UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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¨ Soliciting Material Pursuant to §240.14a‑11(c) or §240.14a‑2
Establishment Labs Holdings Inc.
(Name of Registrant as Specified In Its Charter)
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ESTABLISHMENT LABS HOLDINGS INC.
BUILDING B15 AND 25
COYOL FREE ZONE
ALAJUELA, COSTA RICA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held at 8:1:00 a.m.p.m. Eastern Time on Tuesday, May 25, 2021Friday, June 17, 2022
Dear Shareholders of Establishment Labs Holdings Inc.:
We cordially invite you to attend the 20212022 annual meeting of shareholders (the “Annual Meeting”) of Establishment Labs Holdings Inc. (“Establishment Labs”, “we” or “us”), incorporated in the British Virgin Islands, to be held on May 25, 2021June 17, 2022 at 8:1:00 a.m.p.m. Eastern Time, virtually by visitingvia live audio webcast at www.virtualshareholdermeeting.com/ESTA2021ESTA2022, where you will be able to listen to the meeting live, submit questions and vote online. You will be asked to enter the 16-digit control number located on your Notice of Internet Availability of Proxy Materials, proxy card.card or voting instruction form, as applicable.
We are holding the Annual Meeting for the following purposes, as more fully described in the accompanying proxy statement:
1. To elect onethe three Class III directorI directors named in the accompanying proxy statement to serve for a three-year term;
2. To ratify the appointment of Marcum LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2021;2022;
3. To approve, on an advisory basis, the compensation of our named executive officers;
4. To approve, on an advisory basis, the frequency of future advisory votes on named executive officer compensation; and
5. To transact such other business as may properly come before the Annual Meeting or any adjournmentspostponements or postponementsadjournments thereof.
The Establishment Labs board of directors (the “Board”) has fixed the close of business on April 5, 202128, 2022 as the record date for the Annual Meeting. Only shareholders of record on April 5, 202128, 2022 are entitled to notice of, and to vote at, the Annual Meeting. Further information regarding voting rights and the matters to be voted upon at the Annual Meeting is presented in the accompanying proxy statement.
The accompanying proxy statement and our annual report can be accessed by visiting: www.proxyvote.com. You will be asked to enter the 16-digit control number located on your proxy card.
YOUR VOTE IS IMPORTANT. We urge you to submit your vote via the Internet, telephone or mail as soon as possible to ensure your shares are represented. For additional instructions on voting by telephone or the Internet, please refer to your Notice of Internet Availability of Proxy Materials, proxy card.card or voting instruction. Returning the proxy or voting instructions does not deprive you of your right to virtually attend the Annual Meeting and to vote your shares during the Annual Meeting.
We appreciate your continued support of Establishment Labs.
By order of the Board,
/s/ Juan José Chacón Quirós
Juan José Chacón Quirós
Board Member and Chief Executive Officer
Alajuela, Costa Rica
April 14, 202129, 2022
TABLE OF CONTENTS
| | | | | |
| Page |
| QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING | |
PROPOSAL 1—ELECTION OF DIRECTORDIRECTORS | |
| CORPORATE GOVERNANCE | |
| COMMITTEES OF THE BOARD | |
| NON-EMPLOYEE DIRECTOR COMPENSATION | |
CERTAIN RELATIONSHIPRELATIONSHIPS AND RELATED PARTY TRANSACTIONS | |
PROPOSAL 2—RATIFICATION OF SELECTIONAPPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | |
| REPORT OF THE AUDIT COMMITTEE | |
| SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | |
| EXECUTIVE OFFICERS | |
| EXECUTIVE COMPENSATION | |
REPORTPROPOSAL 3—ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION | |
PROPOSAL 4—ADVISORY APPROVAL OF THE FREQUENCY OF EXECUTIVE COMPENSATION COMMITTEEADVISORY VOTES | |
| EQUITY COMPENSATION PLAN INFORMATION | |
| OTHER MATTERS | |
ESTABLISHMENT LABS HOLDINGS INC.
