-to-day involvement with the Company.
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Director Independence
All of our directors, except Messrs. Weiss and White, have been determined by the Board to be independent. Mr. White is our current CEO and Mr. Weiss previously served as our CEO until April 2018 and was compensated as an employee through December 2018. Mr. Weiss is consideredbecame aNon-Employee Director as ofon January 1, 2019.
In making determinations regarding independence, the Board considers the objective requirements for independence set forth by the NYSENew York Stock Exchange (“NYSE”) and the SEC and has confirmed that each independent director has no relationship to the Company, either directly or indirectly, other than as a stockholder of the Company or through their service on the Board. The Board and its committees conduct regular self-evaluations and review director independence and committee composition to ensure continued compliance with applicable regulations.
Additionally, under our Corporate Governance Principles, directors are not permitted to serve on the boards of more than two other public companies while they serve on our Board; provided, that the Board may make exceptions to this standard as it deems appropriate in the interest of our stockholders. We do not limit service on private company boards of directors or withnon-profit organizations. The Board considers these affiliations and professional relationships on a case by case basis to ensure there are no conflicts of interest with the Company or other factors that would impair the relevantNon-Employee Director’s independence from the Company.
Director Nomination ProcessDIRECTOR NOMINATION PROCESS
The Corporate Governance and& Nominating Committee (the “CGNC”) is responsible for identification and recommendation of qualified candidates to present to the Board for consideration as director nominees. As part of this responsibility, the CommitteeCGNC annually considers the size, composition, and responsibilities of the Board. The CommitteeCGNC considers the background and skills of the current board members, the needs of the Board, and the qualifications of any potential candidates prior to making recommendations regarding nominations.
Stockholder nominations must be received on a timely basis and meet the criteria set forth below and in the information on Stockholder Proposals and Nominations for Director on page 65.
Criteria for Nominees
The Committee believes that nominees for election to the BoardCGNC has set minimum criteria which must at a minimum:be met by any director candidate as follows:
(1) | meet the objective independence requirements set forth by the SEC and NYSE (other than executive nominees); |
(2) | exhibit strong personal integrity, character, and ethics, and a commitment to ethical business and accounting practices; |
(3) | demonstrate an understanding of and commitment to good governance practices and the fiduciary responsibilities expected of a director; |
(4) | have an appropriate educational background and significant business or professional experience; |
(5) | not serve on more than two other public company boards; |
(6) | not be involved inon-going litigation with us or be employed by an entity which is engaged in such litigation; and |
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(7) | not be the subject of anyon-going criminal investigations, including investigations for fraud or financial misconduct. |
The CommitteeCGNC also considers whether a candidate has any special expertise, skills, or background that would be of particular benefit to the Company andCompany. The CGNC seeks candidates who demonstrate an understanding of
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financial statements and financial matters, and who offer business and managerial experience that will complement the experience of current directors and provide additional depth of knowledge in areas that will benefit the Board in its oversight of our business.
Diversity and Inclusion
In addition to these minimum standards, the CommitteeCGNC believes it is important to have Directorsdirectors from various backgrounds and professions in order to ensure that the Board has a wealth of experiences to inform its decisions. Consistent with this philosophy, the CommitteeCGNC is committed to including in each search, candidates who reflect diverse backgrounds, including, but not limited to, diversity of gender and race.
Board Refreshment
The Corporate GovernanceBoard has not adopted formal term limits or retirement age requirements, as it believes these are arbitrary and Nominating Committee considers suggestions from stockholders for nominees for election aslimit the ability to retain directors at our Annual Meetings onwith valuable experience and company knowledge. However, the same terms as nominees selected byBoard is committed to refreshment of the Committee. Stockholder suggestions must be receivedboard of directors on a timelyregular basis to ensure a balance of new ideas with experienced leadership.
In furtherance of this commitment, the Board has worked actively to develop internal policies and meetpractices to ensure regular refreshment of appointments and the criteria set forth inCGNC has developed a succession planning framework to ensure continued refreshment of Board appointments.
Four of our current directors joined the information onStockholder ProposalsBoard within the past five years and Nominationsour two longest tenured directors have indicated their intention to retire as of the Annual Meeting, at which time over half of our directors will have served for Director on page 66.no more than ten years. The Board views this as a meaningful advancement of its efforts to refresh its membership and expects to continue these efforts going forward.
Board CommitteesBOARD COMMITTEES
The Board currently maintains three standing committees as described below. Committee membership is determined by the Board and reviewed regularly. As required by the SEC and NYSE, all members of our Audit Committee, Corporate Governance and& Nominating Committee, and Organization & Compensation Committee are independent directors. At the Board’s discretion, other committees may include directors who have not been determined to be independent.
Each committee maintains a written charter detailing its authority and responsibilities. These charters are updated periodically as legislative and regulatory developments and business circumstances warrant.
Our committee charters are available in their entirety on our website athttp://investor.coopercos.com/corporate-governance.
The Audit Committee provides advice with respect to our financial matters and assists the Board in fulfilling its oversight responsibilities regarding: (i) the quality and integrity of our financial
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statements, (ii) our compliance with legal and regulatory requirements, (iii) review of our potential risk factors, (iv) the qualifications, independence, and performance of the independent registered public accounting firm serving as auditors of the Company, (v) retention and engagement of the independent registered public accounting firm, and (vi) the performance of the Company’s Internal Audit function and internal controls. The Audit Committee advises and makes recommendations to the Board regarding our financial, investment, and accounting procedures and practices.
The Organization & Compensation Committee (the “OCC”)reviews and approves all aspects of the compensation paid to our Chief Executive Officer and all executives identified by the OCC as officers under Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The OCC also approves all compensation for employees whose total combined annual base salary plus targetnon-equity incentive bonus is $750,000 or greater, regardless of whether they have been designated as officers under Section 16(a) of the Exchange Act. Members of the OCC are not eligible to participate in any of our executive compensation programs.
The OCC also approves the composition of our peer group for comparative compensation review, approves all awards under our equity andnon-equity incentive bonus plans, and has approval
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authority for agreements providing for the payment of benefits following a change in control of the Company, severance following a termination of employment, or any other special arrangement with the executive officers or employees which would affect their compensation. The OCC also oversees succession planning, diversity & inclusion objectives, and management development programs designed to strengthen our internal pool of candidates for executive level positions and promote mentoring of senior level employees.
The Corporate Governance and & Nominating Committee (the “CGNC”) develops, implements, and maintains the corporate governance standards by which we conduct business, and advises and makes recommendations to the Board concerning our primary governance policies. The Corporate Governance and Nominating CommitteeCGNC meets with the Chief Executive Officer and senior corporate staff as it deems appropriate to fulfill its obligations with regard to our corporate governance standards. The Corporate Governance and Nominating CommitteeCGNC also performs the functions described underDirector Nomination Processon page 3.4 and has oversight for our Environmental, Social and Governance (“ESG”) initiatives as discussed in more detail on page 9.
Meetings
The Board and its committees met as follows during our most recent fiscal year:
Number of Meetings | ||
Board of Directors | 7 | |
Audit Committee | 7 | |
Organization | ||
Corporate Governance |
TheNon-Employee Directors hold executive sessions in connection with regular meetings of the Board and more often as they deem appropriate. Either Mr. Bender, as Chair, or Dr. Rubenstein, as Lead Director, presides over executive sessions.
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During the 20192020 fiscal year, each director attended all of the board meetings and meetings of committees on which the director served. Currently we do not maintain a formal policy regarding director attendance at the Annual Meeting. Due to COVID-19 limitations, Mr. White was the only director that attended the 2020 Annual Meeting.
BOARDOF DIRECTORS’ ROLEIN RISK OVERSIGHT
General
Our Board of Directors recognizes the importance of appropriate oversight of potential business risks in running a successful operation and meeting its fiduciary obligations to our business and our stockholders. While our management team has responsibility for the day-to-day assessment and management of potential business risks, the Board maintains responsibility for ensuring an appropriate culture of risk management and setting the proper “tone at the top.”
In this function, the Board, directly and through its committees, takes an active role in overseeing our aggregate risk potential and in assisting management with addressing specific risks, including competitive, legal, regulatory, operational, and financial risks. Each committee of the Board regularly reviews risks related to its area of focus and management’s Global Risk Committee provides updates to the Board and Audit Committee regarding key business risks and management efforts to mitigate identified risks.
Risk and Compensation
The OCC regularly reviews and assesses the possible risks related to our compensation programs. Based on this assessment, the OCC has concluded that the structure of our compensation programs does not create unreasonable risk or the likelihood of a material adverse impact on the Company.
In making this determination, the OCC considered possible compensation-based risks and means by which potential risks may be mitigated, including through the operation of our internal control structure and the Committee’s oversight. The OCC also considered the structure of our compensation programs, including:
the use of a combination of short- and long-term compensation programs to create a balanced mix of pay components for our executives;
equity ownership guidelines for our senior executives to strengthen the connection between executive and stockholder interests;
capped bonus targets and recoupment provisions under short-term incentive plans to reduce the risk that executives would be motivated to maximize performance in a specific period over long-term goals; and
• | double-trigger change-in-control provisions in employment agreements with our NEOs to prevent guaranteed payouts (see “Potential Payments on Termination” on page 44). |
Management Succession Planning
At least annually, and more often as deemed appropriate, the OCC meets with management to discuss succession plans for our executive management, including our Chief Executive Officer. Succession plans are designed to allow for an orderly transition of the top executive posts either in the ordinary course of business or in response to emergency situations. Management develops and presents plans for identification, mentoring, and continuing development of potential internal
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candidates for executive leadership positions. The Committee provides oversight, input, and recommendations with regard to the criteria to be used for identification of potential candidates for succession to leadership positions. The Committee also meets with individual members of management occasionally throughout the year to assess leadership development within the executive team.
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Corporate Governance PoliciesCORPORATE GOVERNANCE
We have an ongoing commitment to good governance and business practices. In furtherance of this commitment, we regularly monitor developments in the area of corporate governance and review our policies and procedurespractices in light of such developments. We seek to comply with the rules and regulations promulgated by the SEC and the NYSE and implement other corporate governance practices we believe are in the best interest of the Company and its stockholders.
In keeping with this commitment:
All members of our Board are independent other than Mr. White and Mr. Weiss (our current and prior CEOs)Chief Executive Officers);
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All members of the committees of our Board are independent;
Board members stand forre-election annually and our corporate Bylaws include a majority voting standard for the election of our directors;
We adopted amendments to ourOur Bylaws early in the 2019 fiscal year to include proxy access provisions;
The Board is active in oversight of risk and risk management;
We do not maintain a stockholder rights plan (“poison pill”); and
We are committed to corporate social responsibility and sustainability.
Additionally, we maintain various corporate policies, discussed in more detail below, that reflect our dedication to good governance. We believe that the policies and practices currently in place enhance our stockholders’ interests.
ENVIRONMENTAL, SOCIALAND GOVERNANCE INITIATIVES
We believe that conducting business in a socially and environmentally responsible manner is important to our long-term success and the future of our planet. Recognizing the significant impact that environmental, social, and governance (“ESG”) issues have on our ability to achieve sustainable growth, we have been actively developing initiatives to make sustainability and corporate responsibility a key focus of our business.
To better support these initiatives from the top down, our Corporate Governance & Nominating Committee has added oversight responsibility for ESG matters to its charter and the Board has increased the frequency of ESG discussions at its meetings.
Key highlights for the 2020 fiscal year include:
Continued enhancement of our employee experience and human capital management initiatives, including:
o | Elevated focus on diversity & inclusion through signing the CEO Action for Diversity & Inclusion™ Pledge and establishing a Global Inclusion Council comprised of leaders from across the Company that have a key role in shaping our inclusion strategy; |
o | Began roll-out of a new Performance Enablement Process for employees and publicly disclosed our commitment to pay equity for employees globally; |
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o | Launched new Employee Resource Groups (ERGs) under direction of the Global Inclusion Council, with our first ERG to support employees of African descent launching at the end of the 2020 fiscal year; |
o | Achieved our strongest employee engagement scores to date, and for the 3rd consecutive year were certified as a Great Place to Work; and |
o | Received recognition from Fortune magazine as one of the Top 10 Best Large Workplaces in Manufacturing and Production. |
• | Obtained LEED® Silver certification of our Juana Díaz, Puerto Rico manufacturing plant, which expanded the number of our facilities certified to internationally-recognized standards for sustainable buildings; |
Began procuring Renewable Energy Certificates to source 100% wind-derived electricity at our CooperSurgical Paragard facility, as part of efforts across CooperCompanies to increase renewable energy sourcing;
Furthered implementation of ESG long-term planning initiatives, including the addition of a dedicated senior leader with responsibility for ESG projects; and
Made the health and wellbeing of our 12,000 plus employees and their families a top priority during the COVID-19 pandemic, including instituting robust safety programs within our facilities and maintaining compensation of employees at pre-pandemic levels regardless of facility status.
For more information about our ESG initiatives, we encourage you to visit our website at http://www.coopercos.com/corporate-responsibility.
CORPORATE GOVERNANCE POLICIES
Corporate Governance Principles
We maintain a set of Corporate Governance Principles which specify our standards for director qualifications, director responsibilities, Board committees, director access to our executive officers and employees, director orientation and continuing education, and performance evaluations of the Chief Executive Officer and of the Board and its committees. The Principles also address compensation and stock ownership requirements for ourNon-Employee Directors (discussed in more detail in the section onDirector Compensation starting on page 45)47). The Principles are available in their entirety on our website athttp://investor.coopercos.com/corporate-governance.
Ethics and Business Conduct Policy
Our Ethics and Business Conduct Policy, or Ethics Policy, applies to all of our employees, executive officers, andnon-employee directors, including the Chief Executive Officer and Chief Financial Officer. Employees are encouraged to report any conduct that they believe in good faith to be an actual or apparent violation of the Ethics Policy.
The Ethics Policy includes provisions relating to: (i) conflicts of interest, (ii) the protection and proper use of Company assets, (iii) relationships with customers, suppliers, competitors and associates, (iv) government relations and anti-corruption regulations, and (v) compliance with laws and regulations, including laws and regulations relating to insider trading, equal employment opportunity, harassment, health and safety.
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The Ethics Policy is translated into multiple languages to facilitate readability and all employees receive a copy of the Ethics Policy both at their date of hire and annually. The Ethics Policy is also posted on our internal web pages for ease of access and is available in its entirety on our website athttp://investor.coopercos.com/corporate-governancecorporate-governance..
Amendments to the Ethics Policy and any waivers from the Ethics Policy granted to directors or executive officers will be made available through our website. As of the date of this proxy statement, no waivers have been requested or granted.
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Stock Trading Policy: Hedging & Pledging
We have implemented a Stock Trading Policy that applies to our senior executives, including our Named Executive OfficersNEOs and all members of the Board of Directors. Under this Policy, trading in Company securities is prohibited except during specifically designated windows. Additionally, executives and members of the Board are prohibited from engaging in various trading practices which would suggest speculation in our securities, including short sales, puts, calls, forward sales, equity swaps, or other hedging transactions. Our policy does permit executives and members of the Board to pledge securities as collateral, but only upon prior notice to, and approval from, the Company.
Procedures for Handling Accounting Complaints
The Audit Committee has established procedures for receipt and handling of potential complaints we may receive regarding accounting, internal accounting controls, or auditing matters, and to allow for the confidential, anonymous submission by our employees of concerns regarding accounting or auditing matters. In furtherance of this goal, we have established a confidential reporting system managed by an independent third-party vendor through which employees may report concerns about our business practices. The reporting system provides both a telephone hotline and online reporting options in multiple languages.
Board of Directors’ Role in Risk OversightRELATED PARTY TRANSACTIONS
General
Our Board of Directors recognizes the importance of appropriate oversight of potential business risks in running a successful operation and meeting its fiduciary obligations to our business and our stockholders. While our management team has responsibility for theday-to-day assessment and management of potential business risks, the Board maintains responsibility for creating an appropriate culture of risk management and setting the proper “tone at the top.”
In this function, the Board, directly and through its committees, takes an active role in overseeing our aggregate risk potential and in assisting management with addressing specific risks, including competitive, legal, regulatory, operational, and financial risks. Each committee of the Board regularly reviews risks related to its area of focus and the Board receives regular reports from management’s Global Risk Committee regarding key business risks and management efforts to mitigate identified risks.
Risk and Executive Compensation
The OCC reviews and assesses the possible risks related to our compensation programs. Based on this assessment, the OCC has concluded that the structure of our compensation program does not create unreasonable risk or the likelihood of a material adverse impact on the Company.
In making this determination, the OCC considered possible compensation-based risks and means by which potential risks may be mitigated, including through the operation of our internal control
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structure and the Committee’s oversight. The OCC also considered the structure of our compensation plans, including:
the use of a combination of short- and long-term compensation programs to create a balanced mix of pay components for our executives;
equity ownership guidelines for our senior executives to strengthen the connection between executive and stockholder interests;
capped bonus targets and recoupment provisions under short-term incentive plans to reduce the risk that executives would be motivated to maximize performance in a specific period over long-term goals; and
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Management Succession Planning
At least annually, and more often as deemed appropriate, the OCC meets with management to discuss succession plans for our executive management, including our CEO. Succession plans are designed to allow for an orderly transition of the top executive posts either in the ordinary course of business or in response to emergency situations. Management develops and presents plans for identification, mentoring, and continuing development of potential internal candidates for executive leadership positions. The Committee provides oversight, input, and recommendations with regard to the criteria to be used for identification of potential candidates for succession to leadership positions. The Committee also meets with individual members of management occasionally throughout the year to assess leadership development within the executive team.
Related Party Transactions
We review all relationships and transactions in which the Company and our directors and executive officers or their immediate family members are participants. The Company’s legal and governance staff is primarily responsible for monitoring and obtaining information from the directors and executive officers with respect to related party transactions and for then determining, based on the facts and circumstances, whether the Company or a related party has a direct or indirect material interest in the transaction.
Management reports related party transactions to the Corporate Governance and& Nominating Committee in accordance with written policy and the Committee reviews and approves (or ratifies) all transactions between the Company and related parties that are required to be disclosed under SEC rules.
Under this policy, certain transactions have been deemed by the Committee to bepre-approved or ratified even if the aggregate amount involved exceeds thresholds that would otherwise require disclosure as follows:
Compensation paid for service as aNon-Employee Director or executive officer of the Company;
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Transactions with other companies where the related person’s only relationship is as a director and/or beneficial owner of less than 10% of that company’s equity interests;
Transactions where the related person’s only interest arises from the ownership of the Company’s common stock and all holders of the Company’s common stock received the same benefit on a pro rata basis (such as payment of regular dividends or stock splits);
Transactions between parent and subsidiary entities within the Company’s subsidiary structure, joint ventures, equity investments, and limited liability entities;
Transactions where the rates or charges are regulated by law or government authority; and
Transactions involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture, or similar services.
KPMG LLP, as our independent registered public accounting firm, reviews our controls around the identification and reporting of related party transactions as required by current accounting and auditing standards.
We have determined that there were no material related party transactions during the 20192020 fiscal year.
Compensation Committee Interlocks and Insider Participation
During the 2019 fiscal year, all of the members of the OCC were independent directors, no member was an employee or former employee of the Company, and no Committee member had any relationship requiring disclosure as a related party transaction. Also, none of our executive officers served on the compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on the OCC.
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Principal Securityholders
PRINCIPAL SECURITYHOLDERS
The following table contains information regarding all individuals or groups who have advised us that they own more than five percent (5%) of the outstanding shares of our common stock. Information is presented as of the Record Date.
Name & Address of Beneficial Owner | Aggregate # of Shares Beneficially Held | Percentage of Shares | ||||||||
T. Rowe Price Associates, Inc.(1) 100 E. Pratt Street Baltimore, MD 21202 | 6,028,501 | 12.200% | ||||||||
The Vanguard Group, Inc.(2) 100 Vanguard Blvd. Malvern, PA 19355 | 5,155,965 | 10.470% | ||||||||
BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10022 | 3,732,729 | 7.600% | ||||||||
Generation Investment Management LLP (4) 20 Air Street, 7th Floor London, United Kingdom W1B 5AN | 3,279,108 | 6.660% | ||||||||
Janus Henderson Group PLC(5) 201 Bishopsgate London, United Kingdom EC2M 3AE | 2,756,881 | 5.600% | ||||||||
Massachusetts Financial Services Company (6) 111 Huntington Avenue Boston, MA 02199 | 2,751,296 | 5.600% | ||||||||
State Street Corporation(7) One Lincoln Street Boston, MA 02111 | 2,548,484 | 5.200% |
Name & Address of Beneficial Owner | Aggregate # of Shares Beneficially Held | Percentage of Shares | ||
The Vanguard Group, Inc. (1) 100 Vanguard Blvd. Malvern, PA 19355 | 5,618,290 | 11.450% | ||
T. Rowe Price Associates, Inc. (2) 100 E. Pratt Street Baltimore, MD 21202 | 5,218,202 | 10.600% | ||
BlackRock, Inc. (3) 55 East 52nd Street New York, NY 10022 | 3,854,015 | 7.800% | ||
Janus Henderson Group PLC (4) 201 Bishopsgate London, United Kingdom EC2M 3AE | 2,998,127 | 6.100% | ||
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(1) | Based on information disclosed in a Schedule 13G/A filed by The Vanguard Group, Inc. on February 12, 2020. The Vanguard Group beneficially owns and has the sole power to dispose of or direct the disposition of 5,533,803 of these shares and has the shared power to dispose of or direct the disposition of 84,487 of these shares; and has the sole power to vote or to direct the vote of 72,974 of these shares and has shared power to vote 15,106 of these shares. |
(2) | Based on information disclosed in a Schedule 13G/A filed by T. Rowe Price Associates, Inc. on February 14, |
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(3) | Based on information disclosed in a Schedule 13G/A filed by BlackRock, Inc. on |
(4) |
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Based on information disclosed in a Schedule 13G filed by Janus Henderson Group PLC (“Janus”) on February |
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Securities Held by InsidersSECURITIES HELDBY INSIDERS
The following table contains information regarding ownership of our common stock by each of our directors, the executives named in the Summary Compensation Table, and all of the current directors and executive officers as a group. The figures in this table represent sole voting and investment power except where otherwise indicated.
Common Stock Beneficially Owned as of January 23, 2020 | ||||||||
Name of Beneficial Owner | Number of Shares | Percentage of Shares | ||||||
Brian G. Andrews | 17,213 | (1) | * | |||||
Robert D. Auerbach, M.D. | 8,282 | (2) | * | |||||
A. Thomas Bender | 28,618 | (3) | * | |||||
Colleen E. Jay | 5,424 | (4) | * | |||||
Michael H. Kalkstein | 19,429 | (5) | * | |||||
William A. Kozy | 5,694 | (6) | * | |||||
Jody S. Lindell | 38,895 | (7) | * | |||||
Daniel G. McBride | 122,602 | (8) | * | |||||
Gary S. Petersmeyer | 7,202 | (9) | * | |||||
Allan E. Rubenstein, M.D. | 3,191 | * | ||||||
Holly R. Sheffield | 2,749 | (10) | * | |||||
Robert S. Weiss | 243,817 | (11) | * | |||||
Albert G. White III | 148,750 | (12) | * | |||||
All current directors and executive officers as a group (15 persons) | 687,290 | 1.4% |
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Common Stock Beneficially Owned as of January 21, 2021 | ||||||||
Name of Beneficial Owner | Number of Shares | Percentage of Shares | ||||||
Brian G. Andrews | 27,561 | (1) | * | |||||
Robert D. Auerbach, M.D. | 11,940 | (2) | * | |||||
A. Thomas Bender | 28,618 | (3) | * | |||||
Colleen E. Jay | 5,424 | (4) | * | |||||
William A. Kozy | 5,694 | (5) | * | |||||
Jody S. Lindell | 32,395 | (6) | * | |||||
Teresa S. Madden | 87 | * | ||||||
Daniel G. McBride | 179,489 | (7) | * | |||||
Gary S. Petersmeyer | 6,202 | (8) | * | |||||
Allan E. Rubenstein, M.D. | 3,191 | * | ||||||
Holly R. Sheffield | 17,217 | (9) | * | |||||
Robert S. Weiss | 292,320 | (10) | * | |||||
Albert G. White III | 232,656 | (11) | * | |||||
All current directors and executive officers as a group | 856,785 | 1.7% |
* | Less than 1% ownership. |
(1) | Includes |
(2) | Includes |
(3) | Includes 10,000 shares which Mr. Bender could acquire upon the exercise of currently exercisable stock options. |
(4) | Includes 1,766 shares which Ms. Jay could acquire upon the exercise of currently exercisable stock options. |
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(5) |
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Includes 1,766 shares which Mr. Kozy could acquire upon the exercise of currently exercisable stock options. |
Includes |
Includes |
Includes |
Includes |
Includes |
Includes |
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The Audit Committee operates under a written charter adopted by the Board in December 2003 and most recently amended in March 2017. The Audit Committee’s charter is available in its entirety on our website athttp://investor.coopercos.com/corporate-governance.corporate-governance.
