Edwards Lifesciences Corporation 2020 Notice of Annual Meeting and Proxy Statement
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  | Edwards Lifesciences Corporation One Edwards Way Irvine, California 92614 Phone: 949.250.2500 www.edwards.com | |||||||
 | March 28, 2023 Dear Fellow Stockholders: On behalf of the Edwards Board of Directors, it is my pleasure to invite you to attend our After careful consideration and the completion of a rigorous succession process overseen by our Board, Edwards announced in December that I have made the decision to retire as CEO. Bernard Zovighian will assume the role of CEO effective as of our Annual Meeting. Bernard has a strong track record of success, previously leading our Transcatheter Mitral and Tricuspid Therapy (TMTT) business, and most recently serving as President of Edwards. During his career, he has launched breakthrough therapies for patients and developed deep management experience across multiple disciplines. We are working together closely, along with our Executive Leadership Team, to ensure a smooth transition. I am proud of the immense contributions Edwards Lifesciences has made towards helping millions of patients around the world over my tenure, and I look forward to continuing the work we do for patients in the role of non-executive Chairman of our Board. I am retiring as CEO with confidence that, under Bernard’s leadership, our Company will continue to be defined by our "patients-first" mission and culture as well as a commitment to innovation and excellence that positions all stakeholders for an even brighter future. While our business has grown and innovated over my tenure, our formula for success remains the same: strive for breakthrough innovation, be a leader in the work we do, and focus on the tremendous number of underserved patients with structural heart disease and the critically ill. Our evolution has been guided by our Credo and Aspirations, and I am confident our leadership team will continue to build long-term success from these values. Despite a challenging environment over the past year, we grew as a business, met our commitments, and advanced our long-term strategy. Hospital staffing challenges and the impacts of COVID-19 created headwinds, but we made meaningful strides in approvals, trials and adoptions of our breakthrough technologies that create a record of long-term performance. We continue to outperform the market over the long-term, with total stockholder returns of 99% and 396% on five- and ten-year bases, respectively. We look forward to reviewing our 2022 performance and our long-term growth strategy further at our Annual Meeting, which will be held in-person at our http://ir.edwards.com. Details of the business to be conducted at the Annual Meeting are included in the attached Notice of
Thank you for your continued Sincerely,  Michael A. Mussallem Chairman of the Board and Chief Executive Officer | |||||||
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 | Dear Fellow Stockholders: On behalf of the Board of Directors, I would like to thank you for your continued Choosing the right leadership for Edwards is one of the Board’s primary responsibilities. As we previously announced, we are pleased that Bernard Zovighian will be Edwards’ next CEO following Mike Mussallem’s retirement as our CEO. Mike will move to the role of non-executive Chairman, as of the Annual Meeting. On behalf of the Board, I would like to recognize Mike’s dedicated, focused and valuable leadership over many years of long-term growth and innovation, and we look forward to his continued leadership in
Our recent leadership changes reflect the Board’s long-term approach to succession planning. As an internal candidate, Bernard has Our Board is comprised of
At Edwards, we are defined by how we serve others in our multi-stakeholder model, from patients to
Thank you for your for being an Edwards Lifesciences stockholder. Sincerely,
 Martha H. Marsh Lead Independent Director | |||||||
| Date and | Location | ||||||||
| May | Edwards Lifesciences Corporation | March 13, 2023 | |||||||
| 10:00 a.m. PT | One Edwards Way, Irvine, CA 92614 | ||||||||
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1. Election of nine director nominees named in the attached Proxy Statement to serve until our next annual meeting of stockholders and until their respective successors are duly elected and qualified 2.Approval, on an advisory basis, of the named executive officer compensation disclosed in the attached Proxy Statement 3.Approval, on an advisory basis, of the frequency of future advisory votes on the compensation of our named executive officers 4.Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023 5.Approval of an amendment to the Company's Amended and Restated Certificate of Incorporation to provide for exculpation of officers as permitted by the Delaware General Corporation Law 6.Consider a stockholder proposal, if properly presented at the Annual Meeting 7.Other business as |
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We will also vote on any other business that may properly come before the Annual Meeting, orand any postponement or adjournment of the meeting.
Annual Meeting
| How to Vote Your Shares | |||||||||||||||
 | By Internet Go to www.proxypush.com/EWand follow the instructions |
 | By Telephone Call 1-866-892-1604 and follow the
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 | By Mail Complete, sign, date, and return your proxy card or voting instruction form in the envelope provided |  |  | In Person Attend our Annual Meeting and vote by ballot | |||||||||||
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Important notice regarding the availability of proxy materials for our
2020 Annual Meeting of Stockholders to be held on May 7, 2020:
Our Proxy Statement and 2019 Annual Report to stockholders are available on the Internet at
www.proxyvote.com.
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| Director Independence | ||||||||
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Directors’ Stock Ownership Guidelines and Holding Requirement | ||||||||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | ||||||||
| Executive Summary | ||||||||
| Compensation Process | ||||||||
| Deferred Compensation | ||||||||
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| Audit Committee Report | ||||||||
| OTHER MATTERS AND BUSINESS | ||||||||
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| Delivery of the Proxy Materials | ||||||||
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STOCKHOLDER VOTING MATTERS(Page 1)
| 2023 Annual Meeting of Stockholders | |||||||||||||||
| Date and Time | Location | Record Date | ||||||||||||||
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| May 11, 2023 | Edwards Lifesciences Corporation |
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10:00 a.m. PT
| One Edwards Way, Irvine, CA 92614
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| Proposal | Board’s Voting Recommendation | |||||||||||||
| Proposal 1: | Election of Directors |  FOReach nominee | ||||||||||||
| Proposal 2: |  |  FOR | ||||||||||||
| Proposal 3: | Advisory Vote to Approve Frequency of Future Advisory Votes on Named Executive Officer Compensation | ONE YEAR | ||||||||||||
| Proposal 4: | FOR | |||||||||||||
| Proposal 5: | Approval of Amendment of the Certificate of Incorporation to Provide for Exculpation of Officers | FOR | ||||||||||||
| Proposal 6: | Stockholder Proposal Regarding Independent Board Chairman | ✗ AGAINST | ||||||||||||
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Committee Memberships | ||||||||||||
Name | Age | Director Since | Independent | Audit Committee* | Compensation and Governance | Other Public Company | ||||||
Kieran T. Gallahue Former Chairman and CEO CareFusion Corporation | 56 | 2015 | Yes |  | 3 | |||||||
Leslie S. Heisz Former Managing Director Lazard Frères & Co | 59 | 2016 | Yes |  | 2 | |||||||
William J. Link, Ph.D. Managing Director and Co-Founder Versant Ventures | 73 | 2009 | Yes |  | 2 | |||||||
Steven R. Loranger Former Chairman, President, and CEO ITT Corporation | 68 | 2016 | Yes |  | 1 | |||||||
Martha H. Marsh** Retired President and CEO Stanford Hospital & Clinics | 71 | 2015 | Yes | | 1 | |||||||
Michael A. Mussallem Chief Executive Officer and Chairman Edwards Lifesciences Corporation | 67 | 2000 | No | 0 | ||||||||
Ramona Sequeira*** President Takeda Pharmaceuticals USA, Inc. | 54 | N/A | Yes | 0 | ||||||||
Nicholas J. Valeriani Former CEO, West Health Institute Former EVP, Johnson & Johnson | 63 | 2014 | Yes | | 1 | |||||||
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EachMeeting, each director nominee other than Ms. Sequeira, was elected as a director at the Company’sour annual meeting held on May 8, 2019,3, 2022, to hold office until the next annual meeting.
Committee Memberships | ||||||||||||||||||||
| Name | Age | Director Since | Independent | Audit Committee* | Compensation and Governance Committee | Other Public Company Boards | ||||||||||||||
Kieran T. Gallahue Former Chairman and CEO, CareFusion Corporation | 59 | 2015 | Yes |  | 1 | |||||||||||||||
Leslie S. Heisz Former Managing Director, Lazard Frères & Co | 62 | 2016 | Yes |  | 2 | |||||||||||||||
Paul A. LaViolette Managing Partner and COO, SV Health Investors LLC | 65 | 2020 | Yes | | 0 | |||||||||||||||
Steven R. Loranger Former Chairman, President and CEO ITT Corporation | 71 | 2016 | Yes |  | 1 | |||||||||||||||
Martha H. Marsh** Retired President and CEO, Stanford Hospital & Clinics | 74 | 2015 | Yes | | 1 | |||||||||||||||
Michael A. Mussallem Chief Executive Officer+ and Chairman, Edwards Lifesciences Corporation | 70 | 2000 | No | 0 | ||||||||||||||||
Ramona Sequeira President of the U.S. Business Unit and Global Portfolio Commercialization, Takeda Pharmaceuticals USA, Inc. | 57 | 2020 | Yes |  | 0 | |||||||||||||||
Nicholas J. Valeriani Former CEO, West Health Institute Former EVP, Johnson & Johnson | 66 | 2014 | Yes |  | 1 | |||||||||||||||
Bernard J. Zovighian President and incoming CEO, Edwards Lifesciences Corporation | 55 | Nominated | No | 0 | ||||||||||||||||
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| Diverse Range of Qualifications and Skills Represented by Our Directors | ||||||||||||||
Medical Technology Industry Experience | International Executive Experience | Corporate Governance | ||||||||||||
Regulatory and Compliance | Senior Leadership | Operations Management | ||||||||||||
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| Innovation and Technology | Risk Management | Risk Oversight | ||||||||||||
Finance and Financial Industry | Human Capital Resources | |||||||||||||
| IT and Cybersecurity | Corporate Strategy | Corporate Responsibility | ||||||||||||
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| Lead Independent Director provides strong independent leadership of our Board | |||||
 | Independent Board, all but Mr. Mussallem, who will retire as our Chief Executive Officer at the Annual | |||||
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| Proxy access right to permit a stockholder, or a group of up to 30 stockholders, owning at least 3% of our outstanding shares continuously for at least 3 years, to nominate up to the greater of 2 directors or 20% of our Board for inclusion in our annual meeting proxy statement | |||||
| Annual election of directors | |||||
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| Majority vote standard in uncontested elections, with director resignation policy | |||||
| Commitment to Board diversity | |||||
| Executive session of independent directors held at each | |||||
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| Retirement policy for directors | |||||
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| Annual Board and committee self-evaluations and peer reviews | |||||
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| Encourage continuing director education with designated annual reimbursement policy | |||||
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| Formal director orientation and continuing education program | |||||
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| Nonemployee directors expected to own Edwards’ stock equal to $500,000 and also hold 50% of net shares received upon vesting or exercise of equity | |||||
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| Senior management succession planning regularly considered at | |||||
| Active stockholder outreach and engagement | |||||
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| Robust code of ethics in our Global Business Practice Standards | |||||
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| Active Board oversight of enterprise risks and risk management | |||||
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| “Clawback” policy for performance-based compensation | |||||
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No pledging or hedging of Edwards’ securities by members of | |||||
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| No stockholder rights plan (“poison pill”) | |||||
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| No supermajority voting provisions in | |||||
| Edwards’ Board and management are committed to engaging with our stockholders and incorporating feedback into their decision-making processes. Throughout the year, our CEO, CFO, and Vice President of Investor Relations meet, by phone and in-person, with current and prospective stockholders to discuss Edwards’ strategy, business, and financial results. Our CFO, Corporate Secretary, and Senior Vice President of Investor Relations, and our Lead Independent Director, when appropriate, engage stockholders to solicit their views and feedback on issues that matter most to our stockholders, including, among other things, corporate governance, compensation, sustainability, corporate social responsibility, human capital management, diversity, inclusion and belonging, succession planning, and other related matters. Stockholder feedback is shared with our Board and its committees, which enhances our corporate governance practices, facilitates future dialogue between stockholders and our Board, and provides additional transparency to our stockholders. Since our 2022 annual meeting of stockholders, we contacted our top stockholders representing approximately 55% of our outstanding shares and engaged with stockholders representing approximately 33% of our outstanding shares. | |||||||||||||
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ACTIVE STOCKHOLDER ENGAGEMENT PROGRAM (Page 12)
Edwards’ Board and management are committed to engaging with Edwards’ stockholders and incorporating feedback into their decision-making processes. Throughout the year, our CEO, CFO, and Vice President of Investor Relations meet, by phone andface-to-face, with current and prospective stockholders to discuss Edwards’ strategy, business, and financial results. Our CFO, Corporate Secretary and Vice President of Investor Relations, together with other members of management and, from time to time, our Lead Independent Director, engage stockholders to solicit their views and feedback on corporate governance, compensation and other related matters and to discuss the issues that matter most to our stockholders. Stockholder feedback is shared with the Board and its committees, which enhances our corporate governance practices, facilitates future dialogue between stockholders and the Board and provides additional transparency to our stockholders. Since the 2019 annual meeting of stockholders, our CFO, Corporate Secretary and Vice President of Investor Relations contacted our top stockholders representing approximately 56% of our outstanding shares and engaged with stockholders representing approximately 32% of our outstanding shares. In this engagement, we received feedback from stockholders on a range of topics including corporate governance, compensation and sustainability.
Over time, we have amended our Charter and Bylaws to adopt various stockholder rights andor taken other actions to align our corporate governance practices with our stockholders’ interests.
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Lead Independent Director Responsibilities |
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Right to Call Special Meetings |
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| Proxy Access | • Amended our Bylaws to provide for proxy access at 3% and 3-year ownership and holding period duration thresholds | |||||
| Disclosure of EEO-1 Data | • Disclosed our EEO-1 data and relevant infographics on our website | |||||
| Declassified Board |
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No Supermajority Voting |
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Majority Voting in Director Elections |
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Our Board recognizes20)
Report posted on our website at
www.edwards.com/sustainability.Named• For the third consecutive year, Edwards appeared on Barron’s fifth annual list of the 100 Most Sustainable Companies in the United States. Significant performance indicators included increased efforts to mitigate our impact on the environment, as well as initiatives undertaken to bolster employee welfare, community health and customer satisfaction.
Named as one of theManagement Top 250 by the Wall Street Journal in partnership with the Drucker Institute — for the sixth year in a row—listed #25#87 out of 820902 companies ranked. Within this list,ranked according to their overall effectiveness of “doing the right things well.” The evaluation aims to recognize firms that are particularly good at balancing a wide range of competing management priorities. Edwards was also cited as one of 8 “all stars” foracross-the-board rankings, achievingachieved high marks in all five dimensions of corporate performance: Customer Satisfaction, Employee Engagement and Development, Innovation, Social Responsibility and Financial Strength;
Recognized• For the second consecutive year, Edwards was recognized as #1 on the Investor’s Business Daily inaugural50 Best ESG Companies in 2019 for superior Environmental, Social and Governance (ESG) ratings in addition to strong fundamental and technical performance highlighting Edwards’ “comprehensive product quality and safety controls” and its “ability to deliver exceptional shareholder value”; and
Constituentone of the World’s Top Female-Friendly Companies. Forbes ranked Edwards #156 out of 400 companies included in the list. Forbes’ partner, Statista, surveyed 85,000 women in 36 countries. Honorees were selected in part due to their competitive pay and strong career advancement opportunities, along with flexible work arrangements, which are considered critical to correct gender inequities. They also assessed female representation at the executive and board levels.
26) hospital setting.25)as well asand critical care and surgical monitoring. Driven by a passion to help patients, we partner with the world’s leading clinicians and researchers and invest in research and development (or “R&D”) to transform care for those impacted by structural heart disease or who require hemodynamic monitoring during surgery or in intensive care. Edwards Lifesciences has been a leader in these areas for over six decades. Since our founder, Miles Lowell Edwards, first dreamed of using engineering to address diseases of the human heart, we have steadily built a company on the premise of imagining, building, and realizing a better future for patients. The Our Compensation and Governance Committee strives to create apay-for-performance culture and strongly believes that executive compensation should be tied not only to financial and operating performance, but also directly to the long-term successful implementation of our long-term corporate strategy. As a direct result of our strategy, we have introduced therapies such as transcatheter aortic valve replacement, rapid-deploymentnovel resilient surgical heart valves and noninvasive advanced hemodynamic monitoring, all while achievingmonitoring. Successfully managing our stated financial and operating objectives. Managing our business well in a challenging, highly regulated, dynamic environment requires talented and energetic leaders who champion our strategy and deliver on our commitments.
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2019
Strong underlyingpatients:
Groundbreaking PARTNER 3 clinical results which demonstrated superiority over surgery of our SAPIEN 3 valve technologyrate” and led“adjusted earnings per share” are non-GAAP items. Refer to Appendix A for reconciliation to the U.S. regulatory approval ofmost directly comparable GAAP financial measures.
The European launch ofaortic valves through the PASCAL system, an important early addition to our portfolio of Transcatheter Mitral and Tricuspid Therapies (“TMTT”) ;
Continuedcontinued adoption of our newest premiumtechnologies, the INSPIRIS RESILIA aortic surgical valve, INSPIRIS RESILIA;the KONECT RESILIA aortic tissue valved conduit, and
Broad use the launch of our MITRIS RESILIA valve; and
Profitability was also strong in 2019, even as we continued to invest aggressively to fuel important breakthrough innovations to strengthen our longer-term outlook. Utilizing significant savings in the reduction of our effective tax rate resulting from the Tax Cutsadvanced monitoring technology and Jobs Act of 2017, we hired new employees, accelerated research and development initiatives, and contributed more to employee retirement accounts. We directed a significant portion of our infrastructure investment to growing our dedicated commercial and clinical teams in Europe to support our TMTT business.
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Stock Performance. As a general indicator of ourpay-for-performance culture, theour Compensation and Governance Committee considers how Edwards’ cumulative total return to stockholders (“TSR”) compares to both the S&P 500 Index and the S&P Healthcare Equipment Select Industry Index (the “SPSIHE”). The table below illustrates our5-year cumulative TSR on common stock with the cumulative total returns of the S&P 500 Index and the SPSIHE.
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| Linkage Between Performance Measures and Strategic Imperatives.Performance measures for incentive compensation are linked to our Strategic Imperatives through achievement of KODs and are designed to create long-term stockholder value and hold executives accountable for their individual and Edwards’ performance. | ||||
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| Performance-Based Equity.Our PBRSUs vest based on our relative TSR over a three-year period. | ||||
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| Minimum Three-Year Vesting.Equity compensation is structured to vest over a minimum period of three years, subject to limited exceptions. | ||||
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| Robust Executive Stock Ownership Guidelines with Holding Period Requirements.Executives are required to hold Edwards’ stock with a value not less thansix-times salary for our CEO and three-times salary for each other NEO. Fifty percent of net shares received as equity compensation must be retained until the guideline has been met. | ||||
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| CEO Stock Ownership.Our CEO far exceeds | ||||
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| Modest Perquisites.We provide modest perquisites and have a business rationale for the perquisites that we do provide. | ||||
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No excise taxgross-ups for executive officers. | |||||
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No repricing or buyout of underwater stock options. | |||||
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No pledging of Edwards’ securities by members of | |||||
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We ALIGN executive compensation with the interests of our stockholders. | We DESIGN executive compensation programs to avoid excessive risk and foster long-term value creation. | We ADHERE to strong executive compensation and corporate governance practices. | ||||||||||||
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EDWARDS LIFESCIENCES CORPORATION
PROXY STATEMENT FOR THE
2020
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| Proposal | Board’s Voting Recommendation | |||||||||||||
| Proposal 1. | | FOR each nominee | ||||||||||||
| Proposal 2. | Advisory Vote to Approve Named Executive Officer Compensation |  FOR | ||||||||||||
| Proposal 3. | ONE YEAR | |||||||||||||
| Proposal 4. | Ratification of Appointment of Independent Registered Public Accounting Firm | FOR | ||||||||||||
| Proposal 5. | Approval of Amendment of the Certificate of Incorporation to Provide for Exculpation of Officers |  FOR | ||||||||||||
| Proposal 6. | ✗ AGAINST | |||||||||||||
GENERAL MEETING AND VOTING INFORMATION
Stockholders will also be asked to consider and transact such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof. Pursuant to our Bylaws, the chairmanchair of the Annual Meeting will determine whether any business proposed to be brought before the Annual Meeting has been properly presented. If the chairmanchair determines that the business was not properly brought before the Annual Meeting, the chairmanchair will declare at the Annual Meeting that such business was not properly brought and such business will not be transacted.
The
the Proxy Materials.
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GENERAL MEETING AND VOTING INFORMATION
Deadline to Vote
5, 2023.
The
5, 2023.
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GENERAL MEETING AND VOTING INFORMATION
Vote Required on Proposals
The following summary describes the vote required to approve each of the proposals at the Annual Meeting.
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Proposal 1. | Election of Directors |
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Proposal 2.
| Advisory Vote to Approve Named Executive Officer Compensation
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| Proposal 3. | Advisory Vote to Approve Frequency of Future Advisory Votes on Named Executive Officer Compensation | |||||||||||||
| Proposal 4. | Ratification of Appointment of Independent Registered Public Accounting Firm | |||||||||||||
| Proposal 5. | Approval of Amendment of the Certificate of Incorporation to Provide for Exculpation of Officers | • Majority of outstanding shares entitled to vote on the proposal | • Abstentions and broker non-votes will have the effect of votes “against” | |||||||||||
| Proposal 6. | Stockholder Proposal Regarding an Independent Board Chairman Policy | • Majority of shares represented at the Annual Meeting and entitled to vote on the proposal | • Abstentions will have the effect of votes “against” • Broker non-votes will not be counted as shares entitled to vote on the proposal | |||||||||||
 | | THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR. | |||||||||||
PROPOSAL 1 – ELECTION OF DIRECTORS
THE BOARD RECOMMENDS A VOTE“FOR” THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.
General. Our Board currently consists of eightnine directors forming onea single class of directors.
The
The Board has nominated seven of our incumbent directors for election to the Board at the Annual Meeting. In accordance with the retirement policy in our Corporate Governance Guidelines, our Board did not nominate Wesley von Schack for election at the Annual Meeting. The Board also nominated Ms. Ramona Sequeira for election at the Annual Meeting. Ms. Sequeira is not currently a member of our Board and is standing for election to the Board for the first time at the Annual Meeting.
The
The Board retained Spencer Stuart to commence a director search in 2018. Spencer Stuart identified potential candidates
The CompensationGovernance Committee will consider qualified candidates for director nominees suggested by theour Company’s stockholders. Stockholders can suggest qualified candidates for director nominees by writing to the Corporate Secretary of theour Company at One Edwards Way, Irvine, California 92614. Submissions should include the information about the director candidate and the stockholder making the submission that would otherwise be required by Article I, Section 2(f) of our Bylaws if the stockholder was nominating the individual for election to our Board. Submissions received that meetinclude such information, and provided that the recommended candidate meets the criteria described below, are forwarded to theour Compensation and Governance Committee for further review and consideration. TheOur Compensation and Governance Committee may also request additional information concerning the director candidate that it deems reasonably required to determine the eligibility and qualification of the director candidate to serve on our Board. Stockholders suggesting director candidates for consideration by our Board in connection with the next annual meeting of stockholders should provide their submission no earlier than January 12, 2024, and no later than February 11, 2024. Our Compensation and Governance Committee does not intend to evaluate candidates proposed by stockholders any differently thanfrom other candidates.