PROXY STATEMENT
FOR 20212022 ANNUAL MEETING OF SHAREHOLDERS
To Be Held at 8:1:00 a.m.p.m. Eastern Time on Tuesday, May 25, 2021Friday, June 17, 2022
This proxy statement and the enclosed form of proxy areis being furnished in connection with the solicitation of proxies by our Board for use at the 20212022 Annual Meeting of Shareholders (the "Annual Meeting") of Establishment Labs Holdings Inc., incorporated in the British Virgin Islands, and any postponements adjournments or continuationsadjournments thereof. The Annual Meeting will be held on Tuesday, May 25, 2021Friday, June 17, 2022 at 8:1:00 a.m.p.m. Eastern Time, virtually by visitingvia live audio webcast at www.virtualshareholdermeeting.com/ESTA2021ESTA2022, where you will be able to listen to the meeting live, submit questions and vote online. The Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access this proxy statement and our annual report is first being mailed on or about April 14, 2021 to all shareholders entitled to vote at the Annual Meeting. The proxy materials and our 2020 annual report can be accessed by following the instructions in the Notice.
The information provided in the “questionunder "Questions and answer” formatAnswers About These Proxy Materials and Voting" below is for your convenience only and is merely a summary of the information contained in this proxy statement.only. You should read this entire proxy statement carefully. Information contained on, or that can be accessed through, our website is not intended to be incorporated by reference into this proxy statement and references to our website address in this proxy statement are inactive textual references only.
What matters am I voting on?
You will be voting on:
•the election of one Class III director to serve for a three-year term;
•a proposal to ratify the appointmentImportant Notice Regarding Internet Availability of Marcum LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2021; and
•any other business as may properly come before the Annual Meeting.
How does the Board recommend I vote on these proposals?
Our Board recommends a vote:
•“FOR” the election of the nominee for director named in this proxy statement; and
•“FOR” the ratification of the appointment of Marcum LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2021.
Q: When is the Annual Meeting and where will it be held?
A: The Annual Meeting will be held on Tuesday, May 25, 2021 at 8:00 a.m. Eastern Time, virtually by visiting www.virtualshareholdermeeting.com/ESTA2021, where you will be able to listen to the meting live, submit questions and vote online.
Q: Why did you send me this proxy statement?
A: We sent you this proxy statement and the enclosed proxy card because the Board is soliciting your proxy on behalf of Establishment Labs to vote your shares at the Annual Meeting. This proxy statement summarizes information that we are required to provide to you under the rules of the United States Securities and Exchange Commission (the "SEC") and which is designed to assist you in voting.
1Proxy Materials
This proxy statement and our annual report can be accessed by visiting: www.proxyvote.com. These materials are also available in the Investors section of our website at https://establishmentlabs.com.
Questions and Answers About These Proxy Materials and Voting
Q: Why did I receive a Notice of Internet Availability of Proxy Materials instead of a full set of proxy materials?
A: In accordance with the rules of the SEC,Securities and Exchange Commission (the “SEC”), we have elected to furnish our proxy materials, including this proxy statement and our annual report, primarily via the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our shareholders of record, while brokers, banks and other nominees who hold shares on behalf of beneficial owners will be sending their own similar Notice to the beneficial owners. All shareholders will have the ability to access the proxy materials, including this proxy statement and our annual report, on the website referred to in the Notice or to request to receive a printed copy of the proxy materials. The Notice containing instructions on how to access our proxy materials is first being mailed on or about April 14, 2021May 6, 2022 to all shareholders entitled to vote at the Annual Meeting. Shareholders may request to receive all future proxy materials in printed form by mail or electronically by e-mail by following the instructions contained in the Notice. We encourage shareholders to take advantage of the availability of our proxy materials on the Internet to help reduce the environmental impact and cost of our annual meetings of shareholders.
Q: What matters am I voting on?
