UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
Preliminary Proxy | ||
Confidential, | ||
Definitive Proxy | ||
Definitive Additional | ||
Soliciting Material |
COLFAX CORPORATION
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Thanother than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required. | ||||
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||||
1) | Title of each class of securities to which transaction applies: | |||
2) | Aggregate number of securities to which transaction applies: | |||
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 | |||
4) | Proposed maximum aggregate value of transaction: | |||
5) | Total fee paid: | |||
☐ | Fee paid previously with preliminary materials. | |||
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | ||||
1) | Amount Previously Paid: | |||
2) | Form, Schedule or Registration Statement No.: | |||
3) | Filing Party: | |||
4) | Date Filed: |
Proxy Statement
and
Notice of Special Meeting
February 28, 2022 at 9:00 a.m. ET
January 18, 2022
Dear Stockholders of Colfax Corporation:
On behalf of the Board of Directors (the “Board”) of Colfax Corporation (“Colfax” or the “Company”), you are cordially invited to virtually attend a Special Meeting of Stockholders (the “Special Meeting”) to be held at 9:00 a.m. Eastern Time, on February 28, 2022, at www.virtualshareholdermeeting.com/CFX2022SM.
At the Special Meeting, stockholders will consider and vote on a proposal to adopt and approve an amendment to our Amended and Restated Certificate of Incorporation that effects (a) a reverse stock split of our outstanding shares of common stock, at one of three reverse stock split ratios, one-for-two,one-for-three or one-for-four, with the exact ratio to be determined by our Board at a later date, and (b) if and when the reverse stock split is effected, a corresponding reduction in the number of authorized shares of our common stock by the selected reverse stock split ratio.
Colfax intends to effect the reverse stock split and authorized share count reduction in connection with and immediately following the previously announced separation (the “Spin-off”) of its existing fabrication technology business, which will operate as ESAB Corporation (“ESAB”), and its specialty medical technology businesses, which will operate under the new name Enovis Corporation (“Enovis”). If the Spin-off is completed, then the market price and trading ranges of Enovis’s common stock will no longer reflect the value of the ESAB business. With a reverse stock split, the price of each common share is expected to increase so that a stockholder would have fewer but higher priced shares. A reverse stock split would not have any impact on the voting and other rights of stockholders, and would have no impact on the Company’s business operations or any of its outstanding indebtedness.
Even if the reverse stock split proposal is approved by the Company’s stockholders, the Board may delay or abandon the reverse stock split at any time prior to the effective time of the reverse stock split if the Board determines that the reverse stock split is no longer in the best interests of the Company or its stockholders.
The proxy statement attached to this letter provides you with information about the proposed reverse stock split amendment. Please read the entire proxy statement carefully. You may obtain additional information about the Company from documents we file with the Securities and Exchange Commission.
It is important that your shares be represented and voted at the meeting. Please submit your proxy as soon as possible even if you plan to attend the Special Meeting. We appreciate your continued ownership of Colfax shares and your support regarding this matter.
Sincerely
Matthew L. Trerotola
President and Chief Executive Officer
Notice of
of Stockholders |
|
Monday, February 28, 2022
Wednesday, May 12, 2021
3:9:00 p.m.a.m. Eastern Time
Via live webcast atwww.virtualshareholdermeeting.com/CFX2021
www.virtualshareholdermeeting.com/CFX2022SM
To Our Stockholders:
Notice is hereby given that the 2021 Annuala Special Meeting of Stockholders (the “Annual“Special Meeting”) of Colfax Corporation will be held via live webcast at www.virtualshareholdermeeting.com/CFX2021CFX2022SM on Wednesday, May 12, 2021Monday, February 28, 2022 at 3:9:00 p.m.a.m. Eastern Time, for the following purposes:
1. | To |
2. | |
To approve one or more adjournments of the | |
Even if the reverse stock split proposal is approved by the Company’s stockholders, the Board may delay or abandon the reverse stock split at any time prior to the effective time of the reverse stock split if the Board determines that the reverse stock split is no longer in the best interests of the Company or its stockholders.
The accompanying proxy statement describes the matters to be considered at the AnnualSpecial Meeting. Only stockholders of record at the close of business on March 22, 2021January 10, 2022 are entitled to notice of, and to vote at, the AnnualSpecial Meeting and at any adjournments or postponements thereof.
We are pleased to take advantage of the Securities and Exchange Commission (“SEC”) rules that allow us to furnish our proxy materials and our annual report to stockholders on the Internet. We believe that posting these materials on the Internet enables us to provide our stockholders with the information that they need more quickly while lowering our costs of printing and delivery and reducing the environmental impact of our AnnualSpecial Meeting.
Due to continuing concerns relating to the coronavirus (COVID-19) pandemic and to support the health and well-being of our stockholders, directors, officers, employees and other meeting attendees, the AnnualSpecial Meeting will be completely virtual. To attend, participate in, and vote during the AnnualSpecial Meeting, stockholders of record must go to the meeting website at www.virtualshareholdermeeting.com/ CFX2021CFX2022SM and enter the 16-digit control number found on their proxy card or Notice of Internet Availability of Proxy Materials (the “Notice”). If you are a beneficial stockholder who owns common stock in street name, meaning through a bank, broker or other nominee, and your voting instruction form or Notice indicates that you may vote those shares through the http://www.proxyvote.com website, then you may attend, participate in, and vote during the AnnualSpecial Meeting using the 16-digit control number indicated on that voting instruction form or Notice. Otherwise, stockholders who hold their shares in street name should contact their bank, broker or other nominee (preferably at least five days before the Annual Meeting) and obtain a “legal proxy” in order to be able to attend, participate in or vote at the AnnualSpecial Meeting.
A list of stockholders of record as of the Record Date will be available for inspection during ordinary business hours at our corporate headquarters located at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, for 10 days prior to the date of our Special Meeting. The list will also be available for inspection at the Special Meeting at www.virtualshareholdermeeting.com/CFX2022SM.
As a stockholder of Colfax Corporation, your vote is important. Whether or not you plan to attend the AnnualSpecial Meeting virtually, we urge you to votesubmit your sharesproxy at your earliest convenience and thank you for your continued support of Colfax Corporation.
Dated: April 1, 2021
January 18, 2022
By Order of the Board of Directors
Bradley J. Tandy
Secretary
A-1 |
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. Page references are supplied to help you find further information in this proxy statement.
AnnualSpecial Meeting of Stockholders
Date and Time: | Monday, February 28, 2022 at | |
Location: | Via live webcast at www.virtualshareholdermeeting.com/ | |
Record Date: | January 10, 2022 |
Availability of Proxy Materials – Use of Notice and Access
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on May 12, 2021: Our Annual Report to Stockholders and this Proxy Statement areFebruary 28, 2022: This proxy statement is available at www.proxyvote.com.
Pursuant to the “notice and access” rules adopted by the U.S. Securities and Exchange Commission, we have elected to provide stockholders access to our proxy materials primarily over the Internet. Accordingly, on or about April 1, 2021,January 18, 2022, we sent a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders entitled to vote at the AnnualSpecial Meeting as of the close of business on March 22, 2021,January 10, 2022, the record date of the meeting. The Notice includes instructions on how to access our proxy materials over the Internet and how to request a printed copy of these materials. In addition, by following the instructions in the Notice, stockholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis.
Choosing to receive your future proxy materials by e-mail will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail prior to our next yearannual meeting with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it.
Who May Vote
You may vote if you were a stockholder of record at the close of business on March 22, 2021,January 10, 2022, the record date.
How to Cast Your Vote
You can vote or submit your proxy by any of the following methods:
Via the internet | ||
By telephone (1-800-690-6903) through | ||
By completing, signing and returning your proxy by mail in the envelope provided or to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, | ||
Via virtual attendance and voting at the |
If you are a beneficial stockholder who owns your shares in street name, the availability ofability to provide your voting instructions online or by telephone voting may depend on the voting procedures of the organization that holds your shares.
- Meeting Proxy Statement
|
| |||||||
|
1 |
Voting Matters
We are asking you to vote on the following proposals at the AnnualSpecial Meeting:
Proposal | Board Vote Recommendation | Page Reference | ||
Proposal 1 – | ||||
Authorized Share Reduction | FOR | |||
Proposal | FOR |
Board and Governance Highlights
Board Nominees (page 13)
The following table provides summary information about each director nominee:
Name | Age | Director Since | Occupation | Independent | Committee Memberships | Other Public Boards | ||||||
Mitchell P. Rales | 64 | 1995 | Chairman of the Board, Colfax Corporation | N/A | Danaher Corporation; Fortive Corporation | |||||||
Chairman of the Executive Committee, Danaher Corporation | ||||||||||||
Matthew L. Trerotola | 53 | 2015 | President and Chief Executive Officer, Colfax Corporation | N/A | None | |||||||
Patrick W. Allender | 74 | 2008 | Former Executive Vice President and Chief Financial Officer, Danaher Corporation | Nominating (Chair) Audit | Brady Corporation | |||||||
Thomas S. Gayner | 59 | 2008 | Co-Chief Executive Officer, Markel Corporation | Audit | Markel Corporation; Cable One, Inc.; Graham Holdings, Inc. | |||||||
Rhonda L. Jordan | 63 | 2009 | Former President, Kraft Foods Inc. | Compensation (Chair) Nominating | Ingredion, Inc. | |||||||
Liam J. Kelly | 54 | 2020 | President and Chief Executive Officer, Teleflex Incorporated | Nominating | Teleflex Incorporated | |||||||
Philip A. Okala | 52 | 2021 | Chief Operating Officer, University of Pennsylvania Health Systems | Compensation | None | |||||||
A. Clayton Perfall | 62 | 2010 | Operating Executive, Tailwind Capital | Audit (Chair) | None | |||||||
Didier Teirlinck | 64 | 2017 | Former Executive Vice President, Climate Segment, Ingersoll Rand | Audit | None | |||||||
Rajiv Vinnakota | 50 | 2008 | President, Institute for Citizens & Scholars (formerly the Woodrow Wilson National Fellowship Foundation) | Compensation Nominating | None | |||||||
Sharon Wienbar | 59 | 2016 | Former Venture Partner, Scale Venture Partners | Compensation | Resideo Technologies, Inc. Covetrus, Inc. |
|
| |
Of our 11 director nominees:
The table below highlights the collective skills, experiences and attributesaffirmative vote of our director nominees:
In accordance with the Company’s Amended and Restated Bylaws (the “Bylaws”), to be elected each director nominee must receiveholders of a majority of the votes cast with respect to that director’s election. Incumbent directors nominatedoutstanding shares of our common stock is required for election by the Board are required, as a condition to such nomination, to submit a conditional letter of resignation to the Chairmanapproval of the Board. InReverse Stock Split Proposal. Abstentions and broker non-votes, if any, will have the event that a nominee for director does not receivesame effect as votes against the Reverse Stock Split Proposal. The affirmative vote of the holders of a majority of the votes castoutstanding shares of our common stock present in person or represented by proxy at the AnnualSpecial Meeting with respectand entitled to his or her election,vote on the Boardmatter is required for the approval of the Adjournment Proposal. Abstentions will promptly consider whether to accept or rejecthave the conditional resignationsame effect as a vote against the Adjournment Proposal and broker non-votes, if any, will have no effect on the outcome of that nominee, or whether other action should be taken. The Board will then take action and will publicly disclose its decision and the rationale behind it no later than 90 days following the certification of election results.Adjournment Proposal.
- Meeting Proxy Statement
|
| |||||||
|
Corporate Social Responsibility and Sustainability
Our corporate social responsibility (“CSR”) and sustainability program is organized around identifying, assessing and managing on an ongoing basis the environmental, social and governance (“ESG”) factors that are relevant to our long-term financial performance. Our sustainability program takes into account the interests of our key stakeholder constituencies, including our employees, customers, communities and stockholders. ESG issues that we focus on across the Company include workplace health and safety, energy efficiency, waste management, climate risk, human capital management, diversity and inclusion, supply chain management, business ethics and compliance, and data privacy and protection.
In 2020, we committed to enhancing our CSR and sustainability reporting. At the direction of our Nominating and Corporate Governance Committee, we commenced a review of our CSR and sustainability programs and disclosures. To facilitate this review, we formed a cross-functional internal working group, which included a number of our senior leaders, including our CFO, CHRO and General Counsel. The review focused on (i) gaining a better understanding of the expectations of our stakeholders with respect to ESG disclosures and practices, (ii) identifying those ESG topics which we believe are most material to our stakeholders and (iii) assessing and disclosing how we currently manage and measure risks and opportunities related to these ESG topics. These efforts culminated in the publication of our inaugural CSR Report in March 2021, which can be accessed on our website at www.colfaxcorp.com on the Investors page under the Corporate Governance tab.
We expect to continue to enhance our CSR and sustainability reporting into 2021 and beyond, as ESG integration by investors and reporting frameworks continue to evolve.
Highlights of some of our recent ESG enhancements are discussed below.
The information on our website is not, and shall not be deemed to be, a part of this Proxy Statement or incorporated into any other filings we make with the SEC.
|
|
| |
2 |
|
|
|
|
| |
Auditor Ratification (page 24)
We ask our stockholders to approve the selection of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2021. Below is summary information about fees paid to Ernst & Young LLP for services provided in 2020 and 2019:
Fee Category (fees in thousands) | 2020 | 2019 | ||||||
Audit Fees | $ | 5,575 | $ | 7,417 | ||||
Audit-Related Fees | — | 1,628 | ||||||
Tax Fees | 646 | 1,023 | ||||||
All Other Fees | 4 | 4 | ||||||
TOTAL | $ | 6,225 | $ | 10,072 |
Executive Compensation (page 27)
We strive to create a compensation program for our associates, including our executives, that provides a compelling and engaging opportunity to attract, retain and motivate the best talent. We believe this results in performance-driven leadership that is aligned to achieve our financial and strategic objectives with the intention to deliver superior long-term returns to our stockholders. Our compensation program includes the following key features:
Say-on-Pay: Advisory Vote to Approve the Compensation of our Named Executive Officers (page 53)
We are asking our stockholders to approve on an advisory basis the compensation of our named executive officers. We believe our compensation programs and practices are appropriate and effective in implementing our compensation philosophy, and our focus remains on linking compensation to performance while aligning the interests of management with those of our stockholders.
Proxy Statement for AnnualSpecial Meeting of Stockholders
2021 Annual
February 28, 2022 Special Meeting
We are furnishing this Proxy Statement (the “Proxy Statement”) in connection with the solicitation by the Board of Directors (the “Board”) of Colfax Corporation (hereinafter, “Colfax,” “we,” “us” and the “Company”) of proxies for use at the 2021 AnnualSpecial Meeting of Stockholders (the “Annual“Special Meeting”) to be held on Wednesday, May 12, 2021,Monday, February 28, 2022, at 3:9:00 p.m.a.m. Eastern Time, and at any adjournments or postponements thereof. The Board has made this Proxy Statement and the accompanying Notice of AnnualSpecial Meeting available on the Internet. We first made these materials available to the Company’s stockholders entitled to vote at the AnnualSpecial Meeting on or about April 1, 2021.January 18, 2022.
The purpose of the Special Meeting is to consider and vote on the following proposals:
|
2. |
|
The Purpose of the Reverse Stock Split
Colfax intends to effect the reverse stock split and authorized share count reduction in connection with and immediately following the previously announced separation (the “Spin-off”) of its existing fabrication technology business, which will operate as ESAB Corporation (“ESAB”), and its specialty medical technology businesses, which will operate under the new name Enovis Corporation (“Enovis”). If the Spin-off is completed, then the market price and trading ranges of Enovis’s common stock will no longer reflect the value of the ESAB business. With a reverse stock split, the price of each common share is expected to increase so that a stockholder would have fewer but higher priced shares. A reverse stock split would not have any impact on the voting and other rights of stockholders, and would have no impact on the Company’s business operations or any of its outstanding indebtedness.
Even if the reverse stock split proposal is approved by the Company’s stockholders, the Board may delay or abandon the reverse stock split at any time prior to the effective time of the reverse stock split if the Board determines that the reverse stock split is no longer in the best interests of the Company or its stockholders.
About Colfax Corporation
Colfax Corporation is a leading diversified technology company that provides fabrication technology and medical technology products and services to customers around the world, principally under the ESAB and DJO (as defined below) brands. We have been built through a series of acquisitions and organic growth. We seek to build an enduring premier global enterprise by applying the Colfax Business System, (“CBS”)a comprehensive set of tools and processes, to create superior value for customers, stockholders and associates, to continuously improve our company and pursue growth in revenues and improvements in profit and cash flow.
- 2022 Special Meeting Proxy Statement | 3 |
In January 2012,
Proposal 1 | Authorized Share Reduction |
General
We are asking our stockholders to approve a series of three proposed amendments to our Amended and Restated Certificate of Incorporation to effect the Reverse Stock Split and the Authorized Share Reduction (the “Amendments”). Our Board has unanimously approved and declared advisable the Amendments, and recommends that our stockholders approve and adopt the Amendments. The foregoing description of the Amendments is a summary and is subject to the full text of the Amendments, which is attached to this Proxy Statement as Annex A.
If our stockholders approve this proposal, the Board will determine the reverse stock split ratio from among the proposed ratios and cause a certificate of amendment to our Amended and Restated Certificate of Incorporation setting forth the Amendment with the selected ratio (the “Certificate of Amendment”) to be filed with the Delaware Secretary of State to effect the Reverse Stock Split and the Authorized Share Reduction only if the Board determines that the Reverse Stock Split and the Authorized Share Reduction would be in the best interests of Colfax and its stockholders. The Board will abandon the other Amendments. The Board also may determine in its discretion not to effect the Reverse Stock Split and the Authorized Share Reduction and abandon the Amendments, which means that the Certificate of Amendment will not be filed with the Delaware Secretary of State. Colfax will not affect the Reverse Stock Split without also effecting the Authorized Share Reduction, and vice versa. Subject to stockholder approval, the Board currently expects and intends to file the Certificate of Amendment to implement the Reverse Stock Split and Authorized Share Reduction such that they become effective immediately following the intended Spin-off transaction as described above. No further action on the part of stockholders will be required to either implement or abandon the Reverse Stock Split or the Authorized Share Reduction.
The Amendments, if effected, will effect a Reverse Stock Split of the outstanding shares of Colfax’s common stock at one of three Reverse Stock Split ratios, one-for-two,one-for-three or one-for-four, as shown in Amendment A, Amendment B and Amendment C, respectively, to the Certificate of Amendment that is attached as Annex A hereto, with an exact ratio to be determined by our Board, in its sole discretion, at a later date. As of December 31, 2021, 156,249,234 shares of our common stock were issued and outstanding. Based on such number of shares of our common stock issued and outstanding, immediately following the effectiveness of the Reverse Stock Split (and without giving any effect to the payment of cash in lieu of fractional shares), we will have, depending on the Reverse Stock Split ratio selected by our Board, issued and outstanding shares of stock as illustrated in the table under the caption “—Effects of the Reverse Stock Split and the Authorized Share Reduction—Effect on Shares of Common Stock.”
The Amendments, if effected, will also result in a corresponding reduction of the total number of shares of our common stock by the selected Reverse Stock Split ratio, as shown in Amendment A, Amendment B and Amendment C, to the Certificate of Amendment that is attached as Annex A hereto. See “—Effects of the Reverse Stock Split and the Authorized Share Reduction—Effect on Shares of Common Stock” for the number of shares of common stock authorized but not outstanding or reserved that will remain available for issuance immediately following the effectiveness of the Reverse Stock Split and the Authorized Share Reduction.
All holders of Colfax’s common stock will be affected proportionately by the Reverse Stock Split and the Authorized Share Reduction.
No fractional shares of common stock will be issued as a result of the Reverse Stock Split. Instead, any stockholder who would have been entitled to receive a fractional share as a result of the Reverse Stock Split will receive cash payments in lieu of such fractional shares. Each stockholder will hold the same percentage of the outstanding common stock immediately following the Reverse Stock Split as that stockholder did immediately prior to the Reverse Stock Split, except to the extent that the Reverse Stock Split results in stockholders receiving cash in lieu of fractional shares. The par value of our common stock will continue to be $0.001 per share (see “—Effects of the Reverse Stock Split and the Authorized Share Reduction—Accounting Matters”).
Background
We have been built through a series of acquisitions, as well as organic growth, since our founding in 1995. We seek to build an enduring premier global enterprise by applying the Colfax Business System to continuously improve our Company and pursue growth in revenues and improvements in profit and cash flow. On February 22, 2019, we completed theour acquisition of Charter International plc, which transformed Colfax from its historical roots as a fluid handling business into a diversified industrial enterprise with additional growth platforms in the fragmented fabrication technology sector and air & gas handling products. We strengthened and expanded our fluid handling and air & gas handling operations through acquisitions and the application of CBS before divesting these platforms in December 2017 and September 2019, respectively. The sales of these businesses were part of a strategic transformation of our portfolio to create a faster-growing, less cyclical and higher-margin company with more predictable cash flows.