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PROPOSAL 1 — ELECTION OF DIRECTORS
Board Criteria and Diversity Policy. Our Board, led by theour Compensation and Governance Committee, is responsible for assessing, identifying, evaluating, and, ultimately, recommending to the stockholders individuals qualified to be directors of theour Company. We believe that diverse backgrounds and experiences strengthen Board performance and promote long-term stockholder value creation.
The
The
intelligence,
honesty,
perceptiveness,
•good judgment,
maturity,
•high ethics and standards,
integrity,
fairness and responsibility,
• responsibility;
the ability to hold• independent opinions and expressthe willingness to state them in a constructive manner.
Further, before a Board member accepts a position on another public company’s board of directors, the Board member informs the Chairman and CEO as well as the Lead Independent Director.
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PROPOSAL 1 — ELECTION OF DIRECTORS
75, except in special circumstances specifically approved by our Board. In light of the robust process described above, our Board believes our nominees’
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| Diverse Range of Qualifications and Skills Represented by Our | ||||||||||
Medical Technology Industry Experience | International Executive Experience | Corporate Governance | ||||||||
Regulatory and Compliance | Senior Leadership |
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Finance and Financial Industry | Human Capital Resources | Financial Reporting | ||||||||
| IT and Cybersecurity | Corporate Strategy | Corporate Responsibility | ||||||||
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| Michael A. Mussallem Chief Executive Officer* and Chairman, Edwards Lifesciences Corporation | ||||||||||||||
PROPOSAL 1 — ELECTION OF DIRECTORS
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| his position as Chief Executive Officer of the Company at the Annual Meeting. | •Forum for Corporate Directors Hall of Fame •University of California Irvine Medal Award •The Phoenix Conference Lifetime Achievement Award •WomenHeart Excellence in Corporate Leadership Wenger Award Select Skills and Qualifications: Mr. Mussallem has | ||||||||
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PROPOSAL 1 — ELECTION OF DIRECTORS
 | Kieran T. Gallahue
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to 2022 to 2022 to 2022 from 2020 to 2022 to 2022 |
| •Nanogen, Inc. – Various positions, including President and Chief Financial Officer, from 1998 to 2002 •Prior to 1998, various marketing, sales, and financial positions within Instrumentation Laboratory, the Procter & Gamble Company, and the General Electric Company •Served on the Board and Executive Committee, and as Chairman of the International Committee and Treasurer of Advanced Medical Technology Association (AdvaMed) Select Skills and Qualifications: Mr. Gallahue provides valuable insights and direction to our Board gained through extensive executive management experience at medical technology companies. His leadership roles on other public company boards and committees and prior experience as a public company chief financial officer also | |||||||||
| Throughout his career, Mr. Gallahue has gained expertise and experience in areas that we believe are important to the success of our Company as we execute on our patient-focused innovation strategy, including experience in the medical technology industry, as a senior executive managing global operations, risk management and oversight, marketing and corporate strategy. | ||||||||||||||||
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2017 from 2017 to 2020 2017 2021 (Audit Committee Chair, member of Contracts and Nominating Committees) from 2019-2022, and Chair, from 2021-2022 Previously Held: |
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PROPOSAL 1 — ELECTION OF DIRECTORS
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Directorships Previously Held: to 2021 fund management company, since 2009 2014 2008 | from 2004 to 2008 1993 | • Kendall, Inc., from 1980 to 1984 – Various marketing positions • – Chairman of the • Innovation Advisory Board for the – Chairman of Board, since 2015 Select Skills and Qualifications:
As a result of his over 40 years in the medical technology industry, | ||||||||||||
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 | Steven R. Loranger Former Chairman, President and CEO ITT Corporation Age: 71 Director Since: 2016 | Edwards Board Role: • Audit Committee Member | ||||||||||||||
Chair since 2023 Previously Held: | •Textron, Inc. – Executive Vice President and Chief Operating Officer, from 2002 to 2004 |
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 | Ramona Sequeira President, Global Portfolio Division, Takeda Pharmaceuticals USA, Inc. Age: 57 Director Since: 2020 | Edwards Board Role: •Audit Committee Member | ||||||||||||||||
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PROPOSAL 1 — ELECTION OF DIRECTORS
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to 2020 Vice Chair, 2020 | • Member of the Board of Trustees for
Select Skills and Qualifications: Ms. Sequeira has over 25 years of experience in the pharmaceutical industry through her work with Takeda and, prior to that, with Eli Lilly. She | |||||||||||
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THE BOARD RECOMMENDS A VOTE“FOR” THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.
 | Bernard J. Zovighian President and incoming CEO, Edwards Lifesciences Corporation Age: 55 Director Since: Nominated | Edwards Board Roles: •Board Member | ||||||
Select Professional Experience and Highlights: • Edwards Lifesciences Corporation, since 2015 – Chief Executive Officer, expected May 2023 – President, since January 2023 – Corporate Vice President, Transcatheter Mitral and Tricuspid Therapies (TMTT), from January 2018 to January 2023 – Vice President then Corporate Vice President, Surgical Structural Heart, from 2015 to January 2018 • Johnson & Johnson – Held a variety of roles with increasing levels of responsibility for nearly 20 years, in roles such as regional leadership outside of the United States and Worldwide President of Sterilization & Infection preventions division | Select Skills and Qualifications: Mr. Zovighian has a nearly 30-year career in medical technology, including 12 years leading three different global businesses across two world-class medical technology companies. He has lived in several countries and, as a senior leader, led teams globally and blends this global mindset and a team-based approach to leadership with his strengths in strategy development, the innovation and adoption of disruptive technologies that elevate the standard of care and establishing trusted partnerships. As the global leader for TMTT at Edwards the last five years, Mr. Zovighian established a global organization focused on developing and delivering a portfolio of therapies designed to change the standard of care for mitral and tricuspid patients. | |||||||
| | THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR. | ||||||||||||||||
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BOARD OF DIRECTORS MATTERS
stockholders to solicit their views and feedback on corporate governance, compensation and other related matters and to discuss the issues that matter most to our stockholders.stockholders, including, among other things, corporate governance, compensation, sustainability, corporate social responsibility, human capital management, diversity, inclusion and belonging, succession planning, and other related matters. Stockholder feedback is shared with theour Board and its committees, which enhances our corporate governance practices, facilitates future dialogue between stockholders and theour Board and provides additional transparency to our stockholders. Since the 20192022 annual meeting of stockholders, our CFO, Corporate Secretary and Vice President of Investor Relationswe contacted our top stockholders representing approximately 56%55% of our outstanding shares and engaged with stockholders representing approximately 32%33% of our outstanding shares. In this engagement, we received feedback from stockholders on a range of topics including corporate governance, executive compensation, and sustainability.
corporate social responsibility.
| Topic | Action Taken in Response to Stockholder Feedback | |||||
Lead Independent Director Responsibilities |
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Right to Call Special Meetings |
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| Proxy Access | • Amended our Bylaws to provide for proxy access at 3% and 3-year ownership and holding period duration thresholds | |||||
| Disclosure of EEO-1 Data | • Disclosed our EEO-1 data and relevant infographics on our website | |||||
| Declassified Board |
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No Supermajority Voting |
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| Poison Pill |
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Majority Voting in Director Elections |
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Operating Officer of SV Health Investors, LLC, which has a less than 10% investment interest in Endotronix, Inc., and concluded that the foregoing did not impair Mr. LaViolette’s independence.
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BOARD OF DIRECTORS MATTERS
In addition, our Compensation and Governance Committee annually reviews and evaluates our Board’s committee membership and recommends changes to our Board in the number, authority, and duties of our committees as well as any recommended changes in the leadership and membership of our committees. Our Compensation and Governance Committee considers input from the full Board, including the Chairman of the Board and our Lead Independent Director, in making its recommendations. •reviews and approves Board meeting agendas and relevant information provided to •serves as a liaison between the independent •coordinates the activities of the independent directors, including calling meetings of the independent directors as necessary and appropriate to address their responsibilities; •provides advice and counsel to the •consults and directly communicates with major stockholders and other stakeholders on behalf of our Board, as appropriate, including participation in theour Board’s overall leadership structure at least on a regularan annual basis to ensure that the approach continues to provideprovides independent oversight of theour Company and serves the best interests of stockholders.Board.Board; in addition, since 2003, one of our independent directors has served as the presiding director of our non-management directors. The responsibilities of our presiding director position have expanded since that time and, in 2019, we formally designated this position as our Lead Independent Director. Ms. Marsh, one of our independent directors, currently serves as our Lead Independent Director, and has the responsibilities further described below. We believe this leadership structure contributed to tremendous shareholder value creation at our Company, outperforming the S&P 500 and our peer index, and growing Edwards’ market capitalization from $961.5 million to $50,375.9 million (from March 27, 2000 to February 1, 2023, respectively), which is an increase of 5,140%. Our Board believes it has been and continues to be effective for our Company. Under this model, the Company has experienced strong financial and operational growth over its 20 years as a public company, most recently providing a cumulative TSR of 266% to stockholders from 2014 to 2019. Ourcurrent Chairman and Chief Executive Officer is seen by our stakeholders, including our customers, physicians, business partners, investors and others, as providing strong leadership for theour Company in our industry and the communities we serve.andas our Lead Independent Director. All of the foregoing changes expected to occur in our industry. conjunction with the Annual Meeting are contingent on the named directors being elected at the Annual Meeting.our current leadership structure is effective because it fosters a constructiveunder these circumstances, separating the Chief Executive Officer and cooperative relationship betweenChairman roles will allow the independent directors and management that allows our BoardCompany to most effectively carry out its oversight duties. Our Board also believes that, given its size and constructive working relationships, changing the existing structure would not improve the Board’s performance. The directors bring a broad range of leadership experience to the boardroom and regularly contribute to the thoughtful discussion involved in overseeing the affairsleverage Mr. Mussallem’s extensive knowledge of the Company. AllCompany and the medical technology industry, while transitioning management of the Company’s strategic initiatives and business and operating plans to Mr. Zovighian.Our Board believes that it is important to have an active, engaged Ms. Marsh’s continuation as our Lead Independent Director—even while the Chief Executive Officer and independent Board. Our Governance Guidelines provide that a substantial majority of our Board and all members of our Audit Committee and Compensation Committee will be independent under the applicable rules of the NYSE. All members of our Board, other than the Chairman are independent. In order to assure that the independent directors are not inappropriately influenced by management, thenon-management members of the Board meet in executive session, without management, in conjunction with each regularly scheduledin-person meetingpositions are separate—will facilitate open communication by our independent directors and safeguard the continued independent oversight of the Board and each committee, and otherwise as deemed necessary. These executive sessions allow directors to speak candidly on any matter of interest, without the CEO or other members of management present.Director (formerly referred to as our presiding director).Director. Each year, the Lead Independent Director’s performance is assessed. As part of this review, theour Compensation and Governance Committee evaluates the criteria for nominees for the Lead Independent Director role and assesses any needednecessary changes. In selecting the Lead Independent Director, theour Compensation and Governance Committee considers relevant leadership, operational and corporate governance experience, relationships with other Board members and external commitments. In addition, the Lead Independent Director is expected to have a thorough understanding of theour Company’s business operations and history.Mr. von Schackuntil his retirementand is expected to continue in that role if elected as a director at the Annual Meeting, at which time Ms. Marsh will assume this role. TheMeeting. In her role as Lead Independent Director, Ms. Marsh presides attheour Board;assureensure there is sufficient time for discussion of allagendaall agenda items;members of the Boarddirectors and the Chairman and other members of management;provides feedback to management from the Board’s executive sessions;Chairman;Chairman andtheour Company’s stockholder outreach efforts.14Edwards Lifesciences Corporation2020 Proxy Statement
BOARD OF DIRECTORS MATTERS
While our Board Roleas a whole works together to oversee management’s execution of our Company’s operations, our Company’s risk exposure and risk management plans, and our Company’s overall strategic direction, the Lead Independent Director, who applies her many years of board governance experience, works closely with the Chairman of the Board and takes action as determined necessary or appropriate to ensure there is critical independent oversight in these key areas of focus. These additional actions include, but are not limited to:
The Our Audit Committee oversees risks related to theour Company’s financial statements and the financial reporting process, including our internal control over financial reporting, disclosure controls and procedures and accounting matters. In its oversight of our controls and procedures, our Audit Committee may receive reports or recommendations for the improvement of such controls and procedures from our Senior Vice President of Global Internal Audit, other members of management or our Company’s independent auditor to help mitigate risk. Our Audit Committee may engage such other advisors as it deems appropriate to assess our Company’s management of risk. It also regularly reviews Edwards’our risk management processes and enterprise-wide risk management, focusing on manufacturing processes and supplier quality, product development processes and systems, continuity of our operations and regulatory compliance. TheOur Audit Committee also regularly reviews treasury risks (insurance, credit, debt, currency risk and hedging programs), legal and compliance risks, and other risk management functions; senior leaders of our Company present at least twice a year, and sometimes more frequently as applicable, on information technology infrastructure and cyber-security risk,cybersecurity and other risk management functions.information security risks. In addition, theour Audit Committee considersregularly reviews the corporate compliance program to assess its effectiveness at identifying and managing compliance risks, including but not limited to the Company’s reputationmechanisms and relatedchannels for compliance concerns to the maintenance of a confidential anonymous reporting hotline for ethical and compliance issues. Thebe reported. Our Audit Committee periodically receives reports on, and discusses, the risk management and escalation process, and reviews significant risks and exposures with the subject matter experts inidentified by management, the internal auditors, or the independent public accountants, who identityincluding the steps management has taken to monitor and control such risks and report them to the Audit Committee.
Theexposures.
The Moreover, our Compensation and Governance Committee oversees our Company’s program for engaging with stockholders on corporate governance and other matters relating to meetings of the Company’s stockholders.
above, facilitates effective risk oversight by our Board by ensuring independent director review, led by our Lead Independent Director and working through our independent Board committees, of key risk areas and management’s risk management actions and priorities. We further believe that Mr. Mussallem, in his role as non-executive Chairman of the Board following the Annual Meeting, will be instrumental in guiding our independent directors’ understanding of the most critical risks facing our Company and in helping them challenge members of management to reinforce the effectiveness of the Company’s enterprise risk management.
The2022.
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Director Candidates.” The ages of our director nominees range from 5455 to 73,74, with an average age of approximately 64. We believe in a balanced approach to director tenure that allows theour Board to benefit from a mix of newer directors who bring fresh perspectives and seasoned directors who bring continuity and a deep understanding of our business. For our nominees, lengths of service on our Board range from 0 years to approximately 1123 years, with an average tenure of approximately 78 years. In addition, 37.5%33.3% of our nominees are female.female, and 22% of our nominees are ethnically or racially diverse. None of the nominees currently serve on the boards of directors of more than threetwo other public companies.
| Audit Committee Membership | ||
| Leslie S. Heisz, Chair | ||
| Kieran T. Gallahue | ||
| Steven R. Loranger | ||
Key Highlights. • Our Board has determined that each member of our Audit Committee |
Key Highlights:
Each member is “independent,” “financially literate,” and an “audit committee financial expert” under applicable rules of the NYSE and the SEC.
The• Our Audit Committee held nine meetings in 2019.
•the integrity of The Our Audit Committee assists theour Board in fulfilling its oversight responsibilities relating to, among other things:theour Company’s financial statements;
•compliance with legal and regulatory requirements;
•monitoring the independent registered public accounting firm’s qualifications, performance and independence;
•the performance of theour Company’s internal audit function;
the• our Company’s investment and hedging activities; and
•enterprise-wide riskrisks and management practices.
The
TheCommittee.
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BOARD OF DIRECTORS MATTERS
independent registered public accounting firm, theour Company’s policies and procedures with respect to risk assessment and risk management and reviews and approves or ratifies any related party transactions, as described under “Other Matters and Business—Related PartyPersons Transactions” below.
| Compensation and Governance Committee Membership | ||
| Nicholas J. Valeriani, Chair | ||
| Martha H. Marsh | ||
Each• Our Board has determined that each member of our Compensation and Governance Committee is “independent” under the rules of the NYSE and a “nonemployee director” underRule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The• Our Compensation and Governance Committee held five meetings in 2019.
The Our Compensation and Governance Committee’s responsibilities include, among other things:theour Board the compensation of outside directors;directors who are not employed by us or any of our subsidiaries (“non-employee directors”);
•overseeing management of succession planning, attraction and retention of talent, and risks related to the design of executive compensation programs and arrangements;
•developing and recommending to theour Board corporate governance guidelines for theour Company;
•identifying, evaluating and recommending individuals qualified to be directors to the Board; and
•overseeing the evaluation of theour Board and management.
The
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BOARD OF DIRECTORS MATTERS
TheOur Compensation and Governance Committee also oversees Edwards’ political activities, including the periodic review of its policy on political expenditures and its payments that may be used for political purposes, and confirms that political expenditures from corporate funds are consistentreceives reports regarding compliance with the policy. In addition, theour Compensation and Governance Committee reviews and oversees Edwards’ principles, programs and practices on sustainability topics, including environmental and social affairs.affairs, as well as our Company’s public reporting on these topics. Reports concerning political activities and sustainability efforts and metrics are presented periodically to theour Compensation and Governance Committee.
The planned retirement of Mr. Mussallem as our Chief Executive Officer and the transition of Mr. Zovighian into the role took many months of thoughtful discussion and planning. As part of the process, both internal and external candidates were evaluated for the CEO role.
Our Board, understanding the importance of this decision, was fully engaged in the process of evaluating candidates for the CEO role and selecting Mr. Zovighian as the successor to Mr. Mussallem. Our Board continues to be engaged to support a successful leadership transition. | ||||||||||
Our Board recognizes
Board Oversight Over Environmental, Sustainability, and Corporate Social Responsibility
| Board Oversight Over Environmental, Sustainability, and Corporate Social Responsibility | ||
Our Board has designed robust internal processes to oversee our
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BOARD OF DIRECTORS MATTERS
We receivedwere recognized by numerous recognitionsorganizations for our sustainability and environmental responsibilities practices in 2019,2022, some of which are highlighted below:
Named• For the third consecutive year, Edwards appeared on Barron’s fifth annual list of the 100 Most Sustainable Companies in the United States. Significant performance indicators included increased efforts to mitigate our impact on the environment, as well as initiatives undertaken to bolster employee welfare, community health and customer satisfaction.
Named as one of theManagement Top 250 by the Wall Street Journal in partnership with the Drucker Institute—Institute for the sixth year in a row—listed #25#87 out of 820902 companies ranked. Within this list,ranked according to their overall effectiveness of “doing the right things well.” The evaluation aims to recognize firms that are particularly good at balancing a wide range of competing management priorities. Edwards was also cited as one of 8 “all stars” foracross-the-board rankings, achievingachieved high marks in all five dimensions of corporate performance: Customer Satisfaction, Employee Engagement and Development, Innovation, Social Responsibility and Financial Strength;
Recognized• For the second consecutive year, Edwards was recognized as #1 onone of the Investor’s Business Daily inaugural50 Best ESG CompaniesWorld’s Top Female-Friendly Companies. Forbes ranked Edwards #156 out of 400 companies included in 2019 for superior Environmental, Socialthe list. Forbes’ partner, Statista, surveyed 85,000 women in 36 countries. Honorees were selected in part due to their competitive pay and Governance (ESG) ratings in additionstrong career advancement opportunities, along with flexible work arrangements, which are considered critical to strong fundamentalcorrect gender inequities. They also assessed female representation at the executive and technical performance highlighting Edwards’ “comprehensive product quality and safety controls” and its “ability to deliver exceptional shareholder value”; and
Constituent• Edwards was again a constituent of theDJSI ESG Worldand North America Indices—the Dow Jones Sustainability World index tracks the performance of the top 10% of the 2,500 largest companies in the S&P Global Broad Market Index that lead the field in sustainability.