A: You will be voting on:
•the election of three Class I directors to serve for a three-year term;
•ratification of the appointment of Marcum LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2022;
•approval, on an advisory basis, of the compensation of our named executive officers;
•approval, on an advisory basis, of the frequency of future advisory votes on named executive officer compensation; and
•any other business as may properly come before the Annual Meeting.
Q: How dodoes the Board recommend I vote?vote on these proposals?
A: If you areOur Board recommends a shareholder of record, there are four ways to vote:
•by Internet“FOR” the election of the three Class I nominees for director named in this proxy statement;
•“FOR” the ratification of the appointment of Marcum LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2022;
•“FOR” the compensation of our named executive officers; and
•“1 YEAR” for the frequency of future advisory votes on named executive officer compensation.
Q: When is the Annual Meeting and where will it be held?
A: The Annual Meeting will be held on Friday, June 17, 2022 at www.proxyvote.com, 24 hours a day, seven days a week, until 11:591:00 p.m. Eastern Time, on May 24, 2021 (havevia live audio webcast at www.virtualshareholdermeeting.com/ESTA2022, where you will be able to listen to the meeting live, submit questions and vote online.
Q: Why are you holding a virtual Annual Meeting?
A: We believe a virtual-only meeting format facilitates shareholder attendance and participation by enabling all shareholders to participate fully, equally and without cost, using an Internet-connected device from any location around the world. In addition, the virtual-only meeting format increases our ability to engage with all shareholders, regardless of size, resources or physical location and enables us to protect the health and safety of all attendees. Our shareholders will be afforded the same opportunities to participate at the virtual Annual Meeting as they would at an in-person annual meeting of shareholders.
Q: What do I need to do to attend the Annual Meeting?
A: You will be able to attend the Annual Meeting, submit your Notice or proxy card in hand when you visitquestions during the website);
•by toll-free telephonemeeting and vote your shares electronically at 1-800-690-6903, until 11:59 p.m. Eastern Time on May 24, 2021 (have your Notice or proxy card in hand when you call); or
•by completing and mailing your proxy card (if you received printed proxy materials); or
•by attending the virtual meeting by visiting www.virtualshareholdermeeting.com/ESTA2021ESTA2022, where. To participate in the Annual Meeting, you will need the control number included on your Notice, proxy card or voting instruction form, as applicable. The Annual Meeting webcast will begin promptly at 1:00 p.m. Eastern Time. We encourage you to access the Annual Meeting prior to the start time. Online check-in will begin at 12:45 p.m. Eastern Time, and you should allow ample time for the check-in procedures.
We will have technicians ready to assist you with any technical difficulties you may vote andhave accessing the Annual Meeting. If you encounter any difficulties accessing the virtual-only Annual
Meeting platform, including any difficulties with your control number or submitting questions, you may call the technical support number that will be posted on the Annual Meeting log-in page.
Shareholders will have the opportunity to submit questions during the meeting. Please have your 16-digit control number locatedAnnual Meeting by following the instructions on your proxy card in hand when you visit the website.virtual-only Annual Meeting platform. Following the presentation of all proposals at the Annual Meeting, we will answer as many shareholder-submitted questions as time permits.
Q: Who is entitled to vote?
A: Only holders of record of our common shares at the close of business on April 5, 2021 ("Record28, 2022 (the "Record Date") will be entitled to notice of, and to vote at, the Annual Meeting. As of the close of business on the Record Date, 23,685,98224,197,836 common shares were issued and outstanding. Every shareholder is entitled to one vote for each ordinary share held on the Record Date.
Registered Shareholders. If our common shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered the shareholder of record with respect to those shares, and the Notice or a printed set of the proxy materials was provided to you directly by us. As the shareholder of record, you have the right to grant your voting proxy directly to the individuals listed on the proxy card or to virtually vote live during the Annual Meeting. Throughout this proxy statement, we refer to these registered shareholders as “shareholders of record.”
Street Name Shareholders. If our common shares are held on your behalf inby a brokerage account or by abroker, bank or other nominee, you are considered to be the beneficial owner of shares that are held in “street name,” and the Notice or a printed set of the proxy materials was forwarded to you by your broker or nominee, who is considered the shareholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank or other nominee as to how to vote your shares.