Our Board has determined that all members of the Audit Committee are independent directors and are financially literate as required by the NYSE. Our Board has also determined that Ms. Lindell meetsand Ms. Madden each meet the qualifications of an audit committee financial expert as defined by the SEC.
The Audit Committee’s primary duties and responsibilities relate to:
The reliability and integrity of our accounting policies and financial reporting and financial disclosure practices;
Establishment and maintenance of processes by management to assure that an adequate and effective system of internal controls exists within the Company; and
Engagement, retention, and termination of our independent registered public accounting firm.
The Audit Committee provides advice with respect to our financial matters and assists the Board in fulfilling its oversight responsibilities regarding: (i) the quality and integrity of our financial statements, (ii) our compliance with legal and regulatory requirements, (iii) review of our potential risk factors, (iv) the qualifications, independence and performance of KPMG LLP (“KPMG”), in its role as our independent registered public accounting firm, (v) retention and engagement of KPMG, (vi) the performance of our internal audit function, and (vii) review of our internal controls and risk management procedures.
Management is responsible for the Company’s internal controls and the financial reporting process. The CommitteeTo support this work, management has engaged Ernst & Young LLP (“EY”)as a co-source partner in providing audit support to assist in the assessment of the Company’s internal controls over financial reporting and to provide internal audit services. Such services provided by EY are jointly directed by management and the Audit Committee.team.
KPMG, as the Company’s independent registered public accounting firm, is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and to issue a report on the audit process. The Audit Committee’s responsibility is to monitor and oversee these processes. In this context, the Audit Committee has met and held discussions with management and KPMG regarding the fair and complete presentation of the Company’s financial results.
The Audit Committee held 7 meetings during the 20192020 fiscal year, including regular meetings in conjunction with the close of each fiscal quarter, during which the Audit Committee reviewed and discussed the Company’s financial statements with management and KPMG. These Audit Committee meetings routinely include executive sessions of the committee, as well as private sessions with each of KPMG, Internal Audit, EY, and management.
The Audit Committee reviewed and discussed the audited consolidated financial statements of the Company for the fiscal year ended October 31, 20192020 with management and KPMG, and management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with United States generally accepted accounting principles (GAAP). The Audit Committee discussed with KPMG the matters required to be discussed by the Public Company Accounting Oversight Board Auditing Standard No. 1301 “Communication with Audit Committees.”
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The Audit Committee also reviewed and discussed with KPMG, Internal Audit, EY, and management the processes and procedures associated with our assessment of internal controls over financial reporting, including management’s assessment of such controls.
The Audit Committee maintains policies and procedures for thepre-approval of work performed by KPMG. Under its charter, the Audit Committee must approve all engagements in advance. All engagements with estimated fees above $150,000 require consideration and approval by the full Audit Committee. The Chair of the Audit Committee has the authority to approve on behalf of the full Audit Committee all engagements with fees estimated to be below $150,000. Management recommendations are considered in connection with such engagements, but management has no authority to approve engagements.
In the 20192020 fiscal year, the Audit Committee received both the written disclosures and the letter from KPMG that are mandated by applicable requirements regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and the Audit Committee discussed KPMG’s independence from the Company with the lead engagement partner. The Audit Committee or its Chair approved all audit services provided by KPMG for the fiscal year ended October 31, 2019.2020 prior to the work being performed. The total fees paid or payable to KPMG for the last two fiscal years are as follows:
Fiscal Year Ended | Fiscal Year Ended | |||||||||||||
October 31, 2019 | October 31, 2018 | October 31, 2020 | October 31, 2019 | |||||||||||
Audit Fees | $5,404,750 | $5,304,315 | $4,120,350 | $5,404,750 | ||||||||||
Audit Related Fees | $-0- | $-0- | $-0- | $-0- | ||||||||||
Tax Fees | $-0- | $-0- | $-0- | $-0- | ||||||||||
All Other Fees | $-0- | $-0- | $2,500 | $-0- | ||||||||||
(1) Amounts in “All Other Fees” represent amounts paid for project management training provided by KPMG | (1) Amounts in “All Other Fees” represent amounts paid for project management training provided by KPMG |
Based on the Audit Committee’s discussions with KPMG, Internal Audit, EY, and management, the Audit Committee’s review of the representations of management, the certifications of the Chief Executive Officer and Chief Financial Officer, and the written disclosures and the letter from KPMG to the Audit Committee, the Audit Committee recommended to the Board that our audited consolidated financial statements be included in our Annual Report on Form10-K for the fiscal year ended October 31, 20192020 for filing with the SEC.
THE AUDIT COMMITTEE
Jody S. Lindell (Chair)
William A. Kozy
Gary S. Petersmeyer
Michael H. Kalkstein (Former Member)Teresa S. Madden
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EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is information regarding our current executive officers and other senior employees named in this Proxy Statement who are not also directors. The individuals listed below served in the positions set forth as of the date of this proxy statement.
DANIEL G. MCBRIDE | Age: | |
Executive Vice President & Chief Operating Officer / President, CooperVision, Inc.
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Mr. McBride has served as Executive Vice President and Chief Operating Officer since November 2013 and as the President of CooperVision, our contact lens business, since February 2014. He previously served as our Chief Risk Officer from July 2011 through October 2013, as our General Counsel from November 2007 through January 2014, and as Vice President from July 2006 through October 2013. He also served as Senior Counsel from February 2005 through November 2007. Prior to joining Cooper, Mr. McBride was an attorney with Latham & Watkins LLP from October 1998 to February 2005, concentrating on mergers and acquisitions and corporate finance matters. He holds a B.S. in Finance from Santa Clara University and a J.D. from Stanford Law School.
BRIAN G. ANDREWS | Age: | |
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Mr. Andrews has served as Executive Vice President, Chief Financial Officer & Treasurer since December 2020. He previously served as our Senior Vice President, Chief Financial Officer & Treasurer sincefrom May 2018. He has served2018, and as our Treasurer since January 2013.2013 and Vice President since November 2014. He also served as Vice President, Global Logistics and Service for CooperSurgical, our women’s healthcare business, a position he held from June 2017 to May 2018 and as Vice President of the Company from November 2014 to May 2018. Mr. Andrews previously served as Assistant Treasurer for the Company from April 2006 to December 2012. Prior to joining Cooper, he held various corporate and investment banking positions at KeyBanc Capital Markets from 2002 to 2006 and at ING Barings from 2000 to 2001. He holds a B.A. in Economics from Columbia University.
HOLLY R. SHEFFIELD | Age: | |||
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Ms. Sheffield joined Cooperhas served as President of CooperSurgical, Inc., our women’s healthcare business, since July 2020. Previously, she served as Executive Vice President & Chief Strategy Officer infrom June 2018.2018 to July 2020. Prior to joining Cooper, Ms. Sheffield had over 20 years of experience in investment banking. She joined Cooper from UBS Securities LLC, where she was a Managing Director, Global Head of Medical Technology from 2009 to May 2018. From 2000 to 2009, Ms. Sheffield was at Credit Suisse and from 1997-2000,1997 to 2000, Ms. Sheffield was at Donaldson, Lufkin & Jenrette until it was acquired by Credit Suisse. Ms. Sheffield received a B.S. from Cornell University and an M.B.A. from Columbia Business School.
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| Age: | |||
Vice President, General Counsel & Secretary |
Mr. GoldenDrury has served as Corporate Secretary since May 2018. He has also served as Vice President, General Counsel & Secretary since November 2014February 2020. He previously served as Deputy General Counsel from August 2019 to February 2020, and as ourAssistant General Counsel from February 2014. He previously served as our Assistant General Counsel from May 20132014 through January 2014.July 2019. He also served CooperVision as Senior Counsel from March 2010, when he joined the Company, until May 2013.November 2012 through January 2014, and as Corporate Counsel from January 2011 through October 2012. Prior to joining Cooper, he served as Senior DirectorCooperVision, Mr. Drury was an associate at Latham & Legal Counsel at Align Technology, Inc.Watkins LLP from 2005 throughto 2010, and as Director of Legal Affairs & Senior Counsel with Nokia, Inc. from 2000 to 2005. Mr. Golden also held various associate and senior legal positions prior to 2000, focusing on litigationmergers and commercialacquisitions, corporate finance, public company reporting and business law.corporate governance matters. He holds a B.S.B.A. in FinanceEconomics from the University of IllinoisCalifornia at Los Angeles and both an M.B.A. and a J.D. from the U.C.L.A. SchoolUniversity of Law.California at Berkeley.
AGOSTINO RICUPATI | Age: | |
Senior Vice President, Finance & Tax; Chief Accounting Officer |
Mr. Ricupati has served as our Chief Accounting Officer since October 2017 and as Senior Vice President, Finance & Tax since July 2017. Mr. Ricupati previously served as Vice President, Tax for the Company from July 2013 to July 2017. Prior to joining Cooper, he served as International Tax Director for Intel Corp. from 2010 to 2013 and in various other senior finance and tax positions over the past 20 years. He holds a master’s degree from DePaul University and is a Certified Public Accountant.
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Dr. Auerbach has served as President of CooperSurgical, Inc., our women’s healthcare business, since April 2018. Previously, he served as Executive Vice President, Chief Medical Officer & Chief Strategy Officer of CooperSurgical from May 2005 to April 2018. Prior to joining CooperSurgical, Dr. Auerbach served as Associate Clinical Professor in the Department of Obstetrics, Gynecology & Reproductive Services at the Yale School of Medicine, New Haven, CT. In 2005 he was the recipient of Yale’s Francis Gilman Blake Award, as the most outstanding teacher of the medical sciences, and was elected to the Society of Distinguished Teachers. He remains an adjunct faculty member of the School of Medicine and as an Executive Board member of Yale University’s Center for Biomedical Innovation and Technology. Dr. Auerbach graduated Phi Beta Kappa and Alpha Omega Alpha with highest honors from the Lehigh-Hahnemann6-yearBA-MD program in Philadelphia (1984), and completed his internship and a residency in Obstetrics & Gynecology at the Yale School of Medicine, New Haven, CT.
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COMPENSATION DISCUSSION AND ANALYSIS
The Organization and Compensation Committee of our Board of Directors(“OCC”) oversees our executive compensation program. In this capacity, the OCC regularly reviews our program to ensure that we maintain an effective and appropriate link between pay and performance, and that our compensation practices do not encourage practicesbehaviors that could have a material adverse effect on the Company.
This Compensation Discussion and Analysis (“CD&A”) describes our compensation program and the compensation decisions made by the OCC with regard to compensation of the following Named Executive Officers (“NEOs”) for fiscal 2019:our CEO, CFO and our three other most highly compensated executive officers serving as of October 31, 2020 (collectively, our named executive officers, or NEOs) as follows:
Title | ||
Albert G. White III | President & Chief Executive Officer | |
Brian G. Andrews |
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Daniel G. McBride | Executive Vice President & Chief Operating Officer / President, CooperVision, Inc. | |
Holly R. Sheffield |
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Robert D. Auerbach, M.D. | Former President, CooperSurgical, Inc. / Former Special Advisor to the CEO | |
Fiscal 2019 Performance - The Year in Review
Table of Contents
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Financial Performance Against 2019 GoalsFISCAL 2020 PERFORMANCE - THE YEARIN REVIEW
We delivered solidbegan fiscal 2020 with a strong first quarter, with financial results for fiscal 2019, exceedingthat met our expectations and positioned us to meet or exceed the financial targets set for the year with regard to revenue, operating income, and earnings per share. The non-GAAPCOVID-19 Earnings Per Share (“EPS”)pandemic caused a severe global health crisis, along with economic and setting new recordssocietal disruptions and uncertainties, which negatively impacted business and healthcare activity globally. In our second quarter, as a result of healthcare systems responding to the demands of managing the pandemic, governments around the world imposing measures designed to reduce the transmission of the COVID-19 virus, and individuals responding to the concerns of contracting the COVID-19 virus, many optical practitioners and retailers, hospitals, medical offices and fertility clinics closed their facilities, restricted access, or delayed or canceled patient visits, exams and elective medical procedures. Many customers that remained open or reopened experienced reduced patient visits. Although we saw some improvement as the second half of the fiscal year progressed, the global market disruptions caused by COVID-19 had an adverse effect on our sales, operating results and cash flows. We ended the 2020 fiscal year 8% below the prior year for revenue and operating income. Our 2019below the other financial targets we set for the year for the Company and its businesses, CooperVision and CooperSurgical. A full discussion of our results continue a trendand performance appears in the Management Discussion and Analysis section of consistent growth over the past 5 years.our Annual Report on Form 10-K.
2019 Financial Highlights | ||||||||||||||||||||
Budget Target | FY2019 Results | Change YoY | FY2019 Results (Constant Currency) | Change YoY (Constant Currency) | ||||||||||||||||
Revenue: | $2.681 billion | $2.653 billion | Up 5% | $2.692 billion | Up 7% | |||||||||||||||
CooperVision: | $2.003 billion | $1.973 billion | Up 5% | $2.006 billion | Up 7% | |||||||||||||||
CooperSurgical: | $677.5 million | $680.5 million | Up 5% | $685.8 million | Up 6% | |||||||||||||||
Non-GAAP(1) EPS: | $11.79 | $12.35 | Up 7% | $12.76 | Up 13% | |||||||||||||||
Stock Price (10/31/19): | $291.00 | Up 13% | ||||||||||||||||||
2020 Financial Highlights | ||||||||||||
Budget Target | FY2020 Results | Change YoY | ||||||||||
Revenue: | $2.791 billion | $2.431 billion | ò | 8% | ||||||||
CooperVision: | $2.092 billion | $1.843 billion | ò | 7% | ||||||||
CooperSurgical: | $698.7 million | $587.9 million | ò | 14% | ||||||||
Non-GAAP(1) EPS: | $12.55 | $9.64 | ò | 22% | ||||||||
Stock Price (10/31/2020): | $319.05 | ñ | 10% | |||||||||
(1) | For a reconciliation between GAAP andnon-GAAP measures, see the “Reconciliation ofNon-GAAP Financial Measures” section of this proxy statement. |
Accomplishments
Although we did not achieve our financial targets for revenue and earnings per share as the global Covid-19 pandemic significantly impacted the entire world, including our key markets, we were able to execute on our short- and long-term objectives and drive continued success. This included significant progress on numerous initiatives which will have benefits for many years to come. These achievements included:
Senior management acted quickly to address the COVID-19 pandemic, acting to establish standardized global approaches for employee safety, which often exceeded local governmental requirements, and supporting the abrupt transition to remote work;
CooperVision increased its global market share to become the #2 contact lens company in the world, leveraging its strong brands and customer relationships, and significantly grew its specialty contact lens business, while CooperSurgical gained market share in Fertility, strengthening its leading global position;
• | CooperVision successfully launched MiSight® in the U.S., which received FDA clearance at the beginning of the fiscal year, and the Brilliant Futures™ myopia management program; |
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In additionNumerous infrastructure improvements were implemented, including optimization of our manufacturing facilities to positive overall results, we also:
Significantly enhanced our environmental, socialmeet COVID safety requirements and governance (“ESG”) efforts,adjusting production to better manage inventory to product demand, and previously implemented infrastructure investments were kept on track for completion, including:
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Development of an autonomous power grid for our CooperVision facility in Puerto Rico; and |
○ | Continued CooperSurgical’s global consolidation of manufacturing and distribution facilities including building out its state-of-the-art manufacturing facility in Costa Rica; |
Strategic acquisitions were completed by both CooperVision and CooperSurgical, expanding the specialty contact lens and Fertility businesses;
A new, unsecured $1.605 billion credit facility was successfully negotiated, providing significant interest savings and financial flexibility for future investments and continued growth; and
• | Continued development of our |
○ | We made significant progress with our Inclusion & Diversity efforts, including |
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Positively amended certain debt agreementsThroughout the course of fiscal 2020, we maintained a focus on keeping our customers and resolved certain tax matters,our employees safe and healthy. We made the well-being of our employees a priority, instituting robust health and safety programs within our facilities to ensure employees could complete their responsibilities safely, while maintaining employee compensation at pre-pandemic levels. The dedication and resiliency of our workforce allowed us to continue operations with minimal disruptions.
We were also able to support our customers by offering new and innovative online training and virtual meetings, expanding our world-class customer service efforts, accelerating our direct-to-patient shipping activity, and providing extended payment terms to our small business partners.
Considering our performance and achievements despite the extraordinary circumstances of this year resulting in interest savingsfrom the COVID-19 pandemic, we believe that the 2020 fiscal year was ultimately successful. Although we cannot control COVID-19, and tax refunds;thus the speed of return to normal business practices, we believe we are well positioned to capitalize on future opportunities, due primarily to the extraordinary efforts of our employees and
Implemented our employee stock purchase plan as a benefitexecutive leadership. The OCC took these efforts, and the resulting achievements, into consideration with regard to executive compensation decisions for our US employees, with expectations to expand the program globally.
More information about our corporate responsibility efforts can be found on our website athttps://www.coopercos.com/corporate-responsibility.both fiscal 2020 and fiscal 2021.
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Both
FISCAL 2020 COMPENSATION HIGHLIGHTS
Our fiscal 2020 executive compensation program was designed to support our compensation objectives and reinforce our strong pay-for-performance culture. During fiscal 2020, we maintained an emphasis on performance-based compensation through rigorous goals in our 2020 Incentive Payment Plan (“IPP”) and an emphasis on long-term, performance-based equity in the CooperVisionform of stock options. The OCC considers the use of stock options an effective vehicle for aligning the interests of our CEO with the interests of our stockholders and CooperSurgical divisions hadreinforcing a strong pay-for-performance culture and emphasis on long-term stockholder value creation.
In December 2019, the OCC approved a 33% increase in target total direct compensation for Mr. White, our CEO, to better align his compensation relative to CEO compensation in our peer group. The OCC considered this increase appropriate in light of Mr. White’s strong performance and leadership following his promotion to CEO in May 2018 and strong corporate results during this period.
Changes in target total direct compensation for fiscal 2019 as well, with a number2020 for our other NEOs were based on recognition of accomplishments, including:
CooperVision:
Strong revenue growth across all global regions, ledprior year performance by our daily silicone hydrogel contact lens portfolio;NEOs and approved in the context of competitive pay levels among the companies in our peer group. In the case of Mr. Andrews, more significant increases in base salary and target total direct compensation also reflected our multi-year transition to align with competitive pay levels for the CFO role following his promotion in May 2018.
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Significant progress towards U.S. FDA approval for our MiSight product, a myopia management treatment (resulting in final approval in early fiscal 2020);
Successful execution of succession planning programs to address key executive retirements within the CooperVision organization;
Acquisition of Blanchard Contact Lens, expanding the specialty lens care and myopia management segment of the CooperVision business;
Substantially expanded and upgraded our distribution and packaging facilities, including opening several new facilities;
Completed significant infrastructure investment to begin key expansions in manufacturing capacity;
Ongoing improvements to our IT infrastructure, including updating numerous systems, improving our global system integration activity, and enhancing our data management practices; and
Expansion of sustainability programs leading to receipt of globally-recognized sustainability certifications for our facilities in Costa Rica and Spain.
CooperSurgical:
Change in Compensation – FY2019 to FY2020 | ||||||||
NEO | Target Bonus | Equity Value |
Total Direct Compensation | |||||
White | No change | Up from 100% to 125% | Up 40% | Up 33% | ||||
Andrews | Up 18% | No change | Up 34% | Up 28% | ||||
McBride | No change | No change | Up 8% | Up 5% | ||||
Sheffield | No change | No change | Up 13% | Up 8% | ||||
Auerbach | Up 12% | No change | Up 15% | Up 14% |
Successful launchIn the 2020 fiscal year, approximately 79% of internally developed new productsMr. White’s target total direct compensation was in the form of long-term equity awards vesting over a five-year period. Approximately 63% of our other NEO’s target total direct compensation (on average) was in the form of long-term equity awards.
* “All Other Compensation” represents less than 1% of total target direct compensation for bothour NEOs, including Mr. White, as discussed in footnote 4 to the Office & Surgical Products businessSummary Compensation Table.
Fiscal 2020 Incentive Payout Plan (“IPP”) Result
From the outset of the COVID-19 pandemic, the OCC and the Genomics & Fertility business;
Realignmentsenior leadership team closely monitored the impact of COVID-19 on our financial performance and bonus programs to ensure ongoing alignment between our executive officers’ incentives and our goal of supporting long-term alignment with stockholders during a period of extraordinary volatility. In July 2020, with input from its independent compensation consultant, the OCC considered alternatives for addressing the impact of the organizationalCOVID-19 pandemic on our 2020 IPP financial objectives. Following this review, the OCC determined to leave the 2020 IPP goals and structure unchanged. This approach acknowledged the significant, ongoing uncertainty that prevented an effective recalibration of expectations as well as a desire to maintain flexibility in our use of cash during the year.
In December 2020, we confirmed that our performance against the revenue and non-GAAP EPS goals of the 2020 IPP, which account for 75% of the target IPP award, fell below the threshold required for a payout. The 2020 IPP design also included a 25% weighting tied to the OCC’s discretionary evaluation of individual and company performance for the year. Following a comprehensive assessment of the performance of our employees, including our NEOs, the OCC determined to fund the 2020 IPP for all eligible participants, including our NEOs, at 75% of target.
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The approved funding of the 2020 IPP reflected a 100% payout on the discretionary component of the IPP, weighted at 25% of target, and a 67% payout on the financial component, weighted at 75% of target. Although this exceeded the payout prescribed by the 2020 IPP terms approved in December 2019, the OCC considered this to be an appropriate result based on the extraordinary effort and achievements of our NEOs and employee population during an extremely difficult year. In particular, the OCC considered the significant negative impact of COVID-19 as optical practitioners and retailers, hospitals, medical offices and fertility clinics closed their facilities, restricted access, or delayed or canceled patient visits, exams and elective medical procedures in response to the pandemic. These are all primary sales channels for our products and services and these closures and restrictions had a significant impact on the financial results of both CooperVision and CooperSurgical. The OCC also evaluated the impact of the COVID-19 pandemic on our financial results on a month-by-month basis for fiscal 2020, noting our strong first quarter results followed by the onset of the pandemic and the significant negative impact in April and May, and then the beginning of a rebound. Based on this analysis, the OCC believes that the 75% overall funding approximates what our results would have been when excluding the impact of the Covid-19 pandemic for the months of April and May.
Additionally, the OCC considered notable performance achievement during the year, including CooperVision’s increase to the number two market share position in the global contact lens market, CooperSurgical’s expansion of its Costa Rica manufacturing facility, and our management structures from regional divisionsbeing extremely proactive during the year, moving quickly to a product line model;
Completed successful acquisitions, investments,address the significant challenges presented by the COVID-19 pandemic, led by especially strong efforts within manufacturing and divestitures,distribution. All of this was accomplished while focusing on maintaining the health and safety of our employees, continuing to invest in the future of the business, including the acquisitionhighly successful roll-out of Incisive Surgical, Inc.;MiSight, continuing enhancements to our culture, and continuing development of our ESG initiatives.
Continued investment in infrastructure to significantly expand both manufacturing and distribution capabilities.