As part of this transformation, in February 2019, we acquired DJO Global, Inc. (“DJO”), a global developer, manufacturer and distributor of high-quality medical devices with a broad range of products used for orthopedic bracing, reconstructive implants, rehabilitation, pain management and physical therapy. DJO products address the high-margin orthopedic continuum of patient care from injury prevention to rehabilitation from injury or degenerative disease, enabling people to regain or maintain their natural motion.
- 2022 Special Meeting Proxy Statement | 4 |
Our business management system, CBS, is integral to our operations. CBS consists of
We are currently a comprehensive set of values, behaviors, processes and toolsleading diversified technology company that are designed to drive continuous improvement and create superior value for our customers, shareholders and associates. Rooted in our core values, CBS is our culture. We believe that our management team’s access to, and experience in, the application of the CBS methodology is one of our primary competitive strengths. We have used CBS to accelerate our growth and improve business performance.
We believe our disciplined acquisition program is a strength. Since 2015, we have completed 20 acquisitions to strengthen and accelerate the growth of our businesses. As discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 we completed five acquisitions and three other investments within our medical technology segment during 2020.
We currently report our operations through ourprovides fabrication technology and medical technology segments. These businesses operate in distinct markets, with unique business opportunitiesdevice products and investment requirements. services to customers around the world, principally under the ESAB and DJO brands. We conduct operations through two operating segments, “Fabrication Technology”, which incorporates the operations of ESAB and its related brands, and “Medical Technology”, which incorporates the operations of DJO and its related brands.
On March 4, 2021, we announced theour intention to separate theseour fabrication technology and specialty medical technology businesses into two differentiated, independent, and publicly traded companiescompanies. We intend to enter into a Separation and Distribution Agreement, effective prior to the Spin-off (the “Separation”“Separation Agreement”).
, with our wholly owned subsidiary, ESAB, which will hold our fabrication technology business. Pursuant to the Separation Agreement, we expect to distribute all or a portion of the shares of common stock of ESAB owned as of the record date (as defined in the Separation Agreement) on a pro rata basis to the holders of our common stock. Pursuant to the Separation Agreement, we expect to complete the Spin-off near the end of the first quarter of 2022 and immediately prior to the implementation of the Reverse Stock Split and Authorized Share Reduction. We cannot provide any assurance that the Separation Agreement will be entered into or that the spin-off will be completed, as it is subject to certain conditions precedent. Following the spin-off, we will continue to hold our specialty medical technology business and will operate under the name Enovis Corporation. For additional details on the intended distribution, please see the preliminary Form 10 Registration Statements that ESAB will file with the U.S. Securities and Exchange Commission (the “SEC”), as may be amended from time to time in future filings.
We expect that the SeparationSpin-off will allow each company to: (1) improve both investor alignment with its clear value proposition and the ability for investors to among other things: (1) optimizevalue each company based on its distinct strategic, operational and financial characteristics; (2) tailor capital allocation for internal investment, M&Astructure and returnallocation of capital to shareholders; (2) tailor investment to its specific business profile and strategic priorities in the most efficient manner possible; (3) increase operating flexibility and resources to capitalize on growth opportunities in its respective markets; and (4) improve both investor alignment with its clear value proposition and the ability for investors to value it based onsharpen strategic focus in pursuit of its distinct strategic, operationaloperating priorities and financial characteristics.strategies. The Spin-off would also provide each company with an appropriately valued acquisition currency that could be used for larger, transformational transactions.
We continue to make progress on the Spin-off and are targeting its completion near the end of the first quarter of 2022 and immediately prior to the implementation of the Reverse Stock Split and Authorized Share Reduction. Completion of the SeparationSpin-off is subject to, among other things, completion of financing and other transactions on satisfactory terms, other steps necessary to qualify the separationSpin-off as a tax-free transaction for U.S. federal income tax purposes, receipt of other regulatory approvals, a favorable tax opinion and/or Internal Revenue Service ruling and final approval from our Board of Directors. Details of the separation will be included in future filings with the SEC.Board. There can be no assurance regarding the form and timing of the SeparationSpin-off or its completion.
Our principal executive office is located at 420 National Business Parkway, 5th Floor, Annapolis Junction, MD, 20701. Our telephone number is (301) 323-9000 and our website is located at www.colfaxcorp.com. Our common stock trades on Details of the New York Stock Exchange (NYSE) under the symbol CFX.
|
| |
Proposal 1Spin-off Election of Directors
Eleven director nominees will be elected at the Annual Meeting, each to serve until the next annual meeting of the Company and until his or her successor is duly elected and qualified. At the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated the following persons to serve as directors for the term beginning at the Annual Meeting on May 12, 2021: Mitchell P. Rales, Matthew L. Trerotola, Patrick W. Allender, Thomas S. Gayner, Rhonda L. Jordan, Liam J. Kelly, Philip A. Okala, A. Clayton Perfall, Didier Teirlinck, Rajiv Vinnakota, and Sharon Wienbar. All nominees are currently serving on the Board.
Nominating Committee Criteria for Board Members
The Nominating and Corporate Governance Committee considers, among other things, the following criteriaincluded in selecting and reviewing director nominees:
Pursuant to its charter, the Nominating and Corporate Governance Committee also reviews, among other qualifications, the perspective, broad business judgment and leadership, business creativity and vision, and diversity of potential directors, all in the context of the needs of the Board at that time. We believe that Board membership should reflect diversity in its broadest sense, including persons diverse in geography, gender, and ethnicity, and we seek independent directors who represent a mix of backgrounds and experiences that will enhance the quality of the Board’s deliberations and decisions.
The charter of the Nominating and Corporate Governance Committee affirmatively recognizes diversity as one of the criteria for consideration in the selection of director nominees, and in its deliberations and discussions concerning potential director appointments the Nominating and Corporate Governance Committee has paid particular attention to diversity togetherfuture filings with all other qualifying attributes. The Nominating and Corporate Governance Committee is committed to actively seeking out highly qualified women and minority director candidates, as well as candidates with diverse backgrounds, experiences and skills, as part of each director search that our Company undertakes. In addition, the Nominating and Corporate Governance Committee annually considers its effectiveness in achieving these objectives as a part of its assessment of the overall composition of the Board and as part of the annual Board evaluation process described further below, which includes a director skills matrix to identify areas of director knowledge and experience that may benefit the Board in the future. That information is used as a part of the director search and nomination process. The Nominating and Corporate Governance Committee looks for candidates with the expertise, skills, knowledge and experience that, when taken together with that of other members of the Board, will lead to a Board that is effective, collegial and responsive to the needs of the Company. As further discussed below, certain members of our Board have experience with the business systems that are an integral part of our Company culture. In addition, we feel that the familiarity of certain Board members with our business system from their work experiences at Danaher Corporation and at our Company, combined with strong input from varied and sophisticated business backgrounds, provides us with a Board that is both functional and collegial while able to draw on a broad range of expertise in the consideration of complex issues.
Board Member Service
The biographies of each of the nominees below contain information regarding the experiences, qualifications, attributes or skills that the Nominating and Corporate Governance Committee and the Board considered in determining that the person should serve as a director of the Company. The Board has been informed that all of the nominees listed below are willing to serve as directors, but if any of them should decline or be unable to act as a director, the individuals named in the proxies may vote for a substitute designated by the Board. The Company has no reason to believe that any nominee will be unable or unwilling to serve.
In determining to nominate Mr. Gayner for re-election, the Nominating and Corporate Governance Committee and the Board carefully evaluated and took into account that Mr. Gayner serves as an executive officer at Markel Corporation and serves on the boards of Markel Corporation, Graham Holdings Co. and Cable One Inc. (which was a wholly-owned subsidiary of Graham Holdings until July 2015). The Nominating and Corporate Governance Committee determined, and the Board concurred, that Mr. Gayner is a valuable, productive and fully engaged director who should be re-elected to the Board. In reaching this conclusion, the Nominating and Corporate Governance Committee took note of Mr. Gayner’s valuable role on the Board and stellar attendance record. As a result of his experience as an executive officer at Markel Corporation, Mr. Gayner provides the Board with substantial knowledge regarding business operations
|
| |
strategy, as well as valuable financial and investment expertise. Moreover, Mr. Gayner has continued to be an active participant in all Colfax Board matters and is well-prepared for Board and Committee meetings, and played an important role in the Audit Committee’s discussions and decision-making regarding Colfax’s acquisition of DJO and sale of the Air & Gas Handling business and is expected to provide valuable insight in connection with the Separation. Based on these factors, Mr. Gayner was unanimously recommended and re-nominated for election to our Board of Directors.
The names of the nominees for director, their ages as of April 1, 2021, principal occupations, employment and other public company board service during at least the last five years, periods of service as a director of the Company, and the experiences, qualifications, attributes and skills of each nominee are set forth below:
| ||
| ||
| ||
|
|
| |
| ||
| ||
| ||
|
|
| |
| ||
| ||
|
The affirmative vote of the holders of a majority of the votes cast is required for election of each director.
|
| |
Our Corporate Governance Guidelines require that a majority of our Board members be “independent” under the NYSE’s listing standards. In addition, the respective charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee require that each member of these committees be “independent” under the NYSE’s listing standards and, with respect to the Audit Committee, under the applicable SEC rules. In order for a director to qualify as “independent,” our Board must affirmatively determine that the director has no material relationship with the Company that would impair the director’s independence. Our Board undertook its annual review of director independence in February 2021. The Board has determined that Mr. Allender, Mr. Gayner, Ms. Jordan, Mr. Kelly, Mr. Okala, Mr. Perfall, Mr. Teirlinck, Mr. Vinnakota, and Ms. Wienbar each qualify as “independent” under the NYSE’s listing standards. In reaching a determination on these directors’ independence, the Board considered that during fiscal 2020, Mr. Kelly was the chief executive officer of Teleflex, which does business with Colfax. The amount received by Colfax or Teleflex in each of the last three fiscal years did not exceed the greater of $1 million or 1% of either Colfax’s or Teleflex’s consolidated gross revenues. In addition, the Board considered that during fiscal 2020, Mr. Okala was the chief operating officer of The University of Pennsylvania Health Systems, which does business with Colfax. The amount received by Colfax or The University of Pennsylvania Health Systems in each of the last three fiscal years did not exceed the greater of $1 million or 1% of either Colfax’s or The University of Pennsylvania Health Systems’ consolidated gross revenues. None of the other independent directors nor their immediate family members have within the past three years had any direct or indirect business or professional relationships with the Company other than in their capacity as directors.
The independent members of our Board must hold at least two “executive session” meetings each year without the presence of management. If the Chair of the Board is not an independent director, the independent directors select an independent director to serve as Chairperson for each executive session. In general, the meetings of independent directors are intended to be used as a forum to discuss such topics as they deem necessary or appropriate. Mr. Allender serves as the presiding director of the independent director executive sessions and as such leads the independent directors during these sessions.
Board of Directors and its Committees
The Board and its committees meet regularly throughout the year, and may also hold special meetings and act by written consent from time to time. The Board held a total of seven meetings during the year ended December 31, 2020. During 2020, all of our directors attended all Board meetings and meetings of the committees of the Board on which such directors served (during the periods that he or she served). Our Corporate Governance Guidelines request Board members to make every effort to attend our annual meeting of stockholders. Nine out of our ten directors then serving attended our annual meeting of stockholders in 2020.
The Board has a standing Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. The charters for the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee are available on the Company’s website at www.colfaxcorp.com on the Investors page under the Corporate Governance tab. These materials also are available in print to any stockholder upon request to: Corporate Secretary, Colfax Corporation, 420 National Business Parkway, 5th Floor, Annapolis Junction, Maryland 20701. The Board committees review their respective charters on an annual basis. The Nominating and Corporate Governance Committee oversees an annual evaluation of the Board and each committee’s operations and performance.
|
| |
Audit Committee
Our Audit Committee met 11 times during the year ended December 31, 2020. The Audit Committee is responsible, among its other duties and responsibilities, for overseeing our accounting and financial reporting processes, the audits of our financial statements, the qualifications of our independent registered public accounting firm, and the performance of our internal audit function and independent registered public accounting firm. The Audit Committee reviews and assesses the qualitative aspects of our financial reporting, our processes to manage business and financial risks, and our compliance with significant applicable legal, ethical and regulatory requirements. The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. The members of our Audit Committee are Mr. Perfall, Chair, Mr. Allender, Mr. Gayner, and Mr. Teirlinck. The Board has determined that each of Mr. Perfall and Mr. Allender qualify as an “audit committee financial expert,” as that term is defined under the SEC rules. The Board has determined that each member of our Audit Committee is independent and financially literate under the NYSE’s listing standards and that each member of our Audit Committee is independent under the standards of Rule 10A-3 under the Securities Exchange Act of 1934 (the “Exchange Act”).
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee met five times during the year ended December 31, 2020. The Nominating and Corporate Governance Committee is responsible for recommending candidates for election to the Board. In making its recommendations, the committee will review a candidate’s qualifications and any potential conflicts of interest and assess contributions of current directors in connection with his or her renomination. The committee is also responsible, among its other duties and responsibilities, for making recommendations to the Board or otherwise acting with respect to corporate governance policies and practices, including Board size and membership qualifications, new director orientation, committee structure and membership, related person transactions, and communications with stockholders and other interested parties. The Nominating and Corporate Governance Committee is also responsible for reviewing the Company’s undertakings with respect to environmental, social, and governance matters, including the Company’s role as a corporate citizen and the Company’s policies and programs relating to health, safety and sustainability matters. The members of our Nominating and Corporate Governance Committee are Mr. Allender, Chair, Ms. Jordan, Mr. Kelly and Mr. Vinnakota. The Board has determined that each member of our Nominating and Corporate Governance Committee is independent under the NYSE’s listing standards.
Compensation Committee
Our Compensation Committee met six times during the year ended December 31, 2020. The Compensation Committee is responsible, among its other duties and responsibilities, for determining and approving the compensation and benefits of our Chief Executive Officer and other executive officers, monitoring compensation arrangements applicable to our Chief Executive Officer and other executive officers in light of their performance, effectiveness and other relevant considerations and adopting and administering our equity and incentive plans. The members of our Compensation Committee are Ms. Jordan, Chair, Mr. Vinnakota, Ms. Wienbar and Mr. Okala, who was appointed to the Compensation Committee effective March 3, 2021. The
|
| |
Board has determined that each member of our Compensation Committee is a “non-employee director” within the meaning of SEC Rule 16b-3, and is independent under the NYSE’s listing standards for directors and compensation committee members.
The Compensation Committee annually reviews and approves the corporate goals and objectives relevant to the compensation of our Chief Executive Officer, evaluates his performance in light of those goals and objectives, and determines his compensation level based on that analysis. The Compensation Committee also annually reviews and approves all elements of the compensation of our other executive officers. Our Chief Executive Officer plays a significant role in developing and assessing achievement against the goals and objectives for other executive officers and makes compensation recommendations to the Compensation Committee based on these evaluations. The Compensation Committee also administers all of the Company’s management incentive compensation plans and equity-based compensation plans. The Compensation Committee makes recommendations to the Board regarding compensation of all executive officer hires, all elements of director compensation, and the adoption of certain amendments to incentive or equity-based compensation plans. The Compensation Committee also assists the Board in its oversight of risk related to the Company’s compensation policies and practices applicable to all Colfax associates. Additionally, the Compensation Committee periodically reviews the Company’s strategies and policies related to human capital management, including with respect to matters such as diversity, inclusion, pay equity, corporate culture, talent development and retention. For further information on our compensation practices, including a description of our processes and procedures for determining compensation, the scope of the Compensation Committee’s authority and management’s role in compensation determinations, please see the Compensation Discussion and Analysis section of this Proxy Statement, which begins on page 27.
Since April 2009, our Compensation Committee has engaged Frederic W. Cook & Co. as its independent compensation consultant to, among other things, formulate an appropriate peer group to be used by the Compensation Committee and to provide competitive comparison data and for other compensation consulting services as requested by the Compensation Committee. Additional information on the nature of the information and services provided by this independent compensation consultant can be found below in the Compensation Discussion and Analysis.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is or has ever been an officer or an employee of the Company or any of its subsidiaries, and no Compensation Committee member has any interlocking or insider relationship with the Company which is required to be reported under the rules of the SEC.
Identification of Director Candidates
Reasons for the Reverse Stock Split and Director Nomination Processthe Authorized Share Reduction
The Nominating and Corporate Governance Committee considers candidates for Board membership suggested by its members and other Board members, as well as by management and stockholders. The Nominating and Corporate Governance Committee may also use outside consultants to assist in identifying candidates and during 2020 used third-party recruiters to identify and provide background information on possible candidates. Mr. Okala was first recommended to the Nominating and Corporate Governance Committee by Mr. Kelly. The Nominating and Corporate Governance Committee is responsible for assessing whether a candidate may qualify as an independent director. Each possible candidate is discussed and evaluated in detail before being recommended to the Board. The Nominating and Corporate Governance Committee utilizes the same criteria for evaluating candidates regardless of the source of the referral.
The Nominating and Corporate Governance Committee recommends, and the Board nominates, candidates to stand for election as directors. Stockholders may nominate persons to be elected as directors and, as noted above, may suggest candidates for consideration by the Nominating and Corporate Governance Committee. If a stockholder wishes to suggest a person to the Nominating and Corporate Governance Committee for consideration as a director candidate, he or she must provide the same information as required of a stockholder who intends to nominate a director pursuant to the procedures contained in Section 3.3 of our Bylaws, in accordance with the same deadlines applicable to director nominations, as described below under “General Matters—Stockholder Proposals and Nominations.”
Our Corporate Governance Guidelines specify that the positions of Chairman of the Board and Chief Executive Officer shall be held by separate persons. We believe that this structure is appropriate given the differences between the two roles in our current management structure. Our Chief Executive Officer, among other duties, is responsible for setting the strategic direction for the Company and the day-to-day leadership and performance of the Company, while the Chairman of our Board, among other responsibilities, provides guidance to the Chief Executive Officer, takes an active role in setting the agenda for Board meetings and presides over meetings of the full Board. Our current Chairman, Mr. Rales, is not an independent director and, as noted above in “Director Independence,” Mr. Allender serves as the presiding director for independent director executive sessions and as such leads the independent directors during these sessions.
|
| |
Reverse Stock Split
The Board and its committees conduct self-assessments annually at their February meetings. The Chair of the Nominating and Corporate Governance Committee oversees the process. The annual evaluation procedure is summarized below.
Board’s Role in Risk Oversight
The Board maintains responsibility for oversight of risksbelieves that may affect the Company. The Board discharges this duty primarily through its standing committees and also considers risk in its strategic planning for the Company and in its consideration of acquisitions. The Board engages in discussions about risk at each quarterly meeting, where it receives reports from its committees, as applicable, about the risk oversight activities within their respective areas of responsibility. Specifically, the Audit Committee (i) receives reports from and discusses with management, our internal audit team, and our independent registered public accounting firm all major risk exposures (whether financial, operating or otherwise), (ii) reviews the Company’s policies with respect to risk assessment and enterprise risk management, including with respect to cybersecurity risks, and (iii) oversees compliance with legal and regulatory requirements and our ethics program, including our Code of Business Conduct and Ethics. In addition, the Nominating and Corporate Governance Committee oversees the corporate governance principles and governance structures that contribute to successful risk oversight and management. The Compensation Committee oversees certain risks associated with compensation policies and practices, as discussed below.
The Audit, Nominating and Corporate Governance and Compensation Committees each make full reports to the Board of Directors at each regularly scheduled meeting regarding each committee’s considerations and actions, and risk considerations are presented to and discussed with the Board by management as part of strategic planning sessions and when considering potential acquisitions.
Corporate Governance Guidelines and Pledging
The Board has adopted Corporate Governance Guidelines, which set forth a framework to assist the Board in the exercise of its responsibilities. The Corporate Governance Guidelines cover, among other things, the composition and certain functions of the Board and its committees, executive sessions, Board responsibilities, expectations for directors, director orientation and continuing education, and our policy prohibiting pledging.
In February 2014, the Board amended the Corporate Governance Guidelines to prohibit any future pledging of Colfax’s common stock as security under any obligation by our directors and executive officers. The Board excepted from the policy shares of Colfax common stock that were already pledged at the time the policy was adopted, but any additional share pledges are prohibited. Pledged shares of Colfax common stock do not count toward our stock ownership requirements.