Q: How do I vote?
A: If you are a shareholder of record, there are four ways to vote:
•by Internet at www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. Eastern Time on June 16, 2022 (have your Notice or proxy card in hand when you visit the website);
•by toll-free telephone at 1-800-690-6903, until 11:59 p.m. Eastern Time on June 16, 2022 (have your Notice or proxy card in hand when you call); or
•by completing the enclosed proxy card and returning it in the pre-addressed, postage paid envelope provided to you (if you received printed proxy materials); or
•by attending the virtual meeting by visiting www.virtualshareholdermeeting.com/ESTA2022, where you may vote and submit questions during the meeting. Please have your control number located on your proxy card or Notice in hand when you visit the website.
If you hold your shares in street name through a broker, bank or other nominee, you will receive instructions from your broker, bank or other nominee on how to vote your shares. Your broker, bank or other nominee will allow you to deliver your voting instructions over the Internet and may also permit you to vote by telephone. In addition, if you received a printed copy of this proxy statement, you may submit your voting instructions by completing, dating and signing the voting instruction form that was included with this
proxy statement and promptly returning it in the pre-addressed, postage paid envelope provided to you.
Q: How may my brokerage firm or other intermediary vote my shares if I fail to provide timely directions?
A: Brokerage firms and other intermediaries holding common shares in street name for their customers are generally required to vote such shares in the manner directed by their customers. In the absence of timely directions,If you hold your shares in street name through a brokerage firm and do not submit voting instructions to your broker, your broker will have discretion to vote your shares on our sole “routine” matter:routine matters. However, a broker cannot vote shares held in street name on non-routine matters unless the proposal to ratifybroker receives voting instructions from the shareholder. Proposal 2 (ratification of the appointment of Marcum LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2021. Your2022) is a routine matter, while each of Proposal 1 (election of directors), Proposal 3 (advisory approval of named executive officer compensation) and Proposal 4 (advisory approval of the frequency of future advisory votes on named executive officer compensation) is considered non-routine. Accordingly, if you hold your shares in street name and you do not submit voting instructions to your broker, your broker may exercise its discretion to vote your shares on Proposal 2, but will not be permitted to vote your shares on any of the other items at the Annual Meeting. If your broker exercises this discretion, your shares will be counted as present and entitled to vote for determining the presence of a quorum at the Annual Meeting and will be voted on Proposal 2 in the manner directed by your broker, but your shares will constitute “broker non-votes” for each of Proposals 1, 3 and 4.
Q: How will voting on any other business be conducted?
A: We are not aware of any business to be brought before the shareholders at the Annual Meeting other than as described in this proxy statement. However, if any other business is properly presented for shareholder consideration, your signed proxy card gives authority to Juan José Chacón Quirós and Rajbir S. Denhoy to vote on those matters at his or her discretion.
Q: What constitutes a quorum?
A: Shareholders may not take action during the Annual Meeting unless there is a quorum present at the meeting. A meeting of shareholders is duly constituted, and a quorum is present, if, at the commencement of the meeting, there are present in person or by proxy not less than 50% of the votes of the shares entitled to vote on resolutions of shareholders to be considered at the meeting. Abstentions and broker non-votes (as described above) will be included in the calculation of the number of shares considered to be present at the meeting for quorum purposes.
Q: How many votes are needed for approval of each proposal presented in this proxy statement?
A: Assuming a quorum is present at the Annual Meeting:
Proposal 1: Directors shall be elected by the affirmative vote of a simple majority of the votes of those shareholders entitled to vote and voting on the election of such nominee (meaning the number of shares voted "for" a nominee must exceed the number of shares voted "against" such nominee). Abstentions and broker non-votes are not considered votes cast for the foregoing purpose, and will have no effect on the election of director nominees.