Fiscal 2019 Compensation Highlights2018 Performance Unit Plan (“PUP”) Result
In December 2020, the OCC also evaluated the results of performance share awards that were granted in 2018 and eligible to be earned based on our three-year annualized adjusted EPS growth rate through end of fiscal 2020 (the “2018 PUP Awards”). Our adjusted EPS growth fell short of the threshold required for a payout. Although the impact of the COVID-19 pandemic on our financial results was a significant factor driving this result, the OCC did not make any adjustments to the 2018 PUP Awards. This resulted in zero payout under the 2018 PUP Awards for Messrs. White and McBride. (Our other NEOs were not granted 2018 PUP Awards.)
Response to 2020 Say-on-Pay Vote
The OCC considers the outcome of our annual “Say-on-Pay” vote in determining the design of our executive compensation program and the composition and levels of individual compensation packages. At our 2019 Annual Meeting of Stockholders, 91% of the votes cast on our Say-on-Pay proposal were voted in favor of the compensation program for our NEOs. The OCC viewed this result as an affirmation of our program structure and considered these results in December 2019 when approving the compensation packages for fiscal 2019 reflects2020 as described in this CD&A.
Subsequent to these decisions, at our ongoing commitment topay-for-performance and the continued strong alignment2020 Annual Meeting of Stockholders, 79% of the interestsvotes cast on our Say-on-Pay proposal were voted in favor of our NEOs with those of our stockholders. The key elements of our executivethe compensation program include base salary, a cash bonus plan, and long-term incentivesfor our NEOs. The OCC took note of this change in support when developing the form of stock options and/or RSUs.
Highlightsstructure of our executive compensation program for the coming 2021 fiscal 2019 included the following:year.
Base salaries for our NEOs were increased between 5% and 18%, with adjustments for select executives, including our Chief Executive Officer, targeting increased alignment with peer group practices following recent promotions and expanded responsibilities;
Annual cash bonuses under the 2019 Incentive Payment Plan were paid between100-125% of target for our NEOs (discussed in more detail below starting on page 28);
Long-term incentive awards granted to our executives create strong alignment with long-term stockholder interests; and
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Performance share awardsDuring fiscal 2020, and taking into consideration the results of our 2020 Say-on-Pay proposal, the OCC engaged in a comprehensive evaluation of our executive long-term incentive plan design. In particular, with support from the Committee’s independent compensation consultant, the OCC considered the effectiveness of stock options at supporting our compensation objectives over time. Following this review, in December 2020, the OCC determined to grant 50% of the long-term incentive value awarded to our NEOs in the form of performance-based RSUs with a three-year performance period. The remaining 50% of long-term incentive value was granted in fiscal 2017 were certified at 110%the form of target achievement basedtime vesting stock options. This decision reflects the OCC’s commitment to pay-for-performance and a balance between our historical emphasis on growth innon-GAAP EPS over astock options and stockholder expectations for multi-year performance-based equity awards. The combination of time vesting stock options and three-year period (discussed in more detail below starting on page 31).
Compensation Governanceperformance-based RSUs creates strong alignment between the compensation realized by our NEOs and our long-term stockholder returns.
The OCC seeks to ensure that we maintain sound governance and compensation policies and practices. In designing and overseeing our executive compensation program, we strive to employ best practices and the OCC works closely with its compensation consultants, management, and such other advisors as the OCC considers appropriate to properly assess our practicespolicies and policies.practices.
THINGS WE DO: | THINGS WE DON’T DO: | ||||||||||||||||
✓ | Entirely independent OCC | ❖ | No guaranteed annual salary increases | ||||||||||||||
✓ | Annual assessment by OCC of link between compensation and performance | ❖ | No guaranteed annual bonuses or long-term incentive awards | ||||||||||||||
✓ |
| ❖ | Prohibition on hedging and speculative transactions in Company securities by our officers and directors | ||||||||||||||
✓ |
| ❖ | No Supplemental Executive Retirement Plan or other | ||||||||||||||
✓ |
| ❖ | No related party transactions without approval from our Corporate Governance and Nominating Committee | ||||||||||||||
✓ |
| ❖ | No repricing of long-term incentives without stockholder approval | ||||||||||||||
✓ | Robust stock ownership guidelines applicable to our executive officers | ❖ | No tax gross-ups for NEOs in connection with “change in control” payments | ||||||||||||||
✓ | Limited perquisites based on specific business rationale |
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The OCC also regularly assesses the alignment between our executive compensation packages and our performance through:
Regular updates from management on our business results;
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Review of our quarterly financial statements, management projections, and long-range plans;
Review of management reports on continued progress towards long term strategies;
Review of performance and market information regarding our peer group; and
Review of broader industry compensation data relative to our market and other companies of comparable size.
The OCC considers management input, the advice of its compensation consultants, and publicly available peer information to be valuable tools in its evaluation of the relationship between executive compensation and Company performance.
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Compensation Objectives / Pay for Performance
Our executive compensation program is designed to provide market-competitive target total direct compensation opportunities for our NEOs that focusesis based on paya “pay for performanceperformance” philosophy and aligns NEOour NEOs’ interests with those of our stockholders by emphasizing certain principles:
Aligning compensation with performance by connecting executive compensation to financial measures that correlate strongly with stockholder returns;
Balancing short-term financial results with long-term strategic objectives;
Rewarding achievement of challenging corporate objectives, without encouraging inappropriate risk-taking;
Providing competitive pay packages aligned to market compensation practices of our market peers;practices; and
Maintaining sufficient flexibility to allow recognition of significant individual achievements by our executive officers.
The OCC believes that each element of executive compensation packages forand the total compensation provided to each of our NEOs are designedis reasonable, competitive, and appropriate. The OCC believes that our executive compensation program provides an appropriate mix of elements that will allow us to reward achievementcontinue to attract, retain, and motivate a top performing management team, without encouraging excessive or inappropriate risk-taking by our executive officers, and that its compensation arrangements create incentives that drive our continued strong financial performance.
The amount of compensation payable to our goalsNEOs depends largely on our financial performance and encourage continued servicereturns to the Company.our stockholders. This strategy has created strong financial and operational results and we have maintained steady growth and returns for our stockholders.stockholders over the past decade. We consider our executive compensation program design to be integral to our success and believe the selected performance measures selected for use in our incentive compensation plans serve as significant drivers of our continued success.
Say-on-Pay Vote
The OCC considers the outcome of our annual“Say-on-Pay” vote in determining the design of our executive compensation program and the composition and levels of individual compensation packages.
At our 2018 Annual Meeting of Stockholders, 94% of the votes cast on ourSay-on-Pay proposal were voted in favor of the compensation program for our NEOs. The OCC viewed this result as a strong affirmation of our program structure and considered these results in December 2018 when developing the compensation packages for fiscal 2019 as described in this CD&A.
Use of Compensation Consultants
TheIn fiscal 2020, the OCC retainsretained Compensia, Inc. (“Compensia”) to provide adviceinformation and analysis on the compensation of our executive officers and thenon-employee members of our Board of Directors. The OCC maintains sole authority to determine the terms of Compensia’s retention and services and a representative of the firm generally attends OCC meetings.
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The OCC has reviewed the nature of the relationship between itself and Compensia as an independent consulting firm, and its relationship with the members of Compensia as individuals, for potential conflicts of interest. In conducting this review, the OCC considered the factors identified by the SEC and the NYSE as possibly contributing to conflicts, including the scope of work performed for the OCC by Compensia, the fees paid to Compensia for services, and any personal or business relationships between our executive officers or members of the OCC and Compensia or its individual members. Based on its review, the OCC has determined there are no conflicts of interest or potential conflicts of interest arising in connection with the OCC’s engagement of Compensia.
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Role of Management
The OCC considers input from management regarding executive compensation and performance to be a valuable tool in setting appropriate compensation. Managementcompensation levels. Until July 2020, management separately retains a compensationretained Semler Brossy Consulting Group LLC (“Semler”) as its consultant to assist in the preparation of management’s recommendations on NEOexecutive compensation. A representativeDuring the term of the engaged firm may attend OCC meetings as an invited guest, andthis engagement, the OCC considersconsidered recommendations from management’s consultantsSemler on the same basis as recommendations from management.
Through early 2019, management retained Frederic W. Cook & Co., Inc. (“Frederic Cook”) as its compensation consultant and Frederic Cook provided compensation recommendations for fiscal 2019. In early 2019, management chose to change firms and engaged Semler Brossy Consulting Group LLC (“Semler”) to serve as its consultant. Semler serves on the same basis as Frederic Cook.
In addition to recommendations regarding annual NEOexecutive compensation, management also provides recommendations to the OCC regarding:
Selection of companies for our compensation peer group (as described further below);
Appropriate structure for our annual incentive payment plans,plan, including financial targetsperformance measures, target performance levels, and calculation of achievement;achievement levels;
Long-term incentive plan design and annual award allocations;
Employment terms and arrangements; and
Stock trading policies and ownership guidelines.
The OCC reviews management recommendations with Compensia before making its own decisions on the compensation of our NEOs.
The OCC uses a peer group for understanding and assessing competitive compensation levels and practices within our industry. Our compensation peer group is drawn from publicly-traded companies headquartered in the United States and is reviewed annually.
Recommendations for peer group companies are based on similarity of product lines or industry and similarity in company size as measured by annual revenue, market capitalization, operating margins, and other financial measures of organizational scope and complexity.
For fiscal 2019,2020, companies were considered for inclusion in the compensation peer group that: (i)that are in Healthcare Equipment, Healthcare Supplies, or Life Sciences Tools and Services industries and had revenue and/or market capitalization between 0.5xabout $1 billion and 2.0x of the Company$6 billion in the past fiscal year (ii) were in the medical device industry,(about 0.5x to 2.0x our own revenue). Additional target criteria included a comparable business focus and (iii) were identified asend markets (healthcare supplies or equipment; generally hospital or provider end markets), similar valuation
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multiples, and whether a peer, orcompany had been identified as a peer by one of the major proxy advisory firms.firms and/or is a frequent peer among our peer companies.
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Our compensation peer group for fiscal 20192020 was comprised of the following companies:
Agilent Technologies, Inc. | Illumina, Inc. | |
Align Technology, Inc. | Integra Lifesciences Holding Corporation | |
Bio-Rad Laboratories, Inc. | Masimo Corporation | |
Dentsply Sirona International, Inc. | PerkinElmer, Inc. | |
DexCom, Inc. | Resmed, Inc. | |
Edwards Lifesciences Corporation | ||
Haemonetics Corporation | ||
Hill-Rom Holdings, Inc. | ||
Waters Corporation | ||
For fiscal 2019,2020, the OCC removed Bruker Corporation, Conmed Corporation, Mettler-Toledo International,IDEXX Laboratories, Inc. and West Pharmaceutical Services, Inc., and STERIS plc,added Agilent Technologies, Inc. and added Align Technologies,DexCom, Inc.,Hill-Rom Holdings, Inc., and Masimo Corporation as more appropriate peers based on revenue, business type,industry sector, and primary executive headquarters location.
Stock Ownership GuidelinesCompensation Decision-Making
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ThereThe OCC’s goal is no requiredgenerally to set all elements of compensation within a competitive range, using a balanced approach that does not use rigid percentiles to target pay levels for each compensation element. For fiscal 2020, the OCC reviewed each element of compensation described below and set the target total direct compensation opportunities of our executive officers after taking into consideration the following factors:
a compensation analysis of competitive market data performed by Compensia;
each executive officer’s scope of responsibilities;
each executive officer’s skill set;
each executive officer’s prior experience;
executive’s time periodin his or her position;
the recommendations of our Chief Executive Officer; and
general market conditions.
The OCC does not assign relative weights or rankings to any of these factors and does not solely use any quantitative formula, target percentile or multiple for establishing compensation among the NEOsexecutive officers or in relation to achieve the required ownership, but while ownership is belowcompetitive market data. Instead, the established guidelinesOCC relies upon its members’ knowledge and judgment in assessing the NEO is expected to hold a portion of the shares acquired upon the exercise of stock options or vesting of full-value stock awards until the guidelines are met. Under this requirement the CEO must hold 75% of the shares acquired, net of taxesvarious qualitative and any exercise cost,quantitative inputs it receives regarding each individual and all other NEOs must hold 50% of such shares acquired.makes compensation decisions accordingly.
All NEOs complied with the applicable ownership guidelines during fiscal 2019.
Executive Compensation Structure
Compensation ElementsEXECUTIVE COMPENSATION
The primary elements of our executive compensation program are designed to connect NEO compensation to stockholder returns and company objectives.
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Cash Salary | Provides a minimum level of competitive compensation for our | |
Annual Cash Incentive | Encourages achievement of short-term business goals as reflected in our annual operating | |
Long-Term Equity Incentives | Connects |
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The majority of NEO compensation is a combination of annual cash and long-term equity incentives. These compensation elements require achievement of annual financial metrics and significant increases in our stock price for our NEOs to realize compensation.a financial return from these elements. This creates a direct link between our performance and NEO compensation. Additionally, compensation is balanced between short-term and long-term factors to encourage attention to both annual financial and operational objectives and long-term strategic goals and is intendedin order to drive long-term stockholder value creation.
In the 2019 fiscal year, approximately 72% of Mr. White’s, total direct compensation was in the form of long-term equity awards vesting over a five-year time frame. Approximately58-60% of our other NEO’sAnnual target total direct compensation (on average) was long-term equity awards.
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NEO Compensation – 2019 Fiscal Year
Compensation for our NEOs is determined based on their current role, recent changes to their responsibilities, and overall execution of duties throughout the prior fiscal year. Company performance, internal compensation alignment, among our executive officers, peer group compensation practices, and competitive market changes and conditions are also considered.
The OCC initially approved targetBase Salaries
We offer base salaries that are intended to provide a level of stable fixed compensation to our executive compensationofficers for performance of day-to-day services. Base salaries for our executive officers are generally reviewed annually to determine whether an adjustment is warranted or required, with any changes in base salary generally effective on the first day of our fiscal year.
For fiscal 2020, the annualized base salaries for our NEOs for the 2019 fiscal year in December 2018were as follows:
NEO | Base Salary | Target Bonus (1) | Equity Awards(2) (Grant Date Fair Value) | Total Target Compensation | ||||||
($) | (%) | |||||||||
White | $925,000 | $925,000 | 100% | $5,500,000 | $7,350,000 | |||||
Andrews | $425,000 | $276,250 | 65% | $1,100,000 | $1,801,250 | |||||
McBride | $700,000 | $560,000 | 80% | $2,000,000 | $3,260,000 | |||||
Sheffield | $525,000 | $341,250 | 65% | $1,500,000 | $2,366,250 | |||||
Auerbach | $425,000 | $276,250 | 65% | $1,000,000 | $1,701,250 |
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Executive | 2019 Base Salary | 2020 Base Salary | % Change | |||||||
Albert G. White III | $925,000 | $925,000 | No change | |||||||
Brian G. Andrews | $425,000 | $500,000 | Up 18% | |||||||
Daniel G. McBride | $700,000 | $700,000 | No change | |||||||
Holly R. Sheffield | $525,000 | $525,000 | No change | |||||||
Robert D. Auerbach, M.D. | $425,000 | $475,000 | Up 12% |
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Changes approved at the beginning of the fiscal year were based on recommendations from the CEO, Semler,Increases for Mr. Andrews and Compensia. These recommendations were based on prior year performance and alignment with peer compensation.
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The changes in total target compensation for fiscal 2018 and fiscal 2019 were based on recognition of prior year performance by our NEOs and ongoing efforts to align compensationbe competitive relative to our peers. Changes also reflect the impact of certainone-time grants in fiscal 2018 tied to promotion, retention or start of employment.
CEO Compensation
Target total direct compensation for our CEO recognizes the significant role of the CEO in driving our performance and future growth,comparable executive positions as well as overall responsibility for our strategic direction, management,their strong performance and leadership.
In setting Mr. White’s compensation for fiscal 2019,leadership following promotions to the OCC considered:CFO and President, CooperSurgical roles, respectively, in May 2018.
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2018 Target Direct Compensation (Blended Rate) (1) | 2019 Target Direct Compensation | |||||||||
Base Salary | $688,500 | $925,000 | ||||||||
Annual Cash Incentive | $630,800 | $925,000 | ||||||||
(Target / % of Base Salary) (2) | (92%) | (100%) | ||||||||
Equity Awards(Approved GDFV)(3) | ||||||||||
Performance Share Awards (at Target) | $432,907 (1,885 shares) | n/a | ||||||||
Time-Vested Stock Options | $4,265,000 (73,600 options) | $5,500,000 (90,592) | ||||||||
TOTAL TARGET DIRECT COMPENSATION | $6,017,207 | $7,350,000 |
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Annual Cash Incentives – 20192020 Incentive Payment Plan (“IPP”)
At the beginning of each fiscal year, the OCC approves an Incentive Payment Plan to provide annual performance-based cash incentive opportunities. Target levels for thepre-established performance measures used in the IPP are based on budgeted goals reflected in our annual operating budget. The IPP is discussed in more detail in the narrative to theGrants of Plan Based Awards Table on page 36.37.
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Each NEO’s annual performance-based cash incentive opportunity under the IPP is allocated into two components:
(1) | 75% of the target award is tied to quantitative,pre-established financial performance targets; and |
(2) | 25% of the target award is payable at the discretion of the OCC and intended to recognize other strategic, operational, and individual accomplishments not specifically quantified elsewhere in the IPP. |
Taken together, the IPP encourages our executive officers, including our NEOs, to focus on both our immediate business objectives and short-term financial performance, as well as other factors that support longer-term performance.
Quantitative Performance MeasurementComponent
Quantitative financial targetsperformance measures and related target levels for the 20192020 IPP were based on our pre-COVIDannual operating budget, as approved by our Board of Directors at the beginning of fiscal 2019.2020. Achievement for Messrs. White and Andrews and for Ms. Sheffield were based on overall Revenue andNon-GAAP EPS, adjusted for currency fluctuations. Achievement for Mr. McBride and Dr. Auerbach was based on Revenue and Operating Income, adjusted for currency fluctuations, for each of CooperVision and CooperSurgical, respectively.
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The table below describes the relationship between thehow an award would be earned award andbased on Company performance for each of the finance performance measures included in the 20192020 IPP. NoAs designed, no award waswould be payable with respect to any financial performance measure that did not reach its minimum achievement threshold. For each NEO, the incentive that can be paidmaximum award for any individual financial performance measure was capped at 200%. Specific
The achievement levels required for fiscal 2019 is discussed in detail below.payout under the quantitative performance component of the 2020 IPP were as follows.
IPP Achievement Required to Attain Payout (1)
Performance Measure | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||
Revenue(Constant Currency) | 95% | 100% | 105% | 95% | 100% | 105% | ||||||
Non-GAAP EPS(Constant Currency) | 90% | 100% | 110% | 90% | 100% | 110% | ||||||
Operating Income | 90% | 100% | 110% | 90% | 100% | 110% |
(1) | Potential payments at each of Threshold, Target and Maximum are presented in theGrants of Plan Based Awards table on page |
Adjustments to Quantitative Achievement Component and Clawbacks
QuantitativeThe quantitative financial performance targets were subject to adjustment for acquisitions and/or divestitures, or other items during the fiscal year as determined by the Board. In making such
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adjustments, the OCC considers a report provided by management on variances to the budgets for Revenue, Operating Income, andNon-GAAP EPS that highlights key variances includingnon-recurring,non-controllable, and/or discretionary items. The OCC may elect to include or exclude certain of these items for purposes of determining the overall quantitative achievement level under the 20192020 IPP.
The OCC also has the separatediscretionary authority to reduce the quantitative portion of the bonusannual cash incentive by up to 25%, regardless of our reported budget achievement, based on any facts and circumstances the OCC considers to be in the Company’s best interests. Award payments could also be reduced or wholly recouped by the OCC if a review of the results for the first two months of fiscal 20202021 reflected anomalous unfavorable events that were attributable to fiscal 2019.2020.
The OCC did not determine that any adjustments to awards for fiscal 2019 were necessary under these provisions.
Discretionary ComponentsPerformance Component
As discussed above, the 20192020 IPP provides for 25% of each NEO’s target annual performance-based cash incentive opportunity to be entirely at the discretion of the OCC and not linked to the quantitative financial measures under the 20192020 IPP. The IPP achievement of this discretionary portion may range from 0% to a percentage deemed appropriate by the OCC, subject to a cap on the total bonus earned by any NEO equal to 200% of their target award.
The discretionary component of individual IPP awards is based entirely on the OCC’s assessment of individual NEO performance during the fiscal year. The discretionary component allows the OCC the flexibility to recognize factors such as:
The personal contributions of the NEOs to the performance of the Company during the fiscal year;
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Leadership and operational achievements of each NEO, including those that may not be explicitly reflected in current year financial results (e.g. leadership development and succession planning, identification and/or execution of business development opportunities, etc.);
Strategic business achievements that may not be fully reflected in the Company’s financial performance during the fiscal year; and
Special circumstances that may have impacted the determination of the quantitative portion of the bonus.annual performance-based cash incentive.
The OCC believes this flexibility, which can account for factors that impact our results either positively or negatively, is important to connectalign these annual performance-based cash incentive awards with its assessment of executive achievement in individual roles.
20192020 IPP Results
Financial Measure AchievementAs described above, in December 2020, we confirmed that our performance against the financial goals of the 2020 IPP, which account for 75% of the target IPP award, fell below the threshold level required for a payout. Following a comprehensive assessment of the performance of our employees, including our NEOs, the OCC determined to fund the 2020 IPP for all eligible participants, including our NEOs, at 75% of target.
In approving this decision to make a discretionary payment that exceeded the actual achievement levels for fiscal 2019,results of the 2020 IPP, the OCC reviewed management’s presentation of our financial results and considered the events during the fiscal year that impacted budget targets. On review, the OCC approved achievement under the 2019 IPP based on the financial results as reported forstrong performance of the Company with no adjustments.
The target levels for each ofand our employees, including our NEOs, during an exceptionally difficult year. In particular, the financial performance measures, our actual achievement as approved by the OCC, and the associated award amounts earned with respect to each of these measures under the 2019 IPP is set out below. As approved by the OCC, we exceeded budget targets for Revenue andnon-GAAP EPS across all three divisions and eachresults of CooperVision and CooperSurgical achieved at least 94% of target operating income.
A full discussion of our financial results can be found in Item 7,Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form10-K for the fiscal year ended October 31, 2019. For a reconciliation between reported GAAP andnon-GAAP measures, see the “Reconciliation ofNon-GAAP Financial Measures” section of this proxy statement.
Achievement by Division
(Basis of Awards Paid to NEOs)
Corporate:
Award Factor | Budget Target ($ in Millions; | Achievement ($ in Millions; except EPS) (% of Target) | Achievement 2019 IPP | Target Achievement/ Weighting | Weighted Achievement | |||||||||||||||
Revenue (Constant Currency) | $2,680.9 | $2,692.1 (100.4%) | 108.4% | 50% | 54.2% | |||||||||||||||
Non-GAAP EPS (Constant Currency) | $11.79 | $12.76 (108.2%) | 182.4% | 25% | 45.6% | |||||||||||||||
Total Achievement | 75% | 99.8% |
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CooperVision:
Award Factor | Budget Target ($ in Millions; | Achievement ($ in Millions; except EPS) (% of Target) | Achievement 2019 IPP | Target Achievement/ Weighting | Weighted Achievement | ||||||||||||||||||||
Revenue (Constant Currency) | $2,003.3 | $2,006.2 (100.1%) | 102.9% | 50% | 51.4% | ||||||||||||||||||||
Operating Income (Constant Currency) | $595.0 | $589.2 (99%) | 95.2% | 25% | 23.8% | ||||||||||||||||||||
Total Achievement
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CooperSurgical:
Award Factor | Budget Target ($ in Millions; | Achievement ($ in Millions; except EPS) (% of Target) | Achievement 2019 IPP | Target Achievement/ Weighting | Weighted Achievement | |||||
Revenue (Constant Currency) | $677.5 | $685.8 (101.2%) | 124.6% | 50% | 62.3% | |||||
Operating Income (Constant Currency) | $221.3 | $208.9 (94.4%) | 72.0% | 25% | 18.0% | |||||
Total Achievement
| 75%
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Discretionary Award Determinations
In determining the discretionary payout for each NEO, the OCC made an independent assessment of individual performance and leadership, operational achievements not otherwise enumerated in the 2019 IPP, and such other factors as the OCC considers indicative of executive performance, including operational achievement indicators such as market share growth, new product launches, business development, and executive leadership.