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2022
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | Total ($) | ||||||||||||||||
Mr. Gallahue | $ | 80,075 | $ | 239,913 | — | $ | 319,988 | |||||||||||||
Ms. Heisz | 100,147 | 239,913 | — | 340,060 | ||||||||||||||||
Dr. Link | 93,075 | 239,913 | — | 332,988 | ||||||||||||||||
Mr. Loranger | 75,075 | 239,913 | — | 314,988 | ||||||||||||||||
Ms. Marsh | 75,000 | 239,913 | — | 314,913 | ||||||||||||||||
Mr. von Schack | 115,075 | 239,913 | — | 354,988 | ||||||||||||||||
Mr. Valeriani | 75,000 | 239,913 | — | 314,913 | ||||||||||||||||
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| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | Total ($) | ||||||||||||||||||||||
| Mr. Gallahue | $ 85,075 | $ 249,895 | — | $ 334,970 | ||||||||||||||||||||||
| Ms. Heisz | 102,492 | 249,895 | — | 352,387 | ||||||||||||||||||||||
| Mr. LaViolette | 80,000 | 249,895 | — | 329,895 | ||||||||||||||||||||||
| Mr. Loranger | 85,075 | 249,895 | — | 334,970 | ||||||||||||||||||||||
| Ms. Marsh | 115,000 | 249,895 | — | 364,895 | ||||||||||||||||||||||
| Ms. Sequeira | 85,000 | 249,895 | — | 334,895 | ||||||||||||||||||||||
| Mr. Valeriani | 98,000 | 249,895 | — | 347,895 | ||||||||||||||||||||||
Nonemployee Director Retainers and Fees | |||||
Annual Retainers | |||||
Nonemployee Director | $ | 75,000 | |||
Lead Independent Director | $ | 35,000 | |||
Audit Committee Chair | $ | 25,000 | |||
Audit Committee Member | $ | 5,000 | |||
Additional Meeting Fees if meetings exceed the following: | $ | 1,500 | * | ||
– 10 meetings for the Board | |||||
– 10 meetings for the Audit Committee | |||||
– 7 meetings for the Compensation and Governance Committee | |||||
Compensation Committee Chair | $ | 18,000 | |||
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| Nonemployee Director Retainers and Fees | |||||
| Annual Retainers | |||||
| Nonemployee Director | $80,000 | ||||
| Lead Independent Director | $35,000 | ||||
| Audit Committee Chair | $25,000 | ||||
| Audit Committee Member | $5,000 | ||||
| Additional Meeting Fees if meetings exceed the following: | $1,500* | ||||
| – 10 meetings for the Board | |||||
| – 10 meetings for the Audit Committee | |||||
| – 7 meetings for the Compensation and Governance Committee | |||||
| Compensation and Governance Committee Chair | $18,000 | ||||
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BOARD OF DIRECTORS MATTERS
nearest whole share. elected, subject to earlier vesting in the event of the nonemployee director’s death or disability or in connection with a change in control of Edwards.have implementedmaintain our Nonemployee Directors Stock Incentive Program (the “Nonemployee“2020 Nonemployee Directors Stock Incentive Program”), pursuant to which each nonemployee director receives an annual grant of options for up to 40,000120,000 shares of our common stock, or Restricted Stock Units (“RSU”) for up to 16,00048,000 shares of our common stock, or a combination of options and RSUs with a maximum grant-date value asestablished by our Compensation and Governance Committee or our Board. The annual equity award is typically granted on the day after our annual meeting. Our Board has discretion to determine whether an award will be granted to a director who joins our Board mid-year and to determine the terms and conditions of 2019 of approximately $240,000. Theany such award. Our Compensation and Governance Committee recommends to theour Board for its approval the actual amount and type of award for each year.The For 2022, our Board provided that each nonemployee director in office following our 2022 annual equity award ismeeting would be granted on the day after our annual meeting. The option exercise price is the closing price of our common stock on the grant date. Options are valued as of theRSUs having a grant date using the Black-Scholes valuation model, and the RSUs are valued at the fair market value of $250,000, rounded to the common stock on the grant date.9, 2019,4, 2022, each nonemployee director who was serving on that date received 1,3232,300 RSUs as an annual grant (the grant-date fair value of such award was $239,913,$249,895, determined as noted in footnote 2 to the Director Compensation Table above).completionone-year anniversary of one year of service on the Board measured from the grant date orand the date of the next regular annual meeting of stockholders at which members of our Board are to be elected, subject to earlier vesting in the event of the nonemployee director’s death or disability.disability or in connection with a change of control of Edwards. Once the RSUs vest, the shares must be held until the nonemployee director no longer serves on the Board.Prior to 2017, upon a nonemployee director’s initial election to the Board, the new nonemployee director received a grant of the numbers of RSUs or stock options determined by dividing $200,000 by the fair value of a share on the grant date for RSUs, or the fair value of an option on the grant date, estimated using the Black-Scholes valuation model, and in either case rounding up to the nearest whole share, provided that in no event shall such number exceed twenty thousand (20,000) shares. Initial stock option awards vestone-third each year over three years from the grant date, subject to the nonemployee director’s continued service on the Board,requirements described in “Directors’ Stock Ownership Guidelines and subject to earlier vesting in the event of the nonemployee director’s death or disability. The exercise price of an option is the closing price of our common stock on the date of the award. With respect to initial stock option awards granted after May 14, 2013, the shares of our common stock issued upon exercise of the options must be held until the nonemployee director no longer serves on the Board.(1) theone-year anniversary of the grant date or (2)and the date of the next regular annual meeting of stockholders at which members of theour Board are to be elected.9, 2019,4, 2022, Ms. Heisz received 311 restricted2,209 stock option shares in lieu of the portion of her annual cash retainer she deferred (the grant-date fair value of each such award was $56,397,$57,492, determined as noted in footnote 2 to the Director Compensation Table above). On the same date, Messrs. Gallahue Loranger and von Schack, and Dr. Link eachLoranger received a grant of 414737 restricted shares in lieu of histheir annual cash retainer (the grant-date fair value of each such award was $75,075,$80,075, determined as noted in footnote 2 to the Director Compensation Table above).equal towith a value of at least $500,000. This amount equals almostmore than six times the base annual cash retainer received byfor each nonemployee director. StockShares that is countedcount toward meeting the guideline includes any sharesinclude common stock owned outright, restricted stock, RSUs and 25%RSUs. Once the stock ownership guideline of the value of vested,in-the-money stock options. Upon vesting or exercise of equity awarded after 2011,$500,000 is met, each nonemployee director is required to hold 50% of the underlyingnet remaining shares of the common stock, (netwhether owned outright and/or acquired in connection with the vesting of any shares soldrestricted stock and/or restricted stock units, after satisfaction of applicable taxes (and in the case of stock options granted prior to coverJuly 2021, after satisfaction of applicable taxes and payment of the exercise price and applicable taxes)price) until the director’s Board service ends. The holding requirement does not apply to equity awards directors elect to receive in lieu of their cash retainers.22Edwards Lifesciences Corporation2020 Proxy Statement
BOARD OF DIRECTORS MATTERS
Expense Reimbursement Policy. Directors are reimbursed for travel expenses related to their attendance at Board and committee meetings as well as for the costs of attending director continuing education programs.
The Our Board may change compensation and reimbursement arrangements for nonemployee directors from time to time.
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Grant Date | Exercise Price ($) | Unvested Option Awards (#) | Option Awards Vested and Outstanding (#) | Stock Awards Not Vested (#) | |||||||||||||||||||||||||
Mr. Gallahue | 02/19/2015 | 66.860 | — | 10,752 | — | |||||||||||||||||||||||||
| 05/12/2017 | 110.590 | — | 2,352 | — | ||||||||||||||||||||||||||
| 05/09/2019 | — | — | — | 1,323 | (1) | |||||||||||||||||||||||||
| 05/09/2019 | — | — | — | 414 | (2) | |||||||||||||||||||||||||
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Total | — | 13,104 | 1,737 | |||||||||||||||||||||||||||
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Ms. Heisz | 07/14/2016 | 107.030 | — | 6,557 | — | |||||||||||||||||||||||||
| 05/12/2017 | 110.590 | — | 2,352 | — | ||||||||||||||||||||||||||
| 05/18/2018 | 135.950 | — | 1,913 | — | ||||||||||||||||||||||||||
| 05/09/2019 | — | — | — | 1,323 | (1) | |||||||||||||||||||||||||
| 05/09/2019 | — | — | — | 311 | (2) | |||||||||||||||||||||||||
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Total | — | 10,822 | 1,634 | |||||||||||||||||||||||||||
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Dr. Link | 05/09/2019 | — | — | — | 1,323 | (1) | ||||||||||||||||||||||||
| 05/09/2019 | — | — | — | 414 | (2) | |||||||||||||||||||||||||
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Total | — | — | 1,737 | |||||||||||||||||||||||||||
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Mr. Loranger | 05/12/2016 | 105.590 | — | 6,599 | — | |||||||||||||||||||||||||
| 05/18/2018 | 135.950 | — | 1,913 | — | ||||||||||||||||||||||||||
| 05/09/2019 | — | — | — | 1,323 | (1) | |||||||||||||||||||||||||
| 05/09/2019 | — | — | — | 414 | (2) | |||||||||||||||||||||||||
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Total | — | 8,512 | 1,737 | |||||||||||||||||||||||||||
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Ms. Marsh | 11/19/2015 | 77.965 | — | 9,574 | — | |||||||||||||||||||||||||
| 05/09/2019 | — | — | — | 1,323 | (1) | |||||||||||||||||||||||||
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Total | — | 9,574 | 1,323 | |||||||||||||||||||||||||||
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Mr. von Schack | 05/09/2019 | — | — | — | 1,323 | (1) | ||||||||||||||||||||||||
| 05/09/2019 | — | — | — | 414 | (2) | |||||||||||||||||||||||||
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Total | — | — | 1,737 | |||||||||||||||||||||||||||
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Mr. Valeriani | 11/13/2014 | 62.275 | — | 7,536 | — | |||||||||||||||||||||||||
| 05/09/2019 | — | — | — | 1,323 | (1) | |||||||||||||||||||||||||
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Total | — | 7,536 | 1,323 | |||||||||||||||||||||||||||
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Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Exercise Price ($) | Unvested Option Awards (#) | Option Awards Vested and Outstanding (#) | Stock Awards Not Vested (#) | ||||||||||||||||||||||||||||||||||||||||||
| Mr. Gallahue | 05/12/2017 | 36.8633 | — | 7,056 | — | ||||||||||||||||||||||||||||||||||||||||||
| 05/04/2022 | — | — | — | 2,300(1) | |||||||||||||||||||||||||||||||||||||||||||
| 05/04/2022 | — | — | — | 737(2) | |||||||||||||||||||||||||||||||||||||||||||
| Total | — | 7,056 | 3,037 | ||||||||||||||||||||||||||||||||||||||||||||
| Ms. Heisz | 07/14/2016 | 35.6767 | — | 9,671 | — | ||||||||||||||||||||||||||||||||||||||||||
| 05/12/2017 | 36.8633 | — | 7,056 | — | |||||||||||||||||||||||||||||||||||||||||||
| 05/18/2018 | 45.3167 | — | 5,739 | — | |||||||||||||||||||||||||||||||||||||||||||
| 05/08/2020 | 72.6133 | — | 3,099 | — | |||||||||||||||||||||||||||||||||||||||||||
| 05/04/2022 | — | — | — | 2,300(1) | |||||||||||||||||||||||||||||||||||||||||||
| 05/04/2022 | 108.6500 | — | 2,209(3) | — | |||||||||||||||||||||||||||||||||||||||||||
| Total | 27,774 | 2,300 | |||||||||||||||||||||||||||||||||||||||||||||
| Mr. LaViolette | 05/04/2022 | — | — | — | 2,300(1) | ||||||||||||||||||||||||||||||||||||||||||
| Total | — | — | 2,300 | ||||||||||||||||||||||||||||||||||||||||||||
| Mr. Loranger | 05/18/2018 | 45.3167 | — | 5,739 | — | ||||||||||||||||||||||||||||||||||||||||||
| 05/08/2020 | 72.6133 | — | 4,134 | — | |||||||||||||||||||||||||||||||||||||||||||
| 05/05/2021 | 91.7700 | — | 3,270 | — | |||||||||||||||||||||||||||||||||||||||||||
| 05/04/2022 | — | — | — | 2,300(1) | |||||||||||||||||||||||||||||||||||||||||||
| 05/04/2022 | — | — | — | 737(2) | |||||||||||||||||||||||||||||||||||||||||||
| Total | — | 13,143 | 3,037 | ||||||||||||||||||||||||||||||||||||||||||||
| Ms. Marsh | 05/04/2022 | — | — | — | 2,300(1) | ||||||||||||||||||||||||||||||||||||||||||
| Total | — | — | 2,300 | ||||||||||||||||||||||||||||||||||||||||||||
| Ms. Sequeira | 05/04/2022 | — | — | — | 2,300(1) | ||||||||||||||||||||||||||||||||||||||||||
| Total | — | — | 2,300 | ||||||||||||||||||||||||||||||||||||||||||||
| Mr. Valeriani | 05/04/2022 | — | — | — | 2,300(1) | ||||||||||||||||||||||||||||||||||||||||||
| Total | — | — | 2,300 | ||||||||||||||||||||||||||||||||||||||||||||
Principal Stockholder Name and Address | Total Shares Beneficially Owned | Percentage of Class | ||||||||
The Vanguard Group(1) 100 Vanguard Blvd. Malvern, PA 19355 | 16,261,702 | 7.78 | % | |||||||
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10055 | 18,200,799 | 8.70 | % | |||||||
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2023.
| Principal Stockholder Name and Address | Total Shares Beneficially Owned | Percentage of Class | ||||||||||||
The Vanguard Group(1) 100 Vanguard Blvd. Malvern, PA 19355 | 51,559,391 | 8.34 | % | |||||||||||
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10055 | 53,060,508 | 8.60 | % | |||||||||||
2023.
Named Executive Officers, Executive Officers and Directors: | Outstanding Shares Beneficially Owned(1) | RSUs and Shares Underlying Options | Total Shares Beneficially Owned | Percentage of Class | ||||||||||||||||
Mr. Mussallem | 975,116 | 988,838 | 1,963,954 | * | ||||||||||||||||
Mr. Ullem | 71,588 | 118,900 | 190,488 | * | ||||||||||||||||
Mr. Bobo | 66,052 | 179,309 | 245,361 | * | ||||||||||||||||
Mr. Lemercier | 36,843 | 69,883 | 106,726 | * | ||||||||||||||||
Mr. Wood | 108,744 | 73,443 | 182,187 | * | ||||||||||||||||
Mr. Gallahue | 16,148 | 13,518 | 29,666 | * | ||||||||||||||||
Ms. Heisz | 4,000 | 11,133 | 15,133 | * | ||||||||||||||||
Dr. Link | 19,352 | 414 | 19,766 | * | ||||||||||||||||
Mr. Loranger | 11,632 | 8,926 | 20,558 | * | ||||||||||||||||
Ms. Marsh | 5,630 | 9,574 | 15,204 | * | ||||||||||||||||
Ms. Sequeira | — | — | — | — | ||||||||||||||||
Mr. Valeriani | 12,672 | 7,536 | 20,208 | * | ||||||||||||||||
Mr. von Schack | 38,157 | 414 | 38,571 | * | ||||||||||||||||
All current directors and executive officers as a group (15 persons) | 1,402,158 | 1,698,658 | 3,100,816 | 1.48 | % | |||||||||||||||
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| Named Executive Officers, Executive Officers and Directors | Outstanding Shares Beneficially Owned(1) | RSUs and Shares Underlying Options | Total Shares Beneficially Owned | Percentage of Class | |||||||||||||||||||
| Mr. Mussallem | 3,941,128 | 1,386,898 | 5,328,026 | * | |||||||||||||||||||
| Mr. Zovighian | 8,451 | 85,400 | 93,851 | * | |||||||||||||||||||
| Mr. Ullem | 257,822 | 311,925 | 569,747 | * | |||||||||||||||||||
| Mr. Wood | 189,093 | 163,651 | 352,744 | * | |||||||||||||||||||
| Mr. Lemercier | 154,212 | 209,854 | 364,066 | * | |||||||||||||||||||
| Mr. Gallahue | 60,184 | 7,056 | 67,240 | * | |||||||||||||||||||
| Mr. Loranger | 64,580 | 13,143 | 77,723 | * | |||||||||||||||||||
| Mr. Valeriani | 63,811 | — | 63,811 | * | |||||||||||||||||||
| Ms. Marsh | 26,777 | — | 26,777 | * | |||||||||||||||||||
| Ms. Heisz | 25,180 | 27,774 | 52,954 | * | |||||||||||||||||||
| Ms. Sequeira | 5,918 | — | 5,918 | * | |||||||||||||||||||
| Mr. LaViolette | 2,615 | — | 2,615 | * | |||||||||||||||||||
| All current directors and executive officers as a group (15 persons) | 5,029,078 | 2,843,610 | 7,872,688 | 1.29% | |||||||||||||||||||
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
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| NEO Names and Current Positions | ||
Michael A. Mussallem Chairman and Chief Executive Officer | ||
Scott B. Ullem Corporate Vice President, Chief Financial Officer | ||
Jean-Luc Lemercier Corporate Vice President, EMEACLA (Europe, Middle East, Africa, Canada and Latin America) and JAPAC (Japan, Asia Pacific and Greater China)1 | ||
Larry L. Wood Corporate Vice President and Group President, Transcatheter Aortic Valve Replacement and Surgical Structural Heart2 | ||
Bernard J. Zovighian President3 | ||
the hospital setting.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Long-term incentive awards are designed to align the financial interests of our executives with those of our stockholders. Awards granted to our NEOs in 2019 included stock options, PBRSUs and time-based RSUs. We believe our equity compensation mix provides a balance of incentives that serve to retain executive talent while reinforcing our long-term growth strategy, as a company focused on exceptional revenue growth, strong profitability, and long-term stockholder returns.
Edwards’ 2019 NEOs are as follows:
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2019 Overall, we achieved strong As noted in the chart above, the financial component of our Company’s Annual Cash Incentive compensation was reintroduced for the 2022 year after having been suspended during the COVID-19 pandemic. Our financial results and operating performance in 2019, exceeding2022 were significantly impacted by the pandemic. Procedure rates were highly variable around the globe, leading to lower full Company sales compared to expectations. Treatments were delayed due to hospital prioritization of COVID-19 patients, hospital staffing shortages and patients deferring treatment. Although we saw recovery during 2022, we faced significant headwinds in December 2022 due to a surge in COVID-19 outbreaks, and our target goalsfinancial performance was below original expectations. Despite the impact of these headwinds, 2022 was a year of significant milestones and investments for Edwards. Our total sales for fiscal year 2022 were $5.4 billion, an increase in underlying revenue growth net incomefor the year of approximately 8% over the prior year. We achieved 12% growth in adjusted earnings per share while also increasing R&D by 5%.2 The significant increase in R&D and free cash flow generation. We also madeinfrastructure investments in fiscal 2022 helped strengthen our longer-term outlook.patients.Strong underlying1 sales growthpatients:15% was driven by:Groundbreaking PARTNER 3 clinical results which demonstrated superiority over surgery of ourthe SAPIEN 3 Ultra RESILIA valve in the U.S. incorporating Edwards’ breakthrough RESILIA tissue technology in the industry-leading SAPIEN 3 Ultra transcatheter aortic valve. Separately, we continued to advance enrollment in our PROGRESS pivotal trial for moderate AS patients and ledour ALLIANCE pivotal trial to study our next-generation TAVR technology, the SAPIEN X4 system;U.S. regulatory approval ofmost directly comparable GAAP financial measures.transcatheter heart valve technology for patients at lowleadership in surgical risk;The European launch ofaortic valves through the PASCAL system, an important early addition to our TMTT portfolio;Continuedcontinued adoption of our newest premiumtechnologies, the INSPIRIS RESILIA aortic surgical valve, INSPIRIS RESILIA;the KONECT RESILIA aortic tissue valved conduit, andBroad use the launch of our critical care technologies, includingMITRIS RESILIA valve; andongoing rolloutcontinued introduction of our HemoSphere smartmonitoring platform.Profitability was also strong in 2019, even as we continued to invest aggressively to fuel important breakthrough innovations to strengthen our longer-term outlook. Utilizing significant savings in the reduction of our effective tax rate resulting from the Tax Cutsadvanced monitoring technology and Jobs Act of 2017, we hired new employees, accelerated research and development initiatives, and contributed more to employee retirement accounts. We directed a significant portion of our infrastructure investment to growing our dedicated commercial and clinical teams in Europe to support our TMTT business.1“Underlying” amount is anon-GAAP item. Refer to the Appendix A for a reconciliation to the most directly comparable GAAP financial measure.
Smart Recovery algorithms for patients.28Edwards Lifesciences Corporation2020 Proxy Statement
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Stock Performance. One indicator of ourpay-for-performance culture is the relationship of our NEOs’ target total direct compensation to total stockholder return. Over the past five years, on average, 89%90% of theour CEO’s target total direct compensation has been performance-based, and 74% is76% has been tied to the performance of Edwards’ stock. As a general indicator, theour Compensation and Governance Committee considers Edwards’ total return to stockholders as well as how Edwards’ cumulative total return to stockholders compares to both the S&P 500 Index and the SPSIHE.SPSIHE when determining compensation. The table below illustrates our Company’s5-year cumulative total stockholder return on common stock with the cumulative total returns of the S&P 500 Index and the SPSIHE. The cumulative total return listed below assumes an initial investment of $100 at the market close on December 31, 20142017, and reinvestment of dividends. Stockholder returns over the indicated period should not be considered indicative of future stockholder returns.
* $100 invested on 12/31/14 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. The stock price performance included in this graph is not necessarily indicative of future stock price performance.
2019Outcomes and Long-Term Incentives. Thereturning to the historical plan that includes the following three measures used to evaluateelements:achievement under our annual cash incentive plan weremeasurement (based on underlying revenue growth, net incomeadjusted earnings per share and adjusted free cash flow all computed ontargets);non-GAAP basis. points system across our entire organization); andresultsperformance resulted in financial achievement at 151%61% of target under the cash incentive plan. In addition, our overall achievement of KODs for 2019 was 97%.target. Accordingly, our cash incentive plan for corporate employees funded at 146%69% of target. Final incentive amounts for theour NEOs for 20192022 also took into account each employee’s individual performance, as more fully described below underperformance. See “Elements of Compensation—Annual Cash Incentive Payment.”The PBRSUs awarded to NEOs in 2016 that vested in 2019 were based on Edwards’ TSR over a three-year performance period relative toPayment” below for additional information regarding the TSRannual cash incentive payment.the SPSIHE subset for that same period. These PBRSUs paid out at 75.77% of target, as more fully described under “Elements of Compensation—Determination as to 2016 PBRSU Awards.”Edwards Lifesciences Corporation2020 Proxy Statement29
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Compensation Program Highlights. The Compensation Committee believes that its executive compensation and benefits philosophy and objectives have resulted in programs that align executives with stockholder interests.
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Consideration ofSay-on-Pay Vote Results. At our 20192022 annual meeting, our stockholders cast an advisory vote on the compensation of our NEOs (a“say-on-pay” “say-on-pay” vote). Approximately 95%90% of the votes cast on this proposal voted in favor of
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Compensation Philosophy and Objectives for NEOs. Our compensation programs are designed to attract, retain, motivate and engage executives with superior leadership and management capabilities to enhance stockholder value. Within this overall philosophy, our objectives are to:
•offer programs that place a higher emphasis on performance-based compensation than fixed compensation;
•align the financial interests of executives with those of our long-term stockholders; and
•provide compensation that is competitive.
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The
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Semler Brossy’s responsibilities for fiscal 20192022 generally included:
•Annual and periodic reviews of executive total compensation relative to peers;
•Annual and periodic reviews of Directordirector total compensation;
•Annual and periodic reviews of theour Company’s comparator group;
•Report on proxy advisory firms aroundsay-on-pay and other compensation matters;
•Presentations on specialized topics, as requested or applicable;
•Reports to theour Compensation and Governance Committee on market trends and best practices in compensation; and
•Attendance and participation in all Compensation and Governance Committee meetings and stockholder consultations, as requested.
generally awarded.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
The review of the Comparator Group for pay decisions in 20192022 was conducted in July 2018.2021. After evaluating a series of qualitative and quantitative factors among other publicly traded U.S. companies in our industry, including scale, talent, business, and operational characteristics and overlap among peers, our Compensation and Governance Committee selected the Compensation Committee updatedbelow companies as the Comparator Group used to make 2019 executive compensation decisions by adding Baxter International Inc., Align Technology, Inc. and ABIOMED, Inc. and removing PerkinElmer, Inc. and Integra Lifesciences Holdings Corporation. C.R. Bard Inc.for 2022. The group was acquired by Becton, Dickinson and Company and, therefore, it was also removed from the Comparator Group. For 2019,same as the Comparator Group consisted of the following companies:
| Edwards’ | ||||||
| Abbott Laboratories | Hologic, Inc. | |||||
| IDEXX Laboratories, Inc. | |||||
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Agilent Technologies, Inc. | Illumina, Inc. | |||||
| Align Technology, Inc. | Intuitive Surgical, Inc. | |||||
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Baxter International Inc. |
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Becton, Dickinson and Company |
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Boston Scientific Corporation |
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The Cooper Companies, Inc. |
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| DexCom, Inc. | ||||||
| Zimmer Biomet Holdings, Inc. | |||||
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Element of Compensation | Why We Pay this Element | Compensation and Governance Committee’s Evaluation Criteria | ||||||||||||||||||
Base Salary |
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Annual Cash Incentive
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beginning of the | ||||||||||||||||||||
| year) The financial measurement multiplier may not exceed 175% | ||||||||||||||||||||
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| Up to a maximum of 200% of pre-established Incentive Pay Objective | ||||||||||||||||||||
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
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Long-Term Incentive Awards
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Annual Cash Incentive Payment. All of theour NEOs and many other management andnon-management-level employees (approximately 12,13316,905 employees) participated in the 20192022 Edwards Incentive Plan (the “Incentive Plan”).