Proposals 2, 3 and 4: Approval of each of Proposal 2 (ratification of the appointment of Marcum LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2022), Proposal 3 (advisory approval of named executive officer compensation) and Proposal 4 (advisory approval of the frequency of future advisory votes on named executive officer
not have discretioncompensation) requires the affirmative vote of a simple majority of the votes of those shareholders entitled to vote and voting on the proposal (meaning the number of shares voted "for" the proposal must exceed the number of shares voted "against" the proposal). Abstentions and broker non-votes will have no impact on the outcome of these proposals and no broker non-votes are expected on Proposal 2.
For Proposal 4 (advisory approval of the frequency of future advisory votes on named executive officer compensation), shareholders are not voting to approve or disapprove the recommendation of the Board; instead, shareholders are selecting one of the frequency alternatives (every 1 year, every 2 years or every 3 years).
Notwithstanding the vote standard required by our amended and restated memorandum and articles of association, Proposals 2, 3 and 4 are only advisory votes and are not binding on us. Our Board of Directors will consider the outcome of the vote on each of these proposals in considering what action, if any, should be taken in response to the advisory vote by shareholders. With respect to Proposal 4, if no frequency option receives the affirmative vote of a simple majority of the votes cast at the Annual Meeting, our Board will consider the option receiving the highest number of votes cast as the preferred frequency option of our shareholders.
Q: Can I change my vote?
A: Yes. If you are a shareholder of record, you can change your vote or revoke your proxy by:
•entering a new vote by Internet or by telephone until 11:59 p.m. Eastern Time on June 16, 2022;
•completing and returning a later-dated proxy card at any time before the Annual Meeting;
•notifying Neeta Toprani, General Counsel and Corporate Secretary, in writing at Building B25, Coyol Free Zone, Alajuela 20113, Costa Rica at any time before the Annual Meeting; and
•by virtually attending and voting at the Annual Meeting.
If you are a street name shareholder, your broker, bank or other proposals, whichnominee can provide you with instructions on how to change your vote.
Q: How are “non-routine”my shares voted if I submit a proxy but do not specify how I want to vote?
A: If you are a shareholder of record and you submit a properly executed proxy card or complete the telephone or Internet voting procedures but do not specify how you want to vote, your shares will be voted: (1) FOR the election of the three Class I nominees for director; (2) FOR the ratification of the appointment of Marcum LLP as our independent registered public accounting firm for 2022; (3) FOR the compensation of our named executive officers, (4) 1 YEAR for the frequency of future advisory votes on named executive officer compensation, and (5) in the discretion of the persons named as proxies on all other matters absent direction from you.that may be brought before the Annual Meeting.
Q: Who will count the vote?
A: A representative of Broadridge Financial Services, Inc., an independent tabulator, will count the vote and act as the inspector of elections.
Q: Who will pay for this proxy solicitation?
A: We will pay all the costs of soliciting these proxies, except for costs associated with individual shareholder use of the Internet and telephone. In addition to mailing proxy solicitation material, our directors and employees may solicit proxies in person, by telephone or by other electronic
means of communication. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to our shareholders.
Q: Where can I find the voting results of the Annual Meeting?
A: We will announce preliminary voting results at the Annual Meeting. We will also disclose voting results on a current report on Form 8-K that we will file with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to file a current report on Form 8-K within four business days after the Annual Meeting, we will file a current report on Form 8-K to publish preliminary results and will provide the final results in an amendment to the current report on Form 8-K as soon as they become available.
Q: I share an address with another shareholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?
A: We have adopted a procedure called “householding,” which the SEC has approved. Under this procedure, we deliver a single copy of the Notice and, if applicable, our proxy materials to multiple shareholders who share the same address, unless we have received contrary instructions from one or more of such shareholders. This procedure reduces our printing costs, mailing costs and fees. Shareholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, we will deliver promptly a separate copy of the Notice and, if applicable, our proxy materials to any shareholder at a shared address to which we delivered a single copy of any of these materials. To receive a separate copy, or, if a shareholder is receiving multiple copies, to request that we only send a single copy of the Notice and, if applicable, our proxy materials, such shareholder may contact via e-mail at ir@establishmentlabs.com or by mail at:
Establishment Labs Holdings Inc.