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There is no formulaic relationship betweenCooperSurgical were significantly impacted as optical practitioners and retailers, hospitals, medical offices and fertility clinics closed their facilities, restricted access, or delayed or canceled patient visits, exams and elective medical procedures in response to the OCC’s assessmentpandemic, closing primary sales channels for the businesses.
Despite these challenges, we outperformed many of each NEOour peers and ended fiscal 2020 with a positive stockholder return, including a significant recovery from share price lows in March 2020. Our accomplishments in fiscal 2020 were achieved while prioritizing the health and safety of our employees, continuing to invest in the future of the business, including the highly successful roll-out of MiSight, continuing enhancements to our culture, and continuing to develop our ESG initiatives.
The approved funding of the 2020 IPP reflected a target payout ofon the discretionary component of the IPP. The OCC does not relyIPP, weighted at 25% of target, and a 67% payout on a formal performance evaluation or consider achievementthe financial component, weighted at 75% ofpre-established goals for each NEO. The OCC does consider, among other factors, target. Although this exceeded the input of our Chief Executive Officer regarding recommended award levels (other thanpayout prescribed by the 2020 IPP terms approved in respect to his own IPP award) and the performance of the other NEOs, and each executive’s self-assessment of accomplishments within their area of responsibility. Generally, an award of the target 25% reflects satisfactory performance by an executive officer during the fiscal year and awards in excess of 25% are only made in recognition of significant additional accomplishments.
For fiscalDecember 2019, the OCC approved discretionary awards atconsidered this to be an appropriate result based on the target level forextraordinary effort and achievements of our NEOs other than Mr. McBride. The OCC approved a discretionary award for Mr. McBride at a value equal to 200% of target amount in recognition of his personal performance and leadership for CooperVision, Inc.employee population during the fiscalan extremely difficult year. In making this determination, the OCC noted Mr. McBride’s successful execution of succession planning for his leadership organization following the retirement of certain key executives.
Named Executive Officer Awards Under the 20192020 IPP
Based on the above financial resultsdetermination regarding appropriate funding of annual incentives for fiscal 2019,2020, the OCC approved the following awards for each NEO.
Named Executive Officer | Quantitative Factor Achievement | Discretionary Award | Total Award Achievement | Target Award | Actual Award Paid | |||||||||
($) | (% of Base Salary) | ($) | (% of Base Salary) | |||||||||||
Albert G. White III | 99.8% | 25% | 124.8% | $925,000 | 100% | $1,154,400 | 124.8% | |||||||
Brian G. Andrews | 99.8% | 25% | 124.8% | $276,250 | 65% | $344,760 | 81.1% | |||||||
Daniel G. McBride(1) | 75.2% | 50% | 125.2% | $560,000 | 80% | $701,120 | 100.2% | |||||||
Holly R. Sheffield | 99.8% | 25% | 124.8% | $341,250 | 65% | $425,880 | 81.1% | |||||||
Robert D. Auerbach, M.D.(1) | 80.3% | 25% | 105.3% | $276,250 | 65% | $290,891 | 68.4% | |||||||
|
Named Executive Officer | Target Award | Actual Award Paid | ||||||
($) | (% of Base Salary) | ($) | (% of Base Salary) | |||||
Albert G. White III | $1,156,250 | 125% | $867,188 | 94% | ||||
Brian G. Andrews | $325,000 | 65% | $243,750 | 49% | ||||
Daniel G. McBride | $560,000 | 80% | $420,000 | 60% | ||||
Holly R. Sheffield | $341,250 | 65% | $255,937 | 49% | ||||
Robert D. Auerbach, M.D. | $308,750 | 65% | $231,563 | 49% | ||||
Long-Term Incentive Compensation
For fiscal 2019,2020, the OCC used time-vested equity awards to deliver long-term incentive compensation to our executive officers, including our NEOs. The OCC believes that time-vested award typesequity awards have strong retention value while also closely linking executive compensation to stockholder gains. Stock options only have value to the recipient if we also have growth in our stock price, putting a portion of the executives’executive officers’ compensation at risk of no return, and RSUs provide guaranteed value if the executive officer remains with the Company. Both award types provide the opportunity for long-term gain tied to stockholder returns while also encouraging longevity and stable management for the Company.
In setting equity compensation for our NEOs,executive officers, the OCC discusses appropriate award design with Compensia and management to drive long-term focus on strategic objectives. The OCC also reviews historical grant levels based on the role and position of each executive officer, as well as economic and accounting implications, when determining the type and appropriate size of individual awards.
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Equity awards are generally granted in the first quarter of each fiscal year, after financial results for the prior fiscal year are available, and vest over three to five years. Equity grants made in fiscal 2019 vest over five years and the amount of equity grants was determined based on target accounting value and our stock price at the time of grant.
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The OCC may also grant equity awards periodically to new hires, upon a promotion or other circumstances, or to accomplish specific retention goals. When such awards are approved, the grant date is set by the OCC. Grant dates are not set prior to the date ofOCC after approval by the OCC and no such grants were made to NEOs during fiscal 2019.OCC.
Time-Vested Stock Options and Restricted Stock Units
Equity grants forawards granted to our executive officers, including our NEOs, are made in the form of stock options andand/or restricted stock units which vest over a set period of time. Grant size is based on target accounting value and our stock price at the time of grant. In setting award levels, the OCC considered competitive market practices, management recommendations, and advice froma competitive market analysis provided by Compensia.
The OCC sets the value of awards granted to our NEOs based on an assessment of the value of awards granted by our peers and targets values to be competitive relative to comparable executive positions. Once the grant value is set, the number of options and/or RSUs is determined based on the stock price on the date of grant and the accounting assumptions in accordance with ASC 718. For fiscal 2020, stock options were valued at approximately 23% of the stock price on the date of grant.
Before the date of grant, each NEOexecutive officer, including the NEOs, can choose to receive their award as stock options, restricted stock units, or a 50/50 combination of the two award types. The OCC retains the authority to set awards as it determines appropriate, regardless of managementsuch elections, but it believes that soliciting input from our executive inputofficers enhances the retention value of long-term equity compensation.
Grants to NEOs in 2019 Fiscal Year | ||||||||||||||||||||||
Grants to NEOs in 2020 Fiscal Year | Grants to NEOs in 2020 Fiscal Year | |||||||||||||||||||||
Name | Stock Options | RSUs | Stock Options | RSUs | ||||||||||||||||||
Grant Date Fair Value (1) | Options Granted (2) | Grant Date Fair Value (1) | RSUs Granted (3) | Exercise Price | Grant Date Fair Value (1) | Options Granted (2) | Grant Date Fair Value (1) | RSUs Granted (3) | ||||||||||||||
Albert G. White III | $5,500,000 | 90,592 | — | — | $ | 304.54 | $7,700,000 | 109,313 | ||||||||||||||
Brian G. Andrews | $1,100,000 | 18,118 | — | — | $ | 304.54 | $1,475,000 | 20,940 | ||||||||||||||
Daniel G. McBride | $2,000,000 | 32,943 | — | — | $ | 304.54 | $2,160,000 | 30,664 | ||||||||||||||
Holly R. Sheffield | $750,000 | 12,353 | $750,000 | 2,944 | $ | 304.54 | $1,694,000 | 24,049 | ||||||||||||||
Robert D. Auerbach, M.D. | $500,000 | 8,236 | $500,000 | 1,963 | $1,150,000 | 3,776 | ||||||||||||||||
(1) | Amounts represent the grant values approved by the OCC and may vary slightly from |
(2) | Stock options granted in fiscal 2020 vest annually ratably over a five-year period starting on the first anniversary of the date of grant. |
(3) | Restricted stock units granted in fiscal 2020 vest over |
The OCC revisited the use of performance share awards for fiscal 2019. With input from Compensia, the OCC concluded that the current combination of performance driven annual incentive plans, and equity award compensation reliant on stock price growth with a5-year vesting time horizon, provides appropriate incentives to the NEOs to drive meaningful stockholder value. Based on this determination, the OCC has discontinued use of performance share awards. At this time, there is one outstanding grant of performance share awards, granted in fiscal 2018 to Messrs. White and McBride, which will complete its cycle in fiscal 2020.
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Results for Fiscal 20172018 Performance Share Awards
Performance share awards granted in fiscal 20172018 completed their performance cycle at the end of fiscal 2019.2020. Of our NEOs, only Messrs. White and McBride received these awards.
These awards were eligible to be earned based on our three-year 3-yearnon-GAAPnon-GAAP EPS growth on a constant currency basis, as modified by the OCC for extraordinary,non-recurring, and/or unusual events. Based on our
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non-GAAP EPS growth, adjusted for currency fluctuations, over the three-year performance period, the OCC certified achievement of 12.6% compounded growth, which was in excess ofawards did not meet the Target achievement goal of 12%.
As granted,threshold level for payout and no shares were issued under these awards provide for proration between levels of achievement. Therefore, the NEOs will receive 110% of the Target shares as follows:awards.
Achievement under 2017 Performance Share Awards (Performance Cycle: November 2016 to October 2019) | ||||||||||||
Threshold (9% growth) $10.93 | Target (12% growth) $11.86 | Maximum (15% growth) > $12.84 | Actual (12.6% growth) (110% of Target) | |||||||||
Achievement under 2018 Performance Share Awards (Performance Cycle: November 2017 to October 2020) | Achievement under 2018 Performance Share Awards (Performance Cycle: November 2017 to October 2020) | |||||||||||
Name | Possible Shares | Actual Shares | Shares at Target | Actual Shares | ||||||||
Albert G. White III | 1,166 | 2,331 | 3,497 | 2,564 | 1,885 | -0- | ||||||
Daniel G. McBride | 1,166 | 2,331 | 3,497 | 2,564 | 1,885 | -0- | ||||||
Employee BenefitsEMPLOYEE BENEFITS & Perquisites
PERQUISITES
Our NEOs are eligible to receive benefits under programs provided to our employees generally, including participation in our 401(k) plan (with matching contributions up to a specified dollar value, set annually)contributions), benefits under our Retirement Income Plan (a defined benefit plan), and our health, life and disability insurance programs. Matching contributions to our 401(k) plan for the NEOs are equal to the matching contributions provided to employees generally.generally, matching 50% of employee contributions up to $8,000 (for a maximum benefit of $4,000 per year). Benefits under the Retirement Income Plan are discussed in more detail in the Narrative to the Pension Benefits Table on page 41.
The Company has entered into Employment Agreements with each of the NEOs as of the beginning of the 2019 fiscal year. These agreements provide for severance payments on termination of employment for various reasons, including on a change in control, and are discussed in more detail in the section titledPotential Payments on Termination or a Change in Controlon page 42.43.
Our NEOs also receive limited perquisites or other personal benefits, generally in the form of automobile allowances and expenses, income attributable to life insurance policies, and some limited reimbursement for partner travel to business functions.functions and relocation assistance. We only provide perquisites or other personal benefits to our executive officers, including our NEOs, in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make our executive officers more efficient and effective, and for recruitment and retention purposes.
32EXECUTIVE EMPLOYMENT AGREEMENTS
The Company entered into Employment Agreements with each of the NEOs as of November 2018. Dr. Auerbach’s Employment Agreement was terminated and replaced with a Transition and Retirement Agreement as of July 2020. The employment agreements provide for severance payments on termination of employment for various reasons, including in connection with a change in control, and, together with Dr. Auerbach’s Transition and Retirement Agreement, are discussed in more detail in the section titled Potential Payments on Termination or a Change in Control on page 44.
We maintain stock ownership guidelines that require each of our executive officers to maintain a stock ownership level equal to a specific multiple of their annual base salary as set out below.
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Tax DeductibilityThere is no required time period for the executive officers to achieve the required ownership. While ownership is below the set guideline the executive officers is expected to hold shares acquired from equity awards until the guidelines are met.
In addition to directly held shares, the potential value of Compensationvested stock options and unvested restricted stock units are credited in consideration of whether ownership requirements have been met.
Guideline (as multiple of base salary) | ||
5x base salary - CEO | Must hold 75% of the shares acquired from equity awards, net of taxes and any exercise cost, until guidelines are met. | |
2x base salary - Other Executive Officers | Must hold 50% of the shares acquired from equity awards, net of taxes and any exercise cost, until guidelines are met. |
As of October 31, 2020, all of our NEOs were in compliance with the applicable stock guidelines.
Due to the changes in the tax laws which went into effect in 2017, the Company, generally, will not be able to deduct compensation paid to any of its NEOs in excess of $1 million. While the
TAX DEDUCTIBILITYOF COMPENSATION
The OCC has historically consideredconsiders ways to maintain tax deductibility of the compensation for our NEOs,executive officers, however, the OCC has the discretion to approve, and it is likely that the Company will pay, compensation which will not be deductible under the Internal Revenue Code.
Conclusion
The OCC believes that each element of executive compensation and the total compensation provided to each of our NEOs is reasonable, competitive, and appropriate. The amount of compensation payable to our NEOs depends largely on our financial performance and returns to our stockholders. The OCC believes that our executive compensation program provides an appropriate mix of elements that will allow us to continue to attract, retain, and motivate a top performing management team, without encouraging excessive or inappropriate risk-taking by our executive officers, and that its compensation arrangements create incentives that drive our continued strong financial performance.
REPORT OF THE ORGANIZATION & COMPENSATION COMMITTEE
The Organization & Compensation Committee of the Board has reviewed and discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the OCC has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in our Annual Report on Form10-K for the fiscal year ended October 31, 2019.2020.
ORGANIZATION & COMPENSATION COMMITTEE
Colleen E. Jay (Chair)
William A. Kozy
Gary S. Petersmeyer
Michael H. Kalkstein (Former Chair)
Jody S. Lindell (Former member)
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Summary Compensation TableSUMMARY COMPENSATION TABLE
The table below shows compensation paid during fiscal years 2020, 2019, and 2018 to the individuals who served as our Named Executive OfficersNEOs during the past fiscal year.
Name and Principal Position | Year | Salary | Bonus(1) | Stock Awards (2) | Option Awards (2) | Non-Equity Incentive Plan Compensation (1) | Change in Pension Value (3) | All Other Compensation (4) | Total Compensation | |||||||||||||||||||||||||||
Albert G. White, III | 2019 | $925,000 | $288,600 | $0 | $5,499,840 | $865,800 | $126,711 | $18,794 | $7,724,746 | |||||||||||||||||||||||||||
President & Chief Executive Officer | 2018 | $688,500 | $165,427 | $432,909 | $4,265,233 | $496,282 | $0 | $18,769 | $6,067,120 | |||||||||||||||||||||||||||
2017 | $525,000 | $98,662 | $432,890 | $1,264,912 | $295,985 | $28,074 | $15,583 | $2,661,105 | ||||||||||||||||||||||||||||
Brian G. Andrews | 2019 | $425,000 | $86,190 | $0 | $1,099,944 | $258,570 | $102,243 | $19,324 | $1,991,271 | |||||||||||||||||||||||||||
Senior Vice President, Chief Financial Officer & Treasurer | 2018 | $328,664 | $37,566 | $124,935 | $578,027 | $112,699 | $0 | $15,588 | $1,197,479 | |||||||||||||||||||||||||||
Daniel G. McBride | 2019 | $700,000 | $175,280 | $0 | $1,999,970 | $525,840 | $138,853 | $41,363 | $3,581,305 | |||||||||||||||||||||||||||
Executive Vice President & Chief Operating Officer | 2018 | $613,500 | $122,209 | $432,909 | $2,265,106 | $366,628 | $0 | $30,856 | $3,831,208 | |||||||||||||||||||||||||||
2017 | $525,000 | $112,902 | $432,890 | $1,264,912 | $338,707 | $34,564 | $32,622 | $2,741,597 | ||||||||||||||||||||||||||||
Holly R. Sheffield | 2019 | $525,000 | $106,470 | $750,043 | $749,951 | $319,410 | $10,554 | $44,146 | $2,505,573 | |||||||||||||||||||||||||||
Executive Vice President & Chief Strategy Officer | 2018 | $207,436 | $31,613 | $1,000,020 | $999,972 | $94,840 | $0 | $255,553 | $2,589,434 | |||||||||||||||||||||||||||
Robert D. Auerbach, M.D. | 2019 | $425,000 | $72,723 | $500,114 | $500,008 | $218,168 | $137,032 | $8,304 | $1,861,349 | |||||||||||||||||||||||||||
President, CooperSurgical, Inc. | 2018 | $380,000 | $57,687 | $485,961 | $350,022 | $173,061 | $9,033 | $11,200 | $1,466,964 |
Name and Principal Position | Year | Salary ($) | Bonus (1) ($) | Stock ($) | Option ($) | Non-Equity Incentive Plan Compensation (1) ($) | Change in ($) | All Other ($) | Total Compensation ($) | |||||||||||||||||||||||||||
Albert G. White III | 2020 | $925,000 | $867,188 | $-0- | $7,700,008 | $-0- | $73,576 | $18,255 | $9,584,027 | |||||||||||||||||||||||||||
President & Chief | 2019 | $925,000 | $288,600 | $-0- | $5,499,840 | $865,800 | $126,711 | $18,794 | $7,724,746 | |||||||||||||||||||||||||||
2018 | $688,500 | $165,427 | $432,909 | $4,265,233 | $496,282 | $-0- | $18,769 | $6,067,120 | ||||||||||||||||||||||||||||
Brian G. Andrews | 2020 | $500,000 | $243,750 | $-0- | $1,475,014 | $-0- | $61,739 | $18,259 | $2,298,762 | |||||||||||||||||||||||||||
Executive Vice President, Chief Financial Officer & Treasurer | | 2019 2018 | | | $425,000 $328,664 | | | $86,190 $37,566 | | | $-0- $124,935 | | | $1,099,944 $578,027 | | | $258,570 $112,699 | | | $102,243 $-0- | | | $19,324 $15,588 | | | $1,991,271 $1,197,479 | | |||||||||
Daniel G. McBride | 2020 | $700,000 | $420,000 | $-0- | $2,159,972 | $-0- | $80,289 | $16,997 | $3,377,259 | |||||||||||||||||||||||||||
Executive Vice President & Chief Operating Officer / President, CooperVision, Inc. | | 2019 2018 | | | $700,000 $613,500 | | | $175,280 $122,209 | | | $-0- $432,909 | | | $1,999,970 $2,265,106 | | | $525,840 $366,628 | | | $138,853 $-0- | | | $41,363 $30,856 | | | $3,581,305 $3,831,208 | | |||||||||
Holly R. Sheffield | 2020 | $525,000 | $255,937 | $-0- | $1,694,012 | $-0- | $37,303 | $34,465 | $2,546,717 | |||||||||||||||||||||||||||
President, CooperSurgical, Inc. | | 2019 2018 | | | $525,000 $207,436 | | | $106,470 $31,613 | | | $750,043 $1,000,020 | | | $749,951 $999,972 | | | $319,410 $94,840 | | | $10,554 $-0- | | | $44,146 $255,553 | | | $2,505,573 $2,589,434 | | |||||||||
Robert D. Auerbach, M.D. | 2020 | $475,000 | $231,563 | $1,149,943 | $-0- | $-0- | $83,353 | $9,595 | $1,949,454 | |||||||||||||||||||||||||||
Special Advisor to the CEO | | 2019 2018 | | | $425,000 $380,000 | | | $72,723 $57,687 | | | $500,114 $485,961 | | | $500,008 $350,022 | | | $218,168 $173,061 | | | $137,032 $9,033 | | | $8,304 $11,200 | | | $1,861,349 $1,466,964 | | |||||||||
(1) | Amounts shown in the “Bonus” |
The structure of our Incentive Payment Plan is discussed in more detail below in the narrative discussion following theGrants of Plan Based Awards Table on page |
(2) | Amounts shown in the “Option Awards” and “Stock Awards” columns reflect the aggregate grant date fair value of stock option, restricted stock unit, and performance share awards granted to each |
(3) | Change in value of accumulated pension benefits for the |
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For the period from October 31, 2017 to October 31, 2018, the accumulated value of pension benefits reduced for the following Named Executive Officers:NEOs:
Name | Benefit Reduced By: | |
Albert G. White III | $8,194 | |
Brian G. Andrews | $10,717 | |
Daniel G. McBride | $3,333 |
(4) | Amounts included in the All Other Compensation column include the following: |
Name | Year | Company’s 401(k) Contributions | Automobile allowance and expenses | Income associated to life insurance | Housing / Relocation Expense | Personal Travel / Other | Year | Company’s 401(k) Contributions | Automobile allowance and expenses | Income associated to life insurance | Housing / Expense | Personal Travel / Other | ||||||||||||||||||||||||||||||||||||
Albert G. White, III | 2019 | $4,000 | $12,844 | $1,950 | $0 | $0 | ||||||||||||||||||||||||||||||||||||||||||
Albert G. White III | 2020 | $4,000 | $12,185 | $2,070 | $-0- | $-0- | ||||||||||||||||||||||||||||||||||||||||||
2018 | $4,000 | td3,280 | td,350 | $0 | td39 | 2019 | $4,000 | td2,844 | td,950 | $-0- | $-0- | |||||||||||||||||||||||||||||||||||||
2017 | $4,000 | td0,123 | td,350 | td10 | 2018 | $4,000 | td3,280 | td,350 | $-0- | td39 | ||||||||||||||||||||||||||||||||||||||
Brian G. Andrews | 2019 | $4,000 | $14,436 | $888 | $0 | $0 | 2020 | $4,000 | $13,359 | $900 | $-0- | $-0- | ||||||||||||||||||||||||||||||||||||
2019 | $4,000 | $14,436 | $888 | $-0- | $-0- | |||||||||||||||||||||||||||||||||||||||||||
2018 | $4,000 | $10,860 | $718 | $-0- | $10 | |||||||||||||||||||||||||||||||||||||||||||
2018 | $4,000 | $10,860 | $718 | $0 | $10 | |||||||||||||||||||||||||||||||||||||||||||
Daniel G. McBride | 2019 | $4,000 | $8,982 | $3,570 | $0 | $24,811 | 2020 | $4,000 | $9,127 | $3,870 | $-0- | $-0- | ||||||||||||||||||||||||||||||||||||
2018 | $4,000 | $9,106 | td,070 | $0 | td5,680 | 2019 | $4,000 | $8,982 | $3,570 | $-0- | td4,811 | |||||||||||||||||||||||||||||||||||||
2017 | $4,000 | $8,967 | td,070 | td7,585 | 2018 | $4,000 | $9,106 | td,070 | $-0- | td5,680 | ||||||||||||||||||||||||||||||||||||||
Holly R. Sheffield | 2019 | $4,000 | $10,416 | $1,350 | $28,380 | $0 | 2020 | $4,000 | $8,652 | $1,950 | $19,864 | $-0- | ||||||||||||||||||||||||||||||||||||
2018 | $4,000 | $5,403 | $562 | $245,549 | $39 | 2019 | $4,000 | $10,416 | $1,350 | $28,380 | $-0- | |||||||||||||||||||||||||||||||||||||
2018 | $4,000 | $5,403 | $562 | $245,549 | $39 | |||||||||||||||||||||||||||||||||||||||||||
Robert D. Auerbach, M.D. | 2019 | $4,000 | $0 | $4,304 | $0 | $0 | 2020 | $4,000 | $-0- | $5,595 | $-0- | $-0- | ||||||||||||||||||||||||||||||||||||
2018 | $4,000 | $7,200 | $0 | $0 | $0 | 2019 | $4,000 | $-0- | $4,304 | $-0- | $-0- | |||||||||||||||||||||||||||||||||||||
2018 | $4,000 | $7,200 | $-0- | $-0- | $-0- |
Amounts in the Personal Travel / Other amountscolumn represent airfare, food, lodging, and other amounts which were determined to not be inherently related to the performance of these executive’sNEOs’ duties. Amounts in the “Housing/“Housing / Relocation Expense” column representnon-recurring amounts paid by the Company in connection with Ms. Sheffield’s relocation from New York to California at the time of her hire in 2018.2018 and then her further relocation to Connecticut from California in 2020.