The Our Compensation and Governance Committee establishes for each NEO the amount of incentive payment that will be earned for targeted performance, referred to as the “Incentive Pay Objective.” TheOur Compensation and Governance Committee utilizesgenerally sets the Incentive Pay Objective at a level so that the total cash compensation (base salary plus incentive payment for expected performance) for theour NEOs will be at approximately the median of executives at comparable positions in the Comparator Group. TheOur Compensation and Governance Committee then considers performance results to determine the actual cash incentive payments.
executive's individual performance.
TheNEO for 2022 as well as the maximum amount that could have been earned by each NEO under the Incentive Plan for NEOs in 2019 provided that achievement at2022 had the thresholdmaximum performance levels been attained (which for each NEO is 200% of any one of three Company financial measures (revenue growth, net incomethe NEO’s Incentive Pay Objective).
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The Compensationand Governance Committee, after consultation with management, sets annual incentive performance goals each year for achievement of financial measures and KODs. Financial measures arenon-GAAP calculations generally on the same basis as contained in our financial guidance, subject to further adjustment to account for material developments during the year. In February 2019, the2022, our Compensation and Governance Committee initially establishedselected revenue growth (50% weighting); earnings per share (30% weighting); and free cash flow (20% weighting) as the financial measures atunder the Incentive Plan for 2022 and initially established the minimum, target, and maximum financial measure performance levels set forth in the chart below.
Incentive Plan funding is determined after results of achievement of the predetermined Our Compensation and Governance Committee chooses financial measures that are tied to our performance which is intended to motivate and KODs are known.
The following illustration shows how the Incentive Plan is funded.
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Initially, the Board assesses the percentage of achievement ofpre-established Company financial measures. reward executives for our Company’s annual performance.
For 2019,a more granular level. Annually, our financial goals, and the corresponding weightings, were as follows: revenue growth (50% weighting); net income (30% weighting); and free cash flow (20% weighting). The following table sets forth the target level for each goal as well as the level of achievement required to reach the various levels of financial measure achievement. Interpolation is applied for results between the levels shown in the chart.
Based on the performance levels in the chart below,Board approves our financial measures funded at 151%.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
2019 Company Financial Performance Measures*
| Percentage of Financial Measure Achievement | |||||||||||||||||||||||||
| Minimum (25%) | Target (100%) | Maximum (175%) | Actual (%) | ||||||||||||||||||||||
Underlying Revenue Growth – 50% Weight | 8.0 | % | 10.5 | % | 15.5 | % | 15.3 | % | |||||||||||||||||
Adjusted Net Income ($M) – 30% Weight | $ | 995 | $ | 1,048 | $ | 1,100 | $ | 1,048 | |||||||||||||||||
Adjusted Free Cash Flow ($M) – 20% Weight | $ | 752 | $ | 827 | $ | 902 | $ | 991 | |||||||||||||||||
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The financial measure achievement is multiplied by the level of achievement ofpre-established KODs. Management proposes and the Board reviews and approves the KODs each year to address specific business initiatives derived from ourCompany’s Strategic Imperatives, and operating plans.it is from these Strategic Imperatives that the KODs are derived. The KODs addresscontemplate near and long-term objectives of our multi-year strategy, and the KODs are how we translate these strategic goals into specific tangible and measurable progress towardquantifiable metrics to be achieved in any given year, holding all employees, including executives, accountable for our Company’s and their own performance.
In 2019, there were four KODs:
Lead
Financial Measure Achievement (%) | X | Key Operating Driver Achievement (%) | = | Actual Incentive Plan Funding (%) | |||||||||||||
Transform the treatmentincentive corresponding to a particular goal will be earned if actual performance falls short of mitralthe threshold minimum level for that goal.
| Percentage of Financial Measure Achievement | |||||||||||||||||||||||||||||||||||||||||||||||
| Minimum (25%) | Target (100%) | Maximum (175%) | Actual (%) | ||||||||||||||||||||||||||||||||||||||||||||
| Revenue Growth – 50% Weight | 4% | 12% | 20% | 8% | |||||||||||||||||||||||||||||||||||||||||||
| Earnings per Share ($) – 30% Weight | $2.06 | $2.58 | $3.09 | $2.48 | |||||||||||||||||||||||||||||||||||||||||||
| Free Cash Flow ($M) – 20% Weight | $1,100 | $1,350 | $1,600 | $1,100 | |||||||||||||||||||||||||||||||||||||||||||
Strengthen global leadershipdetermining compensation is not calculated in surgical heart valve, critical careaccordance with GAAP and adjacent opportunities
Strengthen capabilitiesreflects adjustments for items such as intellectual property litigation expenses, amortization of intangible assets, fair value adjustments to contingent consideration liabilities arising from acquisitions, and talenta significant program discontinuation. Free Cash Flow is also a non-GAAP financial measure that is defined as cash flows from operating activities less capital expenditures and, on a non-GAAP basis, Free cash flow was determined excluding the impact of two non-recurring items: (i) a prepayment of property taxes due in 2023 and (ii) a one-time IP settlement amount; this adjustment resulted in a payout increase from 63% to execute key initiatives
Based on the formula above, combining financial performance of 151%61% with KOD performance of 97%113%, theour Compensation and Governance Committee arrived at a corporatean actual calculated Incentive Plan funding of 146%69%.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
against all of his or her individual objectives, taken together, and the executive’s performance relative to the environment and to other executives. There is no formal weighting of the individual performance objectives. Individual performance may impact an executive’s cash incentive payment, subject to an overall cap on incentive payments of 200% of the Incentive Pay Objective.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
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Mr. Wood |
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
| Annualized TSR vs Median of SPSIHE Subset | Payout as a Percentage of Target Award | ||||||||||||||
| Maximum | +7.5% or more points from median | 175% | ||||||||||||||
| Median |
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| Threshold | -7.5% points from median | |||||||||||||||
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stockholders.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following chart shows the values of the PBRSU awards approved by theour Compensation and Governance Committee in 20192022 that were used to determine the number of shares subject to the awards (based on the $177.77$105.93 closing price per share of our common stock on May 3, 2022, the grant date for the PBRSUs, and calculated at the “target” level of performance and without taking the Monte Carlo simulation pricing model into account), as well as the accounting grant-dategrant-
| 2019 PBRSU Awards | |||||||||||||||
Name | Value Based on May 8, 2019 Stock Price | Value Required to be Included in Summary Compensation Table | |||||||||||||
Mr. Mussallem | $ | 1,924,360 | $ | 2,099,509 | |||||||||||
Mr. Ullem | 502,200 | 547,909 | |||||||||||||
Mr. Bobo | 426,648 | 465,480 | |||||||||||||
Mr. Lemercier | 288,876 | 315,169 | |||||||||||||
Mr. Wood | 448,869 | 489,724 | |||||||||||||
| 2022 PBRSU Awards | ||||||||||||||
| Name | Value Based on Grant Date Fair Market Value | Value Required to be Included in Summary Compensation Table | ||||||||||||
| Mr. Mussallem | $ | 2,812,442 | 3,332,025 | |||||||||||
| Mr. Ullem | 662,063 | 784,375 | ||||||||||||
Mr. Lemercier (1) | 1,113,339 | 1,337,137 | ||||||||||||
| Mr. Wood | 587,912 | 696,525 | ||||||||||||
| Mr. Zovighian | 550,836 | 652,600 | ||||||||||||
2016 PBRSU Performance Levels | Rank of SPSIHE Subset | TSR Over Three-Year Period | Payout as a Percentage of Target Award | |||||||||
Maximum | 75th Percentile | 30.17 | % | 175 | % | |||||||
Target | 50th Percentile | 22.59 | % | 100 | % | |||||||
Threshold | 25th Percentile | 15.15 | % | 25 | % | |||||||
Edwards | 38th Percentile | 20.25 | % | 75.77 | % | |||||||
The
2019 PBRSU Performance Levels | Company’s TSR vs Median of SPSIHE Subset | TSR Over Three-Year Period | Payout as a Percentage of Target Award | ||||||||
| Maximum | +7.5% points from Median | 17.81% | 175% | ||||||||
| Target | Median | 10.31% | 100% | ||||||||
| Threshold | -7.5% points from Median | 2.81% | 25% | ||||||||
| Edwards | +14.55% points from Median | 24.86% | 175% | ||||||||
|
| |||||
| CEO | Other NEOs | |||||
| 6 times base salary | 3 times base salary | |||||
All of
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
options, payment of the exercise price) until the guidelines are met. In the event an executive achieved the guideline but was unable to maintain the ownership level due to a decline in the price of our common stock, the 50% holding requirement is reinstated.
The
Car Allowance. An annual
2022.
Perquisite Allowance. NEOs receive a fixed annual allowance for certain expenses. The CEO receives $40,000 (including one club membership that is being used for corporate business purposes, at a cost of $6,190 in 2019), and the other NEOs each receive $20,000. This benefit recognizes the diverse nature of expenses that have a business nexus that may be incurred by our executives. The allowance may also be used to cover certain personal financial, estate and tax planning costs, as we believe that it is appropriate for the executives to have professional assistance in managing their total compensation, permitting them to focus their full attention on growing and managing our business.
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employment.
The
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Although the potential deductibility of compensation is one of the factors theour Compensation and Governance Committee notes when designing theour Company’s executive compensation program, theour Compensation and Governance Committee has the flexibility to take any compensation-related actions it determines are in the best interests of theour Company and itsour stockholders, including awarding compensation that will not be deductible for tax purposes.
The
2020 Compensation Decisions. At its February 2020 meeting, the Compensation Committee approved average base salary increases of approximately 3.6% for the NEOs to maintain market competitiveness. The Compensation Committee also approved other base salary increases to recognize performance for other executives. In addition, the Compensation Committee established the Incentive Pay Objectives and the maximum bonus for each NEO, and established the Company’s 2020 financial measures and operational goals under the Incentive Plan.
Report on Form 10-K.
William
Steven R. Loranger
Nicholas J. Valeriani
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2019 Post-termination benefits for our NEOs are discussed in the section “Potential Payments Upon Termination or Change in Control” below.
– Fiscal 2020-2022
Name and Principal Position | Year | Salary $(1) | Bonus $(2) | Stock Awards $(3) | Option Awards $(3) | Non-Equity Incentive Plan Compensation $(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings $(5) | All Other Compensation $(6) | Total $ | ||||||||||||||||||||||||||||||||||||
Mr. Mussallem | 2019 | 1,072,240 | — | 3,641,664 | 4,235,402 | 2,381,117 | — | 190,550 | 11,520,973 | ||||||||||||||||||||||||||||||||||||
Chairman of the Board and Chief Executive Officer | 2018 | 1,034,769 | — | 3,391,586 | 3,631,053 | 2,597,000 | — | 183,294 | 10,798,318 | ||||||||||||||||||||||||||||||||||||
| 2017 | 995,385 | — | 2,943,863 | 3,409,180 | 2,228,226 | — | 176,099 | 9,734,099 | |||||||||||||||||||||||||||||||||||||
Mr. Ullem | 2019 | 619,760 | — | 1,047,907 | 1,098,595 | 756,864 | — | 47,945 | 3,571,071 | ||||||||||||||||||||||||||||||||||||
Corporate Vice President, Chief Financial Officer | 2018 | 593,628 | — | 843,514 | 975,537 | 559,944 | — | 49,207 | 3,021,830 | ||||||||||||||||||||||||||||||||||||
| 2017 | 569,826 | — | 855,664 | 914,598 | 800,400 | — | 44,082 | 3,184,570 | |||||||||||||||||||||||||||||||||||||
Mr. Bobo | 2019 | 615,455 | 2,000 | 807,687 | 935,153 | 671,600 | — | 73,546 | 3,105,441 | ||||||||||||||||||||||||||||||||||||
Corporate Vice President | 2018 | 592,999 | 4,000 | 772,062 | 891,964 | 563,790 | — | 78,584 | 2,903,399 | ||||||||||||||||||||||||||||||||||||
| 2017 | 573,506 | 2,000 | 821,135 | 881,474 | 802,473 | — | 68,501 | 3,149,089 | |||||||||||||||||||||||||||||||||||||
Mr. Lemercier | 2019 | 576,854 | — | 546,270 | 633,331 | 555,287 | 804,765 | 197,453 | 3,313,960 | ||||||||||||||||||||||||||||||||||||
Corporate Vice President | |||||||||||||||||||||||||||||||||||||||||||||
Mr. Wood | 2019 | 605,791 | 4,000 | 849,708 | 988,184 | 756,864 | — | 88,736 | 3,293,283 | ||||||||||||||||||||||||||||||||||||
Corporate Vice President | 2018 | 574,430 | 4,000 | 804,231 | 936,516 | 507,683 | — | — | 2,918,403 | ||||||||||||||||||||||||||||||||||||
| 2017 | 550,506 | 2,000 | 821,135 | 880,215 | 780,318 | — | 87,602 | 3,121,776 | |||||||||||||||||||||||||||||||||||||
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Name and Principal Position | Year | Salary $(1) | Bonus $(2) | Stock Awards $(3) | Option Awards $(3) | Non-Equity Incentive Plan Compensation $(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings $(5) | All Other Compensation $(6) | Total $ | |||||||||||||||||||||||||||||||||||
| Mr. Mussallem | 2022 | 1,213,038 | — | 5,583,038 | 6,186,115 | 869,400 | — | 140,554 | 13,992,145 | |||||||||||||||||||||||||||||||||||
| Chairman of the Board and Chief Executive Officer | 2021 | 1,153,040 | — | 5,230,175 | 5,501,118 | 1,581,770 | — | 147,202 | 13,613,305 | |||||||||||||||||||||||||||||||||||
| 2020 | 1,121,299 | — | 3,731,409 | 4,232,880 | 734,993 | — | 230,352 | 10,050,933 | ||||||||||||||||||||||||||||||||||||
| Mr. Ullem | 2022 | 704,816 | — | 1,314,025 | 1,457,589 | 319,643 | — | 65,326 | 3,861,399 | |||||||||||||||||||||||||||||||||||
Corporate Vice President, Chief Financial Officer | 2021 | 664,688 | — | 1,244,451 | 1,306,053 | 573,036 | — | 81,175 | 3,869,403 | |||||||||||||||||||||||||||||||||||
| 2020 | 647,079 | 49,583 | 1,091,084 | 1,236,859 | 262,500 | — | 98,860 | 3,385,965 | ||||||||||||||||||||||||||||||||||||
| Mr. Lemercier | 2022 | 665,635 | — | 2,228,867 (7) | 2,446,507 (7) | 361,414 | (5) | 208,689 | 5,911,112 | |||||||||||||||||||||||||||||||||||
| Corporate Vice President | 2021 | 654,236 | — | 693,922 | 728,243 | 532,209 | 433,522 | 239,517 | 3,281,649 | |||||||||||||||||||||||||||||||||||
| 2020 | 625,360 | — | 604,174 | 688,517 | 254,746 | 1,925,308 | 246,810 | 4,344,915 | ||||||||||||||||||||||||||||||||||||
| Mr. Wood | 2022 | 695,336 | 2,000 | 1,165,265 | 1,293,106 | 337,238 | — | 65,876 | 3,558,821 | |||||||||||||||||||||||||||||||||||
| Corporate Vice President | 2021 | 658,063 | 2,000 | 1,114,085 | 1,170,952 | 567,418 | — | 77,726 | 3,590,244 | |||||||||||||||||||||||||||||||||||
| 2020 | 639,273 | — | 968,369 | 1,097,961 | 273,000 | — | 101,114 | 3,079,717 | ||||||||||||||||||||||||||||||||||||
| Mr. Zovighian | 2022 | 641,922 | — | 1,092,210 | 1,209,870 | 344,862 | — | 49,563 | 3,338,427 | |||||||||||||||||||||||||||||||||||
| Corporate Vice President | ||||||||||||||||||||||||||||||||||||||||||||
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
|
Name | Year | Probable Outcome of Performance Conditions Grant-Date Fair Value ($) | Maximum Outcome of Performance Conditions Grant-Date Fair Value ($) | ||||||||||||
Mr. Mussallem | 2019 | 2,099,509 | 3,674,140 | ||||||||||||
| 2018 | 1,970,143 | 3,447,749 | |||||||||||||
| 2017 | 2,071,342 | 3,624,849 | |||||||||||||
Mr. Ullem | 2019 | 547,909 | 958,840 | ||||||||||||
| 2018 | 486,960 | 852,180 | |||||||||||||
| 2017 | 522,158 | 913,777 | |||||||||||||
Mr. Bobo | 2019 | 465,480 | 814,590 | ||||||||||||
| 2018 | 446,070 | 780,623 | |||||||||||||
| 2017 | 501,410 | 877,468 | |||||||||||||
Mr. Lemercier | 2019 | 315,169 | 551,545 | ||||||||||||
Mr. Wood | 2019 | 489,724 | 857,017 | ||||||||||||
| 2018 | 464,656 | 813,148 | |||||||||||||
| 2017 | 501,410 | 877,468 | |||||||||||||
|
|
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
Type of Compensation
|
Mr. Mussallem
|
Mr. Ullem
|
Mr. Bobo
|
Mr. Lemercier
|
Mr. Wood
| ||||||||||||||||||||
401(k) Company Match | $ | 14,000 | $ | 14,000 | $ | 14,000 | $ | — | $ | 14,000 | |||||||||||||||
EDCP Company Contribution | 122,611 | — | 27,789 | — | 41,440 | ||||||||||||||||||||
Company Contribution – Zurich vita Pension Plan (saving) | — | — | — | 153,232 | — | ||||||||||||||||||||
Car Allowance or Company Car Lease Payments | 13,200 | 10,800 | 10,800 | 24,094 | 10,800 | ||||||||||||||||||||
Officer Perquisites (Flexible Allowance, including, among other things, financial planning expenses, airline club dues, club membership dues, home office supplies, personal travel expenses; Annual Physical Examination Expenses and Life Insurance Premiums) | 40,739 | 23,145 | 20,957 | 20,127 | * | 22,496 | |||||||||||||||||||
Totals | $ | 190,550 | $ | 47,945 | $ | 73,546 | $ | 197,453 | $ | 88,736 | |||||||||||||||
|
| Name | Year | Probable Outcome of Performance Conditions Grant-Date Fair Value ($) | Maximum Outcome of Performance Conditions Grant-Date Fair Value ($) | ||||||||||||||||||||||||||||||||||||||||||||
| Mr. Mussallem | |||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 3,231,008 | 5,654,264 | |||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2,188,776 | 3,830,357 | |||||||||||||||||||||||||||||||||||||||||||||
| Mr. Ullem | 2022 | 784,375 | 1,372,656 | ||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 768,570 | 1,344,998 | |||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 638,651 | 1,117,640 | |||||||||||||||||||||||||||||||||||||||||||||
| Mr. Lemercier | 2022 | 1,337,137 | 2,339,989 | ||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 427,988 | 748,979 | |||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 353,428 | 618,500 | |||||||||||||||||||||||||||||||||||||||||||||
| Mr. Wood | 2022 | 696,525 | 1,218,919 | ||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 687,192 | 1,202,586 | |||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 570,446 | 998,280 | |||||||||||||||||||||||||||||||||||||||||||||
| Mr. Zovighian | 2022 | 652,600 | 1,142,050 | ||||||||||||||||||||||||||||||||||||||||||||
Type of Compensation | Mr. Mussallem | Mr. Ullem | Mr. Lemercier | Mr. Wood | Mr. Zovighian | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 401(k) Company Match | $ | 15,250 | $ | 15,250 | $ | — | $ | 15,250 | $ | 15,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EDCP Company Contribution | 123,336 | 47,972 | — | 47,226 | 30,193 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Company Contribution – Zurich vita Pension Plan (saving) | — | — | 149,539 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Company Car Payments | — | — | 27,638 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Officer Perquisites (Mobile Allowance, Gifts, Annual Physical Examination Expenses and Life Insurance Premiums) | 1,968 | 2,104 | — | 3,400 | 4,120 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Housing Allowance | — | — | 31,512 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Totals | $ | 140,554 | $ | 65,326 | $ | 208,689* | $ | 65,876 | $ | 49,563 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||
2022
Estimated Future Payouts Under |
Estimated Future Payouts | All Other Units (#) | All Other Option Awards; Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Share) | Closing Price on Grant Date ($) | Grant-Date Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date(1) | Approval Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Mussallem | — | 02/20/2019 | — | 1,553,240 | (3) | 3,106,480 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | — | — | — | 85,600 | (6) | 177.77 | 177.77 | 4,235,402 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | — | — | 8,675 | (5) | — | — | — | 1,542,155 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | 10,825 | 18,943 | — | — | — | — | 2,099,509 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Ullem | — | 02/20/2019 | — | 480,000 | (3) | 960,000 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/21/2019 | 02/20/2019 | — | — | — | — | — | — | 575 | (5) | — | — | — | 100,016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | — | — | — | 19,900 | (7) | 177.77 | 177.77 | 1,098,595 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | — | — | 2,250 | (5) | — | — | — | 399,983 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | 2,825 | 4,943 | — | — | — | — | 547,909 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Bobo | — | 02/20/2019 | — | 460,000 | (3) | 920,000 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | — | — | — | 18,900 | (6) | 177.77 | 177.77 | 935,153 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | — | — | 1,925 | (5) | — | — | — | 342,207 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | 2,400 | 4,200 | — | — | — | — | 465,480 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Lemercier | — | 02/20/2019 | — | 391,507 | (3) | 783,014 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | — | — | — | 12,800 | (6) | 177.77 | 177.77 | 633,331 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | — | — | 1,300 | (5) | — | — | — | 231,101 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | 1,625 | 2,843 | — | — | — | — | 315,169 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Wood | — | 02/20/2019 | — | 480,000 | (3) | 960,000 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | — | — | — | 17,900 | (7) | 177.77 | 177.77 | 988,184 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | — | — | 2,025 | (5) | — | — | — | 359,984 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 05/07/2019 | — | — | — | — | 2,525 | 4,418 | — | — | — | — | 489,724 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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(1) Our practice is to grant equity-based awards on the date of the Board meeting following our Compensation and Governance Committee’s approval of the grants. (2) These are awards payable under the Incentive Plan for 2022. See the discussion on “Annual Cash Incentive Payment” beginning at page 30 for additional information. Amounts for Mr. Lemercier were converted from Swiss Francs to United States dollars using an exchange rate of 1.086762 CHF/USD (reflects the exchange rate as of January 2022). (3) See the discussions beginning at page 30 on “2022 Annual Incentive Plan” and page 35 on “Annual Cash Incentive Payment” and on “Incentive Pay Objective” for additional information. (4) These are PBRSUs | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Non-Equity Incentive Plan Awards. The material terms of the PBRSUs are described in the section “Equity Incentive Plan Awards—Performance-Based Restricted Stock Units” below.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Equity Incentive Plan Awards. Each of the equity incentive awards reported in the table above was granted under, and is subject to, the terms of the Long-Term Stock Program. TheOur Compensation and Governance Committee administers the Long-Term Stock Program and has authority to interpret the plan provisions and make all required determinations thereunder. Additional terms of the equity incentive awards reported in the table above are described in the “Compensation Discussion and Analysis” section under the heading, “Elements of Compensation—Long-Term Incentive Awards” and in the footnotes accompanying the table above. The terms of the accelerated vesting provisions for equity incentive awards are described in this section and in the section titled “Potential Payments Upon a Termination or Change in Control.”