Certain shares of common stock owned by Mitchell Rales, Chairman of our Board, that were pledged at the time that the policy was adopted were grandfathered from the policy. Notwithstanding that the existing pledge was grandfathered under our policy, as part of its risk oversight function the Audit Committee of the Board reviews
|
| |
Mr. Rales’ share pledges on a quarterly basis to assess whether such pledging poses an undue risk to the Company. In evaluating Mr. Rales’ pledge of Colfax shares, the Audit Committee considered that Mr. Rales acquired these shares with his own funds in connection with founding the Company and did not receive them as compensation from Colfax; that, as a founder of Colfax and dedicated long-term stockholder, he has (as with many institutional stockholders) pledged a portion of his shares instead of selling shares for liquidity; and that Mr. Rales, as a founder or significant investor in other public companies (including Danaher Corporation and Fortive Corporation), has significant personal assets. In addition to taking into account the number of shares and percentage of outstanding shares pledged, the Audit Committee has also considered the degree of overcollateralization (the amount by which the market value of the shares pledged as collateral exceeds the amount of secured indebtedness), as the Committee believes this is a key factor in assessing the degree of risk posed by the pledging arrangements. Based on its evaluation, the Committee has concluded that the existing pledge arrangements do not pose an undue risk to the Company. The Audit Committee will continue to periodically review the shares pledged as part of its risk oversight function.
Code of Business Conduct and Ethics
As part of our system of corporate governance, the Board has also adopted a Code of Business Conduct and Ethics (the “Code of Ethics”), which was updated in 2019, that is applicable to all directors, officers and employees of the Company. The Code of Ethics sets forth Company policies, expectations and procedures on a number of topics, including but not limited to conflicts of interest, compliance with laws, rules and regulations (including insider trading laws), honesty and ethical conduct, and quality. The Code of Ethics also sets forth procedures for reporting violations of the Code of Ethics and investigations thereof. If the Board grants any waivers from our Code of Ethics to any of our directors or executive officers, or if we amend our Code of Ethics, we will, if required, disclose these matters through our website within four business days following such waiver or amendment.
Policies on Insider Trading, Hedging and Stock Ownership
The Company has a Policy on Insider Trading and Compliance which, in addition to mandating compliance with insider trading laws, prohibits any director, officer or employee of the Company from engaging in short sales, transactions in derivative securities (including put and call options), or other forms of hedging and monetization transactions, such as zero-cost collars, equity swaps, exchange funds and forward sale contracts, that allow the holder to limit or eliminate the risk of a decrease in the value of the Company’s securities. Further, we have stock ownership policies applicable to our directors and executives to promote alignment of interests between our stockholders, directors and management.
Where to Find Our Key Governance Policies
The Corporate Governance Guidelines and Code of Ethics are available on the Company’s website at www.colfaxcorp.com on the Investors page under the Corporate Governance tab. These materials also are available in print to any stockholder upon request to: Corporate Secretary, Colfax Corporation, 420 National Business Parkway, 5th Floor, Annapolis Junction, Maryland 20701.
Certain Relationships and Related Person Transactions
Policies and Procedures for Related Person Transactions
We have adopted a written Policy Regarding Related Person Transactions pursuant to which our Nominating and Corporate Governance Committee or a majority of the disinterested members of our Board generally must approve related person transactions in advance. The policy applies to any transaction or series of similar transactions involving more than $120,000 in which the Company is a participant and in which a “related person” has a direct or indirect material interest. “Related persons” include the Company’s directors, nominees for director, executive officers, and greater than 5% stockholders, as well as the immediate family members of the foregoing. In approving or rejecting the proposed transaction, our Nominating and Corporate Governance Committee takes into account, among other factors it deems appropriate, whether the proposed related person transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, the extent of the person’s interest in the transaction and, if applicable, the impact on a director’s independence. Under the policy, if we discover related person transactions that have not been approved, the Nominating and Corporate Governance Committee is to be notified and will determine the appropriate action, including ratification, rescission or amendment of the transaction.
|
| |
Related Person Transactions
Set forth below is a summary of certain transactions since January 1, 2020 in which (i) the Company was or is a participant, (ii) any of our directors, executive officers, beneficial owners of more than 5% of our common stock, or the immediate family members of any of the foregoing had or will have a direct or indirect material interest and (iii) the amount involved exceeds or will exceed $120,000:
Transactions with Fortive Corporation
Certain of our subsidiaries purchase products from and sell products to Fortive Corporation (“Fortive”) from time to time in the ordinary course of business and on an arms’-length basis. Such transactions are pre-approved under our Policy Regarding Related Person Transactions. In 2020, our subsidiaries purchased approximately $150,437 of products from Fortive, which is less than 0.01% of our, and of Fortive’s, gross revenues for 2020. Our subsidiaries intend to purchase products from and sell products to Fortive in the future in the ordinary course of their businesses and on an arms’-length basis. Mitchell P. Rales and Steven M. Rales are each members of Fortive’s Board of Directors, and both are the beneficial owners of at least 5% of Fortive’s outstanding common stock and our outstanding common stock.
Contacting the Board of Directors
The Board of Directors has established a process for stockholders and interested parties to communicate with the Board and to report complaints or concerns relating to our accounting, internal accounting controls or auditing matters. Stockholders and interested parties wishing to communicate with our Board may do so by writing to any of the members of the Board, the Chairman of the Board, or the non-management members of the Board as a group, at:
Colfax Corporation
420 National Business Parkway, 5th Floor
Annapolis Junction, Maryland 20701
Attn: Corporate Secretary
Complaints or concerns relating to our accounting, internal accounting controls or auditing matters will be referred to members of the Audit Committee. Other correspondence will be referred to the relevant director or group of directors. Our Policy on Stockholder and Interested Party Communications with the Board of Directors (the “Board Communications Policy”) requires that any stockholder communication to members of the Board prominently display the legend “Board Communication” in order to indicate to the Corporate Secretary that it is communication subject to our policy and will be received and processed by the Corporate Secretary’s office. Each communication received by the Corporate Secretary is copied for our files and promptly forwarded to the addressee. In our Board Communications Policy, the Board has requested that certain items not related to the Board’s duties and responsibilities be excluded from forwarded communications, such as mass mailings and business advertisements. In addition, the Corporate Secretary is not required to forward any communication that the Corporate Secretary, in good faith, determines to be frivolous, unduly hostile, threatening, illegal or similarly unsuitable. However, the Corporate Secretary maintains a list of each communication subject to this policy that is not forwarded, and on a quarterly basis delivers the list to the Chairman of the Board. In addition, each communication subject to this policy that is not forwarded because it was determined by the Secretary to be frivolous, commercial advertising, irrelevant or similarly unsuitable is nevertheless retained in our files and made available at the request of any member of the Board to whom such communication was addressed.
|
| |
Our Board, at the recommendation of our Compensation Committee, sets the compensation program for non-employee directors. The Compensation Committee reviews this program on an episodic basis and recommends director compensation levels based on its evaluation of competitive levels for director compensation, utilizing data drawn from our current list of peer companies and its reasoned business judgment. See “Role of Compensation Consultants and Peer Data Review” on page 36. The compensation program was last revised in 2019.
Our non-employee Board members receive the following:
As part of the changes made in 2019, Directors no longer receive an initial equity grant, but instead receive a pro-rated portion of the annual equity award.
Our non-executive Chairman of the Board is entitled to receive an annual cash retainer of $1 and does not receive any other cash fees or the annual equity award described above.
The Board has also approved a stock ownership policy for our directors. Each director is required to own shares of our common stock (including shares issuable upon exercise of stock options and shares underlying restricted stock units) with a value equal to five times the annual cash retainer within five years of joining the Board. All of our directors except for Mr. Kelly, who was appointed during 2020, and Mr. Okala, who was appointed in February 2021, have achieved these ownership targets as of the date of this Proxy Statement.
Further, our Board has adopted a policy prohibiting any director (or executive officer) from pledging as security under any obligation any shares of Colfax common stock that he or she directly or indirectly owns and controls (other than shares already pledged as of February 17, 2014), and providing that pledged shares of Colfax common stock do not count toward our stock ownership requirements.
The Board has adopted a Director Deferred Compensation Plan which permits non-employee directors to receive, at their discretion, deferred stock units (“DSUs”) in lieu of their annual cash retainers and committee chairperson retainers. A director who elects to receive DSUs receives a number of units determined by dividing the cash fees earned during, and deferred for, the quarter by the closing price of our common stock on the date of the grant, which is the last trading day of the quarter. A non-employee director also may convert director restricted stock unit grants to DSUs under the plan. DSUs granted to our directors convert to shares of our common stock after termination of service from the Board, based upon a schedule elected by the director in advance. In the event that a director elects to receive DSUs, the director will receive dividend equivalent rights on such DSUs to the extent dividends are issued on our common stock. Dividend equivalents are deemed reinvested in additional DSUs (or fractions thereof) at the dividend payment date.
We also reimburse all directors for travel and other necessary business expenses incurred in the performance of their services on our Board and the committees thereof and extend coverage to them under our directors’ and officers’ indemnity insurance policies.
In light of the impact of the COVID-19 pandemic on our business in 2020, the Compensation Committee recommended, and our Board approved, a 20% reduction to directors’ retainer fees during the second quarter of 2020 and a 10% reduction to directors’ retainer fees in the third quarter of 2020 for all Board members. The Compensation Committee recommended, and the Board approved, a reinstatement to 100% of the directors’ retainer fees during the fourth quarter of 2020. The impact of such reductions is reflected in the table below.
|
| |
The following table sets forth information regarding compensation paid to our non-employee directors during 2020:
DIRECTOR COMPENSATION FOR 2020
Fees Earned or | Stock | Option | ||||||||||
Paid in Cash | Awards | Awards | Total | |||||||||
Name(1) | ($) | ($) | (3) | ($) | (5) | ($) | ||||||
Mitchell P. Rales | 1 | — | — | 1 | ||||||||
Patrick W. Allender | 92,500 | (2) | 65,009 | (4) | 65,007 | 222,516 | ||||||
Thomas S. Gayner | 78,625 | (2) | 65,009 | (4) | 65,007 | 208,641 | ||||||
Rhonda L. Jordan | 92,500 | 65,009 | (4) | 65,007 | 222,516 | |||||||
Liam J. Kelly | 78,625 | 89,514 | 89,512 | 257,651 | ||||||||
A. Clayton Perfall | 97,125 | (2) | 65,009 | (4) | 65,007 | 227,141 | ||||||
Didier Teirlinck | 78,625 | (2) | 65,009 | (4) | 65,007 | 208,641 | ||||||
Rajiv Vinnakota | 78,625 | 65,009 | 65,007 | 208,641 | ||||||||
Sharon Wienbar | 78,625 | (2) | 65,009 | (4) | 65,007 | 208,641 |
As of December 31, 2020, the aggregate number of unvested stock awards and unexercised options outstanding held by each of our non-employee directors was as follows:
Name | Restricted Stock Units | Stock Options | |
Mitchell P. Rales | — | — | |
Patrick W. Allender | 2,568 | 31,732 | |
Thomas S. Gayner | 2,568 | 31,732 | |
Rhonda L. Jordan | 2,568 | 31,732 | |
Liam J. Kelly | 3,260 | 7,741 | |
A. Clayton Perfall | 2,568 | 31,732 | |
Didier Teirlinck | 2,568 | 18,139 | |
Rajiv Vinnakota | 2,568 | 31,732 | |
Sharon Wienbar | 2,568 | 22,377 |
|
| |
We are asking our stockholders to ratify the Audit Committee’s selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021. The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of our independent auditors. Ernst & Young LLP has served as our independent auditor since its appointment in 2002. Although stockholder ratification is not required, the appointment of Ernst & Young LLP is being submitted for ratification as a matter of good corporate practice with a view towards soliciting stockholders’ opinions which the Audit Committee will take into consideration in future deliberations. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders. The Board of Directors and the Audit Committee believe that the retention of Ernst & Young LLP as the Company’s independent auditor is in the best interests of the Company and its stockholders.
Representatives for Ernst & Young LLP are expectedstockholders to reduce the number of issued and outstanding shares at one of three Reverse Stock Split ratios, one-for-two,one-for-three or one-for-four, with an exact ratio to be presentdetermined by the Board at a later date, through the Annual Meeting, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.
Independent Registered Public Accounting Firm Fees and Services
The following table sets forth the aggregate fees for services rendered by Ernst & Young LLP for the Company for the fiscal years ended December 31, 2020 and 2019:
Fee Category (fees in thousands) | 2020 | 2019 | |||||
Audit Fees | $ | 5,575 | $ | 7,417 | |||
Audit-Related Fees | — | 1,628 | |||||
Tax Fees | 646 | 1,023 | |||||
All Other Fees | 4 | 4 | |||||
TOTAL | $ | 6,225 | $ | 10,072 |
Audit Fees
This category of the table above includes fees for the fiscal years ended December 31, 2020 and 2019 that were for professional services rendered (including reimbursement for out-of-pocket expenses) for the integrated audits of our annual consolidated financial statements, for reviews of the financial statements included in our Quarterly Reports on Form 10-Q, and for statutory audits.
Audit-Related Fees
This category of the table above includes the fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees.” There were no Audit-Related Fees incurred for 2020. For 2019, Audit-Related Fees included fees related to services renderedReverse Stock Split implemented in connection with audited carve-out financial statementsand subsequent to the previously announced intended Spin-off. Immediately following the completion of the Reverse Stock Split, the number of shares of our Air & Gas Handling businesscommon stock issued and outstanding will be reduced proportionately based on the selected reverse stock split ratio as determined by our Board at a later date.
The proposed Reverse Stock Split is in connection with the disposition of that business in September 2019 and services rendered in connection with the acquisition of DJO.
Tax Fees
This categoryrecognition of the table above includes fees billed for tax compliance, tax preparation, tax planningfact that if the Spin-off is completed, then the market price and trading ranges of Enovis’s common stock will no longer reflect the value of the ESAB business. With a reverse stock split, the price of each common share is expected to increase so that a stockholder would have fewer but higher priced shares. A reverse stock split would not have any impact on the voting and other tax services. For 2020, Tax Fees included approximately $518,459 for tax compliancerights of stockholders, and tax preparation, approximately $126,300 for tax planning and other tax services and approximately $982 for associated expenses. For 2019, Tax Fees included approximately $1,004,038 for tax compliance and tax preparation and approximately $19,000 for tax planning and other tax services.
All Other Fees
This category of the table above includes fees billed for products and services other than those described above under Audit Fees, Audit-Related Fees and Tax Fees. For 2020 and 2019, these included fees incurred for Ernst & Young LLP’s online accounting information tool.
The Audit Committee has considered whether the services rendered by the independent registered public accounting firm with respect to the fees described above are compatible with maintaining the independent registered public accounting firm’s independence and has concluded that such services do not impair its independence.
|
| |
Audit Committee’s Pre-Approval Policies and Procedures
Pursuant to its charter, the Audit Committee must pre-approve all auditing services, review and attest services, internal control related services and non-audit services provided to the Company by the independent registered public accounting firm and all fees payable by the Company to the independent registered public accounting firm for such services. The Audit Committee also is responsible for overseeing the audit fee negotiations associated with the retention of Ernst & Young LLP for the audit of our financial statements. The Audit Committee has adopted a pre-approval policy to promote compliance with the NYSE’s listing standards and the applicable SEC rules and regulations relating to auditor independence. In accordance with the Audit Committee charter and the pre-approval policy, the Audit Committee reviews with Ernst & Young LLP and management the plan and scope of Ernst & Young LLP’s proposed annual financial audit and quarterly reviews, including the procedures to be utilized and Ernst & Young LLP’s compensation, and pre-approves all auditing services, review and attest services, internal control related services and permitted non-audit services (including the fees and terms thereof) to be performed for us by Ernst & Young LLP. The Audit Committee may delegate pre-approval authority to one or more members of the Audit Committee consistent with the pre-approval policy, provided that the decisions of such Audit Committee member or members must be presented to the full Audit Committee at its next scheduled meeting. Pre-approval of permitted non-audit services can only be approved by the full Audit Committee.
The affirmative vote of the holders of a majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote is required to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2021.
|
| |
The Audit Committee consists of A. Clayton Perfall, Patrick Allender, Thomas Gayner, and Didier Teirlinck, who are all non-management directors. The members of the Audit Committee meet the independence and financial literacy requirements of the NYSE and the additional, heightened independence criteria applicable to members of the Audit Committee under SEC and NYSE rules. In 2020, the Audit Committee held 11 meetings. The Audit Committee operates pursuant to a written charter adopted by the Board of Directors, which it annually reviews. The charter, which complies with all current regulatory requirements, is availablewould have no impact on the Company’s website at www.colfaxcorp.com on the Investors page under the Corporate Governance tab. During 2020, at eachbusiness operations or any of its regularly scheduled meetings, the Audit Committee met with senior members of the Company’s finance team. Additionally, the Audit Committee has separate private sessions, during its regularly scheduled meetings, with the Company’s independent registered public accounting firm and head of internal audit, respectively. The Audit Committee is updated periodically on management’s process to assess the adequacy of the Company’s system of internal control over financial reporting, the framework used to make the assessment, and management’s conclusions on the effectiveness of the Company’s internal control over financial reporting. The Audit Committee has also discussed with the independent registered public accounting firm, their evaluation of the Company’s system of internal control over financial reporting.
The Audit Committee evaluates the performance of the Company’s independent registered public accounting firm each year and determines whether to reengage the current independent registered accounting firm or consider other independent registered accounting firms. In doing so, the Audit Committee considers the quality and efficiency of the services provided by the independent registered accounting firm, the firm’s global capabilities, and the firm’s technical expertise, tenure as the Company’s independent registered accounting firm and knowledge of the Company’s global operations and businesses. In connection with the applicable audit partner rotation requirements, the Audit Committee also is involved in considering the selection of the auditors’ lead engagement partner when rotation is required. Based on this evaluation, the Audit Committee decided to engage Ernst & Young LLP as our independent registered accounting firm for the year ended December 31, 2021. The Audit Committee reviews with the independent registered accounting firm and management the overall audit scope and plans, as well as the results of internal and external audit examinations and evaluations by management and the independent registered accounting firm of the Company’s internal controls over financial reporting and the quality of the Company’s financial reporting. Although the Audit Committee has the sole authority to appoint the independent registered public accounting firm, the Audit Committee recommends that the Board ask stockholders, at the Company’s annual meeting, to ratify the appointment of the independent registered accounting firm (see Proposal 2 beginning on page 24).
The Audit Committee has reviewed and discussed the Company’s audited financial statements for the fiscal year ended December 31, 2020 with management and with the Company’s independent registered public accounting firm, including a discussion of the quality and suitability of the accounting principles, the reasonableness of significant accounting judgments and estimates, and the clarity of disclosures in the financial statements. In addressing the quality of management’s accounting judgments, members of the Audit Committee are apprised of certifications prepared by the Chief Executive Officer and the Chief Financial Officer that the unaudited quarterly and audited annual consolidated financial statements of the Company fairly present, in all material respects, the financial condition, results of operations and cash flows of the Company.
In performing all of these functions, the Audit Committee acts in an oversight capacity. The Audit Committee reviews the Company’s quarterly and annual reports on Form 10-Q and Form 10-K prior to filing with the SEC. In its oversight role, the Audit Committee relies on the work and assurances of the Company’s management, which has the primary responsibility for establishing and maintaining adequate internal control over financial reporting and for preparing the financial statements, and other reports, and of the independent registered public accounting firm, which is engaged to review the quarterly consolidated financial statements of the Company, and audit and report on the annual consolidated financial statements of the Company and the effectiveness of the Company’s internal control over financial reporting as of the Company’s year-end.
The Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and SEC. The Audit Committee has received from the independent registered public accounting firm the written disclosures and the letter required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm its independence. On the basis of the reviews and discussions referenced above, the Audit Committee recommended to the Board of Directors that the audited financial statements for the fiscal year ended December 31, 2020 be included in the Company’s Annual Report on Form 10-K for filing with the Securities and Exchange Commission.
Audit Committee of the Board of Directors
A. Clayton Perfall, Audit Committee ChairPatrick AllenderThomas GaynerDidier Teirlinck
|
| |
The following discussion and analysis of compensation arrangements of our named executive officers for 2020 should be read together with the compensation tables and related disclosures set forth under the section heading “Executive Compensation.”