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Grants of Plan Based Awards TableGRANTSOF PLAN BASED AWARDS TABLE
This table presents information regarding the possible awards payable under our 20192020 Incentive Payment Plan and the value of certain equity awards madegranted to our NEOs in the 20192020 fiscal year. Our equity grant practices and calculation of awards under the 20192020 Incentive Payment Plan are discussed in more detail below and in theCompensation Discussion and Analysis on page 17.19.
Name |
Estimated Future Payouts Under | All Other Stock Awards: Number of Shares of Stock or Units(2) | All Other Option Awards: Number of Securities Underlying Options(3) | Exercise or Base Price of Option Awards ($/share) | Grant Date Fair Value of Stock and Option Awards(4) | |||||||||
Threshold |
Target |
Maximum | ||||||||||||
Albert G. White, III | $115,625 | $925,000 | $1,850,000 | |||||||||||
90,592 | $254.77 | $5,499,840 | ||||||||||||
Brian G. Andrews | $34,531 | $276,250 | $552,500 | |||||||||||
18,118 | $254.77 | $1,099,944 | ||||||||||||
Daniel G. McBride | $70,000 | $560,000 | $1,120,000 | |||||||||||
32,943 | $254.77 | $1,999,970 | ||||||||||||
Holly R. Sheffield | $42,656 | $341,250 | $682,500 | |||||||||||
12,353 | $254.77 | $749,951 | ||||||||||||
2,944 | $750,043 | |||||||||||||
Robert D. Auerbach, M.D. | $34,531 | $276,250 | $552,500 | |||||||||||
8,236 | $254.77 | $500,008 | ||||||||||||
1,963 | $500,114 |
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Name | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | All Other Stock Awards: Number of Shares of Stock or Units (2) | All Other Option Awards: Number of Securities Underlying Options (3) | Exercise or Base Price of Option Awards ($/share) | Grant Date Fair Value of Stock and Option Awards (4) | |||||||||
Threshold | Target | Maximum | ||||||||||||
Albert G. White III | $144,531 | $1,156,250 | $2,312,500 | 109,313 | $304.54 | $7,700,008 | ||||||||
Brian G. Andrews | $40,625 | $325,000 | $650,000 | 20,940 | $304.54 | $1,475,014 | ||||||||
Daniel G. McBride | $70,000 | $560,000 | $1,120,000 | 30,664 | $304.54 | $2,159,972 | ||||||||
Holly R. Sheffield | $42,656 | $341,250 | $682,500 | 24,049 | $304.54 | $1,694,012 | ||||||||
Robert D. Auerbach, M.D. | $34,531 | $276,250 | $552,500 | 3,776 | $1,149,943 |
(1) | Amounts reported in these columns represent the threshold, target, and maximum cash bonus amounts which could have been paid to each |
(2) |
|
(3) | Option awards |
(4) | Amounts |
AnnualNon-Equity Incentives
The OCC adopts an annual Incentive Payment Plan, or IPP, to provide for short-term cash incentive awards tied to the achievement of our business goals. Financial targetsmeasures and related target levels are derived from our approved fiscal year operating budget. The IPP is governed by the 2017 Executive Incentive Plan (the “2017 EIP”), as approved by stockholders in March 2017.
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Participation levels in the IPP are set by the OCC for our executives. TargetsNEOs. Target annual performance-based cash incentive opportunities represent a designated percentage of base salary for the fiscal year and that percentage controls the potential award that can be achieved under the IPP as follows:
|
|
|
|
|
|
|
As presented in theGrants of Plan Based Awards Table, target amounts represent the potential bonus that would be paid on 100% achievement of both quantitative factors and the discretionary
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portion of awards. Threshold amounts represent the minimum achievement necessary for payment on only the lowest weighted quantitative factor and no award of any discretionary amounts. All awards are capped at a maximum of 200% of the target bonusannual performance-based cash incentive opportunity.
Specific budget targets and actual achievement levels under the 20192020 IPP are discussed in more detail in theCompensation Discussion and Analysis on page 17.19.
Equity Awards
We grant equity incentive awards as a tool to promote retention and to connect compensation with our long-term performance and stockholder returns. These awards are granted under our 2007 Long-Term Incentive Plan (as restatedamended and amendedrestated in March 2016) and may vest based on continued service over time and/or performance criteria.
The OCC utilizes a mixture of equity award types, including stock options and restricted stock units. Stock options are granted at 100% of fair market value on the date of grant and have a10-year life. OptionsStock options and RSUs generally vest over a five-year period.
EquityThe equity award grantsgranted to our Named Executive OfficersNEOs in the 2020 fiscal year are discussed in more detail in theCompensation Discussion and Analysis beginning on page 17.19.
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Outstanding Equity Awards at Fiscal Year End TableOUTSTANDING EQUITY AWARDSAT FISCAL YEAR END TABLE
This table provides information regarding the equity award holdings of the Named Executive OfficersNEOs as of the end of the 20192020 fiscal year.
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (Exercisable) | Number of Securities Underlying Unexercised Options (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 | 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 | Number of Securities Underlying Unexercised Options (Exercisable) | Number of Securities Underlying Unexercised Options (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 | 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Albert G. White, III | 10,310 | - | $95.74 | 12/12/2022 | (1 | ) | - | $-0- | - | $-0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8,196 | - | $119.89 | 12/11/2023 | (2 | ) | - | $-0- | - | $-0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,030 | 1,507 | $162.28 | 12/9/2024 | (3 | ) | - | $-0- | - | $-0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Albert G. White III | 10,310 | -0- | $ 95.74 | 12/12/2022 | (1 | ) | -0- | $ - 0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (4 | ) | 452 | $131,532 | - | $-0- | 8,196 | -0- | $ 119.89 | 12/11/2023 | (2 | ) | -0- | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
16,111 | 10,740 | $131.60 | 12/9/2025 | (5 | ) | - | $-0- | - | $-0- | 7,537 | -0- | $ 162.28 | 12/9/2024 | (3 | ) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||
8,950 | 17,901 | $131.60 | 12/9/2025 | (6 | ) | - | $-0- | - | $-0- | 21,481 | 5,370 | $ 131.60 | 12/9/2025 | (5 | ) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||
11,500 | 17,248 | $175.31 | 12/13/2026 | (8 | ) | - | $-0- | - | $-0- | 17,902 | 8,949 | $ 131.60 | 12/9/2025 | (4 | ) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (10 | ) | - | $-0- | 3,497 | $1,017,627 | 17,249 | 11,499 | $ 175.31 | 12/13/2026 | (7 | ) | -0- | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | 17,272 | $229.66 | 12/12/2027 | (14 | ) | - | $-0- | - | $ - | 8,740 | 13,109 | $ 229.66 | 12/12/2027 | (10 | ) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||
4,370 | 17,479 | $229.66 | 12/12/2027 | (12 | ) | - | $-0- | - | $ - | -0- | 17,272 | $ 229.66 | 12/12/2027 | (9 | ) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (15 | ) | - | $-0- | 2,828 | $ 822,948 | -0- | -0- | $ -0- | 12/12/2027 | (14 | ) | -0- | $ -0- | 2,828 | $902,273 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | 34,479 | $230.09 | 5/1/2028 | (18 | ) | - | $-0- | - | $-0- | -0- | 34,479 | $ 230.09 | 5/1/2028 | (15 | ) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||
- | 90592 | $254.77 | 12/11/2028 | (22 | ) | - | $-0- | - | $-0- | 18,119 | 72,473 | $ 254.77 | 12/11/2028 | (18 | ) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||
-0- | 109,313 | $ 304.54 | 12/10/2029 | (20 | ) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brian G. Andrews | 2,396 | - | $119.89 | 12/11/2023 | (2 | ) | - | $-0- | - | $-0- | 2,396 | -0- | $ 119.89 | 12/11/2023 | (2 | ) | -0- | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2,054 | 513 | $162.28 | 12/9/2024 | (3 | ) | - | $-0- | - | $-0- | 2,567 | -0- | $ 162.28 | 12/9/2024 | (3 | ) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (4 | ) | 154 | $44,814 | - | $-0- | 2,685 | 671 | $ 131.60 | 12/9/2025 | (5 | ) | -0- | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,014 | 1,342 | $131.60 | 12/9/2025 | (5 | ) | - | $-0- | - | $-0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (7 | ) | 380 | $110,580 | - | $-0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,137 | 1,704 | $175.31 | 12/13/2026 | (8 | ) | - | $-0- | - | $-0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | 12/13/2026 | (9 | ) | 427 | $124,257 | - | $-0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (11 | ) | 555 | $161,505 | - | $-0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | 1,779 | $229.66 | 12/12/2027 | (13 | ) | - | $-0- | - | $-0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
778 | 3,108 | $229.66 | 12/12/2027 | (12 | ) | - | $-0- | - | $-0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (16 | ) | 435 | $126,585 | - | $-0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | 4,310 | $230.09 | 5/1/2028 | (18 | ) | - | $-0- | - | $-0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | 18,118 | $254.77 | 12/11/2028 | (22 | ) | - | $-0- | - | $-0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daniel G. McBride | 9,446 | 2,361 | $162.28 | 12/9/2024 | (3 | ) | - | $-0- | - | $-0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (4 | ) | 708 | $206,028 | - | $-0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20,380 | 13,586 | $131.60 | 12/9/2025 | (5 | ) | - | $-0- | - | $-0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8,950 | 17,901 | $131.60 | 12/9/2025 | (6 | ) | - | $-0- | - | $-0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11,500 | 17,248 | $175.31 | 12/13/2026 | (8 | ) | - | $-0- | - | $-0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (10 | ) | - | $-0- | 3,497 | $1,017,627 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | 17,272 | $229.66 | 12/12/2027 | (14 | ) | - | $-0- | - | $ - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4,370 | 17,479 | $229.66 | 12/12/2027 | (12 | ) | - | $-0- | - | $ - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (15 | ) | - | $-0- | 2,828 | $ 822,948 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | 32,943 | $254.77 | 12/11/2028 | (22 | ) | - | $-0- | - | $-0- |
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Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (Exercisable) | Number of Securities Underlying Unexercised Options (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 | 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 | Number of Securities Underlying Unexercised Options (Exercisable) | Number of Securities Underlying Unexercised Options (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 | 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Holly R. Sheffield | - | 17,528 | $226.30 | 6/4/2028 | (20 | ) | - | $-0- | - | $-0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | 6/4/2028 | (21 | ) | 4,419 | $1,285,929 | - | $-0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | 12,353 | $254.77 | 12/11/2028 | (22 | ) | - | $-0- | - | $-0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (23 | ) | 2,944 | $856,704 | - | $-0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert D. Auerbach, M.D. | - | - | - | (4 | ) | 554 | $161,214 | - | $-0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | 2,416 | $131.60 | 12/9/2025 | (5 | ) | - | $-0- | - | $-0- | -0- | -0- | $ -0- | 12/9/2025 | (6) | 190 | $60,620 | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (7 | ) | 684 | $199,044 | - | $-0- | 1,705 | 1,136 | $ 175.31 | 12/13/2026 | (7) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | 3,067 | $175.31 | 12/13/2026 | (8 | ) | - | $-0- | - | $-0- | -0- | -0- | $ -0- | 12/13/2026 | (8) | 285 | $90,929 | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (9 | ) | 940 | $273,540 | - | $-0- | 864 | 1,295 | $ 229.66 | 12/12/2027 | (10) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (11 | ) | 666 | $193,806 | - | $-0- | -0- | 1,779 | $ 229.66 | 12/12/2027 | (13) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | 3,454 | $229.66 | 12/12/2027 | (12 | ) | - | $-0- | - | $-0- | 691 | 1,036 | $ 229.66 | 12/12/2027 | (10) | -0- | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (17 | ) | 592 | $172,272 | - | $-0- | -0- | -0- | $ -0- | 12/12/2027 | (12) | 326 | $104,010 | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (16 | ) | 1,219 | $354,729 | - | $-0- | -0- | 4,310 | $ 230.09 | 5/1/2028 | (15) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | 1,739 | $228.11 | 6/1/2028 | (19 | ) | - | $-0- | - | $-0- | 3,624 | 14,494 | $ 254.77 | 12/11/2028 | (18) | -0- | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | 8,236 | $254.77 | 12/11/2028 | (22 | ) | - | $-0- | - | $-0- | -0- | 20,940 | $ 304.54 | 12/10/2029 | (20) | -0- | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daniel G. McBride | 11,807 | -0- | $ 162.28 | 12/9/2024 | (3) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- | - | - | (23 | ) | 1,963 | $571,233 | - | $-0- | 17,902 | 8,949 | $ 131.60 | 12/9/2025 | (4) | -0- | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
27,173 | 6,793 | $ 131.60 | 12/9/2025 | (5) | -0- | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
17,249 | 11,499 | $ 175.31 | 12/13/2026 | (7) | -0- | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8,740 | 13,109 | $ 229.66 | 12/12/2027 | (10) | -0- | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
-0- | 17,272 | $ 229.66 | 12/12/2027 | (9) | -0- | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
-0- | -0- | $ -0- | 12/12/2027 | (14) | -0- | $ -0- | 2,828 | $902,273 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,589 | 26,354 | $ 254.77 | 12/11/2028 | (18) | 0 | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
-0- | 30,664 | $ 304.54 | 12/10/2029 | (20) | 0 | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Holly R. Sheffield | 4,382 | 13,146 | $ 226.30 | 6/4/2028 | (16) | 0 | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
-0- | -0- | $ -0- | 6/4/2028 | (17) | 3,314 | $1,057,332 | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,471 | 9,882 | $ 254.77 | 12/11/2028 | (18) | 0 | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
-0- | -0- | $ -0- | 12/11/2028 | (19) | 2,355 | $751,363 | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
-0- | 24,049 | $ 304.54 | 12/10/2029 | (20) | 0 | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert D. Auerbach, M.D. (22) | 1,208 | 1,208 | $ 131.60 | 12/9/2025 | (5) | 0 | $ -0- | -0- | $ -0- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
-0- | -0- | $ -0- | 12/9/2025 | (6) | 342 | $109,115 | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,022 | 1,023 | $ 175.31 | 12/13/2026 | (7) | 0 | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
-0- | -0- | $ -0- | 12/13/2026 | (8) | 314 | $100,182 | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
864 | 863 | $ 229.66 | 12/12/2027 | (10) | 0 | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
-0- | -0- | $ -0- | 12/12/2027 | (12) | 218 | $69,553 | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
-0- | -0- | $ -0- | 12/12/2027 | (12) | 87 | $ 27,757 | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
-0- | -0- | $ -0- | 12/12/2027 | (11) | 592 | $188,878 | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,648 | 1,647 | $ 254.77 | 12/11/2028 | (18) | 0 | $ -0- | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
-0- | -0- | $ -0- | 12/11/2028 | (19) | 393 | $125,387 | -0- | $ -0- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
-0- | -0- | $ -0- | 12/10/2029 | (21) | 755 | $240,883 | -0- | $ -0- |
(1) | Options were granted on December 12, 2012 and became vested and exercisable in equal portions on each of the first through fifth anniversaries of the date of grant. |
(2) | Options were granted on December 11, 2013 and become vested and exercisable in equal portions on each of the first through fifth anniversaries of the date of grant. |
(3) | Options were granted on December 9, 2014 and become vested and exercisable in equal portions on each of the first through fifth anniversaries of the date of grant. |
40 | P a g e
(4) |
|
(5) | Options were granted on December 9, 2015 and become vested and exercisable in equal portions on each of the first through fifth anniversaries of the date of grant. |
(6) |
|
Award granted as RSUs on December 9, 2015 and valued at |
Options were granted on December 13, 2016 and become vested and exercisable in equal portions on each of the first through fifth anniversaries of the date of grant. |
Award granted as RSUs on December 13, 2016 and valued at |
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|
|
Options were granted on December 12, 2017 and become vested and exercisable in equal portions on each of the first through fifth anniversaries of the date of grant. |
(11) | Award granted as RSUs on December 12, 2017 and valued at $319.05 per share, the closing price of our stock on October 31, 2020. The units vest in full on February 1, 2021. |
(12) | Award granted as RSUs on December 12, 2017 and valued at $319.05 per share, the closing price of our stock on October 31, 2020. The units vest in equal portions on each of January 8, 2019, January 8, 2020, January 8, 2021, January 8, 2022, and January 8, 2023. |
(13) | Options were granted on December 12, 2017 and become vested and exercisable in full on February 1, 2021. |
(14) |
|
Performance share awards granted on December 12, 2017 which will vest depending on the achievement of specified levels of growth in earnings per share for the 2020 fiscal year. Share amounts represent maximum payout amounts (150% of target) and are valued at |
|
|
Options were granted on May 1, 2018 and become vested and exercisable in equal portions on each of the third through fifth anniversaries of the date of grant. |
|
Options were granted on June 4, 2018 and become vested and exercisable in equal portions on each of the second through fifth anniversaries of the date of grant. |
Award granted as RSUs on June 4, 2018 and valued at |
Options were granted on December 11, 2018 and become vested and exercisable in equal portions on each of the first through fifth anniversaries of the date of grant. |
Award granted as RSUs on December 11, 2018 and valued at |
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(20) | Options were granted on December 10, 2019 and become vested and exercisable in equal portions on each of the first through fifth anniversaries of the date of grant. |
(21) | Award granted as RSUs on December 10, 2019 and valued at $319.05 per share, the closing price of our stock on October 31, 2020. The units vest in equal portions on each of January 8, 2021, January 8, 2022, January 8, 2023, January 8, 2024, and January 8, 2025. |
(22) | Dr. Auerbach retired as of February 1, 2021. All unvested awards were forfeit upon termination of employment and all exercisable stock options remain exercisable for a period of three years from the date of his retirement. |
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Option Exercises and Stock Vested TableOPTION EXERCISESAND STOCK VESTED TABLE
The following table details the number of shares acquired by the Named Executive Officersour NEOs on exercise of stock options or release of shares upon vesting of Performance Share and Restricted Stock Unit awards during the 20192020 fiscal year.
Name | Option Awards | Stock Awards | Option Awards | Stock Awards | ||||||||||||
Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting | |||||||||
Albert G. White, III | - | $-0- | 4,323 | $1,176,168 | ||||||||||||
Albert G. White III | -0- | $0.00 | 3,016 | $1,037,524 | ||||||||||||
Brian G. Andrews | - | $-0- | 2,333 | $629,717 | -0- | $0.00 | 1,150 | $387,476 | ||||||||
Daniel G. McBride | 11,981 | $2,349,436 | 4,844 | $1,308,413 | -0- | $0.00 | 3,272 | $1,121,402 | ||||||||
Holly R. Sheffield | - | $-0- | - | $-0- | -0- | $0.00 | 1,694 | $539,801 | ||||||||
Robert D. Auerbach, M.D. | 5,326 | $722,744 | 4,151 | $1,098,681 | -0- | $0.00 | 2,573 | $855,857 |
Pension Benefits TablePENSION BENEFITS TABLE
Credited service and value of the accumulated benefits payable to our Named Executive OfficersNEOs as of October 31, 20192020 under our Retirement Income Plan at the normal retirement age of 65 are as follows:
Name | Plan | Years of Credited | Present Value of Accumulated Benefit(1) | Payments During Last Fiscal Year | Plan Name | Years of Credited | Present Value of Accumulated Benefit (1) | Payments During Last Fiscal Year | ||||||||
Albert G. White, III | Retirement Income Plan | 12.50 | $342,443 | - | ||||||||||||
Albert G. White III | Retirement Income Plan | 13.50 | $416,019 | $-0- | ||||||||||||
Brian G. Andrews | Retirement Income Plan | 12.50 | $229,673 | - | Retirement Income Plan | 13.50 | $291,412 | $-0- | ||||||||
Daniel G. McBride | Retirement Income Plan | 13.67 | $428,885 | - | Retirement Income Plan | 14.67 | $509,174 | $-0- | ||||||||
Holly R. Sheffield(2) | Retirement Income Plan | 0.33 | $10,554 | - | Retirement Income Plan | 1.33 | $47,857 | $-0- | ||||||||
Robert D. Auerbach, M.D. | Retirement Income Plan | 13.50 | $489,218 | - | Retirement Income Plan | 14.50 | $572,571 | $-0- |
(1) | Present value is calculated as of the October 31, |
(2) | As of fiscal year end, Ms. Sheffield is not yet vested in the retirement income plan. |
Narrative to Pension Benefits Table
The Company’s Retirement Income Plan (the “Plan”) was adopted in December 1983. The majority of the Company’s U.S. employees who work at least 1,000 hours per year and were hired before August 1, 2019 are covered by the Plan. For services performed after December 31, 1988, members are entitled to an annual retirement benefit equal to 0.60% of base annual compensation up to $10,000 and 1.20% of base annual compensation which exceeds $10,000 but is not in excess of the applicable annual maximum compensation permitted to be consideredtaken into account under Internal Revenue Service guidelines for each year of service. Furthermore, current active members are entitled to an
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entitled to an annual retirement benefit equal to 1.20% of base annual compensation up to the applicable annual maximum compensation for each year of service in excess of 35 Plan Years of service. For service prior to January 1, 1989, members are entitled to an annual retirement benefit equal to 0.75% of base annual compensation up to the Social Security Wage Base in effect that year and 1.50% of base annual compensation in excess of the Social Security Wage Base for each year of service.
Based on the current accumulated benefits for the Named Executive Officers,our NEOs, the estimated annual benefits payable under this Plan upon retirement (at the normal retirement age of 65) are as follows:
Officer | Estimated Annual Benefits Payable | |
Albert G. White III | $ | |
Brian G. Andrews | $ | |
Daniel G. McBride | $ | |
Holly R. Sheffield(1) | $ | |
Robert D. Auerbach, M.D. | $ |
(1) | As of fiscal year end, Ms. Sheffield is not yet vested in the retirement income plan. |
Potential Payments Upon Termination on Change in ControlPOTENTIAL PAYMENTS UPON TERMINATIONON CHANGEIN CONTROL
We haveOur executive employment agreements with our Named Executive Officers thatNEOs provide for post-employment compensation in the event their employment terminates for specified reasons.
Termination Without Cause or Resignation for Good Reason. In the event of termination of employment without Cause or resignation with Good Reason (as defined in the relevant agreements) each executiveNEO, other than Dr. Auerbach, is entitled to a severance payment equal to 24 months of base salary (paid in continuing installments on the Company’s ordinary payroll schedule), the target value of their annual cash bonus earned under our Incentive Payment Plan for the year in which employment terminates (paid as a lump sum), reimbursement of monthly COBRA premiums for up to 24 months, and the value of their accumulated pension benefits. Additionally, the executiveNamed Executive Officer will have one year to exercise any currently outstanding and exercisable stock options and all time-vesting equity awardawards which would have vested within a specified period12 months (or 24 months in the case of Messrs. White and McBride) after the termination date will be accelerated.
Terminationin Connection with aChange in Control. In the event of termination of employment without Cause, or resignation with Good Reason, within 3 months prior to or 12 months following a Change in Control (as defined in the relevant agreements), each executiveNEO, other than Dr. Auerbach, is entitled to a severance payment equal to 36 months of base salary (paid in continuing installments on the Company’s ordinary payroll schedule), the target value of their annual cash bonus earned under our Incentive Payment Plan for the year in which employment terminates (paid in a lump sum), reimbursement of monthly COBRA premiums for up to 36 months, and the value of their accumulated pension benefits. Additionally, all outstanding equity awards will be accelerated, with any performance share awards to be paid at the target value (unless otherwise specified in the underlying award agreement).
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In addition, the executive employment agreements include an Internal Revenue Code (“Code”) Section 280G “best pay” provision pursuant to which in the event any payments or benefits received by the executiveNEO would be subject to an excise tax under Code Section 4999, the executivethey will receive either the full amount of such payments or a reduced amount such that no portion of the
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payments is subject to the excise tax, whichever results in the greaterafter-tax benefit to the executive.