STOCK OPTIONS | ||||||
Maximum Term | • Seven years from grant date | |||||
Exercise Price Per Share | • Fair market value of a share of common stock on the grant date | |||||
Vesting Schedule—Regular | • 25% annually over four years following the grant date | |||||
Vesting Schedule—Retirement-Eligible | • Monthly over 36 months following the grant date | |||||
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| |||||
Effect of Change in Control |
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Effect of Termination of Employment of Retirement-Eligible NEOs |
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| Effect of Termination of Employment due to Death or Disability | • Unvested options held by the NEO will immediately vest | |||||
Dividend Rights | • No dividend rights | |||||
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
RESTRICTED STOCK UNITS | ||||||
Vesting Schedule |
• 25% of the total number of units subject to the award on the first, second, third and fourth anniversaries of the award date | |||||
Effect of Change in Control |
| |||||
| • No automatic acceleration upon a change in control of | |||||
Effect of Termination of Employment of Retirement- Eligible NEOs |
| |||||
Effect of Termination of Employment ofNon-Retirement-Eligible NEOs | • Unvested RSUs held by the NEO will immediately terminate and be forfeited | |||||
| Effect of Termination of Employment due to Death or Disability | • Unvested RSUs held by the NEO will immediately vest | |||||
Dividend Rights | • Dividend equivalent units may be paid or credited, either in cash or in actual or phantom shares of common stock, on outstanding RSUs; however, to date we have never paid a dividend on our common stock | |||||
PERFORMANCE-BASED RESTRICTED STOCK UNITS | ||||||||||||||
| Vesting Provisions | ||||||||||||||
|
• 0% to 175% of the target number of shares subject to the award will vest based on our Company's TSR measured over a3-year performance period compared to comparator companies, generally subject to continued employment through the applicable vesting date | |||||||||||||
TSR Definition | • The average of the closing price of a share for each trading day during the one month ending on the first day of the performance period compared to the average of the closing price of a share for each trading day during the one month ending on the last day of the performance period | |||||||||||||
Effect of Change in Control |
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
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| No automatic acceleration upon a change in control of | ||||||||||||||||
Effect of Termination due to | • Any unvested PBRSUs will remain eligible to vest at the end of the performance period based on actual attainment of the performance goals, and, for termination due to retirement, the NEO will receive apro-rata portion of the shares subject to the award (after giving effect to the performance conditions) based on the NEO’s whole months of service during the performance period | ||||||||||||||||
Effect of any Other | • Any unvested PBRSUs held by the NEO will terminate and be forfeited | ||||||||||||||||
Compensation and Governance Committee | • At the meeting of | ||||||||||||||||
Dividend Rights | • Dividend equivalent units may be paid or credited, either in cash or in actual or phantom shares of common stock, on outstanding RSUs; however, to date we have never paid a dividend on our common stock | ||||||||||||||||
Performance Period | • Begins April 30 of the grant year and ends on April 30 in the third year following the grant year | ||||||||||||||||
Comparator Companies | • Companies that were listed in the SPSIHE Subset on the grant date that are still publicly traded companies on the last day of the performance period | ||||||||||||||||
Performance Criteria | Performance Levels | Company’s TSR vs Median of SPSIHE | Payout as a Percentage of Target Award | ||||||||||||||
| Maximum | #VALUE! | 175% | |||||||||||||||
| Target | Median | 100% | |||||||||||||||
| Threshold | -7.5% points from Median | 25% | |||||||||||||||
| No Payout | |||||||||||||||||
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More than -7.5% points |
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| 0% | ||||||||||||||||
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Option Awards |
Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||
Name | Award Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity or Other ($)(1) | |||||||||||||||||||||||||||||||||||||||||
Mr. Mussallem | 05/14/2013 | 164,250 | — | 35.785 | 05/13/2020 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2014 | 383,200 | — | 41.940 | 05/07/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 05/14/2015 | 191,200 | — | 65.280 | 05/13/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 05/12/2016 | 117,500 | — | 105.590 | 05/11/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | 101,091 | 16,309 | (2) | 110.250 | 05/10/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | 55,045 | 49,255 | (2) | 135.830 | 05/16/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 16,643 | 68,957 | (2) | 177.770 | 05/07/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/12/2016 | — | — | — | — | 5,875 | 1,370,579 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | — | — | — | — | 11,975 | 2,793,648 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | — | — | — | — | — | — | 14,975 | (4) | 3,493,518 | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | — | — | — | — | 10,600 | 2,472,874 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | — | — | — | — | — | — | 13,250 | (4) | 3,091,093 | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | 8,675 | 2,023,791 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | — | — | 10,825 | (4) | 2,525,364 | |||||||||||||||||||||||||||||||||||||||||
Total | 1,028,929 | 134,521 | 37,125 | 8,660,891 | 39,050 | 9,109,975 | ||||||||||||||||||||||||||||||||||||||||||||
Mr. Ullem | 05/08/2014 | 43,100 | — | 41.940 | 05/07/2021 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/14/2015 | 44,200 | — | 65.280 | 05/13/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 05/12/2016 | 20,175 | 6,725 | (5) | 105.590 | 05/11/2023 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | 13,300 | 13,300 | (5) | 110.250 | 05/10/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | 5,625 | 16,875 | (5) | 135.830 | 05/16/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | 19,900 | (5) | 177.770 | 05/07/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/12/2016 | — | — | — | — | 1,463 | 341,303 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | — | — | — | — | 3,025 | 705,702 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | — | — | — | — | — | — | 3,775 | (4) | 880,670 | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | — | — | — | — | 2,625 | 612,386 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | — | — | — | — | — | — | 3,275 | (4) | 764,025 | |||||||||||||||||||||||||||||||||||||||||
| 02/21/2019 | — | — | — | — | 575 | 134,142 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | 2,250 | 524,903 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | — | — | 2,825 | (4) | 659,044 | |||||||||||||||||||||||||||||||||||||||||
Total | 126,400 | 56,800 | 9,938 | 2,318,436 | 9,875 | 2,303,739 | ||||||||||||||||||||||||||||||||||||||||||||
Mr. Bobo | 05/14/2013 | 26,848 | — | 35.785 | 05/13/2020 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2014 | 52,300 | — | 41.940 | 05/07/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 05/14/2015 | 44,200 | — | 65.280 | 05/13/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 05/12/2016 | 20,175 | 6,725 | (5) | 105.590 | 05/11/2023 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | 24,540 | 3,960 | (2) | 110.250 | 05/10/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | 12,402 | 11,098 | (2) | 135.830 | 05/16/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 3,674 | 15,226 | (2) | 177.770 | 05/07/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/12/2016 | — | — | — | — | 1,463 | 341,303 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | — | — | — | — | 2,900 | 676,541 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | — | — | — | — | — | — | 3,625 | (4) | 845,676 | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | — | — | — | — | 2,400 | 559,896 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | — | — | — | — | — | — | 3,000 | (4) | 699,870 | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | 1,925 | 449,083 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | — | — | 2,400 | (4) | 559,896 | |||||||||||||||||||||||||||||||||||||||||
Total | 184,139 | 37,009 | 8,688 | 2,026,824 | 9,025 | 2,105,442 | �� | |||||||||||||||||||||||||||||||||||||||||||
| ||||||||||
Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Award Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Date | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mr. Mussallem | 05/12/2016 | 146,875 | — | 35.1967 | 05/11/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | 352,200 | — | 36.7500 | 05/10/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | 312,900 | — | 45.2767 | 05/16/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 256,800 | — | 59.2567 | 05/07/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | 182,634 | 29,466 (2) | 72.6800 | 05/06/2027 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | 110,830 | 99,170 (2) | 93.3100 | 05/03/2028 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | 37,021 | 153,379 (2) | 105.9300 | 05/02/2029 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | 13,014 (3) | 970,975 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | — | — | — | — | 10,614 (4) | 791,911 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | — | — | — | — | — | — | 26,475 (5) | 1,975,300 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | — | — | — | — | 16,069 (4) | 1,198,908 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | — | — | — | — | — | — | 26,800 (5) | 1,999,548 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | — | — | — | — | 21,250 (4) | 1,585,463 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | — | — | — | — | — | — | 26,550 (5) | 1,980,896 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 1,399,260 | 282,015 | 60,947 | 4,547,257 | 79,825 | 5,955,744 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mr. Ullem | 05/12/2016 | 80,700 | — | 35.1967 | 05/11/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | 79,800 | — | 36.7500 | 05/10/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | 67,500 | — | 45.2767 | 05/16/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 44,775 | 14,925 (6) | 59.2567 | 05/07/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | 28,050 | 28,050 (6) | 72.6800 | 05/06/2027 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | 11,100 | 33,300 (6) | 93.3100 | 05/03/2028 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | — | 40,600 (6) | 105.9300 | 05/02/2029 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/21/2019 | — | — | — | — | 864 (3) | 64,463 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | 3,375 (3) | 251,809 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | — | — | — | — | 3,114 (4) | 232,336 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | — | — | — | — | — | — | 7,725 (5) | 576,362 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | — | — | — | — | 3,825 (4) | 285,383 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | — | — | — | — | — | — | 6,375 (5) | 475,639 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | — | — | — | — | 5,000 (4) | 373,050 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | — | — | — | — | — | — | 6,250 (5) | 466,313 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 311,925 | 116,875 | 16,178 | 1,207,041 | 20,350 | 1,518,314 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Option Awards |
Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||
Name | Award Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity or Other ($)(1) | |||||||||||||||||||||||||||||||||||||||||
Mr. Lemercier | 05/14/2013 | 13,880 | — | 35.785 | 05/13/2020 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 02/20/2014 | 5,002 | — | 34.050 | 02/19/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 05/08/2014 | 17,360 | — | 41.940 | 05/07/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 05/14/2015 | 11,660 | — | 65.280 | 05/13/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 05/12/2016 | 4,980 | 1,660 | (5) | 105.590 | 05/11/2023 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | 7,200 | 7,200 | (5) | 110.250 | 05/10/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | 8,391 | 7,509 | (2) | 135.830 | 05/16/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 2,488 | 10,312 | (2) | 177.770 | 05/07/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/12/2016 | — | — | — | — | 425 | 99,148 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | — | — | — | — | 1,625 | 379,096 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | — | — | — | — | — | — | 2,050 | (4) | 478,245 | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | — | — | — | — | 1,625 | 379,096 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | — | — | — | — | — | — | 2,025 | (4) | 472,412 | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | 1,300 | 303,277 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | — | — | 1,625 | (4) | 379,096 | |||||||||||||||||||||||||||||||||||||||||
Total | 70,961 | 26,681 | 4,975 | 1,160,618 | 5,700 | 1,329,753 | ||||||||||||||||||||||||||||||||||||||||||||
Mr. Wood | 02/20/2014 | 5,002 | — | 34.050 | 02/19/2021 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/14/2015 | 42,800 | — | 65.280 | 05/13/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| 05/12/2016 | 19,575 | 6,525 | (5) | 105.59 | 05/11/2023 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | 12,800 | 12,800 | (5) | 110.250 | 05/10/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | 5,400 | 16,200 | (5) | 135.830 | 05/16/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | 17,900 | (5) | 177.770 | 05/07/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/12/2016 | — | — | — | — | 1,425 | 332,438 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | — | — | — | — | 2,900 | 676,541 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | — | — | — | — | — | — | 3,625 | (4) | 845,676 | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | — | — | — | — | 2,500 | 583,225 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | — | — | — | — | — | — | 3,125 | (4) | 729,031 | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | 2,025 | 472,412 | (3) | — | — | |||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | — | — | 2,525 | (4) | 589,057 | |||||||||||||||||||||||||||||||||||||||||
Total | 85,577 | 53,425 | 8,850 | 2,064,617 | 9,275 | 2,163,765 | ||||||||||||||||||||||||||||||||||||||||||||
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Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Award Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mr. Lemercier | 05/12/2016 | 19,920 | — | 35.1967 | 05/11/2023 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/11/2017 | 43,200 | — | 36.7500 | 05/10/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/17/2018 | 47,700 | — | 45.2767 | 05/16/2025 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 38,400 | — | 59.2567 | 05/07/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | 29,706 | 4,794 (2) | 72.6800 | 05/06/2027 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | 14,671 | 13,129 (2) | 93.3100 | 05/03/2028 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | 4,763 | 19,737 (2) | 105.9300 | 05/02/2029 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
07/07/2022 (7) | 7,569 | 46,931 (2) | 98.4300 | 07/06/2029 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | 1,950 (3) | 145,490 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | — | — | — | — | 1,725 (4) | 128,702 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | — | — | — | — | — | — | 4,275 (5) | 318,958 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | — | — | — | — | 2,138 (4) | 159,516 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | — | — | — | — | — | — | 3,550 (5) | 264,866 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | — | — | — | — | 2,750 (4) | 205,178 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | — | — | — | — | — | — | 3,425 (5) | 255,539 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
07/07/2022 (7) | — | — | — | — | 6,100 (4) | 455,121 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
07/07/2022 (7) | — | — | — | — | — | — | 7,625 (5) | 568,901 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 205,929 | 84,591 | 14,663 | 1,094,007 | 18,875 | 1,408,264 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mr. Wood | 05/17/2018 | 64,800 | — | 45.2767 | 05/16/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 40,275 | 13,425 (6) | 59.2567 | 05/07/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | 24,900 | 24,900 (6) | 72.6800 | 05/06/2027 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | 23,591 | 21,109 (2) | 93.3100 | 05/03/2028 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | 7,738 | 32,062 (2) | 105.9300 | 05/02/2029 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | 3,039 (3) | 226,740 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | — | — | — | — | 2,739 (4) | 204,357 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | — | — | — | — | — | — | 6,900 (5) | 514,809 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | — | — | — | — | 3,432 (4) | 256,062 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | — | — | — | — | — | — | 5,700 (5) | 425,277 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | — | — | — | — | 4,425 (4) | 330,149 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | — | — | — | — | — | — | 5,550 (5) | 414,086 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 161,304 | 91,496 | 13,635 | 1,017,308 | 18,150 | 1,354,172 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mr. Zovighian | 05/17/2018 | 14,925 | — | 45.2767 | 05/16/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | 38,025 | 12,675 (6) | 59.2567 | 05/07/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | 23,100 | 23,100 (6) | 72.6800 | 05/06/2027 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | 9,350 | 28,050 (6) | 93.3100 | 05/03/2028 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | — | 33,700 (6) | 105.9300 | 05/02/2029 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/08/2019 | — | — | — | — | 2,889 (3) | 215,548 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | — | — | — | — | 2,550 (4) | 190,256 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/07/2020 | — | — | — | — | — | — | 6,375 (5) | 475,639 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | — | — | — | — | 3,207 (4) | 239,274 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/04/2021 | — | — | — | — | — | — | 5,350 (5) | 399,164 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | — | — | — | — | 4,150 (4) | 309,632 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 05/03/2022 | — | — | — | — | — | — | 5,200 (5) | 387,972 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 85,400 | 97,525 | 12,796 | 954,710 | 16,925 | 1,262,775 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2022
Option Awards | Stock Awards | |||||||||||||||||||||||||
| Name | Number of Shares Acquired on Exercise(#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting ($)(2) | ||||||||||||||||||||||
| Mr. Mussallem | 430,875 (3) | 30,341,818 | 96,405 | 9,646,625 | ||||||||||||||||||||||
| Mr. Ullem | — | — | 25,838 | 2,590,444 | ||||||||||||||||||||||
| Mr. Lemercier | 34,880 (4) | 3,050,413 | 14,496 | 1,449,795 | ||||||||||||||||||||||
| Mr. Wood | 76,800 (5) | 4,476,145 | 22,553 | 2,255,999 | ||||||||||||||||||||||
| Mr. Zovighian | — | — | 21,279 | 2,128,907 | ||||||||||||||||||||||
| Option Awards | Stock Awards | ||||||||||||||||||||||||
Name | Number of Exercise(#) | Value Realized on Exercise | Number of Shares Acquired on | Value Realized on Vesting | |||||||||||||||||||||
Mr. Mussallem | 393,950 | (3) | 62,849,542 | 25,794 | 4,645,509 | ||||||||||||||||||||
Mr. Ullem | 37,500 | (4) | 6,997,050 | 6,472 | 1,165,557 | ||||||||||||||||||||
Mr. Bobo | 91,552 | (5) | 15,285,462 | 6,472 | 1,165,557 | ||||||||||||||||||||
Mr. Lemercier | 12,560 | (6) | 1,778,584 | 1,115 | 199,905 | ||||||||||||||||||||
Mr. Wood | 80,600 | (7) | 12,358,576 | 6,264 | 1,128,111 | ||||||||||||||||||||
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number of shares of our common stock to which the exercise of the option related, by (ii) the difference between the per-share sale price of our common stock on the date of exercise and the exercise price of the options.
Name | Plan Name | Number of Years of Credited Service (#) | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year | ||||||||||||||||||||
Mr. Mussallem | — | — | — | — | ||||||||||||||||||||
Mr. Ullem | — | — | — | — | ||||||||||||||||||||
Mr. Bobo | — | — | — | — | ||||||||||||||||||||
Mr. Lemercier | Nyon Plan | $ | 10,700,576 | (2) | — | |||||||||||||||||||
Mr. Wood | — | — | — | — | ||||||||||||||||||||
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| Name | Plan Name | Number of of Credited Service (#) | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year ($) | ||||||||||||||||||||||||||||||||||
| Mr. Mussallem | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Mr. Ullem | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Mr. Lemercier | Nyon Pension | — | $11,976,809(2) | — | ||||||||||||||||||||||||||||||||||
| Mr. Wood | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Mr. Zovighian | — | — | — | — | ||||||||||||||||||||||||||||||||||
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Mr. Lemercier made a regular employee contribution of approximately $113,248$120,170 in 2019.2022. Normal retirement age is 65. At normal retirement, a participant may choose to receive the accumulated account balance as either a lump sum or in the form of a pension annuity.
| Name | Executive Contributions in Last Fiscal Year ($) (1) | Registrant Contributions in Last Fiscal Year ($) (2) | Aggregate Earnings in Last Fiscal Year ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($)(4) | ||||||||||||
| Mr. Mussallem | 173,521 | 123,337 | (2,783,768) | — | 7,927,288 | ||||||||||||
| Mr. Ullem | 57,566 | 47,972 | (48,220) | — | 359,410 | ||||||||||||
| Mr. Lemercier | — | — | — | — | — | ||||||||||||
| Mr. Wood | 56,672 | 47,226 | (326,831) | — | 1,450,185 | ||||||||||||
| Mr. Zovighian | 139,603 | 30,193 | (209,317) | — | 1,170,769 | ||||||||||||
Name | Executive Contributions in Last Fiscal Year ($)(1) | Registrant Contributions in Last Fiscal Year ($)(2) | Aggregate Earnings in Last Fiscal Year ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE | ||||||||||||||||||||
Mr. Mussallem | 172,256 | 122,611 | 1,485,908 | — | 6,460,729 | ||||||||||||||||||||
Mr. Ullem | — | — | — | — | — | ||||||||||||||||||||
Mr. Bobo | 421,589 | 27,789 | 1,275,857 | -4,405 | 7,338,345 | ||||||||||||||||||||
Mr. Lemercier | — | — | — | — | — | ||||||||||||||||||||
Mr. Wood | 49,728 | 41,440 | 229,620 | — | 1,019,932 | ||||||||||||||||||||
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applicable year: $10,414,198 for Mr. Mussallem, $302,092 for Mr. Ullem, $0 for Mr. Lemercier, $1,673,118 for Mr. Wood, and $994,792 for Mr. Zovighian. In addition, Mr. Zovighian deferred $215,498 from his 2021 Non-Equity Incentive payout into the EDCP.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
change-in-control severance agreement, each executive is entitled to receive certain severance payments if, at any time during the period commencing six months prior to and ending on the date that is 24 months following a change in control, the executive incurs a “qualifying termination” of employment. For these purposes, a “qualifying termination” means (i) the executive is involuntarily terminated by us without cause or (ii) the executive voluntarily terminates employment for good reason.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
not be entitled to receive any such payments if he receives payments under hischange-in-control severance agreement and, as described above, any severance benefits Mr. Mussallem may receive under hischange-in-control severance agreement will be offset by any benefits he received under his employment agreement. For purposes of Mr. Mussallem’s employment agreement, “cause” generally includes (1)(i) the executive willfully engaging in conduct that is demonstrably and materially injurious to theour Company; or (2)(ii) the executive’s conviction of a felony.