Named Executive Officers
The following discussion provides details regarding our executive compensation program and the compensation of our named executive officers in 2020. Our named executive officers (“NEOs”) for 2020 are:
Our Compensation Philosophy and Guiding Principles
Our executive compensation approach links compensation to Company and individual performance while aligning the long-term interests of management and stockholders. We strive to create a compensation program for our associates, including our executives, that provides a compelling and engaging opportunity to attract, retain and motivate the best talent. We believe that our compensation programs motivate performance-driven leadership that is aligned to achieve our financial and strategic objectives with the intention to deliver superior long-term returns to our stockholders. Utilizing this philosophy, our executive compensation program has been designed to:
Fiscal 2020 Pay for Performance Alignment and Compensation Overview
Fiscal 2020 was a year unlike any other that we have ever experienced. Having completed a transformational portfolio shift in 2019 with our acquisition of DJO and the divestiture of our Air & Gas Handling business, we entered 2020 with significant momentum and prepared to execute on our strategic plans to drive profitable growth across both of our business platforms. Our Medical Technology and Fabrication Technology segments both delivered strong operating performance in the first quarter of 2020 until mid-March, when the impacts of the COVID-19 pandemic drastically reduced economic activity across the world.
Our leadership teams quickly adapted to implement COVID-19 safety protocols as the safety of our associates is our top priority. We mandated, supported or encouraged remote work wherever possible, and implemented restrictions on non-essential travel. We followed CDC, WHO and other applicable government guidelines at our sites to protect essential workers. These measures included the provision of personal protective equipment; daily wellness checks utilizing infrared thermometers, thermal cameras and self-monitoring; social distancing, supported by signage and visual cues; enhanced cleaning and disinfecting routines; and quarantine and
|
| |
contact tracing protocols. When needed, we provided assistance and guidance to family members in the same household as our associates. We also established a robust communications and feedback plan, led by our executive COVID-19 response team, whose efforts included daily, weekly and bi-weekly safety calls, site communications, employee surveys and town halls.
Colfax businesses were and remain key contributors to the global battle against COVID-19. We redeployed resources and retrofitted certain facilities to produce masks and supply hand sanitizer. In addition, we expanded our offerings of telehealth solutions for healthcare providers and ramped up manufacturing of products such as GCE medical gas controls and Venaflow compression devices used on the front lines to treat COVID-19 patients.
We also quickly and thoughtfully flexed down our costs and other spending to protect our financial strength and mitigate the impacts of the pandemic on our revenues. These actions included, among other things, voluntary pay reductions by our NEOs and directors. At the same time, we protected critical investments in innovation and new product development, including key surgical, bracing and connected medicine product launches across our DJO business, and additional investments in enhanced digital solutions at our ESAB business, such as our WeldCloud Notes document management software. Notwithstanding the challenges of the COVID-19 pandemic, we introduced 112 new products in 2020.
As business activity began to stabilize in the second half of 2020, we resumed our pursuit of strategic bolt-on acquisitions and technology investments, completing a series of acquisitions that included the STAR total ankle replacement business and LiteCure, LLC, a market leader in therapeutic laser technology for human and animal health.
Despite unprecedented and challenging conditions, we finished the fourth quarter of 2020 with strong sequential revenue, earnings and cash flow growth, demonstrating our effective operating execution. We believe that we exited 2020 and are entering 2021 with a clear path for strong growth in operating results and accelerating momentum.
Our NEOs, as well as the rest of our executive management team and our associates worldwide, worked together to overcome the challenges of a global crisis while remaining focused on our priorities: protecting the health and safety of our associates; serving our customers and patients; and keeping our Company financially healthy for the future. Our business results reflect these efforts. The dedication, commitment and focus of our team under tremendous pressure this year is truly remarkable and worthy of extra recognition. And while we believe the efforts and accomplishments of our NEOs this year would justify a payout in excess of their target bonus for 2020, management has recommended, and the Compensation Committee has agreed, to award an overall Company performance factor under our Annual Incentive Plan (“AIP”) of 75% to Messrs. Trerotola, Hix, Pryor and Kambeyanda, and 72.2% to Mr. Shirley.
outstanding indebtedness. Further, the Compensation Committee took the following actions during 2020:
2020 Say-On-Pay Vote
At our 2020 Annual Meeting, approximately 98% of the stockholder votes cast on our advisory proposal to approve the compensation of our NEOs were voted in favor of our executive compensation proposal. Our Compensation Committee considered the outcome of this vote in the context of our prior and on-going engagement with stockholders and accordingly did not make any additional changes to our executive compensation policies and program elements. The Compensation Committee has determined to provide for an annual “say-on-pay” proposal and will continue to carefully evaluate the feedback received from our stockholders in connection with the voting on that proposal.
|
| |
Our Executive Compensation Program
Our executive compensation program includes elements designed to align executive pay with Company objectives and long-term stockholder returns, including the PRSU grants entirely based on relative Total Shareholder Return as discussed above.
For 2020, the Compensation Committee established the following target compensation program for our CEO:
With respect to our other NEOs, for 2020, the Compensation Committee established the following target compensation program:
Our 2020 executive compensation structure consists of three core compensation elements–base salary, an annual cash bonus, and long-term incentives. The Compensation Committee reviewed each element individually while also considering the total compensation package provided to create an appropriate mix designed to attract, incentivize, and retain our executives. The following table summarizes the core elements of our 2020 executive compensation program:
|
| |
Leading Compensation Practices
The framework of our executive compensation program includes the governance features and other specific elements discussed below:
|
| |
Determination of Executive Compensation and Performance Criteria
Our executive compensation program is based on the philosophy and design outlined above with a focus on exceptional performance and continuous improvement from our management team. Within this framework, the Compensation Committee exercises its reasoned business judgment in making executive compensation decisions and takes into account recommendations by our Chief Executive Officer with respect to the compensation of each executive officer, other than himself (see “CEO Recommendations” on page 36). Some of the factors that generally are referenced when making executive compensation decisions, none of which is assigned a particular weight, are as follows:
Further, a substantial percentage of compensation under our Annual Incentive Plan is determined solely by the achievement of annual performance criteria based on Board-approved financial and operational goals for the fiscal year. These goals are then incorporated into the metrics set for our Annual Incentive Plan and approved by the Compensation Committee, as further discussed under “Bonus Calculation and Payment - Financial and Operational Metrics and 2020 Performance Results” on page 32. We believe that this link to our Board-established corporate and business goals reinforces alignment and incents breakthrough results both at the business-unit level and Company-wide.
Elements of Our 2020 Executive Compensation Program
Base Salary
Base salaries are designed to provide compensation that is market competitive so that we can attract the best qualified individuals and retain our senior management. Base salaries are established at an executive’s hire and generally reviewed annually for potential increases. In February 2020, the Compensation Committee set the salary levels for each of our NEOs based on the Compensation Committee’s assessment of the relative roles and responsibilities of management and the results of their individual performance assessments, combined with perspective from competitive compensation data prepared by FW Cook and the Compensation Committee’s reasoned business judgment. Because of concerns about the potential effects of COVID-19 to the business, none of the executives were provided with a base salary increase in 2020. In addition, as noted above, in light of the impact of COVID-19 on our business, our CEO and other NEOs voluntarily took a 20% reduction to their base salaries during the second quarter of 2020 and a 10% reduction to their base salaries during the third quarter of 2020. Accordingly, the base salary levels set forth below are higher than the actual base salaries received by our NEOs in 2020, as reflected in the Summary Compensation Table. A comparison of base salary levels as of December 31, 2020 and 2019 is set forth below:
Named Executive Officer | 2019 Annual Base Salary | 2020 Annual Base Salary* | Percentage Increase | ||||||||
Mr. Trerotola | $ | 1,077,000 | $ | 1,077,000 | — | ||||||
Mr. Hix | $ | 650,000 | $ | 650,000 | — | ||||||
Mr. Pryor | $ | 565,000 | $ | 565,000 | — | ||||||
Mr. Kambeyanda | $ | 625,000 | $ | 625,000 | — | ||||||
Mr. Shirley | $ | 850,000 | $ | 850,000 | — |
|
| |
Annual Incentive Plan
The goal of our AIP is to reward our executives for achievement in key areas of Company operational and financial performance as well as each executive’s individual contributions to Company success. Our NEOs are eligible to receive a cash incentive payment that is expressedbrokerage commissions, as a percentage of the executive’s base salary (i.e., “target bonus”) under our Annual Incentive Plan. Performance measures include corporate and individual performance against pre-determined financial and operational metrics approved by the Compensation Committee at the beginning of the fiscal year.
These performance metrics established by the Compensation Committee for business leaders reflect both Company-wide and business-specific performance targets resulting in a company performance factor (“CPF”). The CPF for Messrs. Kambeyanda and Shirley is a weighted average consisting of 70% segment performance and 30% Colfax corporate performance. The amount payable under the AIP can be adjusted upward or downward based on the individual performance factor (“IPF”), which is linked to specific, individualized business goals. Actual bonus amounts are determined following completion of the performance year and are based on performance relative to these pre-established business and individual goals using the following formulas:
Executives can achieve a payout percentage of their target bonus ranging from zero for below-threshold performance to a threshold of 50% to a maximum of 200%, with 100% target goal achievement resulting in 100% payout of the individual’s target bonus for that performance metric, based on the extent to which objective pre-established financial and operational performance goals are achieved.
The total amount earned is subject to adjustment based on individual achievement as measured by an IPF. The IPF is a multiplier that ranges from 0 to 1.5 (subject to an overall payout cap of 250% of the target bonus). For 2020, due to impacts of COVID-19, the IPFs for our NEOs were recommended by management not to exceed 1.0. The IPF rating is based on individual performance against pre-established objectives and the embodiment of our Company’s core values and behaviors. The IPF and key performance indicators include both financial and non-financial Company objectives over which the executive has primary control.
Detail regarding the individual components of these formulas for fiscal year 2020, including a calculation of the payout percentages and description of the IPF component, follows below.
Key Executive Team Achievements
Bonus Calculation and Payment – Financial and Operational Metrics and 2020 Performance Results
For corporate executives, in 2020 we utilized financial targets based on net sales (as adjusted), adjusted EBITA, cash conversion, and adjusted EPS for the Company performance factors (“CPF”). The targets were based upon Board-approved operational and financial goals for 2020, and represented significant progress in each category toward the achievement of the Company’s long-term growth objectives and aligned with the Board-approved corporate budget.
|
| |
Through the first quarter of 2020, the Company was on track to achieve above-target performance based on these metrics. However, the impacts of the COVID-19 pandemic began to affect our businesses during the last two weeks of March 2020. These impacts continued and intensified during the second quarter of 2020, as worldwide economic activity sharply decreased and government-ordered shutdowns, delays or cancellations in elective surgical procedures and the cessation of organized sporting events, among other things, had a significant negative impact on our financial performance.
Based on the extraordinary and unforeseen impacts of the COVID-19 pandemic, which had not been contemplated when the original financial targets for 2020 were established, the Compensation Committee determined that it was necessary and appropriate to re-evaluate the financial targetstransaction, tend to be used to determine the CPF. The Compensation Committee approved a modified approach, whereby performance would be separately evaluatedhigher for the first quarter, second quarter, and the second half of 2020. In approving such an approach, the Compensation Committee took into consideration the extraordinary efforts required of our teams in order to keep our associates safe and preserve business continuity, while at the same time continuing to execute on our strategic goals and objectives. Management exceeded the modified goals and, as a result, were awarded a payout opportunity as described below.
For the first quarter of 2020, during which the Company’s performance, as previously noted, was tracking above target, the Compensation Committee determined that the Company had achieved 100% of target performance. Accordingly, for the first quarter of 2020, a CPF of 25% was earned (100% x ¼ of the year).
For the second quarter of 2020, the Compensation Committee determined that the Company would have achieved 0% of target performance based on the original metrics, resulting in a CPF of 0%.
For the second half of 2020, the Compensation Committee approved the use of adjusted EPS as a single metric across our businesses. The adjusted EPS metric was based on the Compensation Committee’s assessment of the Company’s performance goals and expected recovery from the impacts of the pandemic in the second half of 2020. Based on the Company’s results for the second half of 2020, the Compensation Committee determined that the Company had achieved 115% of the target adjusted EPS goal for such period, resulting in a CPF of 57.5% for the second half of 2020 (115% x ½ of the year); however, management recommended, and the Committee approved a CPF of 50% for such period. Accordingly, the total CPF for the year was 75% of target.
The following table sets forth the financial performance measures, the actual performance of the Company and resulting CPF for 2020:
Period | % of Target Bonus Opportunity Attributable to Period | Financial Targets Utilized* and Target/Threshold/Maximum Goals | Performance Achieved | CPF for Measurement Period | Total CPF Achieved |
Q1 2020 | 25% | Corporate – (Annual Target) ■ Net Sales (as adjusted): $3.56 billion ■ Adjusted EBITA: $507 million ■ Cash Conversion: 83% ■ Adjusted EPS: $2.18
ESAB/DJO (Annual Target) ■ Net Sales (as adjusted): ESAB: $2.26 billion; DJO: $1.30 billion ■ Adjusted EBITA: ESAB: $351.6 million: DJO: $221.6 million ■ Cash Conversion: ESAB: 90%; DJO: 85% | Q1 performance above target for all metrics on an annualized basis for Corporate, DJO and ESAB | 100% | 25% (100% of 25%) |
Q2 2020 | 25% | Same as Q1 | Q2 performance below target for all metrics on an annualized basis for Corporate, DJO and ESAB | 0% | 0% (0% of 25%) |
H2 2020 | 50% | Adjusted EPS ■ Threshold (50% of target attributable to period): $0.75 ■ Target (100% of target attributable to period): $0.85 ■ Max (125% of target attributable to period): $0.95 | $0.91 | 115% (however, as noted above, management recommended, and Compensation Committee approved, a CPF of 100% for H2 2020) | 50% (100% of 50%) |
|
| |
For Messrs. Kambeyanda and Shirley, Colfax corporate measures constituted 30% of the potential payout factor with their business unit goals consisting of 70% of the total target. These weightings are intended to drive accountability for business operational results while also encouraging thoughtful work and cooperation across the organization. Based on overall business performance for their business units during the second half of 2020, Mr. Kambeyanda achieved an overall CPF of 75% and Mr. Shirley achieved a CPF of 72.2%.
Bonuses for each of our NEOs, as calculated pursuant to the foregoing calculations, are set forth in the following table. These bonuses are also reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table below on page 40.
NEO | Base Salary | Target Bonus Percentage | Target Bonus | CPF | Bonus before IPF application | Individual Performance Factor (IPF) | Executive Bonus Payment | |||||||||||||||
Mr. Trerotola | $1,077,000 | X | 125% | = | $1,346,250 | X | 75% | 1,009,690 | 100% | = | $1,009,690 | |||||||||||
Mr. Hix | $ 650,000 | X | 80% | = | $ 520,000 | X | 75% | 390,000 | 100% | = | $ 390,000 | |||||||||||
Mr. Pryor | $ 565,000 | X | 80% | = | $ 452,000 | X | 75% | 339,000 | 100% | = | $ 339,000 | |||||||||||
Mr. Kambeyanda* | $ 625,000 | X | 80% | = | $ 500,000 | X | 75% | 375,000 | 100% | = | $ 375,000 | |||||||||||
Mr. Shirley* | $ 850,000 | X | 100% | = | $ 850,000 | X | 72.2% | 613,700 | 100% | = | $ 613,700 |
Bonus Calculation – Individual Performance Factor
In addition to the target bonus percentages and financial and operational metrics discussed above, the third and final factor under our AIP is the IPF, as described above. The individual performance factors for each executive were determined after evaluating each NEO’s performance, including the collective achievements detailed on page 32 above. For 2020, IPFs for our NEOs were held at 1.0.
Long-Term Incentives
The goal of our long-term incentive plan is to align the compensation of executives with the interests of stockholders by encouraging sustained long-term improvement in operational and financial performance and long-term increase in stockholder value. Long-term incentives also serve as retention instruments and provide equity-building opportunities for executives. Beginning in 2020, annual equity awards generally consisted of 50% PRSUs, 25% stock options, and 25% time-vesting RSUs. The Compensation Committee believes this further aligns the long-term interests of management and stockholders and promotes increased equity ownership among our executive officers.
2020 Performance Vesting of Outstanding PRSUs
In 2017, we transitioned to using a full three-year performance period for measuring PRSUs.
In 2019, in connection with the acquisition of DJO, Mr. Shirley received an annual equity award consisting in part of DJO PRSUs.
The DJO PRSUs were subject to achieving certain adjusted EBITDA targets at DJO, measured over a two-year period. The DJO PRSUs further provided that 50% of the PRSUs may be earned (but not vest) if a specified adjusted EBITDA target was achieved during 2020. This target was not achieved during 2020 and the DJO PRSUs were not earned.lower-priced stocks. As a result, nonecertain investors may also be dissuaded from purchasing lower-priced stocks. A higher stock price after the Reverse Stock Split may reduce this concern.
Authorized Share Reduction
As a matter of Delaware law, the implementation of the performance goals forReverse Stock Split does not require a reduction in the DJO PRSUs were achieved duringtotal number of authorized shares of our common stock. However, if stockholders approve the two-year performance periodReverse Stock Split Proposal and the awards were forfeited.
In March 2021,Reverse Stock Split is implemented, the Compensation Committee certified the performance resultsauthorized number of certain PRSUs granted to Messrs. Hix, Kambeyanda and Pryor in 2018. The 2018 PRSUs were subject to the Company achieving three-year improvements in adjusted operating margin and investor return performance relative to the S&P MidCap 400 Industrials Index, with each metric weighted 50% in determining the award payout. At the end of the three-year performance period, the Company performance resulted in an investor return performance payout percentage of 73.46% of target and an adjusted operating margin payout of 200.0% of target.
|
| |
Annual Grants under Omnibus Incentive Plan
On February 24, 2020, the Compensation Committee granted annual awards under the 2016 Omnibus Incentive Plan with a target aggregate value as set forth in the table below. Messrs. Trerotola, Hix, Pryor and Kambeyanda received 50% of their annual grant in the form of PRSUs, 25% in the form of RSUs and 25% in the form of stock options. Mr. Shirley received 50% of his annual grant in the form of PRSUs and 50% in the form of RSUs.
Stock options and RSUs vest in three equal annual installments beginning on the first anniversary of the grant date and PRSUs cliff vest at the end of the three-year measurement period to the extent of achievement of the relative TSR performance metric based on the following payout scale:
As shown in the table above, the target payout is subject to achieving the relative TSR performance metric at the 55th percentile, which underscores the Company’s commitment to delivering and incentivizing above-median performance and returns to stockholders.
Additional Compensation Information
Other Elements of Compensation–Non-Qualified Deferred Compensation and Perquisites
The Company does not maintain an active pension plan and instead makes matching contributions to a tax-qualified 401(k) plan and Non-Qualified Deferred Compensation Plan. We established the Non-Qualified Deferred Compensation Plan, which provides participants the opportunity to defer a percentage of their compensation without regard to the compensation limits imposed by the Internal Revenue Code under our 401(k) plan, to allow our senior-level executives to contribute toward retirement on a tax-effective basis in a manner that is consistent with other Colfax employees who are not limited by the Internal Revenue Code limits. For additional details concerning the Non-Qualified Deferred Compensation Plan, please see the Non-Qualified Deferred Compensation Table and the accompanying narrative disclosure. The Company also maintains the DJO Global Executive Deferred Compensation Plan (the “DJO Nonqualified Plan”), which was acquired in connection with the acquisition of DJO. The DJO Nonqualified Plan was frozen to new participants and future deferrals on December 31, 2019. Mr. Shirley holds an account balance in this plan.
Aside from the benefits provided to Mr. Trerotola at the time of his hire, which include (i) an automobile allowance of $20,000 per year and (ii) personal use of a private aircraft chartered by the Company and/or personal financial planning services (or any combination thereof) in an aggregate amount not to exceed $100,000 in compensation income (i.e., imputed income under tax rules) for any calendar year, we provide minimal perquisites to our executives, including up to $10,000 in financial and tax planning services for senior executives, business-related items such as relocation assistance, which may be grossed up consistent with competitive market recruitment practices, and benefits provided in non-U.S. locations in accordance with local practice.
Employment Agreements
Mr. Trerotola is party to an employment agreement with the Company. Mr. Trerotola’s employment agreement has an initial three-year term, subject to automatic one-year term extensions thereafter, unless we or Mr. Trerotola provides written notice in advance to terminate the automatic extension provision. Mr. Trerotola’s base salary may not be reduced below the amount previously in effect. In addition, Mr. Trerotola is entitled to participate in our Annual Incentive Plan with a target bonus amount no less than 120% of his base salary then in effect. Mr. Trerotola’s agreement also provides severance benefits as well as change in control benefits only if a termination for “good reason” or other than for “cause” occurs within two years following the change in control (i.e., “double trigger” provisions).