Termination on Death or Disability. In the event employment is terminated due to the death or disability of the executive,NEO (other than Dr. Auerbach), the executive,Named Executive Officer, or his or hertheir estate, would be entitled to payment of the executive’sNEO’s target cash bonus payable under the Incentive Payment Plan and any amounts due to the executiveNEO at the time of termination of employment. Additionally, outstanding equity awards will be accelerated on apro-rata basis and the executive,NEO, or the executive’stheir estate, will have one year to exercise any currently outstanding and exercisable stock options.
The receipt of all of the foregoing severance payments and benefits (excluding payments and benefits received upon death or disability) is subject to the executive’sNEO’s continued compliance with all of his or hertheir obligations to the Company, including under each executive’sNEO’s confidential information agreement with the Company, and the executive’sNEO’s execution and delivery of a release of claims in favor of the Company.
The following table provides estimated payments to our Named Executive OfficersNEOs if termination of employment occurred on October 31, 2019:2020. Values in the table reflect cash severance plus the value of equity awards that would be exercisable on a termination of employment. Equity award value is based on a stock price of $319.05, which was the closing price of our common stock on October 30, 2020 (the last trading day on the NYSE prior to October 31, 2020).
Termination without Cause / Resignation with Good Reason | Change in Control | Death / Disability | Termination without Cause / Resignation with Good Reason | Change in Control | Death / Disability | |||||||
Albert G. White | $22,983,113 | $30,329,818 | $21,675,713 | |||||||||
Albert G. White III | $48,114,415 | $36,701,853 | $30,829,060 | |||||||||
Brian G. Andrews | $3,394,805 | $5,352,722 | $3,169,027 | $4,577,074 | $6,631,155 | $4,238,288 | ||||||
Daniel G. McBride | $18,973,583 | $23,441,954 | $17,896,750 | $24,289,259 | $27,406,740 | $23,494,922 | ||||||
Holly R. Sheffield | $2,374,126 | $5,768,225 | $2,064,624 | $3,116,289 | $6,488,760 | $2,842,257 | ||||||
Robert D. Auerbach, M.D. | $2,824,046 | $3,285,394 | $2,938,415 |
Retirement of Dr. Auerbach
On July 1, 2020, we entered into a Transition and Retirement Agreement (the “TRA”), effective July 8, 2020, with Dr. Auerbach, which provides for his resignation as President of CooperSurgical, effective July 13, 2020, and his continuation with us as Special Advisor to the Chief Executive Officer until his retirement on February 1, 2021 (the “Retirement Date”). The TRA provided that Dr. Auerbach continued to receive his current salary through the Retirement Date and remained eligible for his performance bonus for fiscal 2020 under the IPP (as discussed in more detail in the Compensation Discussion and Analysis on page 19). Following his Retirement Date, (i) we will reimburse Dr. Auerbach for monthly COBRA health insurance premiums during the twenty-four month period following the Retirement Date in exchange for certain non-competition obligations over that period, (ii) we paid Dr. Auerbach severance in a lump sum equal to $25,000 (less required withholdings, the “Severance Payment”), subject to his execution and non-revocation of a release, and (iii) Dr. Auerbach’s vested stock options will remain exercisable until the earlier of the third anniversary of the Retirement Date or the original expiration date.
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The ratio of our CEO’s total annual compensation to the median annual total compensation of all employees excluding the CEO (the “CEO Pay Ratio”) is a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K.
To identify the median employee, we evaluated the base salary of all employees globally (other than our Chief Executive Officer) as of November 30, 2018. We believe this measure most reasonably reflects the typical annual compensation of our employee population and was consistently applied for all employees, and we have not had such significant changes to our employee population or employee compensation arrangements that would cause us to reasonably believe would result in a remeasurement would be necessary.significant change to our pay ratio disclosure.
For employees paid other than in U.S. dollars, base salary amounts were converted from local currency to USD based on exchange rates at November 30, 2018. We did not exclude anynon-U.S. employees under the de minimis or other exceptions set forth in Item 402(u) of RegulationS-K, and we did not makeany cost-of-living adjustments. Once the median employee was identified, we calculated the median employee’s total annual compensation in accordance with the requirements of the Summary Compensation Table.
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As calculated, we determined:
The annual total compensation of our median-paid employee was $39,775.$40,271.
• | The annual total compensation of our Chief Executive Officer was |
The ratio of CEO compensation to the median of the annual total compensation of all our median employeeemployees was 194: 238:1.
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Directors of a publicly traded company have substantial responsibilities and time commitments, and with ongoing changes in corporate governance standards, highly qualified and experienced directors are in high demand; therefore, we seek to provide suitable economic incentives for our directors and to compensate them appropriately for their continued performance, increased responsibilities, and dedication. This compensation applies only to ourNon-Employee Directors. Members of the Board who are also our employees receive no additional compensation for their service as directors.
The OCC reviews and recommends compensation amounts for ourNon-Employee Directors, and the full Board approves compensation based on these recommendations. The OCC considers director responsibilities, compensation practices of our peer companies, and recommendations from Compensia (its independent compensation consultant) in makingNon-Employee Director compensation program recommendations to the Board. Compensation levels are reviewed at least annually and modified as the Board considers necessary or appropriate.
Components of Director CompensationCOMPONENTSOF DIRECTOR COMPENSATION
Cash Compensation
OurNon-Employee Directors receive an annual stipendretainer for their service, and directors who also serve as the Chair of a committee of the Board receive an additional annual stipendretainer in recognition of this additional responsibility. TheNon-Employee Directors also receive payment for each meeting attended, for time spent on company business, and for one day of travel in connection with meetings.
Annual Retainer: | ||||
Directors | $30,000 | |||
Non-Executive Lead Director | $40,000 | |||
Chairman of the Board | $125,000 | |||
Annual Retainer for Service as a Committee Chair: | ||||
Audit Committee | $17,500 | |||
Corporate Governance | $10,000 | |||
Organization | $12,000 | |||
Attendance at Meetings of the Board & its Committees: | ||||
$1,000 – $2,000 (per meeting) | ||||
Additional Cash Compensation for Service: | ||||
Travel Days (one per set of scheduled meetings) | $2,000 | |||
Other time spent on Company business (per hour) | $250 |
Directors appointed to, or resigning from, the Boardmid-year are entitled to a prorated portion of the annual stipendretainer based on the number of months of service provided for the fiscal year in which they enter or leave service, rounded to the nearest whole month.
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Equity Compensation
Historically ourOur Non-Employee Directors wereare eligible to receive annual equity awards in the form of restricted stock units (“RSUs”) under the Company’s 20062020 Long-Term Incentive Plan forNon-ExecutiveNon-Employee Directors’ as amended and restatedDirectors (the “2006“2020 Directors’ Plan”) with a total grant date value of $270,000 (or $283,500 and $297,000 in the case of the Lead Director and Chairman, respectively). These grants wereare awarded annually on April 1stand vestedvest in full on the first anniversary of the date of grant. If a director endedends their term of service prior to the vesting date the number of shares released under the award will be prorated according to the amountportion of the year actually served and the prorated number of shares will be released on the original vesting date. If a director’s service was terminated for Cause, as defined in the 2020 Directors’ Plan, they would forfeit the award.
The 2006 Directors’ Plan expired in March 2019, and in the absence of a replacement plan, the directors were each granted the right to receive a cash payment on April 1, 2020 equivalent to the RSU award that would have been granted in April 2019 under the 2006 Directors’ Plan had it remained in effect. Going forward, if the 2020 Long-Term Incentive Plan forNon-Employee Directors is approved at the annual meeting, eachnon-employee director will receive an award on April 1 each year, commencing April 1, 2020. These awards will be granted in the form of RSUs with a grant date value of $270,000 (or $283,500 and $297,000 in the case of the Lead Director and Chairman, respectively).
Stock Ownership RequirementsSTOCK OWNERSHIP REQUIREMENTS
The Board has adopted stock ownership requirements forNon-Employee Directors. The Board adopted this requirement to strengthen the relationship between director and stockholder interests, and under the current requirementsNon-Employee Directors must hold Coopershares of our common stock valued at five times their annual retainer.
Shares held must be free of restrictions to meet ownership requirements, and until the required ownership values are met theNon-Employee Directors must retain 100% of the shares of common stock received on vesting of stock awards or on exercise of stock options. All of theNon-Employee Directors complied with the applicable ownership requirements during fiscal 2019.2020, with the exception of Ms. Madden who was not a member of the Board during fiscal 2020.
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Director Compensation TableDIRECTOR COMPENSATION TABLE
The following table sets forth the total compensation paid to theNon-Employee Directors for their service on the Board and its committees during the 20192020 fiscal year. At present, theNon-Employee Directors are not eligible to participate in our pension programs and no deferred compensation ornon-equity incentive plans are available to theNon-Employee Directors.
Name | Fees Earned or Paid in Cash(1) | Stock Awards (2)(3) | Total | Fees Earned or Paid in Cash (1) | Stock Awards (2)(3) | Total | |||||||||||||||
A. Thomas Bender | $177,000 | $417,398 | $594,398 | $442,142 | $297,078 | $739,221 | |||||||||||||||
Allan E. Rubenstein, M.D. | $74,000 | $398,284 | $472,284 | $320,082 | $283,426 | $603,508 | |||||||||||||||
Colleen E. Jay | $69,000 | $379,462 | $448,462 | $313,295 | $270,046 | $583,341 | |||||||||||||||
Michael H. Kalkstein | $91,000 | $379,462 | $470,462 | ||||||||||||||||||
William A. Kozy | $68,000 | $379,462 | $447,462 | $317,795 | $270,046 | $587,841 | |||||||||||||||
Jody S. Lindell | $88,500 | $379,462 | $467,962 | $324,795 | $270,046 | $594,841 | |||||||||||||||
Teresa S. Madden(4) | n/a | n/a | n/a | ||||||||||||||||||
Gary S. Petersmeyer | $73,000 | $379,462 | $452,462 | $309,295 | $270,046 | $579,341 | |||||||||||||||
Robert S. Weiss | $41,000 | $334,481 | $375,481 | $292,295 | $270,046 | $562,341 | |||||||||||||||
Stanley Zinberg, M.D.(4) | $19,000 | $112,401 | $131,401 |
(1) | Fees earned represent all cash compensation paid to theNon-Employee Directors for their service during the most recent fiscal year. |
|
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payment equivalent to the value of 913 shares of our common stock (or 958 shares for Dr. Rubenstein and 1,004 shares for Mr. Bender) valued at the closing price on April 1, 2020. |
The November 2018 grants provided the right to receive 437 shares to all Non-Employee Directors on April 1, 2019,
(2) | Represents the aggregate grant date fair value of restricted stock units granted on April 1, 2020 under the 2020 Directors’ Plan to all of the Non-Employee Directors. The April 2020 grants provided the right to receive 989 shares to all Non-Employee Directors on April 1, 2021, with the exception that: |
• | Dr. Rubenstein, as Lead Director, received an award providing the right to receive |
• | Mr. Bender, as Chairman of the Board, received an award providing the right to receive |
|
The amounts shown reflect compensation costs recognized in our financial statements in accordance with ASC 718. For a discussion of valuation assumptions, see Note 9, Stock Plans, in our Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended October 31, 2019.2020.
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(3) | At October 31, |
Name | Outstanding Stock Options | |||
A. Thomas Bender |
| |||
10,000 | ||||
Allan E. Rubenstein, M.D. | - | |||
Colleen E. Jay |
| |||
|
| |||
William A. Kozy |
| |||
1,766 | ||||
Jody S. Lindell | 13,591 | |||
| - | |||
Gary S. Petersmeyer |
| |||
4,864 | ||||
Robert S. Weiss | 190,241 | |||
|
|
(4) |
|
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PROPOSAL 1 — ELECTION OF DIRECTORS
Our Bylaws require that we have a minimum of six and maximum of eleven directors serving on the Board. The Board sets the size of the board annually prior to the Annual Meeting and has fixed the number of directors to be elected at the 20202021 Annual Meeting at eight.seven.
The names of the nominees presented for election as directors are listed below, along with information regarding when they joined the Board, their present principal occupation, recent business experience, and their service on other companies’ boards of directors. Each nominee listed below currently serves on the Board and there are no family relationships between any of the nominees, or between the nominees and any of our officers.
Each nominee, if elected, will serve as a director until the next Annual Meeting or until his or hertheir successor is duly elected and qualified. All of the nominees listed below have given their consent to be named as nominees for election and have indicated their intention to serve if they are elected. The Board does not anticipate that any of the nominees will be unable to serve as a director, but in the event that a nominee is unable to serve, the Board may either propose an alternate nominee or elect to reduce the size of the Board. If an alternative nominee is proposed, proxies will be voted for the alternative nominee.
After many years of dedicated service to the Company and its stockholders, Michael H. Kalkstein is going to beboth A. Thomas Bender and Allan E. Rubenstein are retiring from the Board and will not be standing forre-election at the 20202021 Annual Meeting.
The Nominees
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Business Experience: Mr. Bender has served on our Board since 1994 and was elected Chairman in July 2002. He also served as our President and Chief Executive Officer from May 1995 until his retirement in October 2007. He previously served as President of CooperVision, our contact lens subsidiary, from June 1991 to December 2004. Between 1966 and June 1991, Mr. Bender held a variety of management positions at Allergan, Inc., a manufacturer of eye and skin care products, including Corporate Senior Vice President, and President and Chief Operating Officer of Herbert Laboratories, Allergan’s dermatology division.
Other Directorships and Memberships: Mr. Bender serves on the board of directors of Allegro Ophthalmics LLC, a private ophthalmic company focused on pharmaceutical treatment of eye disease. Mr. Bender currently serves on the compensation and audit committees at Allegro. He also serves on the board of Mission Hospital Foundation in Mission Viejo, CA.
Qualifications to Serve: Mr. Bender served as our CEO for 13 years, providing him with unique understanding of our operations and business, which is valuable to the Board, and his15-year tenure as Chairman of the Board has provided leadership continuity and stability to our Company. In addition to his history with the Company, Mr. Bender has over 50 years of experience in the
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pharmaceutical industry, providing him with a strong background and knowledge that assists the Board in analysis of our peer companies, markets, and industry. Additionally, Mr. Bender has served on the boards of other public and private medical device companies, including service as chairman of the compensation and organization committees for several medical device companies, allowing him to gain insight and perspective regarding business and regulatory issues facing our industry. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Mr. Bender forre-election to the Board.
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Business Experience: Ms. Jay served as a Global Division President for Procter and Gamble until her retirement in October 2017. Her most recent operational assignment was President, Global Beauty Specialty Business at Procter & Gamble from 2015 where she was responsible for the Wella Professional Salon, Cosmetics, Retail Hair Color, and Fragrance businesses, and the successful divestiture of them. Prior to that, Ms. Jay led the multi-billion dollar Global Retail Hair Care and Color division of Procter & Gamble from 2012 to 2015 and the Global Female Beauty division from 2010 to 2012. She also served as Vice President & General Manager, Greater China Feminine Care, Personal Cleansing, Oral Care & Entire China Marketing Function, based in Guangzhou, China, from 2006 to 2009, where she was responsible for businesses with a combined value of over $1 Billion. She has worked in various positions with Procter & Gamble since July 1985 and has led operational units in the United States, Canada, China, and Switzerland (including leading global businesses) during the course of her career. Ms. Jay has also volunteered at Catalyst, Inc., anon-profit organization dedicated to improving workplace inclusion for women.
Other Directorships and Memberships: Ms. Jay serves on the board of Treasury Wine Estates (ASX:TWE), a publicly traded company making and selling wine for the global market.
Qualifications to Serve: Ms. Jay has almost 35 years of experience within the consumer goods industry, including over 15 years of experience as a senior executive. She has first-hand experience with leading large, complex international business operations, including direct responsibility for operations in China and Europe, giving her a strong background in international business, including strategy, sales and marketing, regulatory challenges, and cultural differences in various markets. She brings strong operational, consumer branding and global perspective to the Board that assists with understanding and analyzing our markets and global expansion. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Ms. Jay forre-election to the Board.
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THE NOMINEES
JOINED THE BOARD: 2016 | ||
AGE: 58 | Business Experience: Ms. Jay served as a Global Division President for Procter and Gamble until her retirement in October 2017. Her most recent operational assignment was President, Global Beauty Specialty Business at Procter & Gamble from 2015 where she was responsible for the Wella Professional Salon, Cosmetics, Retail Hair Color, and Fragrance businesses, and the successful divestiture of them. Prior to that, Ms. Jay led the multi-billion dollar Global Retail Hair Care and Color division of Procter & Gamble from 2012 to 2015 and the Global Female Beauty division from 2010 to 2012. She also served as Vice President & General Manager, Greater China Feminine Care, Personal Cleansing, Oral Care & Entire China Marketing Function, based in Guangzhou, China, from 2006 to 2009, where she was responsible for businesses with a combined value of over $1 Billion. She worked in various positions with Procter & Gamble since July 1985 and has led operational units in the United States, Canada, China, and Switzerland (including leading global businesses) during the course of her career. Ms. Jay has also volunteered at Catalyst, Inc., a non-profit organization dedicated to improving workplace inclusion for women. | |
INDEPENDENT DIRECTOR | ||
CHAIR – ORGANIZATION & | ||
COMPENSATION COMMITTEE | ||
MEMBER – CORPORATE GOVERNANCE | ||
& NOMINATING COMMITTEE |
Business Experience:Mr. Kozy served as the Chief Operating Officer of Becton Dickinson (NYSE: BDX) from 2012 until his retirement in 2016, and as its Executive Vice President from 2006 until 2016. He also served as a member of the corporate Leadership Team for Becton Dickinson and in various executive roles since 1988, including Senior Vice President of Company Operations from 1998 until 2002, President of BD Diagnostics from 2002 through 2006, President of the BD Biosciences segment from 2006 to 2009 and head of BD Medical from 2009 through 2011.
Other Directorships and Memberships: Mr. Kozy is a member of the board of directors of LivaNova PLC (NASDAQ:LIVN), a publicly traded medical device company focused on neurological and cardiovascular medicine. He also serves on the nominating and corporate governance committee. He also serves as a senior advisor to McKinsey & Company, a global management firm, with a focus on mergers and acquisitions.
Qualification to Serve:Mr. Kozy has over 40 years of experience in the medical technology industry. Prior to serving as Chief Operating Officer for Becton Dickinson, key business worldwide leadership assignments included responsibilities for the Biosciences, Diagnostic, and Medical segments of the company. He is the only leader in Becton Dickinson history to have led all three segments of the company in his career. He also brings corporate experience leadership from Becton Dickinson in other areas: innovation systems, company manufacturing, and Becton Dickinson’s first ERP implementation. Overall, Mr. Kozy brings depth of general management experience in business strategy, operations, and financial performance to this role. Additionally, he has significant experience in merger and acquisition activity, with integration as an area of executive focus. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Mr. Kozy forre-election to the Board.
| ||
| ||
Qualifications to Serve: Ms. Jay has almost 35 years of experience within the consumer goods industry, including over 15 years of experience as a senior executive. She has first-hand experience with leading large, complex international business operations, including direct responsibility for operations in China and Europe, giving her a strong background in international business, including strategy, sales and marketing, regulatory challenges, and cultural differences in various markets. She brings strong operational, consumer branding and global perspective to the Board that assists with understanding and analyzing our markets and global expansion. The Corporate Governance & Nominating Committee considers these factors important to their decision to recommend Ms. Jay for re-election to the Board. |
Business Experience: Ms. Lindell is President and Chief Executive Officer of S.G. Management, Inc., an asset management company she has headed since 2000. Until May 2000, Ms. Lindell was a partner with KPMG LLP where she served asPartner-In-Charge of the Industrial Markets and Healthcare and Life Sciences practices for the Western Area. Ms. Lindell is also a Certified Public Accountant (inactive).
Other Directorships and Memberships: Ms. Lindell served as a director, and on the audit and director’s loan committees, for First Republic Bank, a publicly traded financial institution, until September 2007. First Republic Bank was acquired in 2007, underwent a management led buyout inmid-2010 and again became publicly traded (NYSE: FRC) in December 2010. Ms. Lindell continued to serve as a director for First Republic Bank through May 2017. She also served on the board of directors of PDL BioPharma (NasdaqGS: PDLI) from March 2009 through October 2018.
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Qualifications to Serve: Ms. Lindell’s experience as a partner with KPMG and her accounting background bring valuable knowledge of finance and accounting regulations to our Board and Audit Committee. She is qualified as an Audit Committee Financial Expert under the SEC rules and has experience with the review and analysis of financial statements and operational risk, both through her accounting background and her experience with public company audit committees. Ms. Lindell has also gained a good working knowledge and understanding of our business and operations during her term of service on the Board, which provides efficiency and continuity. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Ms. Lindell forre-election to the Board.
JOINED THE BOARD: | ||
AGE: 69 | Business Experience: Mr. Kozy served as the Chief Operating Officer of Becton Dickinson (NYSE: BDX) from 2012 until his retirement in 2016, and as its Executive Vice President from 2006 until 2016. He also served as a member of the corporate Leadership Team for Becton Dickinson and in various executive roles since 1988, including Senior Vice President of Company Operations from 1998 until 2002, President of BD Diagnostics from 2002 through 2006, President of the BD Biosciences segment from 2006 to 2009 and head of BD Medical from 2009 through 2011. | |
INDEPENDENT DIRECTOR |
Business Experience: Mr. Petersmeyer currently serves as a consultant to companies in the pharmaceutical and medical device industries. Most recently heco-founded Aesthetic Sciences Corporation in 2004 and served as the Chief Executive Officer and Chairman until December 2010. Prior to that he served as President and Chief Operating Officer of Pherin Pharmaceuticals, Inc. from 2000 to 2001 and as President and Chief Operating Officer of Collagen Corporation, Inc. from 1995 to 1997 and as Chief Executive Officer from 1997 to 1999. From 1976 to 2000 he served in various management positions
COMMITTEE
Other Directorships and Memberships: Mr. Kozy the chairman of the board of directors of LivaNova PLC (NASDAQ:LIVN), a publicly traded medical device company focused on neurological and cardiovascular medicine. He also serves on the nominating and corporate governance committee. He also serves as a senior advisor to McKinsey & Company, a global management firm, with a focus on mergers and acquisitions.
Qualification to Serve: Mr. Kozy has over 40 years of experience in the medical technology industry. Prior to serving as Chief Operating Officer for Becton Dickinson, key business worldwide leadership assignments included responsibilities for the Biosciences, Diagnostic, and Medical segments of the company. He is the only leader in Becton Dickinson history to have led all three segments of the company in his career. He also brings corporate experience leadership from Becton Dickinson in other areas: innovation systems, company manufacturing, and Becton Dickinson’s first ERP implementation. Overall, Mr. Kozy brings depth of general management experience in business strategy, operations, and financial performance to this role. Additionally, he has significant experience in merger and acquisition activity, with integration as an area of executive focus. The Corporate Governance & Nominating Committee considers these factors important to their decision to recommend Mr. Kozy for pharmaceutical and medical device companies.
Other Directorships and Memberships: Mr. Petersmeyer served as a director and member of the compensation and audit committees of Omnicell, Inc. (NASDAQ: OMCL) from January 2007 through February 2019. He also served as director and chairman of the board of Cardica, Inc. (NASDAQ: CRDC) through November 2015. He has previously served on the boards of Visx Incorporated and Roxro Pharmaceuticals prior to their acquisitions. He also served as chairman of the board for Positive Coaching Alliance, anon-profit organization dedicated to improving youth sports.
Qualifications to Serve: Mr. Petersmeyer has served as the CEO or President of four companies in the medical device and pharmaceuticals industry and has over 35 years of industry experience in leadership positions. He has extensive knowledge and experience in global markets, including the United States, Asia, and Europe. His expertise includes financial, research and regulatory strategy, and business development with an emphasis on growth, new product lines, and leadership development. He has extensive experience as a director and has experience with service on compensation and audit committees. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Mr. Petersmeyer forre-election to the Board.