•the change in control occurred on December 31, 2019;
•the stock price was $233.29$74.61 per share, which was the closing price of our common stock on December 31, 2019;
•all NEOs were terminated on the date of the change in control; and
•the NEOs received continued participation in our medical and dental plans for three years following termination of employment.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Benefits and Payments upon Termination: Mr. Mussallem
Qualifying (a)
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Termination (b)
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Termination (c)
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Involuntary by the Company Cause(2) (d)
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Salary Severance | $ | 3,213,600 | — | — | $ | 2,142,400 | ||||||||||||||
Bonus Severance | 5,004,681 | — | — | 3,336,454 | ||||||||||||||||
Pro Rata Bonus – 2019 | 1,553,240 | $ | 1,553,240 | $ | 1,553,240 | 1,553,240 | ||||||||||||||
Stock Option Acceleration | 10,634,824 | — | 10,634,824 | — | ||||||||||||||||
Restricted Stock Unit Acceleration | 5,960,560 | 2,700,332 | 5,960,560 | — | ||||||||||||||||
Performance-Based Stock Unit Acceleration | 9,109,975 | 5,297,951 | 5,297,951 | 5,297,951 | ||||||||||||||||
Medical and Dental Coverage Continuation(2) | 34,812 | — | — | 23,208 | ||||||||||||||||
Outplacement | 50,000 | — | — | — | ||||||||||||||||
Total | $ | 35,561,692 | $ | 9,551,523 | $ | 23,446,575 | $ | 12,353,253 | ||||||||||||
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Qualifying Termination in Connection with a Change in Control(1) | Termination Due to Retirement(2) | Termination Due to Disability or Death(2) | Involuntary Termination by the Company Without Case(2) | |||||||||||
| Salary Severance | $ 3,600,000 | $ __ | $ __ | $ 2,400,000 | ||||||||||
| Bonus Severance | 5,400,000 | __ | __ | 3,163,540 | ||||||||||
| Pro Rata Bonus – 2022 | 1,800,000 | 1,800,000 | 1,800,000 | 1,800,000 | ||||||||||
| Stock Option Acceleration | 56,855 | __ | 56,855 | __ | ||||||||||
| Restricted Stock Unit Acceleration | 4,547,013 | 485,431 | 4,547,013 | 485,431 | ||||||||||
| Performance-Based Stock Unit Acceleration | 5,955,744 | 3,306,881 | 5,955,744 | 3,306,881 | ||||||||||
| Medical and Dental Coverage Continuation | 41,534 | __ | __ | 27,689 | ||||||||||
| Outplacement | 50,000 | __ | __ | __ | ||||||||||
| Total | $ 21,451,146 | $ 5,592,312 | $ 12,359,612 | $ 11,183,541 | ||||||||||
Mr. Ullem | Mr. Bobo | Mr. Lemercier | Mr. Wood | |||||||||||||||||
Salary Severance | $ | 1,240,988 | $ | 1,231,048 | $ | 1,159,433 | $ | 1,216,862 | ||||||||||||
Bonus Severance | 1,119,888 | 1,127,580 | 784,468 | 1,015,366 | ||||||||||||||||
Pro Rata Bonus – 2019 | 480,000 | 460,000 | 392,950 | 480,000 | ||||||||||||||||
Stock Option Acceleration | 5,244,700 | 3,272,643 | 2,402,105 | 4,980,815 | ||||||||||||||||
Restricted Stock Unit Acceleration | 2,318,319 | 1,548,462 | 1,065,844 | 2,064,617 | ||||||||||||||||
Performance-Based Stock Unit Acceleration | 2,303,739 | 2,105,442 | 1,329,753 | 2,163,764 | ||||||||||||||||
Medical and Dental Coverage Continuation | 123,338 | 48,154 | 912,445 | 96,028 | ||||||||||||||||
Outplacement | 50,000 | 50,000 | 50,000 | 50,000 | ||||||||||||||||
Total | $ | 12,880,972 | $ | 9,843,329 | $ | 8,096,998 | $ | 12,067,452 | ||||||||||||
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| Mr. Ullem | Mr. Lemercier | Mr. Wood | Mr. Zovighian | ||||||||||||||
| Salary Severance | $ 1,395,794 | $ 1,362,108 | $ 1,375,568 | $ 1,272,632 | |||||||||||||
| Bonus Severance | 1,146,072 | 1,121,119 | 1,150,000 | 1,077,490 | |||||||||||||
| Pro Rata Bonus – 2022 | 545,000 | 560,560 | 575,000 | 510,000 | |||||||||||||
| Stock Option Acceleration | 283,285 | 9,248 | 254,175 | 239,186 | |||||||||||||
| Restricted Stock Unit Acceleration | 1,206,817 | 1,093,969 | 1,017,028 | 954,542 | |||||||||||||
| Performance-Based Stock Unit Acceleration | 1,518,314 | 1,408,264 | 1,354,172 | 1,262,775 | |||||||||||||
Medical and Dental Coverage Continuation (2) | 132,900 | 1,514,424 | 34,302 | 57,767 | |||||||||||||
| Outplacement | 50,000 | 50,000 | 50,000 | 50,000 | |||||||||||||
| Total | $6,278,182 | $7,119,692 | $5,810,245 | $5,424,392 | |||||||||||||
Mr. Ullem | Mr. Bobo | Mr. Lemercier | Mr. Wood | |||||||||||||||||
Cash Severance | $ | 224,412 | $ | 671,947 | $ | 857,467 | $ | 913,661 | ||||||||||||
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| Mr. Ullem | Mr. Lemercier | Mr. Wood | Mr. Zovighian | |||||||||||||||||||||||
| Cash Severance | $336,154 | $1,180,458(1) | $1,115,356 | $281,040 | ||||||||||||||||||||||
EXECUTIVE COMPENSATION AND OTHER INFORMATION
death and disabilityrisks related benefits as part of his pension plan rules. In the event of the termination of his employment due to disability,As Mr. Lemercier has now reached the normal retirement age of 65, he is not eligible to receive disability nor death benefits as an active plan participant. In exchange he would be entitled to a benefit under the Nyonreceive his regular retirement pension plan equal to 60% of his qualifying risk salary payable at 65. Assuming termination of his employment as of December 31, 2019 becausein case of disability Mr. Lemercier would have been entitled to receive $506,616 per year until age 65. Inoccurs and a spouse pension in the event of his death while employed by us, Mr. Lemercier would be entitled to a lump sum payment equal to 200%(60% of his insured salary as well as a spouse pension. Assuming his death as of December 31, 2019, Mr. Lemercier’s death benefit would have been a lump sum of $1,688,721 and a spouse’s pension of $337,744 per year payable for life. An exchange rate of 1.019371 CHF/USD has been used to convert payments in Swiss Francs into United States Dollars.proxy statementProxy Statement the ratio of the total annual compensation of our CEO to the median of the total annual compensation of all of our employees (excluding our CEO). Based on SEC rules for this disclosure and applying the methodology described below, we have determined that our CEO’s total compensation for 20192022 was $11,520,973,$13,992,145, and the median of the total 20192022 compensation of all of our employees (excluding our CEO) was $64,517.$50,997. Accordingly, we estimate the ratio of our CEO’s total compensation for 20192022 to the median of the total 20192022 compensation of all of our employees (excluding our CEO) to be 179274 to 1.The median employee that was used for purposes of calculating the ratio above was the same employee (the “2018 median employee”) that was as the median employee (the “2020 median employee”) for purposes of the CEO pay ratio disclosure included in the Proxy Statement for our 20182021 Annual Meeting of Stockholders. ThereStockholders (the “2020 Pay Ratio Disclosure”), and there has been no change in our employee population or employee compensation arrangements since the 20182020 median employee was identified that we believe would significantly impact our pay ratio disclosure.2019 for thatthe median employee and the total compensation for 2019 for our CEO, as included in the first paragraph of this pay ratio disclosure werewas determined using the same rules that apply to reporting the compensation of our Named Executive OfficersNEOs (including our CEO) in the “Total” column of the Summary Compensation Table. The total compensation amounts included in the first paragraph of this pay-ratio disclosure were determined based on that methodology. The SEC’s pay ratio disclosure rules permit the use of estimates, assumptions, and adjustments, and the SEC has acknowledged that pay ratio disclosures may involve a degree of imprecision. We believe that the foregoing pay ratio is a reasonable estimate calculated in a manner consistent with the SEC’s pay ratio disclosure rules.Total Shareholder Return Peer Group Total Shareholder Return 2022 $ 13,992,145 $ (10,537,711) $ 4,167,440 $ (2,605,075) $ 95.94 $ 113.92 $ 1,521.9 7.7 % 2021 13,613,305 31,516,279 3,501,702 8,147,117 166.60 140.40 1,503.1 17.8 % 2020 10,050,933 15,035,705 3,403,465 4,444,991 117.32 117.63 823.4 0.6 % Year Non-CEO NEOs 2022 Scott Ullem, Jean-Luc Lemercier, Larry Wood, Bernard Zovighian 2021 Scott Ullem, Donald Bobo Jr, Jean-Luc Lemercier, Larry Wood 2020 Edwards Lifesciences Corporation2020 Proxy Statement59Scott Ullem, Donald Bobo Jr, Jean-Luc Lemercier, Larry Wood
| 2022 | 2021 | 2020 | |||||||||
| Total Reported in 2022 Summary Compensation Table (SCT) | $ | 13,992,145 | $ | 13,613,305 | $ | 10,050,933 | |||||
| Less, value of Stock Awards reported in SCT | (11,769,153) | (10,731,293) | (7,964,289) | ||||||||
| Less, change in Pension Value reported in SCT | — | — | — | ||||||||
| Plus, Annual Service Cost (Pension) | — | — | — | ||||||||
| Plus, Year-End value of Awards Granted in Fiscal Year that are Unvested and Outstanding | 5,096,973 | 16,872,757 | 9,943,132 | ||||||||
| Plus, Change in Fair Value of Prior Year awards that are Outstanding and Unvested | (4,858,706) | 1,252,507 | (671,244) | ||||||||
| Plus, FMV of Awards Granted this Year and that Vested this Year | 826,186 | 1,466,945 | 931,746 | ||||||||
| Plus, Change in Fair Value (from prior year-end) of Prior Year awards that Vested this year | (13,825,155) | 9,042,058 | 2,745,426 | ||||||||
| Less Prior Year Fair Value of Prior Year awards that Failed to vest this year | — | — | — | ||||||||
| Total Adjustments | $ | (24,529,856) | $ | 17,902,974 | $ | 4,984,772 | |||||
| Actual Compensation Paid for Fiscal Year 2022 | $ | (10,537,711) | $ | 31,516,279 | $ | 15,035,705 | |||||
| 2022 | 2021 | 2020 | |||||||||
| Total Reported in 2022 Summary Compensation Table (SCT) | $ | 4,167,440 | $ | 3,501,702 | $ | 3,403,465 | |||||
| Less, value of Stock Awards reported in SCT | (3,051,860) | (2,065,155) | (1,879,854) | ||||||||
| Less, change in Pension Value reported in SCT | — | (108,381) | (481,327) | ||||||||
| Plus, Annual Service Cost (Pension) | 73,920 | 284,557 | 211,352 | ||||||||
| Plus, Year-End value of Awards Granted in Fiscal Year that are Unvested and Outstanding | 1,186,590 | 3,325,850 | 2,502,007 | ||||||||
| Plus, Change in Fair Value of Prior Year awards that are Outstanding and Unvested | (1,392,945) | 97,694 | (302,943) | ||||||||
| Plus, FMV of Awards Granted this Year and that Vested this Year | 370,095 | 195,064 | 91,597 | ||||||||
| Plus, Change in Fair Value (from prior year-end) of Prior Year awards that Vested this year | (3,958,314) | 2,915,787 | 900,694 | ||||||||
| Less Prior Year Fair Value of Prior Year awards that Failed to vest this year | — | — | — | ||||||||
| Total Adjustments | $ | (6,772,514) | $ | 4,645,415 | $ | 1,041,526 | |||||
| Actual Compensation Paid for Fiscal Year 2022 | $ | (2,605,075) | $ | 8,147,117 | $ | 4,444,991 | |||||
THE BOARD RECOMMENDS A VOTE“FOR” THE APPROVAL OF THE COMPENSATION OF OUR NEOS.
| THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NEOS. | ||||
•A significant portion of executive compensation is performance based;
•Our performance goals consist of a mix of company-wideCompany-wide financial, operating, and strategic measures as well as personal objectives designed to further theour Company’s annual and long-term business performance; and
•We strive to align the interests of our executives with the interests of our stockholders, with a significant portion of executive compensation being in the form of equity awards with a value dependent upon our stock price.
payment.
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PROPOSAL 2 – ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
Accordingly, we ask our stockholders to vote “FOR”“FOR” the following resolution at the Annual Meeting:
THE BOARD RECOMMENDS A VOTE“FOR” THE APPROVAL OF THE COMPENSATION OF OUR NEOS.
 | THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NEOS. | |||||||||||||
| THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE TO HOLD FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION EVERY “ONE YEAR”. | ||||
| | THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE TO HOLD FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION EVERY “ONE YEAR”. | ||||||||||||||
Plan Category | Number of Securities (a) | Weighted-Average (b) | Number of Securities (a)(c) | ||||||||||||
Equity Compensation Plans Approved by Stockholders | 6,625,353 | (2) | $ | 96.53 | 9,228,578 | (3) | |||||||||
Equity Compensation Plans Not Approved by Stockholders | — | — | — | ||||||||||||
(1)The weighted-average exercise price is calculated without taking into account 1,962,316 shares of common stock subject to outstanding RSUs and PBRSUs (with | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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PROPOSAL 3 – APPROVAL OF THE 2020 NONEMPLOYEE DIRECTORS STOCK INCENTIVE PROGRAM
THE BOARD RECOMMENDS A VOTE“FOR” THE APPROVAL OF THE 2020 NONEMPLOYEE DIRECTORS PROGRAM.
The Company is requesting that stockholders approve the 2020 Nonemployee Directors Stock Incentive Program (the “2020 Nonemployee Directors Program”), which was adopted, subject to stockholder approval, by the Board on February 20, 2020. The 2020 Nonemployee Directors Program will allow us to continue to grant equity awards to our nonemployee directors in order to align the nonemployee directors’ interests more closely with the interests of our stockholders.
The 2020 Nonemployee Directors Program will replace the current Nonemployee Directors Program that will expire according to its terms on April 1, 2020. As of January 31, 2020, there were 766,650 shares of our common stock available for new awards under the current Nonemployee Directors Program. The Company will not grant any new awards under the current Nonemployee Directors Program after April 1, 2020. Under the 2020 Nonemployee Directors Program, 766,650 shares of common stock would be available for award grants, which reflects the number of shares available for new award grants under the current Nonemployee Directors Program (which will expire) with no proposed increase in the share limit.
If stockholder approval for this proposal is not obtained, the Company will not be able to grant equity awards to nonemployee directors after the expiration of the current Nonemployee Directors Program, and we would be unable to continue thelong-term equity component of our nonemployee director compensation program. Our nonemployee directors are not eligible to receive award grants under the Long-Term Stock Incentive Program. Without the ability to use stock, we would be required to replace the long-term equity component of our nonemployee director compensation program with additional cash compensation for our nonemployee directors in order to maintain a competitive nonemployee director compensation program. We believe that additional cash compensation would offer less of an opportunity to further the link between nonemployee director interests and stockholder interests.
The Company encourages stockholders to consider the following factors that support this request:
The Company grantslong-term incentive awards (stock options and RSUs) to its nonemployee directors to further align their interests with those of our stockholders. The size of these incentive award grants has been limited under the Nonemployee Directors Program, and will continue to be limited under the 2020 Nonemployee Directors Program. As a result, the Company has achieved a low burn rate for the Nonemployee Directors Program while providing what we believe to be adequate compensation for our nonemployee directors.
| 2016 | 2017 | 2018 | 2019 | |||||||||||||||||
Annual Burn Rate(1) | 0.01 | % | 0.01 | % | 0.01 | % | 0.01 | % | ||||||||||||
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The 766,650 shares that would be available for award grants under the 2020 Nonemployee Directors Program if stockholders approve this proposal represent 0.37% of our outstanding shares at December 31, 2019.
The total number of shares of our common stock subject to awards granted under the Nonemployee Directors Program over the last three years, and through January 31, 2020, are as follows:
| 2017 | 2018 | 2019 | 2020 Through January 31 | |||||||||||||||||
Stock Options | 4,704 | 3,826 | — | — | ||||||||||||||||
RSAs | 1,764 | 1,437 | 1,967 | — | ||||||||||||||||
RSUs | 14,238 | 11,585 | 9,261 | — | ||||||||||||||||
Total | 20,706 | 16,848 | 11,228 | — | ||||||||||||||||
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PROPOSAL 3 – APPROVAL OF THE 2020 NONEMPLOYEE DIRECTORS STOCK INCENTIVE PROGRAM
As additional context, the total number of shares of our common stock subject to awards granted under the Long-Term Stock Program over the last three years, and through January 31, 2020, are as follows (in each case with PBRSUs taken into account at the targeted level of performance): 1,385,735 that will become issuable as those units vest, without any cash consideration or other payment required for such shares.
Each year since 2008, we have actively repurchased shares of our common stock through various stock repurchase programs. The Board has approved stock repurchase programs authorizing us to purchase our common stock on the open market, including pursuant to aRule 10b5-1 plan and in privately negotiated transactions. As of December 31, 2019, we had remaining authority to purchase $1.2 billion of common stock.
To help assess the potential dilutive impactcolumn 1 of the 2020 Nonemployee Directors Program proposal, the numbertable (Number of sharesSecurities to be Issued Upon Exercise of our common stock issuedOutstanding Options, Warrants and outstanding in each of the last four fiscal years is as follows:
| 2016 | 2017 | 2018 | 2019 | |||||||||||||||||
Shares Outstanding at Fiscal Year End (in millions) | 211.6 | 209.8 | 207.7 | 209.0 | ||||||||||||||||
On January 31, 2020, the Company had outstanding 209,122,578Rights).
As of January 31, 2020, a total of 60,776 shares werestock subject to outstanding stock options, (b) 1,707,729 shares of common stock subject to RSU awards, and stock awards under the Nonemployee Directors Program (referred to as “overhang”). These included 49,548(c) 254,587 shares subject to outstanding options and 1,967 shares subject to outstanding RSAs and 9,261 shares subject to outstanding RSUs. As of that date, a total of 766,650 shares were available for new award grants under the Nonemployee Directors Program. In addition, as of that date, 5,533,228 shares were subject to outstanding options under the Long-Term Stock Program, 781,179 shares were subject to RSUs outstanding under the Long-Term Stock Program, 120,141 shares were subject to PBRSUs outstanding under the Long-Term Stock Program (atPBRSU awards (determined at the targeted level of performance; actual payout could range from 0% to 175% of the targeted level),level based on relative total stockholder return over the performance period). This amount does not include 1,474 restricted stock awards (RSA) granted to nonemployee directors that were outstanding and 8,507,117unvested as of December 31, 2022; these RSAs are grants in lieu of cash retainers under the non-employee director “Deferral Election Program."
We are committed to maintaining strong corporate governance practices and noteProgram may be used for any type of award authorized under the following important factors that pertain to our 2020 Nonemployee DirectorsLong-Term Stock Program, and ourlong-term equity compensation practices:
The Company has adopted stock ownership guidelines and a holding requirement for its nonemployee directors to create additional owner commitment and to emphasize stockholder value creation. (See “Director Compensation—Directors’ Stock Ownership Guidelines and Holding Requirement.”) All current nonemployee directors have met their ownership targets;
The maximum term of options is seven years;
We do not have any program, plan or practice to time equity awards in coordination with the release of material information;
Our practice is to grant equity awards to the nonemployee directors each year on the day following our annual meeting of stockholders; and
We have never engaged in a repricing ofincluding stock options, restricted stock, RSUs and our 2020 Nonemployee Directors Program would require stockholder approval for any repricing actions.
PBRSUs. The principal terms of the 2020 Nonemployee Directors Program are summarized below. The following summary is qualified in its entirety by the full text of the 2020 Nonemployee Directors Program, which has been filed as Appendix B to this Proxy Statement.
Administration. The 2020 Nonemployee Directors Program will be administered by the Compensation Committee, or by another committee appointed by the Board (which shall consist of entirely of directors) or by the Board itself. The administrator of the 2020 Nonemployee Directors Program may also delegate administrative duties under the plan to officers, employees and directors of the Company, except that it may not delegate its authority with respect to granting awards under the plan. The administrator of the 2020 Nonemployee Directors Program (the Board or a committee of directors) will have broad authorityshares available under the 2020 Nonemployee Directors Stock Incentive Program including the authority to select participants and determine awards; establish terms and conditionsmay be used for any type of awards, make certain adjustments to awards and construe and interpret the program.
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PROPOSAL 3 – APPROVAL OF THE 2020 NONEMPLOYEE DIRECTORS STOCK INCENTIVE PROGRAM
Eligibility. Only nonemployee directors of the Company will be eligible to participate in the 2020 Nonemployee Directors Program. As of January 31, 2020, the Company had seven nonemployee directors. The Company’s employees and independent contractors are not eligible to participate in the 2020 Nonemployee Directors Program.
Share Reserve. Subject to adjustment for certain changes in the Company’s capitalization or other events referred to under “Adjustments in Authorized Shares” below, and subject to approval of Proposal 3 by stockholders, a total of 766,650 shares of our common stock will beaward authorized for issuance under the 2020 Nonemployee Directors Stock Incentive Program, which represents the number of shares that were available for new award grants under the current Nonemployee Directors Program as of January 31, 2020. In general, shares subject to outstanding options or other awards under the 2020 Nonemployee Directors Program that expire or otherwise terminate prior to the issuance of the shares subject to those options or awards will be available for subsequent issuance under the 2020 Nonemployee Directors Program. Unvested shares issued under the 2020 Nonemployee Directors Program and subsequently forfeited to or reacquired by the Company will be added back to the number of shares reserved for issuance under the 2020 Nonemployee Directors Program and will accordingly be available for subsequent issuance. In addition, upon exercise of a stock appreciation right, the number of shares reserved for issuance under the 2020 Nonemployee Directors Program shall be reduced by the gross number of shares as to which such stock appreciation right is exercised.
As of January 31, 2020, 49,548 options, 1,967 RSAs, and 9,261 RSUs were outstanding under the current Nonemployee Directors Program. As of the same date, 956,088 shares had been issued pursuant to the exercise of outstanding options and 1,016,486 shares had been issued upon vesting of RSUs and the grant of restricted stock awards, and 766,650 shares remained available for future awards under the current Nonemployee Directors Program. As noted above, the current Nonemployee Directors Program will expire according to its terms on April 1, 2020 and we will not grant any new awards under the current Nonemployee Directors Program after April 1, 2020.
Types of Awards. The following types of awards may be granted to eligible participants under the 2020 Nonemployee Directors Program:including stock options, stock issuances, restricted stock, awards, RSUs and stock appreciation rights.
Stock Options and Stock Appreciation Rights. Nonqualified stock options and stock appreciation rights (“SARs”) may be granted under the 2020 Nonemployee Directors Program. A nonqualified stock option is an option that is not intended to be a qualified stock option within the meaning of Section 422 of the Internal Revenue Code and is the right to purchase shares of the Company’s common stock at a future date at a specified price per share (the “exercise price”). A SAR is the right to receive payment of an amount equal to the excess of the fair market value of share of the Company’s common stock on the date of exercise of the SAR over the base price of the SAR. The Compensation Committee has the discretion to select eligible participants to receive options or SARs, and determine the number of shares, exercise price, and other terms of options or SARs granted under the 2020 Nonemployee Directors Program. The maximum term of an option granted under the 2020 Nonemployee Directors Program is seven years.No option or SAR may be granted with an exercise or base price less than the closing price of our common stock on the grant date. The closing price of our common stock as of January 31, 2020 was $219.86 per share.
Share Issuances, Restricted Stock and Restricted Stock Units. Shares of our common stock may be issued under the 2020 Nonemployee Directors Program to eligible participants, and such shares may or may not have restrictive conditions. The Compensation Committee has the discretion to select eligible participants to receive common stock, and determine the number of shares, purchase price (if any), any conditions of restriction (if any), and other terms of stock issued under the 2020 Nonemployee Directors Program. A plan participant who receives an award of common stock will have stockholder rights, including voting and dividend rights, for those shares unless the Compensation Committee determines otherwise.
The Compensation Committee may issue RSUs under the 2020 Nonemployee Directors Program, which entitle the participant to receive shares of our common stock underlying the units upon attainment of designated performance goals, the satisfaction of specified service requirements or upon the expiration of a designated time period following the vesting of the units. The Compensation Committee has the discretion to select eligible participants to receive RSUs, and to determine the number of shares, any vesting and other terms and conditions of the RSUs. The holders of RSUs will not have any stockholder rights until the underlying shares are actually issued to the holder. However, dividend equivalent units may be paid or credited, either in cash or in actual or phantom shares of our common stock, on outstanding restricted units, subject to such terms and conditions as the Compensation Committee deems appropriate.