Mr. Pryor is party to an employment agreement with the Company. Mr. Pryor’s employment agreement has an initial two-year term, subject to automatic one-year term extensions thereafter, unless
|
| |
our Board or Mr. Pryor provides written notice in advance to terminate the automatic extension provision. Mr. Pryor’s base salary may not be reduced below the amount previously in effect without his written agreement. In addition, Mr. Pryor is entitled to participate in our Annual Incentive Plan with a target bonus amount no less than 50% of his base salary then in effect. Mr. Pryor’s agreement also provides severance benefits.
Mr. Hix’s letter agreement, entered into upon his hire, provides for severance benefits that are substantially comparable, in all material respects, to those provided for in our employment agreements.
Mr. Kambeyanda is party to a letter agreement with the Company that specifies his starting annual salary and a target bonus of at least 70% under the AIP. This agreement also provides for a transition bonus made in connection with his hire that is to be paid in installments over his first five years of employment (with $330,000 payable in each of 2017 and 2018, and $130,000 payable in each of 2019, 2020 and 2021). This letter agreement also provides that Mr. Kambeyanda is eligible for our Executive Officer Severance Plan.
Mr. Shirley is party to a service agreement with DJO, which he entered into prior to our acquisition of the DJO business in 2019 and which was assumed as part of the acquisition. The agreement provides for a four-year initial term, with automatic one-year term extensions commencing November 14, 2020, unless we or Mr. Shirley provides written notice in advance to terminate the automatic extension provision. The agreement provides that Mr. Shirley’s base salary is a specified amount and that he is entitled to such increases as determined by the Board. In addition, Mr. Shirley is entitled to receive an annual bonus of 100% of his base salary. The employment agreement also provides severance benefits, but does not provide enhanced change in control benefits.
In addition, each of our NEOs other than Mr. Trerotola is party to a change in control agreement with the Company. Under the change in control agreements, severance payable upon a change in control is only received upon the executive officer’s termination without cause or resignation for good reason within two years following, or the three months preceding, the change in control. The change in control agreements are designed to retain these executive officers and ensure their continued dedication to the Company notwithstanding a possible change in control.
Additional details regarding the material terms of these agreements are summarized under “Employment Agreements, Change in Control Agreements and Executive Officer Severance Plan” on page 43 and “Potential Payments Upon Termination or Change in Control” on page 45 and a summary of the material terms and eligibility requirements for the Executive Officer Severance Plan is provided under “Potential Payments Upon Termination or Change in Control.”
Stock Ownership Policy and Stock Holding Requirements
Our stock ownership policy further aligns the long-term financial interests of Company executives with those of our stockholders while also serving as a risk mitigation tool. Each executive at a vice president level or higher must retain at least one-half of vested equity awards, less shares withheld or sold for tax withholding obligations, until the executive has accumulated shares of our common stock or other qualifying formsalso would be reduced by the corresponding, selected Reverse Stock Split ratio. The actual number of equity having the value described below. The ownership value thresholds are as follows:
All of the Company’s NEOs have achieved these ownership targets as of the date of this Proxy Statement.
CEO Recommendations
During 2020, Mr. Trerotola provided recommendationsauthorized shares after giving effect to the Compensation Committee with respect to the compensation levels for our executive officers, other than for himself. These recommendations were based on his assessment of the executive officer’s relative experience, overall performance, and impactReverse Stock Split, if implemented, will depend on the achievement of our financial and operational goals and strategic objectives, combined with perspective fromReverse Stock Split ratio that is ultimately determined by the competitive review data. WhileBoard. See the Compensation Committee took these recommendations under advisement, it independently evaluated the pay recommendations for each executive officer and made all final compensation decisions in accordance with its responsibilities astable set forth in the Compensation Committee Charter. As a resultsubsection entitled, “—Effects of the pandemicReverse Stock Split and the resulting economic downturn, management recommended, andAuthorized Share Reduction—Effect on Shares of Common Stock,” which shows the Compensation Committee agreed, that previously agreed upon increases would not be provided.
Rolethree possibilities for the number of Compensation Consultants and Peer Data Review
Our Compensation Committee also obtains perspective from competitive data reviewed by FW Cook,authorized shares of common stock under each of the independent advisor to the Compensation Committee on matters of executive compensation. The Compensation Committee annually reviews the list of peer companies previously recommended by FW Cook to confirm that such continues to reflect the peers used by financial analysts and governance advisors covering Colfax and to represent our growth trajectory, revenue, market capitalization and overall scope and nature of operations. The peer group referenced in 2020 was as follows:Reverse Stock Split ratios.
- Meeting Proxy Statement
|
| |||||||
|
Competitive review data drawn from this group was utilized by the Compensation Committee as one of many reference points to assist in its compensation decisions, and for certain NEOs, competitive review data drawn from this group was used to “benchmark” the amount of compensation paid to such NEOs.
Independence of Compensation Consultant
In March 2021, the Compensation Committee considered the independence of FW Cook in light of the SEC rules regarding conflicts of interest involving compensation consultants and NYSE listing standards regarding compensation consultant independence. The Compensation Committee requested and received a letter from FW Cook addressing conflicts of interest and independence, including specific factors enumerated in both relevant SEC rules and NYSE listing standards. The Compensation Committee discussed and considered these factors, and other factors it deemed relevant, and concluded that FW Cook is independent and that its work during 2020 did not raise any conflict of interest.
Compensation Program and Risk
As part of our continued appraisal of our compensation program, management, with oversight from the Compensation Committee, annually reviews our compensation policies and practices and the design of our overall compensation program in relation to our risk management practices and any potential risk-taking incentives. This assessment includes a review of the primary elements of our compensation program in light of potential risks:
Compensation Program Risk Considerations
| |
| |
We have controls and other policies in place that serve to limit excessive risk-taking behavior within our compensation program, including, but not limited to, the following:
Compensation Risk Mitigation Components
| |
|
|
| |
5 |
The Compensation Committee reviews with management the results of its assessment annually. Based on its most recent review, the Compensation Committee concluded that the risks arising from Company compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company.
Additionally, the Compensation Committee also reviews the Company’s strategies and policies related to human capital management, including with respect to matters such as diversity, inclusion, pay equity, corporate culture, talent development and retention.
Hedging Ban
Any director, officer or employee Determination of the Company is prohibited from engaging in short sales, transactions in derivative securities (including put and call options), or other forms of hedging and monetization transactions, such as zero-cost collars, equity swaps, exchange funds and forward sale contracts, that allow the holder to limit or eliminate the risk of a decrease in the value of the Company’s securities.Reverse Stock Split Ratio
Pledging Policy
Our Board has adopted a policy that prohibits any director or executive officer from pledging as security under any obligation any shares of Colfax common stock that he or she directly or indirectly owns and controls (other than shares already pledged as of February 17, 2014). Any shares of Colfax common stock that were pledged prior to February 17, 2014 do not count toward meeting our stock ownership requirements.
Clawback Policy
The Compensation Committee has adopted a clawback policy applicable to our executive officers. Under the policy, in the event the Company is required to restate its financial results due to material non-compliance with any financial reporting requirement under the securities laws as generally applied, the Board will review all bonus payments made, including all bonus payments under our Annual Incentive Plan, and all performance-based equity compensation that was earned or vested on the basis of having met or exceeded financial results during the three years prior to the date that the Company determines such restatement is required.
If the Board determines that such payments or the amount of awards earned/vested would have been lower had they been determined or calculated based on such restated results, the Board will, to the extent permitted by governing law, seek to recoup for the benefitratio of the Company the valueReverse Stock Split, if approved and implemented, will be at one of such excess payments madethree ratios, one-for-two,one-for-three or one-for-four, with an exact ratio to and/or equity awards earnedbe determined by executive officers.our Board at a later date. The Board maintains discretion,believes that stockholder adoption of three alternatives of reverse stock split ratios (as opposed to the extent permitted under applicable law, not to seek such recoupments if the Board determines, in the exercise of its fiduciary duties, that under the specific circumstances it would not be appropriate to seek to recover such amounts. The Company may effect such recoupment by requiring executive officers to pay such amount(s) to the Company, by set-off, by reducing future compensation, or by such other means or combination of means as the Board determines to be appropriate.
Equity Grant Practice
The Compensation Committee has the authority to grant equity awards. The Company does not time the grant of equity awards around material, non-public information. Grant dates are determined either as of the date of Compensation Committee approval or on the dateadoption of a specific event, such assingle reverse stock split ratio) provides maximum flexibility to achieve the date of hire or promotion, for certain executive officers. The target grant value is translated into a number of shares underlying each grant using a valuation formula that, for PRSUs and RSUs, incorporates a 20-day average closing price up to and including the grant date, to avoid the potential volatility impact of using a single-day closing price.
The Compensation Committee has delegated authority to our CEO and Chief Human Resources Officer for non-annual grants of equity awards to associates who are non-executive officers. The aggregate grant date value of such equity awards may not exceed $4,000,000 during the fiscal year period. Such awards are subject to further restrictions on individual size, and awards must be made pursuant to the terms of award agreement forms previously approved by the Board or the Compensation Committee. The effective grant date of these awards is on the first trading day on or after the date of hire or promotion for newly hired employees following review and approval by the CEO or Chief Human Resources Officer, as applicable. The Compensation Committee receives a report of any grants made pursuant to this delegated authority at each regularly scheduled meeting.
Rule 10b5-1 Trading Plans by Executive Officers
Certain of our executive officers have adopted written stock trading plans in accordance with Rule 10b5-1 under the Exchange Act and our insider trading policy. A Rule 10b5-1 Trading Plan is a written document that pre-establishes the amount (or ratio), prices, and dates (or range of possible dates) of future purchases or sales of our common stock. These plans are entered into during an open window period in accordance with the terms of our insider trading policy. From time to time, certain NEOs have entered into such plans (i) to sell the percentage of vested shares necessary to satisfy applicable tax withholding obligations upon the vesting and delivery of PRSUs and RSUs, or (ii) to exercise options that are approaching the end of their term.
|
| |
The Compensation Committee participated in the preparation of the Compensation Discussion and Analysis, reviewing successive drafts and discussing the drafts with management. Based on its review and discussions with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s 2021 Proxy Statement and in the Company’s Annual Report on Form 10-K for 2020 by reference to the Proxy Statement.
|
| |
Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(4) | Non-Equity Incentive Plan Compensation ($)(5) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(6) | All Other Compen- sation ($)(7) | Total ($) | ||||||||||
Matthew Trerotola | 2020 | 1,029,364 | — | 4,429,992 | 1,443,739 | 1,099,690 | — | 277,101 | 8,279,886 | ||||||||||
President and Chief Executive Officer | 2019 | 1,071,346 | — | 2,724,996 | 2,724,996 | 1,480,600 | — | 428,088 | 8,430,026 | ||||||||||
2018 | 1,049,000 | — | — | — | 1,676,000 | — | 422,927 | 3,147,927 | |||||||||||
Christopher Hix | 2020 | 626,250 | — | 1,534,148 | 499,994 | 390,000 | — | 70,255 | 3,120,897 | ||||||||||
Executive Vice President, Finance and Chief Financial Officer | 2019 | 591,731 | — | 1,999,987 | 999,998 | 476,000 | — | 75,644 | 4,149,158 | ||||||||||
2018 | 570,962 | — | 999,987 | 1,000,002 | 640,000 | — | 29,260 | 3,240,211 | |||||||||||
Daniel Pryor | 2020 | 544,356 | — | 1,419,104 | 462,491 | 339,000 | — | 75,644 | 2,840,595 | ||||||||||
Executive Vice President, Strategy and Business Development | 2019 | 560,962 | — | 924,995 | 924,999 | 497,200 | — | 68,578 | 2,976,734 | ||||||||||
2018 | 544,615 | — | 1,874,996 | 1,875,004 | 532,000 | — | 64,249 | 4,890,864 | |||||||||||
Shyam Kambeyanda | 2020 | 575,521 | 130,000 | 1,150,592 | 374,996 | 375,000 | — | 24,737 | 2,630,846 | ||||||||||
Executive Vice President, President and CEO of ESAB | 2019 | 544,688 | 130,000 | 1,149,998 | 650,001 | 522,720 | — | 58,644 | 3,056,051 | ||||||||||
2018 | 505,000 | 330,000 | 599,992 | 599,999 | 460,000 | — | 96,121 | 2,591,112 | |||||||||||
Brady Shirley | 2020 | 812,404 | — | 2,454,728 | — | 613,700 | — | 16,587 | 3,897,419 | ||||||||||
Chief Executive Officer of DJO | 2019 | 719,231 | — | 2,499,995 | 500,003 | 702,100 | — | 22,027 | 4,443,356 |
Name | Company 401(k)/Deferred Compensation Plan Match and Contribution ($)(a) | Auto Allowance ($)(b) | Financial Services ($)(c) | Aircraft Usage ($)(d) | Supplemental Long-Term Disability Premiums ($)(e) | Group Term Life Insurance ($)(f) | ($)(g) | ($) | Total ($) | |||||||||||
Mr. Trerotola | 150,598 | 20,769 | 10,555 | 91,264 | 948 | 2,967 | — | — | 277,101 | |||||||||||
Mr. Hix | 52,495 | — | 12,462 | — | 948 | 4,350 | — | — | 70,255 | |||||||||||
Mr. Pryor | 62,494 | — | 10,000 | — | 948 | 2,202 | — | — | 75,644 | |||||||||||
Mr. Kambeyanda | 17,100 | — | 4,500 | — | 948 | 2,139 | 50 | — | 24,737 | |||||||||||
Mr. Shirley | 10,092 | — | — | — | 948 | 5,547 | — | — | 16,587 |
|
| |
Grants of Plan-Based Awards for 2020
The following table sets forth information with respect to grants of plan-based awards to our named executive officers during 2020:
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of shares of stock | All Other Option Awards: Number of Securities Underlying | Exercise or Base Price of Option | Grant Date Fair Value of Stock and | ||||||||||||||||||||
Name | Award Type | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | or units (#)(3) | Options (#)(4) | Awards ($/Sh) | Option Awards ($)(5) | |||||||||||||
Matthew L. Trerotola | Annual Incentive Plan | — | 673,125 | 1,346,250 | 3,365,625 | — | — | — | — | — | — | — | |||||||||||||
PRSUs | 2/24/2020 | — | — | — | 39,200 | 78,400 | 156,800 | 2,953,328 | |||||||||||||||||
RSUs | 2/24/2020 | 39,200 | 1,476,664 | ||||||||||||||||||||||
Stock Options | 2/24/2020 | — | — | — | — | — | — | — | 119,416 | 37.67 | 1,443,739 | ||||||||||||||
Christopher M. Hix | Annual Incentive Plan | 260,000 | 520,000 | 1,300,000 | — | — | — | — | — | — | — | ||||||||||||||
PRSUs | 2/24/2020 | — | — | — | 13,575 | 27,151 | 54,302 | — | — | — | 1,022,778 | ||||||||||||||
RSUs | 2/24/2020 | — | — | — | — | — | — | 13,575 | 511,670 | ||||||||||||||||
Stock Options | 2/24/2020 | — | — | — | — | — | — | — | 41,356 | 37.67 | 499,994 | ||||||||||||||
Daniel A. Pryor | Annual Incentive Plan | — | 226,000 | 452,000 | 1,130,000 | — | — | — | — | — | — | — | |||||||||||||
PRSUs | 2/24/2020 | — | — | — | 12,557 | 25,115 | 50,230 | — | — | — | 946,082 | ||||||||||||||
RSUs | 2/24/2020 | 12,557 | 473,022 | ||||||||||||||||||||||
Stock Options | 2/24/2020 | — | — | — | — | — | — | — | 38,254 | 37.67 | 462,491 | ||||||||||||||
Shyam Kambeyanda | Annual Incentive Plan | — | 250,000 | 500,000 | 1,250,000 | — | — | — | — | — | — | ||||||||||||||
PRSUs | 2/24/2020 | — | — | — | 10,181 | 20,363 | 40,726 | — | — | — | 767,074 | ||||||||||||||
RSUs | 2/24/2020 | — | — | — | — | — | — | 10,181 | — | — | 383,518 | ||||||||||||||
Stock Options | 2/24/2020 | — | — | — | — | — | — | — | 31,017 | 37.67 | 374,996 | ||||||||||||||
Brady Shirley | Annual Incentive Plan | — | 425,000 | 850,000 | 2,125,000 | — | — | — | — | — | — | ||||||||||||||
PRSUs | 2/24/2020 | — | — | — | 16,291 | 32,852 | 65,164 | — | — | — | 1,227,364 | ||||||||||||||
RSUs | 2/24/2020 | — | — | — | — | — | — | 32,852 | — | — | 1,227,364 |
|
| |
Outstanding Equity Awards at 2020 Fiscal Year-End
The following table shows, as of December 31, 2020, the number of outstanding stock options, performance-based restricted stock unit awards and restricted stock unit awards held by the named executive officers:
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date(1) | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(5) | ||||||||
Matthew L. Trerotola | 538,600 | — | 39.54 | 7/23/2022 | — | — | — | — | ||||||||
373,042 | 186,521 | 23.74 | 1/3/2023 | — | — | — | — | |||||||||
103,454 | 206,910 | 26.88 | 2/24/2026 | — | — | — | — | |||||||||
— | 119,416 | 37.67 | 2/23/2027 | — | — | — | — | |||||||||
— | — | — | — | 82,119 | 3,140,231 | — | — | |||||||||
— | — | — | — | — | — | 292,524 | 11,186,118 | |||||||||
Christopher M. Hix | 124,611 | — | 26.56 | 6/30/2023 | — | — | — | — | ||||||||
71,609 | — | 40.47 | 2/12/2024 | — | — | — | — | |||||||||
64,474 | 32,238 | 33.41 | 3/7/2025 | — | — | — | — | |||||||||
37,964 | 75,931 | 26.88 | 2/24/2026 | — | — | — | — | |||||||||
— | 41,356 | 37.67 | 2/23/2027 | — | — | — | — | |||||||||
— | — | — | — | 33,170 | 1,268,421 | — | — | |||||||||
— | — | — | — | — | — | 146,780 | 5,612,867 | |||||||||
Daniel A. Pryor | 118,010 | — | 52.02 | 2/15/2022 | — | — | — | — | ||||||||
114,613 | — | 26.51 | 11/15/2022 | — | — | — | — | |||||||||
73,715 | — | 40.47 | 2/12/2024 | — | — | — | — | |||||||||
120,889 | 60,446 | 33.41 | 3/7/2025 | — | — | — | — | |||||||||
35,117 | 70,236 | 26.88 | 2/24/2026 | — | — | — | — | |||||||||
— | 38,254 | 37.67 | 2/23/2027 | — | — | — | — | |||||||||
— | — | — | — | 12,557 | 480,180 | — | — | |||||||||
— | — | — | — | — | — | 174,772 | 6,683,281 | |||||||||
Shyam Kambeyanda | 24,644 | — | 24.96 | 5/12/2023 | — | — | — | — | ||||||||
42,123 | — | 40.47 | 2/12/2024 | — | — | — | — | |||||||||
38,684 | 19,343 | 33.41 | 3/7/2025 | — | — | — | — | |||||||||
24,677 | 49,355 | 26.88 | 2/24/2026 | — | — | — | — | |||||||||
— | 31,017 | 37.67 | 2/23/2027 | |||||||||||||
— | — | — | — | 19,978 | 763,959 | — | — | |||||||||
— | — | — | — | — | — | 96,070 | 3,673,717 | |||||||||
Brady Shirley | 18,982 | 37,966 | 26.88 | 2/24/2026 | — | — | — | — | ||||||||
— | — | — | — | 52,226 | 1,997,122 | — | — | |||||||||
— | — | — | — | — | — | 32,582 | 1,245,936 |
|
| |
Employment Agreements, Change in Control Agreements and Executive Officer Severance Plan
Messrs. Trerotola and Pryor are party to our current form of employment agreement for executive officers, which was adopted by the Company on September 15, 2010, and Mr. Hix is party to an employment letter agreement entered into upon his hire.
Mr. Kambeyanda is party to a letter agreement that specifies his starting annual salary and minimum target bonus. Mr. Shirley is party to a service agreement with DJO, which he entered into prior to our acquisition of the DJO business in 2019. The agreement provides for a four-year initial term, with automatic one-year term extensions commencing November 14, 2020, unless we or Mr. Shirley provides written notice in advance to terminate the automatic extension provision. The agreement provides that Mr. Shirley’s base salary is a specified amount and that he is entitled to such increases as determined by the Board. In addition, Mr. Shirley is entitled to receive an annual bonus of 100% of his base salary. The employment agreement also provides severance benefits, but does not provide change in control benefits.