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JOINED THE BOARD: | ||
AGE: 69 | Business Experience: Ms. Lindell is President and Chief Executive Officer of S.G. Management, Inc., an asset management company she has headed since 2000. Until May 2000, Ms. Lindell was a partner with KPMG LLP where she served as Partner-In-Charge of the Industrial Markets and Healthcare and Life Sciences practices for the Western Area. Ms. Lindell is also a Certified Public Accountant (inactive). Other Directorships and Memberships: Ms. Lindell served as a director, and on the audit and director’s loan committees, for First Republic Bank, a publicly traded financial institution, until September 2007. First Republic Bank was acquired in 2007, underwent a management led buyout in mid-2010 and again became publicly traded (NYSE: FRC) in December 2010. Ms. Lindell continued to serve as a director for First Republic Bank through May 2017. She also served on the board of directors of PDL BioPharma (NasdaqGS: PDLI) from March 2009 through October 2018. | |
INDEPENDENT DIRECTOR; |
Business Experience: Dr. Rubenstein has served as our Vice Chairman and Lead Director since July 2002, and previously served as Chairman of the Board from July 1994 through July 2002. He served as Acting Chairman of the Board from April 1993 through June 1994. He is a Clinical Professor of Neurology and Pediatrics at New York University Langone Medical Center. Formerly, he was Chief Executive Officer of NexGenix Pharmaceuticals in NYC from 2003 to 2011.
Other Directorships and Memberships: He currently serves as Chairman of the Scientific Advisory Boards of Plex Pharmaceuticals in San Diego and Coloursmith in Halifax, Nova Scotia, both privately-held technology companies. He is a member of the Board of Advisors of the Sackler School Graduate Program in Biomedical Sciences at Tufts University. He is also the Founder and Medical Director Emeritus of the Children’s Tumor Foundation and a consultant to the National Institutes of Health, the U.S. Food and Drug Administration and the U.S. Department of Defense, where he served as Chair of the US Army Neurofibromatosis Research Program Integration Panel in 2001. Dr. Rubenstein was a Trustee of the Connecticut River Museum in Essex, CT from 2014-2019 and presently is a Director of the Lunenburg, Nova Scotia DocFest Film Festival.
Qualifications to Serve: Ms. Lindell’s experience as a partner with KPMG and her accounting background bring valuable knowledge of finance and accounting regulations to our Board and Audit Committee. She is qualified as an Audit Committee Financial Expert under the SEC rules and has experience with the review and analysis of financial statements and operational risk, both through her accounting background and her experience with public company audit committees. Ms. Lindell has also gained a good working knowledge and understanding of our business and operations during her term of service on the Board, which provides efficiency and continuity. The Corporate Governance & Nominating Committee considers these factors important to their decision to recommend Ms. Lindell for re-election to the Board. Qualifications to Serve: As a leading academic scientist and clinician, Dr. Rubenstein provides valuable insight into human physiology and medical practices and techniques that aid the Board in making determinations regarding new technologies to develop or acquire. He also brings experience with clinical trials and a knowledge and understanding of the development of medical devices to his service. His experience as the head of a medical technology company provides perspective on operations of a medical device company. Additionally, through his long-term service on our Board, Dr. Rubenstein has gained a good working knowledge and understanding of our business and operations, which provides efficiency and continuity. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Dr. Rubenstein forCOMMITTEE FINANCIAL EXPERT CHAIR – AUDIT COMMITTE MEMBER – CORPORATE GOVERNANCE & NOMINATING COMMITTEE
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JOINED THE BOARD: | ||
AGE: 64 | Business Experience: Ms. Madden served as Executive Vice President and Chief Financial Officer of Xcel Energy, Inc. (NASDAQ:XEL), an electric and natural gas utility, from 2011 until her retirement in 2016. She joined Xcel in 2003 as Vice President, Finance, Customer & Field Operations and was named Vice President and Controller in 2004. Previously, she served as Controller for Rogue Wave Software, Inc. from 2000 to 2003 and as Controller for New Century Energies and Public Service Company of Colorado, predecessor companies of Xcel Energy. Ms. Madden holds a Bachelor of Science in Accounting from Colorado State University and a Master of Business Administration from Regis University. | |
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COMMITTEE FINANCIAL EXPERT | ||
MEMBER –AUDIT COMMITTEE | ||
Other Directorships and Memberships: Ms. Madden serves on the board of Enbridge, Inc. (NYSE: ENB) and serves on the governance committee and as chair of the audit, finance and risk committee. She previously served as a director for Peabody Energy Corporation (NYSE:BTU) from 2017 to 2020 where she served on the health, safety, security & environmental committee and as chair of the audit committee. | ||
Qualifications to Serve: Ms. Madden’s extensive experience in financial leadership roles and service with the audit committees of public company boards brings valuable accounting knowledge to the Board. She is also qualified as an Audit Committee Financial Expert under the SEC rules and has experience with the review and analysis of financial statements and operational risk, both through her accounting background and her experience with public company audit committees. The Corporate Governance & Nominating Committee considers these factors important to their decision to recommend Ms. Madden for election to the Board. |
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GARY S. PETERSMEYER | JOINED THE BOARD: 2013 | |
AGE: 73 | Business Experience: Mr. Petersmeyer currently serves as a consultant to companies in the pharmaceutical and medical device industries. Most recently he co-founded Aesthetic Sciences Corporation in 2004 and served as the Chief Executive Officer and Chairman until December 2010. Prior to that he served as President and Chief Operating Officer of Pherin Pharmaceuticals, Inc. from 2000 to 2001 and as President and Chief Operating Officer of Collagen Corporation, Inc. from 1995 to 1997 and as Chief Executive Officer from 1997 to 1999. From 1976 to 2000 he served in various management positions for pharmaceutical and medical device companies. | |
INDEPENDENT DIRECTOR | ||
MEMBER –AUDIT COMMITTEE; | ||
ORGANIZATION & COMPENSATION | ||
COMMITTEE | ||
Other Directorships and Memberships: Mr. Petersmeyer served as a director and member of the compensation and audit committees of Omnicell, Inc. (NASDAQ: OMCL) from January 2007 through February 2019. He also served as director and chairman of the board of Cardica, Inc. (NASDAQ: CRDC) through November 2015. He has previously served on the boards of Visx Incorporated and Roxro Pharmaceuticals prior to their acquisitions. He also served as chairman of the board for Positive Coaching Alliance, a non-profit organization dedicated to improving youth sports. | ||
Qualifications to Serve: Mr. Petersmeyer has served as the CEO or President of four companies in the medical device and pharmaceuticals industry and has over 35 years of industry experience in leadership positions. He has extensive knowledge and experience in global markets, including the United States, Asia, and Europe. His expertise includes financial, research and regulatory strategy, and business development with an emphasis on growth, new product lines, and leadership development. He has extensive experience as a director and has experience with service on compensation and audit committees. The Corporate Governance & Nominating Committee considers these factors important to their decision to recommend Mr. Petersmeyer for re-election to the Board. |
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ROBERT S. WEISS | JOINED THE BOARD: 1996 | |
AGE: 74 | Business Experience: Mr. Weiss served as our President from March 2008 and as our Chief Executive Officer from November 2007 until his retirement in May 2018. He also served as President of CooperVision, our contact lens subsidiary, from March 2007 to February 2008. He previously served as our Chief Operating Officer from January 2005 to October 2007 and as Executive Vice President from October 1995 to October 2007. He served as our Chief Financial Officer from September 1989 to January 2005. He served as our Treasurer from 1989 to March 2002. Since joining us in 1977, he has held a number of finance positions both with us and Cooper Laboratories, Inc. (our former parent). | |
NON-INDEPENDENT DIRECTOR | ||
FORMER CHIEF EXECUTIVE OFFICER | ||
Other Directorships and Memberships: Mr. Weiss served as a director of Accuray Incorporated (Nasdaq: ARAY), a company that develops, manufactures, and sells precise, innovative tumor treatment solutions that set the standard of care with the aim of helping patients live longer, better lives, until November 2019. He served on its nominating and governance committee and on its audit committee. He is also a member of the Board of Trustees of the University of Scranton in Pennsylvania and serves on its finance, advancement, and audit committees. | ||
Qualifications to Serve: As our former Chief Executive Officer and with over 40 years of experience with the Company, Mr. Weiss provides the benefit of personal perspective on our business, awareness of our peers and our industry, and an understanding of the strategic goals for our Company that is important to the Board in making decisions regarding the direction of our business. He provides leadership, extensive knowledge of our Company, and business, operating, and policy experience to our Board. The Corporate Governance & Nominating Committee considers these factors important to their decision to recommend Mr. Weiss for re-election to the Board. |
Business Experience: Mr. Weiss served as our President from March 2008 and as our Chief Executive Officer from November 2007 until his retirement in May 2018. He also served as President of CooperVision, our contact lens subsidiary, from March 2007 to February 2008. He previously served as our Chief Operating Officer from January 2005 to October 2007 and as Executive Vice President from October 1995 to October 2007. He served as our Chief Financial Officer from September 1989 to January 2005. He served as our Treasurer from 1989 to March 2002. Since joining us in 1977, he has held a number of finance positions both with us and Cooper Laboratories, Inc. (our former parent).
Other Directorships and Memberships: Mr. Weiss served as a director of Accuray Incorporated (Nasdaq: ARAY), a company that develops, manufactures, and sells precise, innovative tumor treatment solutions that set the standard of care with the aim of helping patients live longer, better
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lives, until November 2019. He served on its nominating and governance committee and on its audit committee. He is also a member of the Board of Trustees of the University of Scranton in Pennsylvania and serves on its finance, advancement, and audit committees.
Qualifications to Serve: As our former Chief Executive Officer and with over 40 years of experience with the Company, Mr. Weiss provides the benefit of personal perspective on our business, awareness of our peers and our industry, and an understanding of the strategic goals for our Company that is important to the Board in making decisions regarding the direction of our business. He provides leadership, extensive knowledge of our Company, and business, operating, and policy experience to our Board. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Mr. Weiss forre-election to the Board.
ALBERT G. WHITE III | ||
JOINED THE BOARD: 2018 | ||
AGE: 51 | Business Experience: Mr. White has served as President & Chief Executive Officer, and as a member of our Board of Directors, since May 2018. Previously, he served as Chief Financial Officer from November 2016 until his appointment as CEO and he also served as Executive Vice President and Chief Strategy Officer, positions he held from December 2015 and July 2011, respectively. From August 2015 to May 2018, Mr. White also directed CooperSurgical, our women’s healthcare business, and served as Chief Executive Officer of Cooper Medical, Inc., the parent company to CooperSurgical, Inc. Previously, he served as Vice President, Investor Relations from November 2007 through March 2013 and as Vice President and Treasurer from April 2006 through December 2012. Prior to joining the Company, Mr. White was a Director with KeyBanc Capital Markets for three years and held a number of leadership positions within KeyBank National Association over the prior eight years. | |
NON-INDEPENDENT DIRECTOR | ||
PRESIDENT & CHIEF EXECUTIVE | ||
OFFICER |
Business Experience: Mr. White has served as President
Other Directorships and Memberships: Mr. White does not hold any external directorships.
Qualifications to Serve: As our current Chief Executive Officer, Mr. White provides the Board with a direct connection to senior management and the benefit of management’s perspective on our business and immediate strategic goals. He provides leadership, extensive knowledge of our Company, and insight on the day to day operation of the business. The Corporate Governance & Chief Executive Officer, and as a member of our Board of Directors, since May 2018. Previously, he served as Chief Financial Officer from November 2016 until his appointment as CEO and he also served as Executive Vice President and Chief Strategy Officer, positions he held from December 2015 and July 2011, respectively. From August 2015 to May 2018, Mr. White also directed CooperSurgical, our women’s healthcare business, and served as Chief Executive Officer of Cooper Medical, Inc., the parent company to CooperSurgical, Inc. Previously, he served as Vice President, Investor Relations from November 2007 through March 2013 and as Vice President and Treasurer from April 2006 through December 2012. Prior to joining the Company, Mr. White was a Director with KeyBanc Capital Markets for three years and held a number of leadership positions within KeyBank National Association over the prior eight years.
Other Directorships and Memberships: Mr. White does not hold any external directorships.
Qualifications to Serve: As our current Chief Executive Officer, Mr. White provides the Board with a direct connection to senior management and the benefit of management’s perspective on our business and immediate strategic goals. He provides leadership, extensive knowledge of our Company, and insight on the day to day operation of the business. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Mr. White forre-election to the Board.
The Board of Directors unanimously recommends that you vote FOR each of the nominees for director presented above.
Nominees for director will be elected by a majority of the votes cast in person or by proxy at the Annual Meeting. The number of votes cast FOR a nominee must exceed the number of votes cast AGAINST. Abstentions and brokernon-votes will not be counted as votes cast either for or against the nominee and therefore will not affect the outcome of the director elections.
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PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the work of our independent auditors for the purpose of preparing or issuing an audit report or related work or performing other audit, review or attest services for the Company. The independent auditors report directly to the Committee.
The Audit Committee has appointed the firm of KPMG LLP (“KPMG”) to act as our independent registered public accounting firm and to audit our consolidated financial statements for the fiscal year ending October 31, 2020.2021. This appointment will continue at the pleasure of the Audit Committee and is presented to the stockholders for ratification as a matter of good governance. In the event that this appointment is not ratified by our stockholders, the Audit Committee will consider that fact when it selects our independent auditor for the following fiscal year.
The Company was incorporated in 1980 and KPMG LLP has servedwas engaged to serve as our independent registered public accounting firm since our incorporation in 1980, and one or more representatives1982.
All engagements of KPMG LLPfor any audit or non-audit services are subject to pre-approval by the Audit Committee explicitly, or through policies and procedures developed by the Committee for this purpose.
The Audit Committee will, beat least annually, review the independence and quality control procedures of KPMG, and the experience and qualifications of KPMG senior personnel that are providing audit services to the Company. In conducting its review, the Audit Committee considers:
written reports prepared by KPMG as are required by the PCAOB, SEC, or other accounting authorities;
KPMG’s independence from the Company consistent with PCAOB Rules, and the impact that any relationships or services may have on KPMG’s objectivity and independence; and
KPMG’s compliance with the partner rotation requirements established by the SEC.
In addition, the Committee has set clear hiring policies regarding the Company’s hiring of present ator former employees of KPMG.
The Audit Committee believes that KPMG’s tenure as the Company’s independent registered public accounting firm provides distinct benefits, and in addition to the independence review, the performance evaluation considerations included:
The audit quality and effectiveness given the many years of experience with the Company, as KPMG has obtained significant knowledge and expertise in the Company’s global business operations, accounting policies and practices, and internal control over financial reporting;
KPMG’s knowledge of the Company and its control environment provides a framework for effective audit design and planning which enables cost efficient fees;
The retention of KPMG avoids disruption and additional education, and the substantial knowledge and familiarity required of a new auditor;
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Audit Committee oversight includes frequent private meetings with KPMG, without management, as well as input on the selection of the lead global partner; and
KPMG is an independent registered public accounting firm, subject to PCAOB inspections, peer reviews, and other PCAOB and SEC oversight.
Based on this evaluation, the Audit Committee believes that KPMG is independent and its selection is in the best interests of the Company.
A representative of KPMG is expected to attend the Annual Meeting. These representatives will be providedMeeting with an opportunity to make a statement at the Annual Meeting, if they desire to do so, and will be available toand/or respond to appropriate questions from stockholders.stockholders present at the Annual Meeting.
The Board of Directors unanimously recommends that you vote FOR the ratification of KPMG LLP as our independent registered public accounting firm.
The proposal to ratify the selection of KPMG LLP as our independent registered public accounting firm for the 20202021 fiscal year requires an affirmative vote of the majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the proposal. Abstentions will have the same practical effect as votes against this proposal. Brokernon-votes will have no effect in determining the outcome of this proposal.
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PROPOSAL 3 – APPROVAL OF THE 2020 LONG-TERM INCENTIVE PLAN FORNON-EMPLOYEE DIRECTORS
Overview
The Company is seeking to have stockholders approve The Cooper Companies, Inc. 2020 Long-Term Incentive Plan forNon-Employee Directors (the “2020 Directors’ Plan”), described below. The 2020 Directors’ Plan is designed to replace the 2006 Long-Term Incentive Plan forNon-Employee Directors, which expired by its terms in March 2019. The 2020 Directors’ Plan was adopted by our Board on December 10, 2019 and would become effective following stockholder approval at the Annual Meeting.
As adopted, the 2020 Directors’ Plan would initially authorize the issuance of up to 50,000 shares of common stock, which represents approximately 0.1% of our outstanding shares of common stock as of January 23, 2020.
The full text of the proposed 2020 Directors’ Plan is attached asExhibit A. The following general description of certain features of the 2020 Directors’ Plan is qualified in its entirety by reference to the plan document.
Purpose
The purpose of 2020 Directors’ Plan (as it may be amended or restated from time to time) is to promote the success and enhance the value of the Company by linking the individual interests of Directors to those of Company stockholders and by providing such individuals with an incentive to increase shareholder value. The 2020 Directors’ Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of qualified Directors upon whose judgment, interest, and special efforts the Company relies.
Summary of Terms
Administration. The 2020 Directors’ Plan is administered by the Board or, if the Board delegates its power and authority to administer the plan to a committee of the Board, such committee. Any such committee shall consist solely of two or more directors appointed by and holding office at the pleasure of the Board, each of whom is anon-employee director, as defined in Rule16b-3 under the Exchange Act. As used in this proposal, the term “the Committee” will refer to the above described committee or to the Board, as the case may be.
Eligibility. Only directors who are not also employees are eligible to participate in the 2020 Directors’ Plan.
Grants.The 2020 Directors’ Plan provides for an automatic, annual grant on April 1 to eachNon-Employee Director (the “Annual Awards”). The Annual Awards will be in the form of RSUs and will have a grant date fair value, of (i) $270,000 for eachnon-employee director that is not the Lead Director or the Chairman of the Board, (ii) $283,500 for the Lead Director, and (iii) $297,000 for the Chairman of the Board. The grant date fair value is determined based on the closing price of our shares on the NYSE on the date of grant. The Board may also make the Annual Awards in the form of options or restricted stock, or a combination of RSUs, options and/or restricted stock, in its discretion, but may not change the grant date fair value of the Annual Awards without stockholder approval.
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If aNon-Employee Director is appointed or elected after April 1, then they will receive a grant on the date of such appointment or election that is proportionally adjusted to reflect the number of months of actual service on the board during the first fiscal year of their election or appointment.
The 2020 Director’s Plan also allows the Board to make discretionary grants of RSUs, options, and restricted stock tonon-employee directors.
Shares subject to the 2020 Directors’ Plan. If approved, the 2020 Directors’ Plan would authorize the Committee to grant to ournon-employee directors, in the form of stock options, restricted stock units, and restricted stock awards, up to 50,000 shares of common stock, subject to adjustment for future stock splits, stock dividends and similar events. To the extent that any award under the 2020 Directors’ Plan is forfeited or expires, then the shares subject to such award will be available for future grants. However, no shares withheld to pay taxes or to pay the exercise price of any option will be available for future grants.
Vesting.The Annual Awards will vest on the first anniversary of the grant date. However, if a director leaves the Board for any reason other than cause, they will keep apro-rata portion of the Annual Award based on the number of days elapsed since April 1, rounded to the next full month. Discretionary Awards will all vest no earlier than one year from grant, although the Board may provide the in the event a director leaves the Board for any reason other than cause, that such discretionary award will vestpro-rata similar to Annual Awards. If a director is removed from or leaves the Board for reasons constituting cause prior to a vesting date, then both Annual Awards and discretionary awards will be forfeited. For this purpose, “cause” means the felony conviction of anon-employee director, the failure of thenon-employee director to contest prosecution for a felony or thenon-employee director’s willful misconduct or dishonesty. Generally, no award will vest once anon-employee director leaves the Board, however, the Board may provide for vesting post-termination in the event of certain events, including a change in control, death, retirement, disability or other specified termination. The Board may also accelerate vesting upon a change in control.
Types of Awards:
Restricted Stock Units.Restricted stock units are the right to receive shares of our common stock after the completion of the applicable vesting criteria. Restricted Stock Units granted under the 2020 Directors’ Plan will vest on the first anniversary of the date of grant.
Options. Stock options provide the right to purchase shares or common stock at a set price. Options granted under the 2020 Directors’ Plan will not have a term more than ten years and will not have an exercise price less than the fair market value on the date the option is granted. The options are not transferable, other than for estate or tax planning purposes. The option exercise price may be paid by (i) cash, check, money order, wire transfer or other immediately payable instrument (ii) delivery of shares of our common stock (including shares deliverable upon exercise of the option) which have been held for such time as the Board may establish, (iii) broker assisted cashless exercise, (iv) delivery of such other legal consideration as the Board may determine, or (v) any combination of the foregoing. If shares are delivered in payment of the option exercise price such shares will be valued at fair market value on the exercise date. We do not permit loans tonon-employee directors to fund exercise of stock options. Additionally, options may not be repriced without shareholder approval.
Restricted Stock. Restricted stock granted under the 2020 Directors’ Plan may not be sold or otherwise transferred until the applicable vesting criteria are satisfied and all restrictions thereon are removed or expire. Restricted stock may be transferred for estate or tax planning purposes. If restricted stock is granted thenon-employee director will have all rights as a shareholder to vote
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the restricted stock and rights to dividends; however, the Board may require that any extraordinary dividend be subject to the same restrictions as the restricted stock and only paid once the restricted stock vests.
Adjustment for Stock Dividends, Mergers, etc. The Committee is authorized to make appropriate substitution or adjustments in connection with outstanding awards under the 2020 Directors’ Plan and the number of shares reserved for issuance under the 2020 Directors’ Plan in the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split or change in corporate structure affecting our common stock; provided, that the shares subject to any grant shall always be a whole number.
Amendment and Termination. The Board may amend the 2020 Directors’ Plan at any time with respect to equity awards not yet granted. The Board may amend the provisions of any equity award previously granted only with the holder’s consent. Any amendment which would (i) increase the maximum number of shares which may be issued under the Plan, (ii) increase the dollar amounts of the Annual Awards, (iii) reduce the price per share of any outstanding option granted under the Plan, or (iv) provide for the repricing of options requires the approval of stockholders.
FEDERAL INCOME TAX CONSEQUENCES
THE TAX CONSEQUENCES OF THE 2020 DIRECTORS’ PLAN UNDER CURRENT FEDERAL LAW ARE SUMMARIZED IN THE FOLLOWING DISCUSSION WHICH DEALS WITH THE GENERAL APPLICABLE TAX PRINCIPLES AND IS INTENDED FOR GENERAL INFORMATION ONLY. ALTERNATIVE MINIMUM TAX AND STATE, LOCAL, AND FOREIGN INCOME TAXES ARE NOT DISCUSSED, AND MAY VARY DEPENDING ON INDIVIDUAL CIRCUMSTANCES AND FROM LOCALITY TO LOCALITY.
Stock Options. Options granted to thenon-employee directors do not qualify under the Internal Revenue Code as incentive stock options by their terms. No income is realized by thenon-employee director at the time the option is granted. Generally, at exercise, ordinary income is realized by thenon-employee director in an amount equal to the difference between the option exercise price paid for the shares and the fair market value of the shares on the date of exercise, and we will be entitled to a tax deduction in the same amount. Upon disposition of the stock acquired upon the exercise of the option, any appreciation or depreciation is treated as either short-term or long-term capital gain or loss depending on how long the shares have been held.
Restricted Stock. On the date of grant, thenon-employee directors will have taxable ordinary income equal to the difference between the fair market value of the restricted stock on the date of grant and the price paid for such shares, if any, and we will be entitled to a deduction for the amount of ordinary income recognized by thenon-employee director. Any gain or loss after such date will be eligible for short-term or long-term capital gain or loss depending on how long the shares are held. If theNon-Employee Director forfeits the restricted stock due to termination as a director or failure to bere-nominated as a director for cause, thenon-employee director will be entitled to a capital loss.
Restricted Stock Units. On the date the shares are delivered, thenon-employee director will have taxable ordinary income equal to the fair market value of the stock on such date and we will be entitled to a deduction for the amount of ordinary income recognized. Any gain or loss after such date will be eligible for short-term or long-term capital gain or loss depending on how long the shares have been held.
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Other Information.