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PROPOSAL 3 – APPROVAL OF THE 2020 NONEMPLOYEE DIRECTORS STOCK INCENTIVE PROGRAM
Annual Awards. The 2020 Nonemployee Directors Program provides that each nonemployee director will receive an annual grant of options for up to 40,000 shares of our common stock, or a RSU award for up to 16,000 units with respect to shares of our common stock, or a combination of options and RSUs with a maximum grant date value of approximately $240,000. The Board or Compensation Committee may, from time to time and without stockholder approval, change the grant date value (currently, $240,000) for awards that are to be granted in a combination of options and RSUs, so long as the total number of options granted to a nonemployee director in any one year under the 2020 Nonemployee Directors Program does not exceed 40,000 shares and so long as the total number of RSUs granted to a nonemployee director in any one year under the 2020 Nonemployee Directors Program does not exceed 16,000. As described in “Director Compensation” above, for 2019 each nonemployee director who was serving on the day after our 2019 annual meeting was granted an annual award of 1,323 RSUs. The Compensation Committee recommends to the Board for its approval the actual amount and type of award for each year. The annual equity award is granted on the day after our annual meeting. The option exercise price is the closing price of our common stock on the grant date. The annual awards vest upon the first to occur of (i) the first anniversary of the award date or (ii) the next annual meeting of the Company that occurs in the calendar year after the award date. The annual awards also fully vest upon the director’s death or disability.
Equity Awards in Lieu of Cash. Directors may also elect to receive all or a portion of their annual cash retainer in the form of options or restricted stock granted under the 2020 Nonemployee Directors Program (for more information, see “Director Compensation — Deferral Election Program” above).
Amendment of the 2020 Nonemployee Directors Program; No Limit on Other Authority. The Board may alter, amend, suspend or terminate the 2020 Nonemployee Directors Program at any time, and the Compensation Committee may amend awards previously granted. Stockholder approval will be required for any amendment of the 2020 Nonemployee Directors Program only to the extent required by applicable law. In addition, and except for adjustments made in connection with changes in the Company’s capitalization or other events referred to under “Adjustments in Authorized Shares” below or any repricing that may be approved by our stockholders, the Compensation Committee may not (1) amend an outstanding option for the sole purpose of lowering the exercise price of the option, (2) cancel, exchange or surrender an outstanding option in exchange for cash or other awards for the purpose of repricing the award, or (3) cancel, exchange or surrender an outstanding option for the purposes of reissuing such option at a lower exercise price, without stockholder approval. Further, no termination, amendment or modification of the 2020 Nonemployee Directors Program or amendment of previously granted awards may adversely affect in any material way a previously granted award, without the consent of the participant holding the award. The 2020 Nonemployee Directors Program does not limit the authority of the Company, the Board, or the Compensation Committee to grant awards or authorize any other compensation, with or without reference to the Company’s common stock, under any other plan or authority.
Acceleration upon Change in Control. Awards granted under the 2020 Nonemployee Directors Program will generally become 100% vested and exercisable upon a change in control of the Company.
Adjustments in Authorized Shares. In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including aspin-off, or other distribution of stock or property of the Company, any reorganization or any partial or complete liquidation of the Company, adjustments will be made to: (i) the maximum number and class of shares issuable under the 2020 Nonemployee Directors Program, (ii) the number and class of shares subject to the annual awards to directors under the 2020 Nonemployee Directors Program, and (iii) the number and class of and price of shares subject to outstanding awards granted under the 2020 Nonemployee Directors Program. Such adjustments will be made as deemed to be appropriate and equitable by the Compensation Committee, in its sole discretion, to prevent dilution or enlargement of rights.
New Plan Benefits. No options have been granted, and no direct stock issuances or RSUs have been awarded, on the basis of the approval of this Proposal 3. If the 2020 Nonemployee Directors Program had been in effect in 2019, we expect that our award grants for 2019 would not have been different from those actually made in that year under the current Nonemployee Directors Program.
As described under “Director Compensation — Nonemployee Directors Stock Incentive Program” above, our current compensation practice is to grant each nonemployee director who is serving on the day after our annual meeting an annual equity award of RSUs, with the number of shares subject to each award to be determined by dividing $240,000 by the closing price of our common stock on the grant date (or the immediately preceding trading day if the grant date is not a trading day). Assuming, for illustrative purposes only, that the price of the common stock used for the conversion of the
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PROPOSAL 3 – APPROVAL OF THE 2020 NONEMPLOYEE DIRECTORS STOCK INCENTIVE PROGRAM
dollar amount set forth above into shares is $220, each nonemployee director would receive an annual RSU award with respect to 1,091 shares (after rounding down to the nearest whole share) and 7,637 shares per year would be allocated to the Company’s seven nonemployee directors as a group for the annual grants. This calculation assumes that there are no new eligible directors, no changes in the value of a share, there continues to be seven eligible directors seated and there are no changes to the awards granted under the director equity grant program. This calculation also does not take into account any shares that may be issued under the 2020 Nonemployee Directors Program if directors elect to receive all or a portion of their cash retainer fees in the form of awards under the plan, since it cannot be predicted whether and the extent to which any directors would make this election in the future.
Summary of Federal Income Tax Consequences. The following summary describes the United States federal income taxation treatment applicable to the Company and the participants who receive awards under the 2020 Nonemployee Directors Program. The following summary is not intended to be exhaustive and, among other considerations, does not describe the deferred compensation provisions of Section 409A of the Internal Revenue Code to the extent an award is subject to and does not satisfy those rules, nor does it describe state, local, or international tax consequences.
Option and SAR Grants. Options granted under the 2020 Nonemployee Directors Program may only benon-statutory options which are not intended to be incentive stock options within the meaning of Section 422 of the Internal Revenue Code. No taxable income is recognized by a recipient upon the grant of anon-statutory option or SAR. The recipient will generally recognize ordinary income in the year in which the option or SAR is exercised equal to the excess of the fair market value of the exercised shares on the exercise date over the exercise or base price of the shares, and the recipient will be required to satisfy the tax withholding requirements applicable to such income, if any. The Company will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the recipient with respect to the exercised stock option or SAR. The deduction will generally be allowed for the Company’s taxable year in which such ordinary income is recognized by the recipient.
Share Issuances. A recipient of fully vested common stock will generally recognize ordinary income based on the then- fair market value of the shares at the time of grant. The recipient will be required to satisfy the tax withholding requirements applicable to such income, if any. The Company will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the recipient.
Restricted Stock. A recipient of restricted stock will generally recognize ordinary income when his or her shares vest, based on thethen- fair market value of the shares. The recipient may, however, elect under Section 83(b) of the Internal Revenue Code to include as ordinary income in the year of issuance of the shares the fair market value of the shares at that time. The recipient will be required to satisfy the tax withholding requirements applicable to such income, if any. The Company will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the recipient. The deduction will be allowed for the taxable year in which such ordinary income is recognized by the recipient.
Restricted Stock Units. No taxable income is recognized upon receipt of a RSU. The holder will recognize ordinary income in the year in which the shares subject to that unit are actually issued. The amount of that income will be equal to the fair market value of the shares on the date of issuance. The holder will be required to satisfy the tax withholding requirements applicable to such income, if any. The Company will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the holder. The deduction will, in general, be allowed for the taxable year in which such ordinary income is recognized by the holder.
Other Tax Considerations. If an award is accelerated for a “change in control” under the Internal Revenue Code, the Company may not be permitted to deduct the portion of the compensation attributable to the acceleration if it exceeds certain threshold limits under the Internal Revenue Code (and certain related excise taxes may be triggered).
Board Recommendation. The Board believes that it is in our best interests to continue to align the nonemployee directors’ interests more closely with the interests of our stockholders through annual equity awards under the 2020 Nonemployee Directors Program.
All of our nonemployee directors are eligible for awards under the 2020 Nonemployee Directors Program and thus have a personal interest in the approval of this Proposal 3.
THE BOARD RECOMMENDS A VOTE“FOR” THE APPROVAL OF THE 2020 NONEMPLOYEE DIRECTORS PROGRAM.
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THE BOARD RECOMMENDS A VOTE“FOR” THE ADOPTION AND APPROVAL OF THE AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FOR THE PURPOSE OF EFFECTING A THREE-FOR-ONE STOCK SPLIT.
Description of the Proposed Amendment
Our Certificate of Incorporation currently authorizes the issuance of up to 350 million shares of common stock, par value $1.00 per share, and 50 million shares of preferred stock, par value $0.01 per share.
On February 20, 2020, our Board adopted resolutions approving an amendment (the “Amendment”) to the Certificate of Incorporation to increase the number of authorized shares of common stock from 350 million shares to 1.05 billion shares for the purpose of effecting athree-for-one forward split (the “Stock Split”) of our issued and outstanding common stock following the effectiveness of such Amendment and providing for a proportional increase in our authorized but unissued shares of common stock. The Board determined that the Amendment is advisable and in the best interests of the Company and directed that the proposed Amendment be submitted for adoption and approval by stockholders at the Annual Meeting.
The full text of the Amendment to the Certificate of Incorporation is set forth in Appendix C to this Proxy Statement. The Amendment would not affect the number of authorized shares of preferred stock. Currently, there are no shares of preferred stock issued and outstanding.
Purposes and Effects of the Proposed Amendment
As of March 13, 2020, we have 207,325,907 shares of common stock outstanding and the number of authorized shares of our common stock is 350 million. Based on the number of shares of common stock outstanding as of March 13, 2020, following filing of the Amendment and after giving effect to the Stock Split and a proportional increase in our authorized but unissued shares of common stock, we will have approximately 621,977,721 shares of common stock outstanding and the number of authorized shares of our common stock will be increased to 1.05 billion. Our Board is recommending the proposed increase in the number of authorized shares of common stock to provide adequate shares of common stock for the Stock Split, including to provide for a proportional increase in our authorized but unissued shares of common stock.
Our Board intends to approve, subject to and contingent upon stockholder adoption and approval and the effectiveness of the Amendment, the Stock Split, which would be effected pursuant to a stock dividend (the “Stock Dividend”) of two shares of our common stock to the holders of record of each share of our common stock. The Board anticipates approving a record date as of the close of business on May 18, 2020 (the “Record Date”) for determining the stockholders of record entitled to receive the Stock Dividend and a payment date for the Stock Dividend of May 29, 2020 (the “Payment Date”). If our stockholders adopt and approve the Amendment, the Amendment will become effective on the date that it is filed with the Secretary of State of the State of Delaware. Upon declaration of the Stock Dividend by the Board and approval of the Record Date and Payment Date therefor, each stockholder of record at the close of business on the Record Date will become the record owner of, and be entitled to receive, two additional shares of common stock for each share of common stock then owned of record by such stockholder. If the Amendment is adopted and approved by the stockholders, the Company currently anticipates filing the Amendment with the Secretary of State of the State of Delaware on May 8, 2020. If the Amendment is not adopted and approved by the stockholders or is subsequently abandoned by the Board, the Stock Split will not be effected and the Stock Dividend will not be made to the stockholders. Further, if the Board subsequently determines not to proceed with the currently anticipated Stock Split, the Amendment, even if it is approved by stockholders, will not be filed with the Secretary of State of the State of Delaware.
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PROPOSAL 4 – APPROVAL OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION
The Stock Split and its Effects. The trading price of our common stock has risen significantly over the past several years. Our Board has evaluated the data demonstrating that our employees have a high level of interest and ownership in Edwards’ common stock as well as the feedback from those employees that a higher stock price can limit those who desire to invest in Edwards’ stock, especially those who are earlier in their careers. The Board also reviewed the effect of the trading price of our common stock, reviewing our history of stock splits and other relevant factors. The closing market price of our common stock on March 13, 2020, was $185.50 as reported on the NYSE. The Board believes in the Company’s long-term strategy and the continued growth of the Company and, in consideration of the factors above, the Board believes that effecting the Stock Split would be in the best interests of the Company and its stockholders.
Following the Payment Date of the Stock Dividend, each stockholder will own three times the number of shares of our common stock such stockholder held prior to the Stock Split. The Stock Split will affect all of our stockholders uniformly and will not affect any stockholder’s percentage ownership of our common stock. Proportionate voting rights and other rights and preferences of the holders of our common stock will not be affected by the Stock Split. The number of stockholders of record will also not be affected by the Stock Split.
The Stock Split will also result in a proportionate increase in the number of shares of common stock available for issuance under our equity compensation plans due to the adjustment provisions set forth in such plans. With respect to outstanding stock options to purchase shares of our common stock, the Stock Split would result in an increase in the number of shares subject to such outstanding stock options proportional to thethree-for-one ratio of the Stock Split and would also result in a proportionate decrease in the exercise price of such outstanding stock options (rounded up to the nearest whole cent) due to the adjustment provisions set forth in such options. With respect to other outstanding awards to acquire shares of our common stock, the Stock Split would result in an increase in the number of shares subject to such outstanding awards proportional to thethree-for-one ratio of the Stock Split due to the adjustment provisions set forth in such awards.
Accounting Consequences of Stock Split. The par value per share of our common stock will remain unchanged at $1.00 per share after the Stock Split. As a result, on the Payment Date of the Stock Dividend, the stated capital on our consolidated balance sheet attributable to common stock will be increased proportionately and the additionalpaid-in-capital account will be decreased by the amount by which the stated capital is increased. Per share net income or loss will be decreased for current and prior periods because there will be additional shares of our common stock outstanding. We do not anticipate that any other accounting consequences, including changes to the amount of stock-based compensation expense to be recognized in any period, will arise as a result of the Stock Split.
Other Purposes and Effects of the Amendment. As a general matter, the additional proportional increase in our authorized but unissued shares of common stock as a result of the Amendment would enable the Board to issue additional shares of common stock in its discretion from time to time without further action or approval of our stockholders, subject to and as limited by any rules or listing requirements of the NYSE or of any other applicable rules or regulations. However, the proportion of such additional shares of authorized common stock in relation to our issued and outstanding common stock will be the same both before and after the Stock Split. The corporate purposes for which our Board may issue additional shares of common stock include future acquisitions, capital-raising or financing transactions involving common stock, convertible securities or other equity securities, stock splits, stock dividends and current or future equity compensation plans. Our Board believes the proportionate increase in our authorized but unissued common stock is appropriate to maintain the flexibility currently available to the Company to issue shares in the future without the potential expense or delay incident to obtaining stockholder approval for any particular issuance. Except for shares of common stock reserved for grant(s) pursuant to our equity compensation plans and shares of common stock expected to be distributed to stockholders to effect the planned Stock Split, the Company does not currently have any other plans, agreements, commitments or understandings with respect to the issuance of the additional shares (or the currently authorized but unissued shares) of common stock, nor does the Company currently have any plans, arrangements, commitments or understandings with respect to the issuance of any shares of preferred stock.
The Stock Split will affect all of our stockholders uniformly and will not affect any stockholder’s percentage ownership of our common stock. However, other future issuances of shares of common stock or securities convertible into shares of common stock could, under certain circumstances, be construed as having an anti-takeover effect (for example, by diluting the stock ownership of a person seeking to effect a change in the composition of the Board or contemplating a tender offer or other transaction for the combination of our Company with another company). While we do not intend
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PROPOSAL 4 – APPROVAL OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION
the Amendment to deter or to prevent a change in control, we could use the additional shares of common stock (as we could use the currently authorized but unissued shares of our common stock) to hinder persons seeking to acquire or take control of our Company or to dilute voting power of the outstanding shares. We are not aware of any efforts to obtain control of our Company and we have not made this Proposal 4 in response to any such efforts.
Rights of Additional Authorized Shares of Common Stock
Any additional authorized shares of common stock, if and when issued, would be part of our existing class of common stock, and would have the same rights and privileges as the currently outstanding shares of common stock. The holders of common stock are not entitled to preemptive rights or cumulative voting.
Procedure for Implementing Stock Split
Subject to and contingent upon stockholder adoption and approval and the effectiveness of the Amendment, our Board intends to approve the Stock Split, and establish the Record Date and Payment Date for the Stock Dividend. Accordingly, the Board anticipates that the Stock Dividend will be payable on May 29, 2020 to the record holders of each share of our common stock as of the close of business on May 18, 2020. All shares issued as a result of the proposed Stock Split will be uncertificated, issued in book-entry form, either through the Direct Registration System or as a credit to an existing account of a stockholder of record. Consequently, certificates representing shares of common stock currently issued will remain valid for the number of shares shown and should be retained by each stockholder and should not be returned to the Company or to its transfer agent, as it will not be necessary to submit outstanding certificates for exchange. You will receive information about the additional shares to which you are entitled on or around the payment date. PLEASE DO NOT DESTROY OR RETURN YOUR EXISTING STOCK CERTIFICATES. CERTIFICATES REPRESENTING SHARES OF COMMON STOCK ISSUED PRIOR TO THE STOCK SPLIT WILL CONTINUE TO REPRESENT THE SAME NUMBER OF SHARES OF COMMON STOCK AFTER THE EFFECTIVE DATE OF THE STOCK SPLIT.
Effective Date of Proposed Amendment
If the Amendment is adopted by the required vote of stockholders, such Amendment will become effective on the date the Amendment is filed with the Secretary of State of the State of Delaware. If the Amendment is adopted and approved and becomes effective, we anticipate the Stock Dividend will be paid on May 29, 2020 to the record holders of each share of our common stock as of the close of business on the Record Date.
Reservation of Right to Abandon Amendment and Stock Split.
Our Board reserves the right to not proceed with the Amendment and to abandon the Amendment without further action by our stockholders at any time before the effectiveness of the filing of the Amendment with the Secretary of State of the State of Delaware, even if the Amendment is adopted and approved by our stockholders at the Annual Meeting. By voting in favor of the Amendment, you are expressly also authorizing our Board to delay, not proceed with, and abandon, the proposed Amendment if it should so decide, in its sole discretion, that such action is in the best interests of our Company and its stockholders. If the Board elects to abandon the Amendment, the number of authorized shares of common stock will remain 350 million and the Stock Dividend will not be paid and the Stock Split will not be effected.
THE BOARD RECOMMENDS A VOTE“FOR” THE ADOPTION AND APPROVAL OF THE AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FOR THE PURPOSE OF EFFECTING A THREE-FOR-ONE STOCK SPLIT.
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THE BOARD RECOMMENDS A VOTE“FOR” THE RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
The
| THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. | ||||
•PwC’s qualifications and global capabilities;
•the results of theour Company’s annual assessment of PwC’s performance;
•PwC’s and the audit engagement team’s independence, including whether the provision of non-audit services provided by PwC, individually and in aggregate, to our Company during 2022 was compatible with their independence;
•the quality, timeliness, and candor of PwC’s communications with theour Audit Committee and management;
•the appropriateness of PwC’s fees;
•PwC’s tenure as our independent registered public accounting firm;
•the controls and processes in place that help ensure PwC’s continued independence;
•any Public Company Accounting Oversight Board’s firm inspection reports; and
whether• the provisionpotential impact ofnon-audit services provided by PwC to the Company during 2019 was compatible with their independence.
The
THE BOARD RECOMMENDS A VOTE“FOR” THE RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
 | | THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. | ||||||||||||||||
| 2019 | 2018 | |||||||||
Audit Fees | $ | 3.5 | $ | 3.4 | ||||||
Audit-Related Fees | 0.3 | 0.3 | ||||||||
Tax Fees | 1.5 | 1.3 | ||||||||
All Other Fees | (1 | ) | (1 | ) | ||||||
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| 2022 | 2021 | ||||||||||
| Audit Fees | $ | 4.0 | $ | 3.8 | |||||||
| Audit-Related Fees | 0.2 | 0.1 | |||||||||
| Tax Fees | 2.0 | 1.8 | |||||||||
| All Other Fees | (1) | (1) | |||||||||
The
The
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AUDIT MATTERS
In fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed with management the Company’s consolidated financial statements as of and for the fiscal year ended December 31, 2019.2022. The Audit Committee has discussed with the Company’s independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board.Board and the SEC. The Audit Committee has received and reviewed the written disclosures and the letter from the independent registered public accounting firm under applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm its independence.
Wesley W. von Schack
| | THE BOARD RECOMMENDS A VOTE “FOR” THE ADOPTION AND APPROVAL OF THE AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO PROVIDE FOR EXCULPATION OF OFFICERS AS PERMITTED BY THE DELAWARE GENERAL CORPORATION LAW | ||||||||||||||||
PROPOSAL 6 – STOCKHOLDER PROPOSAL REGARDING ACTION BY WRITTEN CONSENT
THE BOARD RECOMMENDS A VOTE“AGAINST” THIS PROPOSAL REGARDING ACTION BY WRITTEN CONSENT.
A stockholderEffective August 1, 2022, Section 102(b)(7) of the DGCL was amended to permit a corporation’s certificate of incorporation to include a provision eliminating or limiting monetary liability for certain senior corporate officers for breach of the duty of care, subject to certain exceptions.
TheDGCL, is necessary in order to continue to attract and retain experienced and qualified officers. Our Board and management prioritizes attracting and retaining top industry talent as a key driver of our long-term strategy and continued stockholder value creation.
Proposal 6 – Adopt a New Shareholder Right – Written Consent
Shareholders request thatinterests. Further, our board of directors take the steps necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. This written consent is to give shareholders the fullest power to act by written consent consistent with applicable law. This includes shareholder ability to initiate any appropriate topic for written consent.
Hundreds of major companies enable shareholder action by written consent. This proposal topic won majority shareholder support at 13 large companies in a single year. This included 67%-support at both Allstate and Sprint. This proposal topic also won 63%-support at Cigna Corp. (CI) in 2019. This proposal topic would have received higher votes that 63% to 67% at these companies if more shareholders had access to independent proxy voting advice.
Edwards Lifesciences shareholders already gave 51%-support to the written consent topic in 2015. This 51% vote can means close to 60% support from shareholders who had access to independent proxy voting advice.
This 51%-vote apparently triggered a sort of engagement redirection lead by Wesley von Schack, presiding director. After Mr. von Schack did his sort of engagement redirection it was somehowBoard has determined that the 51%proposed provision would not negatively impact stockholder rights.
Mr. von Schack is apparently a lesson in how management “engagement” can be usedDelaware Secretary of State, which our Company intends to negatively redirectfile promptly following the purported meaning of a shareholder vote.
Annual Meeting if the requisite votes are obtained.
The directors at Intel apparently thought they could divert shareholder attention away from written consent by making it less difficult for shareholdersfull text of the Proposed Amendment as set forth in Appendix B to call a special meeting. However Intel shareholders responded with greater support for written consent in 2019 compared to 2018.
Written consent support at Flowserve Corporation increased from 43% to 51% inone-year. Written consent also received 45%-support at The Bank of New York Mellon Corporation (BK) in 2018 and BK said it adopted written consent in 2019. And a proxy advisor has set certain minimum requirements for a company adopting written consent in case management is tempted to adopt a “fig leaf” version of written consent.