Messrs. Hix, Kambeyanda, Pryor and Shirley are party to our current form of change in control agreement for executive officers, which was approved by the Board on October 27, 2020.
We also maintain an Executive Officer Severance Plan, which provides for severance benefits upon a termination without cause or a resignation for good reason for executive officers who are not otherwise contractually entitled to severance compensation. The Executive Officer Severance Plan does not provide for change in control benefits. Mr. Kambeyanda is the only NEO subject to this plan.
Employment Agreements and Change in Control Agreements
Messrs. Trerotola and Pryor are each parties an employment agreement based on the Company’s form of employment agreement for executive officers. Mr. Trerotola’s employment agreement has a three-year term and Mr. Pryor’s agreement has a two-year term and, in each case, is subject to automatic extension unless the Board or the executive provides written notice to terminate the automatic extension provision. In addition, in the case of Mr. Trerotola, in the event we undergo a “change in control” (as described below under “Potential Payments Upon Termination or Change in Control”) during the term of the employment agreement, the agreement will be automatically extended to the second anniversary of the change in control. Each officer’s base salary may not be reduced below the amount previously in effect without the written agreement of the executive.
With respect to the benefits payable to Mr. Trerotola under his agreement upon a change in control of Colfax, the benefits are only paid upon a “double trigger,” meaning a change in control event must occur and Mr. Trerotola must either be terminated without cause by Colfax (or its successor) or must resign for good reason.
On October 27, 2020, the Board approved a new form of change in control agreement for certain executive officers. Messrs. Hix, Kambeyanda, Pryor and Shirley are each parties to change in control agreements based on this form. The change in control
|
| |
agreements supersede and replace any prior agreement between the Company and such executive officers with respect to a “change in control” of the Company (as described below under “Potential Payments Upon Termination or Change in Control”).
Pursuant to the change in control agreements, upon a change in control of the Company, each executive officer will be entitled to an annual base salary, cash bonus opportunity and benefits package equal to or greater than the base salary, cash bonus opportunity or benefits package in effect for such executive officer immediately prior to the change in control. If during the two year period following, or the three month period preceding, a change in control of the Company, (a) the Company terminates the executive officer’s employment other than for cause or by reason of death or disability (as such terms are defined in the change in control agreements) or (b) the executive officer resigns for good reason (as such term is defined in the change in control agreements), the Company will pay the executive officer an amount equal to: (i) two times the annual base salary of such executive officer plus (ii) two times the target cash bonus opportunity of such executive officer. Any outstanding long-term equity incentive awards held by the executive officer will continue to be treated in accordance with the terms and conditions of the award agreements and plans pursuant to which such awards were granted.
Each change in control agreement has an initial two-year term, subject to automatic extension for successive one-year periods unless either the Company or the executive officer gives notice of non-renewal to the other or the agreement is otherwise terminated pursuant to its terms.
In entering into these employment and change in control agreements, the Company wanted to ensure the continued dedication of these executive officers, notwithstanding the possibilitypurposes of a changeReverse Stock Split and, therefore, is in control, and to retain such officers in our employ after any such transaction. We believe that, should the possibility of a change in control arise, Colfax should be able to receive and rely upon our officers’ advice as to the best interests of the Company and without the concern that such officer might be distracted by the personal uncertainties and risks created by the potential change in control.Company. In the event, however, that such officer is actually terminated during the period beginning three months prior todetermining a change in control event or within a certain period of timeratio following the change in controlreceipt of stockholder adoption, the Board (or prior to the endany authorized committee of the termBoard) may consider, among other things, factors such as:
the historical trading price and trading volume of our common stock;
the anticipated impact of the applicable employment agreement should the changeSpin-off on our trading price and trading volume of control not be consummated), which termination may be out of their control (i.e., by the successor company or management), we believe that the officers should be compensated for their efforts in positioning Colfax for the possibility of an acquisition event. Additional information on certain benefits provided under the forms of employment agreement and change in control agreement in certain terminations or in connection with a change of control is discussed below under “Potential Payments Upon Termination or Change in Control.”our common stock;
Option Exercises and Stock Vested
The following table provides information regarding the vesting of earned PRSUs and RSUs. No stock options were exercised during 2020 by the CEO or NEOs. The number of shares acquired upon exercise or vesting and the value realized before payment of any taxes and broker commissions is reflected below. Value realized represents the product of the number of shares received upon exercise or vestingof our common stock outstanding;
the then-prevailing market price and trading volume of our common stock and the closinganticipated impact of the Reverse Stock Split on the trading market for our common stock;
the anticipated impact of the Reverse Stock Split on our ability to raise additional financing;
the anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs; and
prevailing general market and economic conditions.
Certain Risk Factors Associated With the Reverse Stock Split
We cannot assure you that the proposed Reverse Stock Split will increase our stock price.
We expect that the Reverse Stock Split will increase the per share trading price of our common stock. However, the effect of the Reverse Stock Split on the per share trading price of our common stock cannot be predicted with any certainty, and the history of reverse stock splits for other companies is varied, particularly since some investors may view a reverse stock split negatively. It is possible that the per share trading price of our common stock after the Reverse Stock Split will not increase in the same proportion as the reduction in the number of our outstanding shares of common stock following the Reverse Stock Split, and the Reverse Stock Split may not result in a per share trading price that would attract investors who do not trade in lower priced stocks. In addition, although we believe the Reverse Stock Split may enhance the marketability of our common stock to certain potential investors, we cannot assure you that, if implemented, our common stock will be more attractive to investors. Even if we implement the Reverse Stock Split, the per share trading price of our common stock may decrease due to factors unrelated to the Reverse Stock Split, including our future performance and the Spin-off. If the Reverse Stock Split is consummated and the per share trading price of the common stock declines, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of the Reverse Stock Split.
The proposed Reverse Stock Split may decrease the liquidity of our common stock.
The liquidity of our common stock may be negatively impacted by the Reverse Stock Split, given the reduced number of shares that would be outstanding after the Reverse Stock Split, particularly if the per share trading price does not increase as a result of the Reverse Stock Split. Accordingly, the Reverse Stock Split may not achieve the desired results as described above.
Effective Time
The effective time of the Reverse Stock Split and the Authorized Share Reduction (the “Effective Time”), if approved by stockholders and implemented by Colfax, will be the time that the Certificate of Amendment is filed with the Delaware Secretary of State or at such later time as specified in the Certificate of Amendment. It is expected that such filing will take place immediately after the completion of the intended Spin-off. However, the exact timing of the filing of the Certificate of Amendment will be determined by our Board based on its evaluation as to when such action will be the most advantageous to the Company and our stockholders.
If, at any time prior to the filing of the Certificate of Amendment with the Delaware Secretary of State, notwithstanding stockholder approval and without further action by the stockholders, the Board, in its sole discretion, determines that it is in Colfax’s best interests and the best
- 2022 Special Meeting Proxy Statement | 6 |
interests of Colfax’s stockholders to delay the filing of the Certificate of Amendment or abandon the Reverse Stock Split and the Authorized Share Reduction, the Reverse Stock Split and the Authorized Share Reduction may be delayed or abandoned.
Fractional Shares
Stockholders will not receive fractional shares of common stock in connection with the Reverse Stock Split. Instead, the transfer agent will aggregate all fractional shares and sell them as soon as practicable after the Effective Time at the then-prevailing prices on the open market, on behalf of those stockholders who would otherwise be entitled to receive a fractional share as a result of the Reverse Stock Split. We expect that the transfer agent will conduct the sale in an orderly fashion at a reasonable pace and that it may take several days to sell all of the aggregated fractional shares of our common stock. After the transfer agent’s completion of such sale, stockholders who would have been entitled to a fractional share will instead receive a cash payment from the transfer agent in an amount equal to their respective pro rata shares of the total proceeds of that sale net of any brokerage costs incurred by the transfer agent to sell such stock.
Stockholders will not be entitled to receive interest for the period of time between the Effective Time and the date payment is made for their fractional share interest. You should also be aware that, under the escheat laws of certain jurisdictions, sums due for fractional interests that are not timely claimed after the funds are made available may be required to be paid to the designated agent for each such jurisdiction. Thereafter, stockholders otherwise entitled to receive such funds may have to obtain the funds directly from the state to which they were paid.
If you believe that you may not hold sufficient shares of our common stock at the Effective Time to receive at least one share in the Reverse Stock Split and you want to continue to hold Colfax’s common stock after the Reverse Stock Split, you may do so by either:
purchasing a sufficient number of shares of Colfax’s common stock; or
if you have shares of Colfax’s common stock in more than one account, consolidating your accounts;
in each case, so that you hold a number of shares of our common stock in your account prior to the Reverse Stock Split that would entitle you to receive at least one share of common stock in the Reverse Stock Split. Shares of our common stock held in registered form and shares of our common stock held in “street name” (that is, through a broker, bank or other holder of record) for the same stockholder will be considered held in separate accounts and will not be aggregated when effecting the Reverse Stock Split.
Effects of the Reverse Stock Split and the Authorized Share Reduction
General
After the Effective Time, each stockholder will own a reduced number of shares of common stock. The principal effect of the Reverse Stock Split will be to proportionately decrease the number of outstanding shares of our common stock based on one of the three Reverse Stock Split ratios, one-for-two,one-for-three or one-for-four, with the exact ratio to be determined by our Board at a later date. The Authorized Share Reduction will reduce the authorized number of shares of our capital stock by the corresponding, selected Reverse Stock Split ratio that is ultimately determined by our Board.
Voting rights and other rights of the holders of our common stock will not be affected by the Reverse Stock Split, other than as a result of the treatment of fractional shares as described above. For example, a holder of 2% of the voting power of the outstanding shares of our common stock immediately prior to the effectiveness of the Reverse Stock Split will generally continue to hold 2% (assuming there is no impact as a result of the payment of cash in lieu of issuing fractional shares) of the voting power of the outstanding shares of our common stock after the Reverse Stock Split. The number of stockholders of record will not be affected by the Reverse Stock Split (except to the extent any are cashed out as a result of holding fractional shares). If approved and implemented, the Reverse Stock Split may result in some stockholders owning “odd lots” of less than 100 shares of our common stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares. Our Board believes, however, that these potential effects are outweighed by the benefits of the Reverse Stock Split.
Effect on Common Stock
On December 30, 2021, the Board adopted resolutions (1) approving and declaring advisable a series of three alternative amendments of our Certificate of Amendment to effect, at the discretion of the Board, a reverse stock split at one of three Reverse Stock Split ratios, one-for-two,one-for-three or one-for-four, and contemporaneously with such Reverse Stock Split, to effect a corresponding reduction in the number of authorized shares of common stock by the corresponding, selected Reverse Stock Split ratio that is ultimately determined by our Board, (2) directing that the Reverse Stock Split Proposal be submitted to the holders of our common stock for their
- 2022 Special Meeting Proxy Statement | 7 |
approval and (3) recommending that the holders of our common stock approve the Reverse Stock Split Proposal. The actual number of authorized shares of our common stock after giving effect to the Reverse Stock Split, if and when effected, will depend on the Reverse Stock Split ratio that is ultimately determined by our Board. The following table contains approximate information, based on share information as of December 31, 2021, relating to our outstanding common stock and information regarding our authorized shares for each of the three alternative amendments:
Number of Shares of Common Stock Authorized | Number of Shares of Common Stock Issued and Outstanding | |||
Pre-Reverse Stock Split | 400,000,000 | 156,249,234 | ||
Post-Reverse Stock Split 1:2 | 200,000,000 | 78,124,617 | ||
Post-Reverse Stock Split 1:3 | 133,333,333 | 52,083,078 | ||
Post-Reverse Stock Split 1:4 | 100,000,000 | 39,062,309 |
After the Effective Time, our common stock would have a new committee on uniform securities identification procedures, or CUSIP number, a number used to identify our common stock.
Our common stock is currently registered under Section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), and we are subject to the periodic reporting and other requirements of the Exchange Act. The Reverse Stock Split will not affect the registration of our common stock under the Exchange Act or the listing of our common stock on the exercise or vesting date, lessNew York Stock Exchange (“NYSE”). Following the exercise price for options. Mr. ShirleyReverse Stock Split, the Spin-off transaction and Mr. Pryor did not exercise any Company options nor did any of their Companyour name change to Enovis Corporation, our common stock awards vest in 2020.
Option Exercises and Stock Vested During Fiscal 2020
Option Awards | Stock Awards | |||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||
Matthew Trerotola | N/A | N/A | 80,855 | 2,762,955 | ||||
Christopher M. Hix | N/A | N/A | 23,012 | 728,703 | ||||
Shyam Kambeyanda | N/A | N/A | 35,537 | 906,686 |
Nonqualified Deferred Compensation
Effective January 1, 2016, we established the Colfax Corporation Nonqualified Deferred Compensation Plan (the “Nonqualified Plan”)will continue to provide certain select members of management and other highly compensated employees, including each of the NEOs, with an opportunity to defer a stated percentage of their base compensation or their bonus compensation without regard to the compensation limits imposed by the Internal Revenue Code for our 401(k) plan. We established the Nonqualified Plan to allow these individuals to contribute toward retirement on a tax-effective basis in a manner that is consistent with other Colfax employees who are not limited by the Internal Revenue Code limits. The plan is “unfunded,” meaning there are no assets segregated for the exclusive benefit of plan participants.
|
| |
The Nonqualified Plan allows the NEOs to defer up to 50% of their base salaries and up to 75% of their bonus compensation. In addition, during 2020 we matched up to 4% of all excess deferrals by the NEOs and provided a 2% Company contribution. Our NEOs vest in these Company contributions to the Nonqualified Plantrade on the same terms asNYSE under the Company’s 401(k) plan.
Deferrals under the Nonqualified Plan are notionally invested among a number of different mutual funds, insurance company separate accounts, indexed rates or other measurement funds, which are selected periodically by the plan administrator to best match the funds offered in the qualified 401(k) plan. Each participating NEO can allocate his deferrals among these notional fund investment options and may change elections at any time by making a change of election with the plan administrator. Colfax notionally invests its match and contribution amounts in the same investment options in the same amounts and allocations as the reference funds selected by the officer.
Simultaneously with the executive’s election to defer amounts under the Nonqualified Plan, the executive must elect the time and form of payment for the deferred amounts, which may generally be either a lump sum distribution or in quarterly installments payable over a period of one to ten years following a specified date (that must be at least one year following the end of the year to which the officer’s deferral election relates) or at least six months following the officer’s separation from service. Limited changes to deferral elections are permitted in accordance with the terms of the Nonqualified Plan. If no election is made, the benefit will be paid in a lump sum on the last day of the month which occurs six months after the executive’s separation from service. Deferred amounts may alternatively be paid out in a lump sum in the event of an executive’s death or disability or in the event of an unforeseeable financial emergency, Furthermore, in the event the executive’s account balance at the time of his or her separation from service is less than $15,000, payment of the account balance will be made in a lump sum on or before the later of (i) December 31 of the calendar year of separation, or (ii) the date 2.5 months after the executive’s separation from service.
The Company also maintains the Colfax Corporation Excess Benefit Plan (the “Excess Benefit Plan”) which was frozen to new participants and future new deferrals on December 31, 2015. Like the Nonqualified Plan, the Excess Benefit Plan is an unfunded non-qualified deferred compensation plan in which Mr. Pryor holds an account balance. Like the Nonqualified Plan, amounts deferred under the Excess Benefit Plan are notionally invested in offered measurement funds as selected by the plan participantsymbol “ENOV” and will be distributed in accordance with participant electionsassigned a new CUSIP number.
Effect on Preferred Stock
Pursuant to our Certificate of Incorporation, our authorized capital stock consists of 20,000,000 shares of Preferred Stock, par value $0.001 per share. The proposed Certificate of Amendment to effect the Reverse Stock Split and the termsAuthorized Share Reduction would not impact the total authorized number of shares of preferred stock or the par value of the Excess Benefit Plan following a participant’s separation from service, death or disability.preferred stock. There are currently no shares of preferred stock outstanding.
Accounting Matters
The Company also maintainsReverse Stock Split will not affect the DJO Global Executive Deferred Compensation Plan (the “DJO Nonqualified Plan”),common stock capital account on our balance sheet and the par value of our common stock will remain unchanged. The stated capital component, which was acquired in connection withconsists of the acquisitionpar value per share of DJO. The DJO Nonqualified Plan was frozen to new participants and future deferrals on December 31, 2019. Like the Nonqualified Plan, the DJO Nonqualified Plan is an unfunded non-qualified deferred compensation plan. Mr. Shirley holds an account balance in this plan. Like the Nonqualified Plan, amounts deferred under the DJO Nonqualified Plan are notionally invested in offered measurement funds as selectedour common stock multiplied by the plan participantaggregate number of shares of our common stock issued and outstanding, will be distributedreduced in accordance with participant elections. Deferred amounts may generallyproportion to the size of the Reverse Stock Split, subject to a minor adjustment in respect of the treatment of fractional shares, and the additional paid-in capital account will be paid out in either a lump sum distribution or in annual installments payable over a period of two to ten years following a specified date orincreased by the officer’s separation from service (subject to any required 6-month delay). Deferred amounts will alternatively be paid out in a lump sumamount by which the stated capital is reduced. Our stockholders’ equity, in the eventaggregate, will remain unchanged. Immediately after the Reverse Stock Split, the per share net income or loss and net book value of an executive’s death.our common stock will be increased, as compared to the per share amounts absent the Reverse Stock Split, because there will be fewer shares of common stock outstanding. All historic and per share amounts in our financial statements and related footnotes (for periods after the Reverse Stock Split and, on a pro forma basis, for periods prior to the Reverse Stock Split) will be restated to reflect the Reverse Stock Split.
Effect on Colfax’s Stock Incentive Plans
Nonqualified Deferred Compensation
Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | |||||
Matthew L. Trerotola | 113,071 | 133,498 | 69,850 | — | 1,387,489 | |||||
Christopher M. Hix | 19,050 | 35,395 | 11,981 | — | 343,015 | |||||
Daniel A. Pryor | 58,810 | 45,394 | 38,472 | — | 1,273,421 | |||||
Shyam Kambeyanda | — | 4,384 | 20,211 | — | 353,327 | |||||
Brady Shirley | — | — | 1,785 | — | 71,470 |
Potential Payments Upon Termination or Change in Control
The information below describes relevant employment agreement, change in control agreement, severance plan and equity plan provisions for payments upon termination or a change in control and sets forth the amount of compensation that could have been received by each of the NEOs in the event such executive’s employment had terminated under the various applicable triggering events described below asAs of December 31, 2020. The benefits discussed below are in addition to those generally available to all salaried employees, such as distributions under the 401(k) plan, health care benefits and disability benefits or vested amounts payable under the Nonqualified Plan and Excess Benefit Plan described above. In addition, these benefits do not take into
|
| |
account any arrangements that we may provide in connection with an actual separation from service or a change in control. Due to the number of different factors that affect the nature and amount of any benefits provided in connection with these events, actual amounts payable to any of the NEOs should a separation from service or change-in-control occur during the year will likely differ, perhaps significantly, from the amounts reported below. Factors that could affect such amounts include the timing during the year of the event, the Company’s stock price, and the target amounts payable under annual and long-term incentive arrangements that are in place at the time of the event.
Employment Agreements
Pursuant to the terms of the employment agreements with each of Messrs. Trerotola, Pryor and Shirley, each executive is entitled to the following severance payments or benefits in the event his employment is terminated by us without “cause” or the executive resigns for “good reason,” in the case of Messrs. Trerotola and Pryor, or as a result of a “constructive termination,” in the case of Mr. Shirley (each as described below):
In the event we terminate Mr. Trerotola’s employment without “cause,” or Mr. Trerotola terminates his employment for “good reason” within three months prior to a “change in control event” (as described below), or two years after a “change in control”, the terms of his employment agreement would entitle him to the following severance payments or benefits:
Mr. Shirley’s agreement does not provide for any additional payments or benefits in the event of a change in control or a termination in connection with a change in control. However, he is party to a change in control agreement, as further described under “Change in Control Agreements” below.
In each case described above, the executive’s right to the severance payments and benefits is conditioned on the executive’s execution of a waiver and release agreement in favor of Colfax. In addition, each employment agreement contains standard confidentiality covenants, non-disparagement covenants, non-competition covenants and non-solicitation covenants.
Under Mr. Trerotola’s and Mr. Pryor’s agreements, in the event that any payment or benefit to the executives pursuant to the employment agreements or otherwise constitute excess parachute payments under Section 280G of the Internal Revenue Code such that they would trigger the excise tax provisions of the Internal Revenue Code, such payments are to be reduced so that the excise tax provisions are not triggered, but only upon determination that the after-tax value of the termination benefits calculated with the restriction described above exceed the value of those calculated without such restriction.