The closing price of a share of our common stock on the Record Date was $357.00.
New Plan Benefits
All 50,000 shares reserved for grant under the 2020 Directors’ Plan will be granted solely to non-employee directors and none of our named executive officers, other executive officers or other employees will receive any benefits under the plan:
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Equity Compensation Plan Information Table
Plan category | No. of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (1) | Weighted- average Exercise Price of Outstanding Options, Warrants and Rights | No. of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in column (A)) | |||||||||
Equity compensation plans approved by stockholders(2) | 1,480,021 | $186.24 | 2,280,407 | |||||||||
Equity compensation plans not approved by stockholders | - | $-0- | - | |||||||||
Total | 1,480,021 | $186.24 | 2,280,407 |
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The Board of Directors unanimously recommends that you vote FOR the approval of the 2020 Long-Term Incentive Plan forNon-Employee Directors.
The proposal to approve the 2020 Long-Term Incentive Plan forNon-Employee Directors requires an affirmative vote of the majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the proposal. Abstentions will have the same practical effect as votes against this proposal. Brokernon-votes will have no effect in determining the outcome of this proposal.
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PROPOSAL 43 — ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
As required by Section 14A of the Exchange Act, we are requesting stockholder approval, on an advisory basis, of the compensation of our Named Executive Officers as presented in theCompensation Discussion and Analysis beginning on page 1719 and the compensation tables and associated narrative disclosure included in the discussion of executive compensation beginning on page 34.36.
Our executive compensation program has been designed to retain and incentivize a talented, motivated, and focused executive team by providing compensation that is competitive within our market. We believe that our executive compensation program provides an appropriate balance between salary and“at-risk” forms of incentive compensation, as well as a mix of incentives that encourage executive focus on both short-term and long-term goals as a company without encouraging inappropriate risks to achieve performance.
In addition to annual review of our overall programs by our Organization & Compensation Committee, we also presenthave presented this advisory vote to our stockholders on an annual basis. We were pleased to receive a favorable vote forbasis since 2011. The OCC considers these results when setting our compensation practices at both our 2018 and 2019 Annual Meetings, with over 90% of the votes cast by our stockholders on ourSay-on-Pay proposals voted in favor of the compensation of the Named Executive Officers each year. We consider these results to affirm stockholder support for our executive compensation practices and we continuecontinues to take steps to maintain alignment between executiveNEO pay and Company performance. The next vote on the compensation of our NEOs will be held at our 2022 Annual Meeting.
Highlights of our executiveNEO compensation programfor fiscal 2020 include:
A mixture of base salaryShort-term and incentive compensation that makeslong-term incentives make a significant portion of executive compensation dependent on our performance as a company;
Checks and balances within our compensation packages to balance both short-term and long-term goals, encouraging our executives to focus on the health of the company both during the immediate fiscal year and for the future;
Agreements with our Named Executive OfficersNEOs include a “double-trigger” for any compensation on termination of employment resulting from a change in control; and
Clawback provisionsWe maintain Stock Ownership Guidelines for our executives.
Compensation for our NEOs was set prior to the COVID-19 pandemic and achievement under our incentive programs and impacts from COVID-19 are discussed in our short-term incentive compensation program.more detail in the Compensation Discussion and Analysis beginning on page 19.
As an advisory vote, this proposal is not binding upon us as a Company. However, the OCC, which is responsible for the design and administration of our executive compensation program, values the opinions of our stockholders as expressed through your vote on this proposal. The OCC will consider the outcome of this vote in making future compensation decisions for our Named Executive Officers.NEOs.
Accordingly, we will present the following resolution for vote at the 20202021 Annual Meeting of Stockholders:
“RESOLVED, that the stockholders of The Cooper Companies, Inc. (the “Company”) approve, on an advisory basis, the compensation of the Company’s Named Executive Officers as described in the Compensation Discussion and Analysis and disclosed in the Summary Compensation Table and related compensation tables and narrative disclosure as set forth in our Proxy Statement.”
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The Board of Directors unanimously recommends that you vote FOR the approval, on an advisory basis, of our executive compensation program as presented in this Proxy Statement.
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The proposal to approve our executiveNamed Executive Officer’s compensation, program, on an advisory basis, requires an affirmative vote of the majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the proposal. Abstentions will have the same practical effect as votes against this proposal. Brokernon-votes will have no effect in determining the outcome of this proposal.
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The Board knows of no other matters to be presented at the Annual Meeting, but if any such matters properly come before the Annual Meeting, it is intended that the persons holding the accompanying proxy will vote in accordance with their best judgment.
The Board unanimously recommends that the stockholders vote:
FOR the election of each of the nominees for director named in this Proxy Statement;
FOR the ratification of KPMG LLP as our independent registered public accounting firm for the fiscal year ending October 31, 2020;
FOR the 2020 Long-Term Incentive Plan forNon-Employee Directors;2021; and
FOR the approval, on an advisory basis, of the compensation of our Named Executive Officers as presented in this Proxy Statement.
When a properly executed proxy in the form enclosed with this Proxy Statement is returned, the shares will be voted as indicated or, if no directions are indicated, the shares will be voted in accordance with the recommendations of the Board.
Your vote is important to us.us. Regardless of whether you plan to attend the meeting, we encourage you to read this Proxy Statement and the accompanying materials and to vote your shares as soon as possible to ensure that your vote is recorded. We look forward to your participation.
Who is entitled to vote at the Annual Meeting?
Our Record Date for the Annual Meeting is January 23, 2020.21, 2021. All stockholders who owned our stock at the close of business on the Record Date are entitled to receive proxy materials and to vote at the Annual Meeting and any continuations, adjournments or postponements thereof.
As of the Record Date, there were 49,166,61549,143,100 shares of our common stock outstanding and entitled to vote at the Annual Meeting.
How many votes do I have?
Each outstanding share of our common stock is entitled to one vote at the Annual Meeting. You have one vote per share that you owned at the close of business on the Record Date.
How do I vote my shares?
You can vote your shares in person at the Annual Meeting or vote by proxy. The method of voting by proxy differs for shares held as a record holder and shares held in “street name.” If you hold your shares of common stock as a record holder you may vote your shares by following the instructions on the Notice, or by completing, dating, and signing the proxy card included with this Proxy Statement and promptly returning it in thepre-addressed, postage paid envelope provided to you. If phone or internet voting is available to you, instructions are included in the Notice or on your proxy card.
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If you hold your shares of common stock in “street name,” which means your shares are held of record by a broker, bank, or other nominee, you will receive the proxy materials from your broker, bank, or other nominee with instructions on how to vote your shares. Your broker, bank, or other nominee may allow you to deliver your voting instructions by phone or through the internet. If you wish to vote your shares in person you may do so by attending the Annual Meeting and requesting a ballot.
What happens if I vote my shares by proxy?
When you return a completed proxy card, or vote your shares by telephone or internet, you authorize our officers listed on the proxy card to vote your shares on your behalf as you direct.
If you sign and return a proxy card, but do not provide instructions on how to vote your shares, the designated officers will vote on your behalf as recommended by the Board:
Shares will be voted FOR each of the individuals nominated to serve as directors;
Shares will be voted FOR ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending October 31, 2020;
Shares will be voted FOR the 2020 Long-Term Incentive Plan forNon-Employee Directors;2021; and
Shares will be voted FOR the compensation of our Named Executive Officers as described in this Proxy Statement.
Can I change or revoke my vote after I return my proxy card or voting instructions?
If you choose to vote your shares by proxy, you may revoke or change your vote at any time prior to the casting of votes at the Annual Meeting. To revoke or change your vote, you may take any of the following actions:
1. | Execute and submit a new proxy card bearing a later date than your original proxy card; |
2. | Submit new voting instructions through telephonic or internet voting, if available to you; |
3. | Notify |
4. | Vote your shares in person at the Annual Meeting. |
Attending the Annual Meeting in person will not automatically revoke your proxy.
How many votes must be present to hold the Annual Meeting?
In order to conduct business and have a valid vote at the Annual Meeting a quorum must be present in person or represented by proxies. A quorum is defined as a majority of the shares outstanding on the Record Date and entitled to vote. In accordance with Delaware law and our Bylaws, broker“non-votes” and proxies reflecting abstentions will be considered present and entitled to vote for purposes of determining whether a quorum is present.
What are broker“non-votes”?
Broker“non-votes” occur when a broker is not permitted to vote on behalf of shares it holds for a beneficial owner and the beneficial owner does not provide voting instructions. Shares held in a broker’s name may be voted by the broker, but only in accordance with the rules of the NYSE. Under those rules, the broker must follow the instructions of the beneficial owner. If instructions are not provided, NYSE rules determine whether the broker may vote the shares based on its own judgment or if it is required to withhold its vote. This determination depends on the proposal being voted on. For the proposals to be presented at the Annual Meeting, broker discretionary voting is only permitted for the ratification of our independent registered public accounting firm.
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Will I have appraisal or similar dissenters’ rights in connection with the proposals being voted on at the Annual Meeting?
No. You will not be entitled to appraisal or similar dissenters’ rights in connection with the proposals to be voted on at the Annual Meeting.
OtherOTHER Q&A
Why did I receive aone-page notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials?
The SEC permits us to provide our proxy materials electronically if you have not previously requested to receive only printed materials on an ongoing basis. Accordingly, on or about February 6, 2020,5, 2021, we mailed a Notice of Internet Availability of Proxy Materials (“the Notice”). The Notice includes instructions on how to access the proxy materials over the internet or to request a printed copy.
The Notice was sent to our stockholders of record at January 23, 2020.21, 2021. All stockholders receiving the Notice have the ability to access the proxy materials electronically through the website referred to in the Notice, and they also have the option to request a printed set of the proxy materials. We encourage stockholders to take advantage of the availability of proxy materials on the internet.
Can I vote my shares by filling out and returning the Notice of Internet Availability of Proxy Materials?
No. The Notice only identifies the items to be voted on at the Annual Meeting. You cannot vote by marking the Notice and returning it. The Notice provides instructions on how to cast your vote.
Who pays for the proxy solicitation and how will the Company solicit votes?
We pay all costs associated with the solicitation of proxies, including any costs incurred by brokers and other fiduciaries to forward proxy solicitation materials to beneficial owners.
We may solicit proxies in person or by mail, telephone, facsimile, ore-mail. Proxies may be solicited on our behalf by any of our directors, officers, or employees. Additionally, we have retained the firm of D.F. King & Co., Inc. to assist with the solicitation of proxies and will pay a fee of $16,500 for this service, plus reasonable costs and expenses.
How can I communicate with the Board of Directors?
Any interested party can contact our Board to provide comments, to report concerns, or to ask a question, at the following address:
Randal L. GoldenMark J. Drury
Vice President, Secretary & General Counsel
The Cooper Companies, Inc.
6101 Bollinger Canyon Road, Suite 500
San Ramon, CA 94583
Communications are distributed to the Board, or to any individual directors as appropriate, depending on the facts and circumstances outlined in the communication. You may also communicate online with our Board of Directors as a group through our website. Please refer to our website athttp://investor.coopercos.com/investor.coopercos.com for any changes in this process.
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STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR
SEC rules and our Bylaws permit stockholders to nominate directors for election and to propose other business to be considered by stockholders at the Annual Meeting under various mechanisms.
To be considered at the 20212022 Annual Meeting, director nominations or other proposals must be submitted in writing to:
Randal L. Golden,Mark J. Drury, Secretary
The Cooper Companies, Inc.
6101 Bollinger Canyon Road, Suite 500
San Ramon, CA 94583
Proposals to be Presented Under Rule14a-8:
No later than October 9, 2020.8, 2021.
Director Nominations under Bylaw Article II, Section 16 (“Proxy Access”):
No earlier than September 9, 20208, 2021 and no later than October 9, 2020.8, 2021.
Proposals and Director Nominations Submitted Under Other Bylaw Provisions:
No earlier than November 18, 202017, 2021 and no later than December 18, 2020.17, 2021.
In the event that we set the date for the 20212022 Annual Meeting more than 30 days before or more than 70 days after March 18, 2021,17, 2022, submissions may be made no earlier than the close of business on the 120th day prior to the announced meeting date and no later than the close of business on the later of the 90th day prior to the announced meeting date or the 10th day following our first public disclosure of the date of the meeting.
The Corporate Governance and Nominating Committee will consider director nominees suggested by stockholders on the same terms as nominees selected by the Committee. See page 3 for information about the Committee’s criteria for director nominations.
The person recommending the nominee must be a stockholder entitled to vote at the 2021 Annual Meeting. To be considered, recommendations must include:
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If we increase the number of directors to be elected at the 20212022 Annual Meeting with less than 100 days’ notice prior to March 18, 2021,17, 2022, stating the size of the increase and naming all the nominees for director, then stockholder nominations for directors will be considered if the proposal is delivered to our Secretary at our principal offices no later than 10 days after we make a public announcement of the increased board size. This only applies to nominations for positions created by the increase and does not apply to nominations for current positions.
Director nominations submitted under Bylaw provisions must meet the requirements set forth in the applicable Bylaw provisions.
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RECONCILIATION OFNON-GAAP FINANCIAL MEASURES
THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP Results toNon-GAAP Results
(In millions, except per share amounts)
(Unaudited)
THE COOPER COMPANIES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP Results to Non-GAAP Results (In millions, except per share amounts) (Unaudited) | THE COOPER COMPANIES, INC. AND SUBSIDIARIES Reconciliation of Selected GAAP Results to Non-GAAP Results (In millions, except per share amounts) (Unaudited) |
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Twelve Months Ended October 31, | Twelve Months Ended October 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 GAAP | Adjustment | 2019 Non-GAAP | 2018 GAAP | Adjustment | 2018 Non-GAAP | 2020 GAAP | Adjustment | 2020 Non-GAAP | 2019 GAAP | Adjustment | 2019 Non-GAAP | |||||||||||||||||||||||||||||||||||||||||||||||||
Cost of sales | $896.6 | $(28.2) | A | $868.4 | $900.5 | $(75.5) | A | $825.0 | $ | 896.1 | $ | (90.1 | ) | A | $ | 806.0 | $ | 896.6 | $ | (28.2 | ) | A | $ | 868.4 | ||||||||||||||||||||||||||||||||||||
Operating expense excluding amortization, impairment and a gain on sale of an intangible | $1,083.3 | $(30.2) | B | $1,053.1 | $1,058.1 | $(50.9) | B | $1,007.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expense excluding amortization and gain on sale of an intangible | $ | 1,085.8 | $ | (30.9 | ) | B | $ | 1,054.9 | $ | 1,083.3 | $ | (30.2 | ) | B | $ | 1,053.1 | ||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangibles | $145.8 | $(145.8) | C | $- | $146.7 | $(146.7) | C | $- | $ | 137.2 | $ | (137.2 | ) | C | $ | — | $ | 145.8 | $ | (145.8 | ) | C | $ | — | ||||||||||||||||||||||||||||||||||||
Impairment of intangibles | $- | $- | $- | $24.4 | $(24.4) | D | $- | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain on sale of an intangible | $(19.0) | $19.0 | E | $- | $- | $- | $- | $ | — | $ | — | $ | — | $ | (19.0 | ) | $ | 19.0 | D | $ | — | |||||||||||||||||||||||||||||||||||||||
Interest Expense | $68.0 | $(0.8) | F | $67.2 | $82.7 | $(4.2) | F | $78.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | $ | 36.8 | $ | (4.0 | ) | E | $ | 32.8 | $ | 68.0 | $ | (0.8 | ) | E | $ | 67.2 | ||||||||||||||||||||||||||||||||||||||||||||
Other expense (income), net | $1.3 | $- | $1.3 | $(11.5) | $14.2 | G | $2.7 | $ | 8.5 | $ | (7.0 | ) | F | $ | 1.5 | $ | 1.3 | $ | — | $ | 1.3 | |||||||||||||||||||||||||||||||||||||||
Provision for income taxes | $10.7 | $35.1 | H | $45.8 | $192.0 | $(144.5) | H | $47.5 | $ | 28.1 | $ | 29.4 | G | $ | 57.5 | $ | 10.7 | $ | 35.1 | G | $ | 45.8 | ||||||||||||||||||||||||||||||||||||||
Diluted earnings per share | $9.33 | $3.02 | $12.35 | $2.81 | $8.69 | $11.50 | $ | 4.81 | $ | 4.83 | $ | 9.64 | $ | 9.33 | $ | 3.02 | $ | 12.35 | ||||||||||||||||||||||||||||||||||||||||||
Weighted average diluted shares used | 50.0 |
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A | Fiscal 2020 GAAP cost of sales includes $90.1 million of costs primarily related to COVID-19 and other manufacturing related costs, resulting in fiscal 2020 GAAP gross margin of 63% as compared to fiscal 2020 non-GAAP gross margin of 67%. Fiscal 2019 GAAP cost of sales includes $28.2 million of costs primarily related to product transition write off costs, integration and other manufacturing related costs, resulting in fiscal 2019 GAAP gross margin of 66%, as compared to fiscal 2019 |
B | Fiscal 2020 and 2019 GAAP operating expense comprised of $30.9 million and $30.2 million |
C | Amortization expense was |
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Fiscal 2019 gain on sale of an intangible asset relates to a gain recognized in CooperSurgical on the sale of an exclusive distribution right of the Filshie Clip System. Items A, B, C |
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G | Fiscal |
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To supplement our financial results and guidance presented on a GAAP basis, we usenon-GAAP measures that we believe are helpful in understanding our results. Thenon-GAAP measures exclude costs which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Ournon-GAAP financial results and guidance are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Management uses supplementalnon-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. Thesenon-GAAP measures are among the factors management uses in planning and forecasting for future periods. We believe it is useful for investors to understand the effects of these items on our consolidated operating results. Ournon-GAAP financial measures may include the following adjustments, and as appropriate, the related income tax effects and changes in income attributable to noncontrolling interests:
We exclude the effect of amortization and impairment of intangible assets from ournon-GAAP financial results. Amortization of intangible assets will recur in future periods; however, the amounts are affected by the timing and size of our acquisitions. Impairment of intangible assets is anon-recurring cost.
We exclude the effect of acquisition and integration expenses and the effect of restructuring expenses from ournon-GAAP financial results. Such expenses generally diminish over time with respect to past acquisitions; however, we generally will incur similar expenses in connection with any future acquisitions. We incurred significant expenses in connection with our acquisitions and also incurred certain other operating expenses or income, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition and integration expenses include direct effects of acquisition accounting, such as inventory fair valuestep-up and items such as personnel costs for transitional employees, other acquired employee related costs and integration related professional services. Restructuring expenses include items such as employee severance, product rationalization, facility and other exit costs.
We exclude other exceptional or unusual charges or expenses and gains or income. These can be variable and difficult to predict, such as certain litigation expenses and product transition costs, and are not what we consider as typical of our continuing operations. Investors should considernon-GAAP financial measures in addition to, and not as replacements for, or superior to, measures of financial performance prepared in accordance with GAAP.
We report revenue growth using thenon-GAAP financial measure of pro forma which includes constant currency revenue and revenue from acquisitions and excludes CooperSurgical product line exits in both periods. Management also presents and refers to constant currency information so that revenue results may be evaluated excluding the effect of foreign currency rate fluctuations. To present this information, current period revenue for entities reporting in currencies other than the United States dollar are converted into United States dollars at the average foreign exchange rates for the corresponding period in the prior year.
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We define thenon-GAAP measure of free cash flow as cash provided by operating activities less capital expenditures. We believe free cash flow is useful for investors as an additional measure of liquidity because it represents cash flows that are available for repayment of debt, repurchases of our common stock or to fund our strategic initiatives. Management uses free cash flow internally to understand, manage, make operating decisions and evaluate our business. In addition, we use free cash flow to help plan and forecast future periods.
By Order of the Board of Directors |
A. Thomas Bender |
Chairman of the Board of Directors |
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EXHIBIT A – 2020 LONG-TERM INCENTIVE PLAN FORNON-EMPLOYEE DIRECTORS
THE COOPER COMPANIES, INC.
2020 LONG-TERM INCENTIVE PLAN FORNON-EMPLOYEE DIRECTORS
ARTICLE 1. PURPOSE
The purpose of The Cooper Companies, Inc. 2020 Long-Term Incentive Plan forNon-Employee Directors (as it may be amended or restated from time to time, the “Plan”) is to promote the success and enhance the value of The Cooper Companies, Inc. (the “Company”) by linking the individual interests of Directors to those of Company stockholders and by providing such individuals with an incentive to increase shareholder value. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of qualified Directors upon whose judgment, interest, and special efforts the Company relies.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates.
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ARTICLE 3. SHARES SUBJECT TO THE PLAN
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
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Meeting Date
March |
ANNUAL MEETING OF STOCKHOLDERS OFImportant Notice of Availability of Proxy Materials for the Stockholder Meeting of
THE COOPER COMPANIES, INC.
To Be Held On:
March 18, 202017, 2021 at 8:00 a.m., (P.D.T.), at the offices of The Cooper Companies, Inc.,
GO GREEN6101 Bollinger Canyon Road, Suite 500, San Ramon, CA 94583
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COMPANY NUMBER | ||||
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This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting.
If you want to receive a paper or e-mail copy of the proxy materials you must request one. There is no charge to you for requesting a copy. To facilitate timely delivery please make the request as instructed below before 3/3/2021.
Please visit investor.coopercos.com/financial-information, where the following materials are available for view:
• Proxy Statement • Form of Electronic Proxy Card • Annual Report on Form 10-K
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$ Please detach along perforated line and mail in the envelope provided. $
| TELEPHONE: 888-Proxy-NA (888-776-9962) 718-921-8562 (for international callers) E-MAIL: info@astfinancial.com WEBSITE: https://us.astfinancial.com/OnlineProxyVoting/ProxyVoting/RequestMaterials | ||||||||||
TO VOTE: | ONLINE: To access your online proxy card, please visit www.voteproxy.comand follow the on-screen instructions or scan the QR code with your smartphone. You may enter your voting instructions at www.voteproxy.com up until 11:59 PM Eastern Time the day before the cut-off or meeting date. | ||||||||||
IN PERSON: You may vote your shares in person by attending the Annual Meeting. | |||||||||||
TELEPHONE: To vote by telephone, please visit www.voteproxy.comto view the materials and to obtain the toll free number to call. | ||||
MAIL: You may request a card by following the instructions above.
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In their discretion, the proxies are authorized to vote for the election of such substitute nominee(s) for directors as such proxies may select in the event that any nominee(s) named herein become unable to serve, and on such other matters as may properly come before the meeting or any adjournments or postponements thereof.
| 1. | ELECTION OF | ||||||||||||||||||||
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Colleen E. Jay
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William A. Kozy
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Jody S. Lindell
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Teresa S. Madden
Gary S. Petersmeyer
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Robert S. Weiss
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Albert G. White III
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2. | Ratification of the appointment of KPMG LLP as the independent registered public accounting firm for The Cooper Companies, Inc. for the fiscal year ending October 31,
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| An advisory vote on the compensation of our named executive officers as presented in the Proxy Statement; and
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☐ ⬛
PROXY
THE COOPER COMPANIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, MARCH 18, 202017, 2021
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of The Cooper Companies, Inc., a Delaware corporation, hereby appoints BRIAN G. ANDREWS, RANDAL L. GOLDEN,MARK J. DRURY, DANIEL G. MCBRIDE AND ALBERT G. WHITE III, and each of them, proxies, with full power of substitution, to vote all of the shares of common stock of The Cooper Companies, Inc. which the undersigned is entitled to vote at the Annual Meeting of Stockholders of The Cooper Companies, Inc. to be held at the offices of The Cooper Companies, Inc., 6101 Bollinger Canyon Road, Suite 500, San Ramon, CA 94583 at 8:00 a.m., (P.D.T.), and at any continuations, adjournments or postponements thereof, as set forth on the reverse, and in their discretion upon any other business that may properly come before the meeting.
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED “FOR” ITEMS 1 THRU 4,3, AND WILL GRANT DISCRETIONARY AUTHORITY PURSUANT TO ITEM 5.4.
(Continued and to be signed on the reverse side.)
⬛ 1.1 | 14475 ⬛ |