Please vote yes:
Adopt a New Shareholder Right – Written Consent — Proposal 6
| THE BOARD RECOMMENDS A VOTE “FOR” THE ADOPTION AND APPROVAL OF THE AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO PROVIDE FOR EXCULPATION OF OFFICERS AS PERMITTED BY THE DELAWARE GENERAL CORPORATION LAW | |||||||||
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John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, owner of 100 shares of our common stock, has informed the Company in writing that he intends to offer the following resolution for consideration at the Annual Meeting. The Board and the Company disclaim any responsibility for its content. We will furnish, orally or in writing, as requested, the name, address and claimed share ownership of the stockholder that submitted this proposal promptly upon oral or written request to the Company’s Corporate Secretary. Proposal 6 – Independent Board Chairman Shareholders request that the Board of Directors adopt an enduring policy, and amend the governing documents as necessary in order that 2 separate people hold the office of the Chairman and the office of the CEO. Whenever possible, the Chairman of the Board shall be an Independent Director. The Board has the discretion to select a Temporary Chairman of the Board who is not an Independent Director to serve while the Board is seeking an Independent Chairman of the Board. Although it is best practice to adopt this policy soon this policy could be phased in where there is a contract renewal for our current CEO or for the next CEO transition. This proposal topic won 52% support at Boeing and 54% support at Baxter International in 2020. Boeing then adopted this proposal topic. The roles of Chairman and CEO are fundamentally different and should be held by 2 directors, a CEO and a Chairman who is completely independent of the CEO and our company. A lead director is no substitute for an independent Board Chairman. According to the Edwards Lifesciences | annual meeting proxy the EW Lead Directors has hardly any exclusive powers: • serves as the principal liaison, but not the only liaison, between the independent Board members and the Chairman. • okays, but does not initiate, Board meeting agendas. • okays, but does not initiate, Board meeting schedules to only to ensure there is sufficient time • is one of the coordinators of the activities of the independent directors • is one of the persons providing feedback to management from the Board’s executive sessions. • is one of the persons providing advice, counsel and support to the Chairman. • is one of the persons communicating with major stockholders, but only as appropriate. When the Lead Director shares roles with others it means that the Lead Director may need to do little or nothing in those roles in a given year. Plus management fails to give shareholders enough information on this topic to make an informed decision. There is no comparison of the exclusive powers of the Office of the Chairman and the exclusive powers of the Lead Director. The ascending complexities of a company with $50 Billion in market capitalization, like Edwards Lifesciences, increasingly demand that 2 persons fill the 2 most important jobs at EW on an enduring basis – Chairman and CEO Please vote yes: Independent Board Chairman – Proposal 6 | ||||||
OTHER MATTERS AND BUSINESS
The same stockholder proposal was submitted by
The stockholder proposal would deprive all stockholders of the right to be consulted on key matters impacting their investment.
The Board expanded the right of stockholders to call special meetings in direct response to feedback received through extensive stockholder outreach led by our Lead Independent Director in 2015-2016 on this exact topic. In those conversations, stockholders overwhelmingly indicated that expansion of our existing special meeting right was superior to implementing a right for stockholders to act by written consent.
•The existing right to call a special meetingBoard’s independent leadership structure is preferable and is set at an appropriate threshold.
We have a strong corporate governance structure and record of accountability.
The same stockholder proposal was submitted by the same stockholder in 2018, and that proposal received support from only 23.7% of the votes cast, confirming what we heard in the course of our active stockholder engagement efforts—most stockholders support the Board’s position on this proposal.
Ongoing active stockholder engagement efforts, and a vote on the same proposal in 2018, further affirm that most stockholders are comfortable with our existing practices. The Company Board and management have remained committed to engaging with stockholders. Among other engagement efforts, our Corporate Secretary and Investor Relations teams, together with other members of management and, from time to time, our Lead Independent Director, engage stockholders to solicit their views and feedback on corporate governance and other related matters and to discuss the issues that matter most to our stockholders. For the past several years, we have reached out to over 50% of our outstanding stock annually to discuss areas of interest. Stockholder feedback is shared with the Board and its committees to directly inform decisions.
In these engagement discussions, we received feedback from stockholdersevaluated on a range of topics including corporate governance.Although stockholders possess a variety of views,regular basis to ensure that the feedback we have received affirms that most of our stockholders are supportive of the Company’s existing stockholder rights, including our special meeting threshold of 15%, and recognize that a written consent right would deprive stockholders of the rightapproach continues to be consulted on key matters impacting their investment.
The stockholder proposal would deprive all stockholders of the right to be consulted on key matters impacting their investment.
Our governing documents require that actions on which stockholders will be asked to vote be considered at a meeting of stockholders. This requirement assures that all stockholders receive advance notice of the proposed action, have an opportunity to discuss it, and consider all points of view. In contrast, the proposal would allow critical actions to be approved without notice to other stockholders and without an opportunity for discussion at a stockholder meeting. This proposal, if adopted, could disenfranchise stockholders and may deprive them of these rights, while enabling other short-term or special interest investors with no fiduciary duties to stockholders or to the Company to approve proposals that are not in the best interestprovide effective independent oversight of the Company and allserves the best interests of stockholders. Accordingly,
The Board expanded the right of stockholdersflexibility to call special meetings in direct response to feedback received through extensive stockholder outreach led by our Lead Independent Director in 2015-2016 on this exact topic. In those conversations, stockholders overwhelmingly indicated that expansion of our existing special meeting right was superior to implementing a right for stockholders to act by written consent.
The above stockholder proposal was submitted by the same stockholder in 2014 and then again in 2015. Following the vote on this proposal in 2015 (the “2015 proposal”), which was approved by 50.8% of the votes cast (39% of the shares
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OTHER MATTERS AND BUSINESS
then outstanding), we, including Mr. von Schack, the Board’s Lead Independent Director (then-Presiding Director), engaged in substantial stockholder outreach in order to be able to inform the Board of our stockholders’ current views on this matter. The feedback provided by stockholders during these meetings was provided to the full Board for consideration.
2015 Outreach. During 2015, our management contacted 26 of our largest stockholders representing approximately 54% of our outstanding shares to, among other things, seek their feedback on the 2015 proposal that was narrowly approved at the 2015 Annual Meeting. This outreach resulted in conversations with 13 stockholders representing approximately 43% of our outstanding shares. The engagement included extensive discussions of the positive and negative aspects of the special meeting versus the written consent rights, both generally and specifically as it relates to the Company.
Overall, stockholders were pleased to be consulted and, among other things, voiced two consistent themes:
Our stockholders strongly favored the right to call a special meeting over the right to act by written consent. Many of these stockholders said they preferred the right to call a special meeting over the right to act by written consent because while both provide stockholders an avenue to be heard outside the annual meeting cycle, special meetings provide additional protections for all stockholders and avoid the logistical issues that some stockholders have experienced when presented with a consent solicitation.
Regardless of their views on the right to act by written consent, stockholders believed it was important that the Board be responsive to the vote on the 2015 proposal.
Based on this feedback, the Board evaluated various alternatives. After careful deliberation and consideration ofdetermine the Company’s specific circumstances, including its history of having a concentrated stockholder base, the Board determined that lowering the threshold for the special meeting right from 25% to 15% likely was the most responsive and appropriate course of action. Before doing so, however, the Board wanted to understand how our stockholders would view that action and whether they would consider it superior to the adoption of a right to act by written consent.
2016 Outreach. To obtain feedback specific to this proposed action,leadership structure in early 2016, we contacted 20 stockholders representing approximately 51% of our outstanding shares and spoke with 18 stockholders representing just over 50% of our shares, including many stockholders who had provided their views during our initial outreach. Mr. von Schack led conversations with five of our top six stockholders. The remaining calls were conducted by the management team that participated on the calls with Mr. von Schack, which included the CFO, the Corporate Secretary and the Vice President of Investor Relations.
The results of these conversations were as follows:
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During our 2016 outreach, the one stockholder who said that it had voted for the 2015 proposal and would still prefer to have both special meeting and written consent rights indicated that it appreciated the Board’s thoughtful process to address the feedback received during the 2015 outreach conversations. This stockholder believed the Board was responsive to the vote on the 2015 proposal.
In light of the feedback received duringcircumstances at the outreach, indicating that lowering the threshold requiredtime and not be restricted to call a special meeting is superior to the adoption of a right to act by written consent and also having considered the factors listed below, in February 2016,single rigid approach.
The existing right to call a special meetingmay change its leadership structure if it determines that doing so is preferableappropriate and is set at an appropriate threshold.
Our existing stockholder right to call special meetings allows stockholders to propose actions without waiting for the Company’s next Annual Meeting. A special meeting set at an appropriate threshold is preferable to action by written consent because a meeting allows all stockholders to participate in and discuss the merits of, a proposed action, and
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OTHER MATTERS AND BUSINESS
allows the Board to make a thoughtful recommendation about the action. As a result, a strong stockholder special meeting right is better suited to a culture of transparency and good corporate governance.
The Board continues to believe that having a special meeting right at 15% strikes the right balance for the Company, as it is a low enough threshold to provide a meaningful right for stockholders to act between annual meetings yet high enough to prevent a single stockholder (or small group of stockholders) from acting without broad stockholder support. The Company has a history of having significant concentration amongst its top stockholders. Over the past decade, the Company has always had at least one stockholder with ownership at or above approximately 8%, and approximatelytwo-thirds of the time, the Company has had at least one stockholder with ownership above 10%. Four different institutions have owned at least 10% of the Company’s stock at some point during that same period.
In addition, at the present time, only 18% of S&P 500 companies maintain a special meeting right with a threshold at or below 15%, providing additional confidence to the Board that a special meeting right with a threshold of 15% is in line with the Company’s strong corporate governance structures.
We have a strong corporate governance structure and record of accountability.
Our current corporate governance structure reflects a significant and ongoing commitment to strong and effective governance practices and a willingness to be responsive and accountable to our stockholders. We regularly assess and refine our corporate governance policies and procedures to take into account evolving best practices and to address feedback provided by our stockholders during our regular engagement with them. The Board firmly believes that the company’s strong corporate governance practices are a key enabler of the exceptional and sustainable value that the Company has created for stockholders.
In addition to adopting a special meeting right in 2014, and expanding that right in 2016, we have implemented numerous other corporate governance measures to ensure the Board remains accountable to stockholders, provide our stockholders with a meaningful voice in the nomination and election of directors, ensure the ability to communicate with directors, and promote the consideration of stockholder views. For example:
Annual Election of Directors and Majority Voting in Director Elections – All of our directors stand forre-election at each annual meeting. Directors must be elected by a majority vote in an uncontested election, and a director who fails to receive the required number of votes forre-election must tender his or her written resignation for consideration by the Board.
Substantial Majority of the Board is Independent – The Board is composed entirely of independent directors, other than the Chief Executive Officer.
Lead Independent Director – We have a Lead Independent Director with defined and significant responsibilities. Based on feedback from stockholders, in 2019 the responsibilities of the Presiding Director position were further expanded and the position was renamed Lead Independent Director. Our Lead Independent Director provides strong independent leadership of our Board by, among other things, presiding at executive sessions in connection with every Board meeting and approving Board meeting agendas and meeting schedules.
Board Refreshment – The Board has added five new directors over the past six years. These additions are the result of a thoughtful process that has involved the participation of all directors and occasionally an executive search firm to assist in evaluating candidates. This process is designed to ensure that our Board benefits from fresh perspectives, diversity of thought and a collective skill set that is aligned with the needs of our business.
Proxy Access – In 2016, the Board amended our Bylaws to implement proxy access. Under our Bylaws, a stockholder or a group of up to 30 stockholders owning at least 3% of our outstanding common stock continuously for at least three years may nominate and include in our proxy materials up to the greater of two director candidates or 20% of the Board. This right provides an avenue for stockholder action that is incremental to our special meeting right and further reduces the need for stockholders to act by written consent.
Eliminating Supermajority Voting – In 2013, in response to anon-binding stockholder proposal at the 2012 Annual Meeting of Stockholders, the Board recommended and stockholders approved amendments to our Certificate of Incorporation to eliminate the supermajority voting provision. The Board subsequently eliminated the supermajority voting provision from our Bylaws as well.
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OTHER MATTERS AND BUSINESS
No Stockholder Rights Plan – We do not have a stockholder rights plan, orso-called “poison pill.”
Stockholder Engagement – Stockholders can communicate directly with the Board and/or individual directors, and we regularly engage with our investors to solicit views on important issues such as our governance practices, executive compensation program, and our stockholders’ rights. For the past several years, we have reached out to over 50% of our outstanding stock annually to discuss areas of interest, with feedback reported back to the Board to directly inform Board decisions.
Consistent with its current practice, the Board will continue to engage with its stockholders on corporate governance measures and evaluate appropriate changes to our governance structure, policies, and practices that will serve the best interests of the Company and our stockholders at any given time. We believe that this approach is in the stockholders’ best interests as it provides the Board with the necessary flexibility to intentionally and thoughtfully determine the leadership needs of the Company at any particular time; the Board is in the best position to make this decision, informed by its regular discussions on succession as well as its knowledge of Company dynamics.Limiting this critical decision to the rigid requirements of the stockholder proposal would be detrimental to our Company’s stockholders.
THE BOARD RECOMMENDS A VOTE“AGAINST” THIS PROPOSAL REGARDING ACTION BY WRITTEN CONSENT.
| FOR THESE REASONS, THE BOARD UNANIMOUSLY URGES STOCKHOLDERS TO VOTE “AGAINST” THIS PROPOSAL REGARDING INDEPENDENT BOARD CHAIRMAN. | |||||||||||
to the directors in May 2022 due to an administrative error.
including salary and bonus, for 2022 was approximately $134,519.
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OTHER MATTERS AND BUSINESS
Our Bylaws require that a stockholder must provide certain information concerning the proposing person, the nominee and the proposal, as applicable. Nominations and proposals not meeting the requirements set forth in our Bylaws will not be entertained at the 20212024 annual meeting. Stockholders should contact the Corporate Secretary of theour Company in writing at One Edwards Way, Irvine, California 92614 to obtain additional information as to the proper form and content of stockholder nominations or proposals.
ALL STOCKHOLDERS ARE URGED TO SUBMIT THEIR PROXIES PROMPTLY.
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We report our
significant program discontinuation.
Surgical Consignment Conversion. In 2018,follow
TAVR Germany StockingNon-GAAP Financial Information
| 2022 | 2021 | |||||||||||||
| GAAP diluted earnings per share | $ | 2.44 | $ | 2.38 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
| Intellectual property litigation expenses, net | 0.03 | 0.02 | ||||||||||||
| Change in fair value of contingent consideration liabilities | (0.06) | (0.19) | ||||||||||||
| Amortization of intangible assets | — | 0.01 | ||||||||||||
| Program discontinuation | 0.07 | — | ||||||||||||
| Adjusted diluted earnings per share | $ | 2.48 | $ | 2.22 | ||||||||||
| Adjusted growth rate | 11.7 | % | ||||||||||||
RECONCILIATION OF SALES
| 2018 Adjusted | ||||||||||||||||||||||||||||||||||||||||||||||||||
Sales (YTD) | YTD 4Q 2019 | YTD 4Q 2018 | Change | GAAP Growth | CASMED Acquisition | Surgical Consignment Conversion | Germany Stocking | FX Impact | YTD 4Q 2018 Adjusted Sales | Underlying Growth Rate* | ||||||||||||||||||||||||||||||||||||||||
Total | $ | 4,348.0 | $ | 3,722.8 | $ | 625.2 | 16.8 | % | $ | 15.3 | $ | 82.5 | $ | 8.0 | $ | (56.4 | ) | $ | 3,772.2 | 15.3 | % | |||||||||||||||||||||||||||||
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| 2021 Adjusted | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sales (YTD) | Full Year 2022 | Full Year 2021 | Change | GAAP Growth Rate* | FX Impact | Full Year 2021 Adjusted Sales | Underlying Growth Rate * | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 5,382.4 | $ | 5,232.5 | $ | 149.9 | 2.9 | % | $ | (233.6) | $ | 4,998.9 | 7.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 Nonemployee Directors Stock Incentive Program
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Whenever used in the Program, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized:
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APPENDIX B
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APPENDIX B
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APPENDIX B
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The Option Price upon exercise of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; (b) by tendering previously acquired Shares (by either actual delivery or attestation) having an aggregate Fair Market Value at the time of exercise equal to the total Option Price; (c) by a cashless exercise as permitted under Federal Reserve Board’s Regulation T, subject to applicable securities law restrictions and such procedures and limitations as the Company may specify from time to time; (d) by any other means which the Committee determines to be consistent with the Program’s purpose and applicable law; or (e) by a combination of two or more of (a) through (d).
Subject to any governing rules or regulations, including cashless exercise procedures, as soon as practicable after receipt of a notification of exercise and full payment (or a satisfactory “cashless exercise” notice), the Company shall cause to be issued and delivered to the Participant, in certificate form or otherwise, evidence of the Shares purchased under the Option(s).
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Shares of Restricted Stock awarded pursuant to the Program shall be registered in the name of the Participant and if such Shares are certificated, in the sole discretion of the Committee, such certificate may be deposited in a bank designated by the Committee or with the Company. The Committee may require a stock power endorsed in blank with respect to Shares of Restricted Stock whether or not certificated.
Except asotherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the Program shall become freely transferable (subject to any restrictions under any applicable securities law) by the Participant after the last day of the applicable Period of Restriction.
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APPENDIX B
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Except asotherwise provided in this Article 9, Shares subject to Restricted Stock Units under the Program shall be freely transferable (subject to any restrictions under applicable securities law) by the Participant after receipt of such shares.
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APPENDIX B
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Each Participant under the Program may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Program is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.
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The Committee may permit or require a Participant to defer such Participant’s receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option, or Stock Appreciation Right or the lapse or waiver of restrictions with respect to Restricted Stock or Restricted Stock Units. If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals which shall be consistent with the requirements of Code Section 409A and the Treasury Regulations and rulings promulgated thereunder.
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Upon the occurrence of a Change in Control and notwithstanding the terms of any Award Agreement, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges:
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Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Program and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
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All obligations of the Company under the Program with respect to Awards granted hereunder shall, to the extent legally permissible, be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
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APPENDIX B
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EDWARDS LIFESCIENCES CORPORATION
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
EDWARDS LIFESCIENCES CORPORATION
1. The Amended and Restated Certificate of Incorporation of the Corporation is hereby amended by deleting Article NINTH thereof and inserting the following in lieu thereof: “NINTH: To the fullest extent that the General Corporation Law of the State of Delaware, as it exists on the date hereof or as it may hereafter be amended, permits the limitation or elimination of the liability of directors or officers, no person who is, or was at any time but is no longer serving as, a director or officer of |
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“The total number of shares of stock which the Corporation shall have authoritybe personally liable to issuethe Corporation or its stockholders for monetary damages for any breach of fiduciary duty by such person as a director or officer. If the General Corporation Law of the State of Delaware is One Billion One Hundred Million (1,100,000,000) shares,amended to authorize corporate action further eliminating or limiting the personal liability of which Fifty Million (50,000,000) shares, par value $.01 per share,directors or officers, then the liability of a director or officer of the Corporation shall be preferred stock (“Preferred Stock”) andeliminated or limited to the fullest extent permitted by the General Corporation Law of which One Billion Fifty Million (1,050,000,000) shares, par value $1.00 per share,the State of Delaware, as so amended. No amendment to or repeal of this Article NINTH shall be common stock (the “Common Stockhave the effect of increasing the liability or alleged liability of any director or officer of the Corporation for or with respect to any act or omission of such director or officer occurring prior to such amendment or repeal.”).”
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EDWARDS LIFESCIENCES CORPORATION ONE EDWARDS WAY IRVINE, CA 92614 ATTN: LINDA J. PARK VOTE BY INTERNET: www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m., ET the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site, and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by Edwards in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To enroll in electronic delivery of proxy materials, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE: 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., ET the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign, and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. You may hold Edwards shares in multiple accounts and therefore receive more than one proxy card or voting instruction form and related materials. Please vote EACH proxy card and voting instruction form that you receive. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E95773-P34055-Z76409 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY EDWARDS LIFESCIENCES CORPORATION The Board of Directors recommends you vote FOR the following nominees: 1. ELECTION OF DIRECTORS For Against Abstain 1a. Michael A. Mussallem 1b. Kieran T. Gallahue 1c. Leslie S. Heisz 1d. William J. Link, Ph.D. 1e. Steven R. Loranger 1f. Martha H. Marsh 1g. Ramona Sequeira 1h. Nicholas J. Valeriani Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date The Board of Directors recommends you vote FOR Proposals 2, 3, 4, and 5. 2. ADVISORY VOTE TO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS 3. APPROVAL OF THE 2020 NONEMPLOYEE DIRECTORS STOCK INCENTIVE PROGRAM 4. APPROVAL OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FOR THE PURPOSE OF EFFECTING A THREE-FOR-ONE STOCK SPLIT 5. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors recommends you vote AGAINST Proposal 6. 6. ADVISORY VOTE ON A STOCKHOLDER PROPOSAL REGARDING ACTION BY WRITTEN CONSENT NOTE: In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournments or postponements thereof. Signature (Joint Owners) Date For Against Abstain For Against Abstain
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. E95774-P34055-Z76409 EDWARDS LIFESCIENCES CORPORATION Annual Meeting of Stockholders May 7, 2020 10:00 a.m., PT This proxy is solicited by the Board of Directors The undersigned hereby appoints William J. Link and Michael A. Mussallem as proxies, each with the power to appoint his substitute and with authority in each to act in the absence of the others, to represent and to vote all shares of Edwards Lifesciences Corporation which the undersigned is entitled to vote at the Annual Meeting of Stockholders of Edwards Lifesciences Corporation to be held at the corporate headquarters of Edwards Lifesciences Corporation, One Edwards Way, Irvine, California 92614, on Thursday, May 7, 2020, at 10:00 a.m., PT, and any adjournments thereof, on the proposals described in the Proxy Statement in accordance with the instructions on the reverse side, and all other matters properly coming before the meeting. This proxy revokes all proxies previously given by the undersigned to vote at such meeting and any adjournments thereof. This proxy will also serve to instruct the trustee of Edwards Lifesciences Corporation 401(k) Savings and Investment Plan and the Edwards Lifesciences Technology Sarl Retirement Savings Plan (formerly known as the Edwards Lifesciences Corporation of Puerto Rico Savings and Investment Plan) (collectively, the "Plans") to vote in accordance with the instructions on the reverse side all shares held for the undersigned in the Plans. For shares held in the Plans, voting instructions submitted over the Internet, by telephone, or by mail must be received by the Plans' trustee by 11:59 p.m., ET, on Monday, May 4, 2020. The Plans' trustee will vote allocated shares for which it receives no written instructions in the same proportion as the allocated shares for which voting instructions have been received. IMPORTANT This Proxy must be signed and dated on the reverse side if voting by mail. (continued and to be signed on reverse side)