Mr. Trerotola’s and Mr. Pryor’s agreements further provide that, in the event it is determined that the willful actions of the executive have resulted in a material misstatement or omission in any report or statement filed by Colfax with the SEC, or material fraud against Colfax, Colfax is entitled to recover all or any portion of any award or payment made to the executive.
For purposes of the employment agreements, the following terms generally have the following meanings:
|
| |
Trerotola Pro-Rata Vesting Provisions
In addition, Mr. Trerotola’s CEO Performance Stock Unit Agreements provide that if he is terminated by the Company without “cause” (and not on account of disability) or resigns for “good reason” his outstanding performance-based equity awards shall vest pro-ratably only if the performance objectives are achieved as of the end of the performance period.
Hix Letter Agreement
Mr. Hix ishad approximately 3,660,646 shares subject to a letter agreement entered into withstock options and 1,718,449 shares subject to unvested restricted stock units (including performance-based restricted stock units) outstanding under our stock incentive plans.
If the Company upon his hire. Pursuant to that letter agreement, severance in an amount equal to the sum of his base salary and target bonusReverse Stock Split is to be provided in the event of a termination without “cause” or for “good reason.” In the event of termination in connection with a “change in control,” Mr. Hix would be entitled to the benefits provided under his change in control agreement, as described below.
Change in Control Agreements
Pursuant to the terms of the change in control agreements with each of Messrs. Hix, Kambeyanda, Pryor and Shirley, in the event of a change in control, the executive will continue to be paid an annual base salary at a rate not less than such executive’s current fixed or base compensation and will be given a bona fide opportunity to earn his annual cash bonus opportunity for the year. In the event the executive’s employment is terminated by us without “cause” or he resigns for “good reason” (each as described below) during the two year period following, or the three month period preceding, a change in control, such executive is entitled to a lump sum payment equal to (i) two times the executive’s base salary plus (ii) two times his target annual cash bonus opportunity for the year.
Each executive’s right to the severance payments is conditioned on the executive’s execution of a general release of claims in favor of Colfax. In addition, each change in control agreement contains standard confidentiality covenants, non-disparagement covenants, non-competition covenants and non-solicitation covenants.
In the event that any payment or benefit under the change in control agreements would constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code and would have the effect of decreasing the after-tax amounts received by the executive, the executive has the right to reduce or eliminate any such payment or benefit to avoid having the payment or benefit being deemed a parachute payment.
For purposes of the change in control agreements, the following terms have the following meanings:
|
| |
Executive Officer Severance Plan
Mr. Kambeyanda is a participant in our Executive Officer Severance Plan, which provides for severance benefits upon termination without cause or for good reason for executive officers who are not otherwise contractually entitled to severance compensation pursuant to a separate agreement with the Company. Severance provided in the event of termination without “cause” or for “good reason” (each defined as in the form of employment agreement) is a lump sum payment equal to one times the executive’s base salary in effect and a pro rata payment of his or her target annual incentive compensation for the year of termination. The Executive Officer Severance Plan does not provide for any additional change in control benefits.
Equity Awards
The vesting of outstanding equity awards, other than performance-based awards, accelerates in full upon the death or total and permanent disability of the grantee or, unless assumed or substituted as discussed below, upon a “corporate transaction” (as defined below). The vesting of the outstanding PRSUs accelerates in full upon the death or total and permanent disability of the grantee only if and when the performance criteria for such award are achieved as of the end of the performance period upon certification of the same by the Compensation Committee, or immediately if the performance period has already ended and the Compensation Committee has certified that the performance criteria have been achieved. The outstanding PRSUs will terminate and cease to vest upon a “corporate transaction,” unless prior to the corporate transaction the achievement of the performance criteria is certified by the Compensation Committee, in which case the vesting for the award will accelerate in full unless assumed or substituted as discussed below. While these benefits are available to all of our equity plan participants equally, pursuant to SEC requirements, we have included these acceleration benefits in the table below. In addition, in the event of termination of service other than for death, disability or cause, any stock option awards will remain exercisable to the extent vested for 90 days after termination of service.
A “corporate transaction” under any outstanding equity awards is generally defined as:
Accelerated vesting upon a “corporate transaction” will not occur to the extent that provision is made in writing in connection with the corporate transaction for the assumption or continuation of the outstanding awards, or for the substitution of such outstanding awards for similar awards relating to the stock of the successor entity, or a parent or subsidiary of the successor entity, with appropriate adjustments toeffected, the number of shares available for issuance under our stock incentive plans, as well as the number of stock that would be deliveredshares subject to any outstanding award and the exercise price, grant price or purchase price relating to any such award. Ifaward under our stock incentive plans, are expected to be equitably adjusted by our Board to reflect the Reverse Stock Split. Further, any fractional shares resulting from such adjustment are expected to be eliminated by rounding downward to the nearest whole share.
For illustrative purposes only, if a one-for-four reverse stock split is effected, the 2,590,182 shares that remain available for issuance under our 2020 Omnibus Incentive Plan as of December 31, 2021, are expected to be adjusted to 647,546 shares, subject to increase as and when outstanding awards made under the plan expire or are forfeited or are otherwise again made available for issuance pursuant to the terms of the plan. Further, for illustrative purposes only, if a one-for-four reverse stock split is effected, we expect that an award is assumedoutstanding stock option for 10,000 shares of common stock, exercisable at $40.00 per share, would be adjusted as a result of the one-for-four split ratio into an option exercisable for 2,500 shares of common stock at an exercise price of $160.00 per share.
- 2022 Special Meeting Proxy Statement | 8 |
No Dissenter’s Rights
Neither Delaware law, the Certificate of Incorporation, nor the Company’s Amended and Restated Bylaws (the “Bylaws”) provides for appraisal or substitutedother similar rights for dissenting stockholders in connection with a corporate transaction andthis proposal. Accordingly, if the holder is terminated without cause within a year following a change in control,proposed amendments are authorized by our stockholders at the awardSpecial Meeting, our stockholders will fully vest and may be exercised in full,have no right to dissent to the Reverse Stock Split or obtain payment for their shares (other than with respect to fractional shares, as described above), and we will not independently provide stockholders with any such right.
No Going Private Transaction
Notwithstanding the decrease in the number of outstanding shares following the proposed Reverse Stock Split, our Board does not intend for this transaction to be the first step in a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act.
Shares Held in Book-Entry and Through a Broker, Bank or Other Holder of Record
If you hold registered shares of our common stock in book-entry form, you do not need to take any action to receive your post-Reverse Stock Split shares of our common stock in registered book-entry form or your cash payment in lieu of fractional shares, if applicable. If you are entitled to post-Reverse Stock Split shares of our common stock, a transaction statement will automatically be sent to your address of record as soon as practicable after the Effective Time indicating the number of shares of our common stock you hold. In addition, if you are entitled to a payment of cash in lieu of fractional shares, a check will be mailed to you at your registered address as soon as practicable after the Effective Time. By signing and cashing this check, you will warrant, to the fullest extent applicable, beginningpermitted by law, that you owned the shares of Colfax’s common stock for which you received a cash payment.
At the Effective Time, we intend to treat stockholders holding shares of our common stock in “street name” (that is, through a broker, bank or other holder of record) in the same manner as registered stockholders whose shares of our common stock are registered in their names. Brokers, banks or other holders of record will be instructed to effect the Reverse Stock Split for their beneficial holders holding shares of our common stock in “street name”; however, these brokers, banks or other holders of record may apply their own specific procedures for processing the Reverse Stock Split. If you hold your shares of our common stock with a broker, bank or other holder of record, and you have any questions in this regard, we encourage you to contact your holder of record.
If you hold any of your shares of our common stock in certificate form, you will receive a transmittal letter from our transfer agent as soon as practicable after the Effective Time. The transmittal letter will be accompanied by instructions specifying how you can exchange your certificate representing the pre-Reverse Stock Split shares of our common stock for either: (1) a certificate representing the post-Reverse Stock Split shares of our common stock or (2) post-Reverse Stock Split shares of our common stock in a book-entry form, evidenced by a transaction statement that will be sent to your address of record as soon as practicable after the Effective Time indicating the number of shares of our common stock you hold, in each case together with any payment of cash in lieu of fractional shares to which you are entitled. Beginning on the effective date of such termination andthe Reverse Stock Split, each certificate representing pre-Reverse Stock Split shares of our common stock will be deemed for the one-year period immediately following such termination or for such longer periodall corporate purposes to evidence ownership of post-Reverse Stock Split shares. If you are entitled to a payment of cash in lieu of fractional shares, payment will be made as the compensation committee shall determine.described under “—Fractional Shares.”
Estimate of Payments
Material U.S. Federal Income Tax Consequences
The following table provides information relateddiscussion is a summary of the material U.S. federal income tax consequences to compensation payableU.S. Holders (as defined below) of the Reverse Stock Split, but does not purport to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or foreign tax laws are not discussed. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the IRS, in each NEO assuming terminationcase in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such executive’s employmentchange or differing interpretation may be applied retroactively in a manner that could adversely affect a U.S. Holder. We have not sought and do not currently intend to seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the Reverse Stock Split.
This discussion is limited to U.S. Holders that hold our common stock as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to a U.S. Holder’s particular circumstances, including the impact of the alternative minimum tax, the Medicare contribution tax on December 31, 2020,net investment income or assumingany item of gross income with respect to our common stock being taken into account in an “applicable financial statement” (as defined in the Code). In addition, it does not address consequences relevant to Non-U.S. Holders subject to special rules, including, without limitation:
persons whose functional currency is not the U.S. dollar;
- 2022 Special Meeting Proxy Statement | 9 |
persons holding our common stock as part of a changehedge, straddle or other risk reduction strategy or as part of controla conversion transaction or corporate transaction with corresponding qualifying termination occurredother integrated investment;
banks, insurance companies and other financial institutions;
real estate investment trusts and registered investment companies;
brokers, dealers or traders in securities;
corporations that accumulate earnings to avoid U.S. federal income tax;
S corporations, partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);
tax-exempt organizations or governmental organizations;
persons deemed to sell our common stock under the constructive sale provisions of the Code;
persons who hold or receive our common stock pursuant to the exercise of any employee stock option or otherwise as compensation; and
tax-qualified retirement plans.
If a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner in the partnership will depend on December 31, 2020. Amounts also assume the pricestatus of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships holding our common stock and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences of the Reverse Stock Split to them.
THIS DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our common stock was $38.24, the closing price on December 31, 2020, the last trading daythat for U.S. federal income tax purposes is, or is treated as:
an individual who is a citizen or resident of the fiscal year.United States;
|
| |
Potential Payments Upon Terminationa corporation created or Change of Control
Executive | Matthew L. Trerotola | Christopher M. Hix | Daniel A. Pryor | Shyam Kambeyanda | Brady Shirley | |||||
Employment Agreement/Severance Plan Benefits: | ||||||||||
Termination without “cause” or “good reason” (for all NEOs other than Mr. Shirley) or “constructive termination” (for Mr. Shirley) | ||||||||||
Payment Over 24 Months/18 Months//Lump Sum Payment(1) | 4,846,500 | 1,170,000 | 1,017,000 | 625,000 | 2,550,000 | |||||
Pro Rata Incentive Compensation(2) | 1,346,250 | — | 452,000 | 500,000 | 850,000 | |||||
Termination in connection with a “change of control” | ||||||||||
Lump Sum Payment | 4,846,500 | 2,340,000 | 2,034,000 | 2,250,000 | 3,400,000 | |||||
Pro Rata Incentive Compensation(2) | 1,346,250 | — | — | — | — | |||||
Accelerated Stock Options(3) | 5,123,119 | 1,041,859 | 1,111,640 | 671,779 | 431,294 | |||||
Accelerated PRSUs(4) | 8,733,289 | 3,104,438 | 3,407,184 | 2,093,525 | 4,250,758 | |||||
Accelerated RSUs(4) | 1,449,008 | 1,268,421 | 480,180 | 763,959 | 1,997,122 | |||||
NQDC Plans/Pension(5) | 1,387,489 | 343,015 | 1,273,421 | 353,327 | 71,470 |
|
| |
As required by Section 953(b)organized under the laws of the Dodd-Frank Wall Street ReformUnited States, any state thereof or the District of Columbia;
an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
a trust that (i) is subject to the primary supervision of a U.S. court and Consumer Protection Act, and Item 402(u)the control of Regulation S-K, we are providingone or more United States persons (within the following information about the relationshipmeaning of Section 7701(a)(30) of the annual total compensation of our median compensated associateCode) or (ii) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.
The Reverse Stock Split is intended to qualify as a “recapitalization” for U.S. federal income tax purposes, and the annual total compensation of Mr. Trerotola, our President and Chief Executive Officer. The pay ratio included in this section is a reasonable estimate calculated in a matter consistent with Item 402(u) of Regulation S-K.
For 2020:
The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
To identify our median compensated employee, as well as to determine the annual total compensationremainder of this “median employee”:
|
| |
The following table summarizes Colfax Corporation’s equity plan information as of December 31, 2020:
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a) | Weighted-average exercise price of outstanding options, warrants, and rights (b)(1) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(c) | ||||||||
Equity compensation plans approved by Company stockholders | 7,163,261 | $ | 33.92 | 4,245,953 | |||||||
Stock options | 4,599,067 | $ | 33.92 | ||||||||
Restricted stock units | 1,101,392 | — | |||||||||
Performance-based restricted stock units | 1,462,802 | (2) | — | ||||||||
Equity compensation plans not approved by Company stockholders | — | — | — | ||||||||
TOTAL | 7,163,261 | $ | 33.92 | 4,245,953 |
|
| |
Section 16(a) of the Exchange Act requires our officers (as defined under Section 16(a) ofReverse Stock Split so qualifies. A U.S. Holder generally should not recognize gain or loss upon the Exchange Act), directors and persons who own greater than 10%Reverse Stock Split, except with respect to cash received in lieu of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. Based on our records and other information, we believe that each of our officers, directors and certain beneficial ownersfractional share of our common stock, complied with all Section 16(a) filing requirements applicableas discussed below. A U.S. Holder’s aggregate tax basis in the shares of our common stock received pursuant to them during 2020the Reverse Stock Split should equal the aggregate tax basis of the shares of our common stock surrendered (excluding any portion of such basis that is allocated to any fractional share of our common stock), and such U.S. Holder’s holding period in the shares of our common stock received should include the holding period in the shares of our common stock surrendered. Treasury Regulations provide detailed rules for allocating the tax basis and holding period of the shares of our common stock surrendered to the shares of our common stock received pursuant to the Reverse Stock Split. U.S. Holders who acquired shares of our common stock on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
A U.S. Holder that receives cash in lieu of a timelyfractional share of our common stock pursuant to the Reverse Stock Split should recognize capital gain or loss in an amount equal to the difference between the amount of cash received and the U.S. Holder’s tax basis exceptin the shares of our common stock surrendered that is allocated to such fractional share of our common stock. Such capital gain or loss should be long-term capital gain or loss if the U.S. Holder’s holding period for our common stock surrendered exceeds one year at the late filingeffective time of one late Form 4 by Mr. Shirley with respectthe Reverse Stock Split. The deductibility of capital losses is subject to one transaction.limitations.
A U.S. Holder may be subject to information reporting and backup withholding when such holder receives cash in lieu of a fractional share of our common stock pursuant to the Reverse Stock Split. Certain U.S. Holders are exempt from backup withholding, including corporations and certain tax-exempt organizations. A U.S. Holder will be subject to backup withholding if such holder is not otherwise exempt and:
- Meeting Proxy Statement
|
| |||||||
|
10 |
We are asking our stockholders
the holder fails to castfurnish the holder’s taxpayer identification number, which for an advisory vote at our Annual Meeting to approve individual is ordinarily his or her social security number;
the compensation of our named executive officers, as disclosed in this Proxy Statement. Pursuant to Section 14A of furnishes an incorrect taxpayer identification number;
the Exchange Act, we are asking that you vote onapplicable withholding agent is notified by the following advisory resolution:
RESOLVED,IRS that the 2020 compensation paidholder previously failed to properly report payments of interest or dividends; or
the holder fails to certify under penalties of perjury that the holder has furnished a correct taxpayer identification number and that the IRS has not notified the holder that the holder is subject to backup withholding.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the Company’s named executive officers, as disclosed pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.
Though the vote is non-binding, the Compensation CommitteeIRS. U.S. Holders should consult their tax advisors regarding their qualification for an exemption from backup withholding and the Board of Directors value your opinion and will consider the outcome of the vote in establishing our compensation philosophy and making future compensation decisions. At this time, we intend to seek stockholder approval of our executive compensation program onprocedures for obtaining such an annual basis and thus expect the next such vote to occur at our 2022 Annual Meeting of Stockholders.exemption.
Why You Should Approve Our Executive Compensation Program
As discussed in our Compensation Discussion and Analysis, we believe our compensation programs and practices are appropriate and effective in implementing our compensation philosophy, and our focus remains on linking compensation to performance while aligning the interests of management with those of our stockholders.
The affirmative vote of the holders of a majority of the outstanding shares of our common stock is required for the approval of the amendments to our Certificate of Incorporation to effect the Reverse Stock Split and the Authorized Share Reduction. If you do not vote (either by proxy or during the meeting) on the Reverse Stock Split Proposal, it will have the same effect as a vote “against” the proposal.
The Board unanimously recommends that stockholders vote “FOR” Proposal 1. |
- 2022 Special Meeting Proxy Statement | 11 |
Proposal 2Adjournment of Special Meeting
The Board has approved the submission to the stockholders of a proposal to approve one or more adjournments of the Special Meeting or any adjournment(s) thereof in the event that there is not a sufficient number of votes at the Special Meeting to approve Proposal 1. In order to permit proxies that have been timely received to be voted for such adjournments, we are submitting this proposal as a separate matter for your consideration. If it is necessary to adjourn the Special Meeting and if the adjournment is for a period of 30 days or less and the record date remains unchanged, no notice of the time and place of the reconvened meeting will be given to stockholders, other than an announcement of the place and time of the adjourned meeting made at the Special Meeting.
The affirmative vote of the holders of a majority of the outstanding shares of our common stock present in person or represented by proxy at the AnnualSpecial Meeting and entitled to vote on the matter is required for the approval of the adjournment of the Special Meeting, if necessary. Abstentions with respect to approve the advisoryAdjournment Proposal will have the same effect as a vote approvingagainst the compensation of our named executive officers.Adjournment Proposal.
The Board unanimously recommends that |
- Meeting Proxy Statement
|
| |||||||
|
12 |
BENEFICIAL OWNERSHIP OF OUR COMMON STOCK |
The following table sets forth certain information as of March 22,December 31, 2021 (unless otherwise specified), with respect to the beneficial ownership of our common stock by each person who is known to own beneficially more than 5% of the outstanding shares of common stock, each person currently serving as a director, each nominee for director, each named executive officer (as listed below), and all directors and executive officers as a group. Unless otherwise indicated, to our knowledge, each person has sole dispositive and voting power over the shares in the table.
Beneficial Owner | Shares Beneficially Owned | Percent of Class | Shares Beneficially Owned | Percent of Class | ||||||||||||
5% Holder and Director | ||||||||||||||||
Mitchell P. Rales | 9,237,859 | (1) | 6.8 | % | 9,450,461 | (1) | 6.0 | % | ||||||||
5% Holders | ||||||||||||||||
T. Rowe Price Associates, Inc. | 16,546,189 | (2) | 12.2 | % | 16,546,189 | (2) | 10.6 | % | ||||||||
BlackRock, Inc. | 9,600,661 | (3) | 7.1 | % | 9,600,661 | (3) | 6.1 | % | ||||||||
The Vanguard Group | 9,032,587 | (4) | 6.7 | % | 9,032,587 | (4) | 5.8 | % | ||||||||
Steven M. Rales | 8,420,373 | (5) | 6.2 | % | 8,410,679 | (5) | 5.4 | % | ||||||||
Directors | ||||||||||||||||
Patrick W. Allender | 317,204 | (6)(7) | * | 317,776 | (6)(7) | * | ||||||||||
Thomas S. Gayner | 91,539 | (7) | * | 91,781 | (7) | * | ||||||||||
Rhonda L. Jordan | 113,583 | (7)(8) | * | 111,866 | (7)(8) | * | ||||||||||
Liam J. Kelly | 17,365 | (7) | * | 17,365 | (7) | * | ||||||||||
A. Clayton Perfall | 85,961 | (7)(9) | * | 86,644 | (7)(9) | * | ||||||||||
Philip A. Okala | 878 | (7) | * | 1,235 | (7) | * | ||||||||||
Didier Teirlinck | 39,414 | (7) | * | 41,373 | (7) | * | ||||||||||
Rajiv Vinnakota | 33,116 | (7) | * | 38,654 | (7) | * | ||||||||||
Sharon Wienbar | 47,380 | (7) | * | 49,339 | (7) | * | ||||||||||
Named Executive Officer and Director | ||||||||||||||||
Matthew L. Trerotola | 1,513,655 | (10) | * | 1,053,737 | (10) | * | ||||||||||
Named Executive Officers | ||||||||||||||||
Christopher M. Hix | 434,290 | (10) | * | 420,459 | (10) | * | ||||||||||
Daniel A. Pryor | 766,948 | (10)(11) | * | 731,000 | (10)(11) | * | ||||||||||
Shyam Kambeyanda | 233,643 | (10) | * | 245,555 | (10) | * | ||||||||||
Brady Shirley | 63,133 | (10) | * | 113,020 | (10) | * | ||||||||||
All of our directors and executive officers as a group (17 persons) | 13,033,583 | (10) | 9.6 | % | 12,818,996 | (10) | 8.2 | % |
* | Represents beneficial ownership of less than 1% |
(1) | Includes |
(2) | The amount shown and the following information is derived from a Schedule 13G/A filed February 16, 2021 by T. Rowe Price Associates, Inc. (“Price Associates”), which sets forth Price Associates’ beneficial ownership as of December 31, 2020. According to the Schedule 13G/A, Price Associates has sole voting power over 6,417,757 shares and sole dispositive power over 16,546,189 shares. The business address of Price Associates is 100 E. Pratt Street, Baltimore, MD 21202. |
(3) | The amount shown and the following information is derived from a Schedule 13G/A filed February 5, 2021 by BlackRock, Inc. (“BlackRock”), which sets forth BlackRock’s beneficial ownership as of December 31, 2020. According to the Schedule 13G/A, BlackRock has sole voting power over 9,248,315 shares and sole dispositive power over 9,600,661 shares. The business address of BlackRock is BlackRock, Inc. 55 East 52nd Street, New York, NY 10055. |
- Meeting Proxy Statement
|
| |||||||
|
13 |
(4) | The amount shown and the following information is derived from a Schedule 13G/A filed February 10, 2021 by The Vanguard Group (“Vanguard”), which sets forth Vanguard’s beneficial ownership as of December 31, 2020. According to the Schedule 13G/A, Vanguard has shared voting power of 64,568 shares, sole dispositive power over 8,889,016 shares, and shared dispositive power over 143,571 shares. The business address of Vanguard is 100 Vanguard Blvd., Malvern, PA 19355. |
(5) | Includes |
(6) | Includes 23,648 shares owned by the JWA Irrevocable Trust #1, 27,504 shares held by the JWA GRAT #4, 57,978 shares held by the JWA GRAT #5, 90,129 shares held by the JWA Irrevocable Trust #2, and 20,000 shares held by an irrevocable trust, of which Patrick Allender is a trustee. Mr. Allender disclaims beneficial ownership of all shares held by the JWA irrevocable trusts and the JWA GRATs, except to the extent of his pecuniary interest therein. |
(7) | Beneficial ownership by directors (other than Mitchell P. Rales) includes: (i) for each of Messrs. Allender and Gayner and Ms. Jordan, 34,785 DRSUs or DSUs that have vested or will vest within 60 days of |
(8) | Includes 18,010 shares held by a family trust, 6,191 shares held by her spouse and 799 shares held in a trust account for her spouse. |
(9) | Includes 7,447 shares held by a trust. |
(10) | Beneficial ownership by named executive officers and our executive officers as a group includes shares that such individuals have the right to acquire upon the exercise of options that have vested or will vest within 60 days of |
(11) | Includes 3,000 shares held by trusts for his children and 2,312 shares held in his 401(k) account. |
- Meeting Proxy Statement
|
| |||||||
|
14 |
GENERAL MATTERS |
Outstanding Stock and Voting Rights
The Board has fixed the close of business on March 22, 2021January 10, 2022 (the “Record Date”) as the record date for determining the stockholders entitled to notice of, and to vote at, the AnnualSpecial Meeting. Only stockholders of record on that date will be entitled to vote. Proxies will be voted as specified in the stockholder’s proxy. In the absence of specific instructions, proxies will be voted in accordance with the Company’s recommendations and in the discretion of the proxy holders onrecommendations. On any other matter which properly comes before the meetingSpecial Meeting or any adjournment or postponement thereof.thereof, the proxies will be voted in the discretion of the proxy holders. The Board has selected Mitchell P. Rales and Matthew L. Trerotola to act as proxies with full power of substitution.
Any stockholder of record giving a proxy has the power to revoke the proxy at any time before it is exercised by either (i) delivering a written notice of revocation to Colfax Corporation at 420 National Business Parkway, 5th Floor, Annapolis Junction, Maryland 20701,2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, Attn: Corporate Secretary, (ii) delivering prior to the AnnualSpecial Meeting a properly executed and subsequently dated proxy, or (iii) virtually attending and voting at the AnnualSpecial Meeting. Attendance at the AnnualSpecial Meeting will not cause your previously granted proxy to be revoked unless you specifically so request.request or unless you vote at the Special Meeting. A beneficial stockholder who owns common stock in street name, meaning through a bank, broker or other nominee, should contact that entity to revoke a previously given proxy.
The Company will bear the total expense of this solicitation, including reimbursement paid to brokerage firms and others for their expenses in forwarding material regarding the AnnualSpecial Meeting to beneficial owners. Solicitation of proxies may be made personally or by mail, telephone, Internet, e-mail or facsimile by officers and other management employees of the Company, who will receive no additional compensation for their services.
The holders of shares of the Company’s common stock as of the Record Date are entitled to vote at the AnnualSpecial Meeting. As of the Record Date, 135,252,369156,263,657 shares of the Company’s common stock were outstanding. Each outstanding share of the Company’s common stock entitles the holder to one vote on all matters brought before the AnnualSpecial Meeting.
A list of stockholders of record as of the Record Date will be available for inspection during ordinary business hours at our corporate headquarters located at 420 National Business Parkway, 5th Floor, Annapolis Junction, Maryland 20701,2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, for 10 days prior to the date of our AnnualSpecial Meeting. The list will also be available for inspection at the Annual Meeting.
Special Meeting at www.virtualshareholdermeeting.com/CFX2022SM.
The quorum necessary to conduct business at the AnnualSpecial Meeting consists of the holders of a majority of the shares of the Company’s stock outstanding on the Record Date and entitled to vote at the AnnualSpecial Meeting, either present in person or represented by proxy. Abstentions and broker non-votes (described below) are not counted for purposes of determining the presence or absence of a quorum. In accordance with the Company’s Amended and Restated Bylaws (the “Bylaws”), to be elected each director nominee must receive a majority of the votes cast with respect to that director’s election. Incumbent directors nominated for election by the Board are required, as a condition to such nomination, to submit a conditional letter of resignation to the Chairman of the Board. In the event that a nominee for director does not receive a majority of the votes cast at the Annual Meeting with respect to his or her election, the Board will promptly consider whether to accept or reject the conditional resignation of that nominee, or whether other action should be taken. The Board will then take action and will publicly disclose its decision and the rationale behind it no later than 90 days following the certification of election results.
The affirmative vote of the holders of a majority of the outstanding shares of our common stock is required to approve the Reverse Stock Split Proposal.
The affirmative vote of the holders of a majority of the outstanding shares of our common stock present in person or represented by proxy at the AnnualSpecial Meeting and entitled to vote is required for ratification ofto approve the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021 and for approval of the advisory vote approving the compensation of our named executive officers.
Adjournment Proposal.
Abstentions will have no effect on the election of directors but will have the same effect as a vote against ratification of the appointment of Ernst & Young LLP and approval of the advisory vote approvingReverse Stock Split Proposal and the compensation of our named executive officers.
Adjournment Proposal. Under the rules of the New York Stock Exchange (the “NYSE”), brokerage firms may vote in their discretion on behalf of clients who have not furnished voting instructions on the ratificationNYSE, each of the selection of our registered public accounting firm. In contrast, the remaining proposals are “non-routine” items.is a “routine” item. This means that brokerage firms that have not received voting instructions from their clients may notwill have discretionary voting power to vote on these proposals, (a “broker non-vote”so we do not anticipate any brokerage firms failing to vote because they have not received voting instructions from their clients (“broker non-votes”). Broker non-votes will not be considered in determining the number of votes necessary for election and, therefore, will have no effect on the outcome of the vote for the election of directors. Further, broker non-votes will have no effect on the advisory vote to approve the compensation of our named executive officers.
Only stockholders as of the Record Date are entitled to attend the AnnualSpecial Meeting. To attend the AnnualSpecial Meeting, stockholders of record must go to the meeting website at www.virtualshareholdermeeting.com/CFX2021CFX2022SM and enter the 16-digit control number found on the proxy card or the Notice previously received. If you are a beneficial stockholder who owns common stock in street name, meaning through a bank, broker or other nominee, and your voting instruction form or Notice indicates that you may vote those shares through the http://www.proxyvote. comwww.proxyvote.com website, then you may attend the AnnualSpecial Meeting using the 16-digit control number indicated on that voting instruction form or Notice. Otherwise, stockholders who hold their shares in street name should contact their bank, broker or other nominee (preferably at least five days before the Annual Meeting) and obtain a “legal proxy” in order to be able to attend the AnnualSpecial Meeting. Once admitted, during the AnnualSpecial Meeting, stockholders may vote, submit questions and view the list of stockholders entitled to vote at the AnnualSpecial Meeting by following the instructions available on the meeting website.
- Meeting Proxy Statement
|
| |||||||
|
15 |
Stockholder Proposals and Nominations
Requirements for Stockholder Proposals to be Considered for Inclusion in our Proxy Materials. To be considered for inclusion in next year’s proxy statement pursuant to Rule 14a-8 of the Exchange Act, stockholder proposals must be received by our Corporate Secretary at our principal executive offices no later than the close of business on December 2, 2021.
Requirements for Stockholder Proposals to be Brought Before an Annual Meeting. Our Bylaws provide that, for a stockholder to nominate a candidate for election to the Board or propose any other business to be considered at an annual meeting other than through a proposal presented pursuant to Rule 14a-8 of the Exchange Act, the stockholder must have given timely notice thereof in writing to the Secretary of the Company at Colfax Corporation, 420 National Business Parkway, 5th Floor, Annapolis Junction, Maryland 20701,2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, Attn: Corporate Secretary. To be timely for an annual meeting, the stockholder’s notice must be delivered to or mailed and received by the Secretary not less than the close of business 90 days nor more than 120 days before the anniversary date of the preceding annual meeting; accordingly, for the 2022 annual meeting, notice must be delivered to or mailed and received by the Secretary no later than the close of business on February 11, 2022 and no earlier than January 12, 2022. However, if the annual meeting is set for a date that is more than 30 days before or more than 70 days after such anniversary, the Company must receive the notice not earlier than the 120th day prior to the annual meeting date and not later than the close of business on the later of the 90th day prior to such annual meeting or the tenth day following the day when the Company makes a public announcement of the annual meeting date. Such notice must provide the information required by Section 2.2 of our Bylaws with respect to each matter, other than stockholder nominations of directors, that the stockholder proposes to bring before the annual meeting. Notice of stockholder nominations must provide the information required by Section 3.3 of our Bylaws. Both Section 2.2 and Section 3.3 of our Bylaws mandate certain additional information to be provided by a stockholder who wishes to introduce business or nominate a director candidate. The chairman of the annual meeting may refuse to acknowledge or introduce any nomination or proposal if notice thereof is not received within the applicable deadlines or does not otherwise comply with our Bylaws. If the stockholder seeking to make a nomination or propose business pursuant to the advance notice provision of our Bylaws does not provide notice of a nomination or proposal within the applicable deadlines or does not comply with the requirements of Rule 14a-4(c) under the Exchange Act, we may exercise discretionary voting authority under proxies that we solicit to vote in accordance with our best judgment on any such nomination or proposal.
Delivery of Documents to Stockholders Sharing an Address
SEC rules permit the delivery of a single copy of a company’s annual report and proxy statement, or notice of internet availability of proxy materials, as applicable, to any household at which two or more stockholders reside if they appear to be members of the same family. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces mailing and printing expenses.
The broker, bank or other nominee for any stockholder who is a beneficial owner of the Company’s stock may deliver only one copy of the Company’s Annual Report to Stockholders and Proxy Statement or the Company’s Notice, as applicable, to multiple stockholders who share the same address, unless that broker, bank or other nominee has received contrary instructions from one or more of the stockholders. We will deliver promptly, upon written or oral request, a separate copy of the Company’s Annual Report to Stockholders and Proxy Statement or the Company’s Notice, as applicable, to any stockholder at a shared address to which a single copy of the documents was delivered. A stockholder who wishes to receive a separate copy of the Company’s Annual Report to Stockholders and Proxy Statement or the Company’s Notice, as applicable, now or in the future, should submit a written request to Investor Relations, Colfax Corporation, 420 National Business Parkway, 5th Floor, Annapolis Junction, Maryland 207012711 Centerville Road, Suite 400, Wilmington, Delaware 19808 or call (301) 323-9000(302) 252-9160 and ask for Investor Relations. Beneficial owners sharing an address who are receiving multiple copies of the Company’s Annual Report to Stockholders and Proxy Statement, or the Company’s Notice, as applicable, and wish to receive a single copy of such materials in the future will need to contact their broker, bank or other nominee to request that only a single copy of each document be mailed to all stockholders at the shared address in the future.
|
| |
Additional InformationOther Matters
A copyOur principal executive office is located at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. Our telephone number is (302) 252-9160 and our website is located at www.colfaxcorp.com. Our common stock trades on the NYSE under the symbol “CFX.” Upon our name change to Enovis Corporation following completion of the Company’s Annual ReportSpin-off, we will change our ticker symbol to Stockholders for the fiscal year ended December 31, 2020 has been made available concurrently with this Proxy Statement to all stockholders entitled to notice of and to vote at the Annual Meeting. The Annual Report is not incorporated into this Proxy Statement and is not considered proxy-soliciting material.“ENOV.”
The Company filed its Annual Report on Form 10-K with the SEC on February 18, 2021. The Company will mail without charge, upon written request, a copy of its Annual Report on Form 10-K for the fiscal year ended December 31, 2020, including financial statements but excluding exhibits. Exhibits, if requested, will be furnished upon the payment of a fee determined by the Company, such fee to be limited to the Company’s reasonable expenses in furnishing the requested exhibit or exhibits. Please send a written request to Investor Relations, Colfax Corporation, 420 National Business Parkway, 5th Floor, Annapolis Junction, Maryland 20701, or access these materials on the Company’s website at www.colfaxcorp.com on the Investors page.
As of the date of this Proxy Statement, the Board does not intend to present anyNo matters, other than those described hereinthe Reverse Stock Split Proposal and the Adjournment Proposal, will be presented for action at the Annual Meeting and is unaware of any matters to be presented by other parties. If other matters are properly brought before the meeting for action by the stockholders, proxies returned to us will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holder.
Special Meeting.
By Order of the Board of Directors
Bradley J. Tandy
Secretary
- Meeting Proxy Statement
|
| |||||||
|
16 |
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
COLFAX CORPORATION
Colfax Corporation (the “Corporation”), a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify as follows:
FIRST: The Amended and Restated Certificate of Incorporation of the Corporation is hereby amended by deleting Article 1 in its entirety and inserting the following in lieu thereof:
Article 1. NAME
The name of this corporation is Enovis Corporation.
SECOND: The Amended and Restated Certificate of Incorporation of the Corporation is hereby amended by deleting Section 4.1 of Article 4 in its entirety and inserting the following in lieu thereof:
“4.1. Authorized Shares
The total number of shares of all classes of stock that the Corporation shall have the authority to issue is [Amendment A: 220,000,000; Amendment B: 153,333,333; Amendment C: 120,000,000] of which [Amendment A: 200,000,000; Amendment B: 133,333,333; Amendment C: 100,000,000] of such shares shall be Common Stock having a par value of $.001 per share (the “Common Stock”), and 20,000,000 of such shares shall be Preferred Stock, having a par value of $.001 per share (the “Preferred Stock”).
Upon the filing and effectiveness (the “Effective Time”) of this Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Corporation, each [Amendment A: two; Amendment B: three; Amendment C: four] shares of the Corporation’s common stock, par value $0.001 per share (“Common Stock”), issued and outstanding immediately prior to the Effective Time shall automatically be reclassified and combined into one validly issued, fully paid and non-assessable share of Common Stock without any further action by the Corporation or the holder thereof (the “Reverse Stock Split”). Notwithstanding the prior sentence, no fractional shares shall be issued at the Effective Time as a result of the Reverse Stock Split and, in lieu thereof, the Corporation’s transfer agent shall aggregate all fractional shares remaining after the Reverse Stock Split and sell them as soon as practicable after the Effective Time at the then-prevailing prices on the open market, on behalf of those stockholders who would otherwise be entitled to receive a fractional share, and after the transfer agent’s completion of such sale, stockholders shall receive a cash payment (without interest or deduction) from the transfer agent in an amount equal to their respective pro rata share of the total net proceeds of that sale. Each stock certificate that,
- 2022 Special Meeting Proxy Statement | A-1 |
immediately prior to the Effective Time, represented shares of Common Stock that were issued and outstanding immediately prior to the Effective Time shall, from and after the Effective Time, automatically and without the necessity of presenting the same for exchange, represent that the number of whole shares of Common Stock after the Effective Time into which the shares of Common Stock formerly represented by such certificate shall have been reclassified in the Reverse Stock Split, provided, however, that each person of record holding a certificate that represented shares of Common Stock that were issued and outstanding immediately prior to the Effective Time shall receive, upon surrender of such certificate, a new certificate evidencing and representing the number of whole shares of Common Stock after the Effective Time into which the shares of Common Stock formerly represented by such certificate shall have been reclassified in the Reverse Stock Split.”
THIRD: This Amendment shall become effective as of [⚫], 2022 at [⚫] [a.m./p.m.]
FOURTH: This Amendment was duly adopted in accordance with Section 242 of the DGCL.
* * *
- 2022 Special Meeting Proxy Statement | A-2 |
SCAN TO COLFAX CORPORATION VIEW MATERIALS & VOTE w 2711 CENTERVILLE ROAD SUITE 400 WILMINGTON, DE 19808 VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on February 27, 2022. 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. During The Meeting - Go to www.virtualshareholdermeeting.com/CFX2022SM You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on February 27, 2022. 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. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D65075-S37863-Z81627 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY COLFAX CORPORATION Company Proposals The Board of Directors recommends you vote FOR proposals 1 and 2. For Against Abstain 1. To approve and adopt an amendment to our Amended and Restated Certificate of Incorporation to effect (a) a reverse stock split of our common stock at one of three reverse stock split ratios, one-for-two, one-for-three and one-for-four, with an exact ratio to be determined by our Board at a later date, ! ! ! and (b) a corresponding reduction in the number of authorized shares of our common stock by the selected reverse stock split ratio. 2. To approve one or more adjournments of the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the ! ! ! reverse stock split proposal at the Special Meeting or any adjournment(s) thereof. NOTE: The undersigned authorizes the proxies to vote according to their discretion on such other business as may properly come before the meeting or any adjournment or postponement thereof. Yes No Please indicate if you plan to attend the virtual meeting. ! ! 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 Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting:
The Notice and Proxy Statement are available at www.proxyvote.com.
D65076-S37863-Z81627
COLFAX CORPORATION
Special Meeting of Stockholders
February 28, 2022, 9:00 a.m. Eastern Time
This proxy is solicited by the Board of Directors
Mitchell P. Rales and Matthew L. Trerotola, or either of them, each with the full power of substitution, are hereby authorized to represent and to vote all of the shares of COLFAX CORPORATION common stock which the undersigned is entitled to vote at the Special Meeting of Stockholders of COLFAX CORPORATION to be held virtually at 9:00 a.m., Eastern Time, on Monday, February 28, 2022 at www.virtualshareholdermeeting.com/CFX2022SM, and at any adjournment or postponement of the meeting.
The above named proxies will vote the shares represented hereby as directed on the other side of this card, and if no such direction is made, the above named proxies will vote “FOR” Proposals 1 and 2. The above named proxies may vote according to their discretion on any other matter which may properly come before the meeting or any adjournment or postponement thereof. The undersigned may revoke this proxy prior to its exercise.
Please fill the appropriate boxes, sign and date on the other side of this card.