Attention: Investor Relations
Building B25
Coyol Free Zone
Alajuela 20113, Costa Rica
+506 2434 2400
Street name shareholders may contact their broker, bank or other nominee to request information about householding.
Q: How will voting on any other business be conducted?
A: We are not aware of any businessdo I submit shareholder proposals or director nominations to be brought before the shareholders at the Annual Meeting other than as described in this proxy statement. However, if any other business is properly presented for shareholder consideration, your signed proxy card gives authority to Juan José Chacón Quirós and Renee M. Gaeta to vote on those matters at his or her discretion.
Q: What constitutes a quorum?
A: Shareholders may not take action during the Annual Meeting unless there is a quorum present at the meeting. A2023 annual meeting of shareholders is duly constituted, and a quorum is present, if, at the commencement of the meeting, there are present in person or by proxy not less than 50% of the votes of the shares entitled to vote on resolutions of shareholders to be considered at the meeting. Abstentions and broker non-votes (as described below) will be included in the calculation of the number of shares considered to be present at the meeting for quorum purposes.
Q: How many votes are needed for approval of each proposal presented in this proxy statement?
A: Assuming that at least a majority of the common shares of Establishment Labs are represented at the Annual Meeting, either in person or by proxy:
Proposal No. 1: Director shall be elected by the affirmative vote of a simple majority of the votes of those shareholders entitled to vote and voting on the election (meaning the number of shares voted "for" a nominee must exceed the number of shares voted "against" such nominee). Abstentions and broker non-votes are not considered votes cast for the foregoing purpose, and will have no effect on the election of nominees.
Proposal No. 2: The Audit Committee's appointment of Marcum LLP as Establishment Labs' independent registered public accounting firm for 2021 will be ratified if a majority of the votes cast support the appointment. Your broker or other nominee will be able to vote your shares with respect to this proposal without your instructions because the proposal to ratify the appointment of Marcum LLP is considered "routine." Abstentions have no impact on the outcome of this proposal.
Q: Can I change my vote?
A: Yes. If you are a shareholder of record, you can change your vote or revoke your proxy any time before the Annual Meeting by:
•entering a new vote by Internet or by telephone;
•completing and returning a later-dated proxy card;
•notifying Renee M. Gaeta, Chief Financial Officer, Building B25, Coyol Free Zone, Alajuela 20113, Costa Rica.
If you are a street name shareholder, your broker, bank or other nominee can provide you with instructions on how to change your vote.
Q: How are my shares voted if I submit a proxy but do not specify how I want to vote?
A: If you submit a properly executed proxy card or complete the telephone or Internet voting procedures but do not specify how you want to vote, your shares will be voted: (1) FOR the election of the nominee for director; (2) FOR the ratification of the appointment of Marcum LLP as Establishment Labs' independent registered public accounting firm for 2021; and (3) in the discretion of the persons named as proxies on all other matters that may be brought before the meeting.
Q: Who will count the vote?
A: A representative of Broadridge Financial Services, Inc., an independent tabulator, will count the vote and act as the inspector of elections.
Q: Who will pay for this proxy solicitation?
A: We will pay all the costs of soliciting these proxies, except for costs associated with individual shareholder use of the Internet and telephone. In addition to mailing proxy solicitation material, our directors and employees may solicit proxies in person, by telephone or by other electronic means of communication. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to our shareholders.
Q: Who is entitled to attend the Annual Meeting?
A: Virtual attendance at the Annual Meeting will be limited to our shareholders as of the Record Date. If you are not the record holder of your shares, to attend the Annual Meeting you must first obtain a legal proxy form from your broker or other organization that holds your shares. Please contact your broker or organization for instructions regarding obtaining a legal proxy.
Q: What do I need to do to attend the Annual Meeting?
A: You will be able to attend the Annual Meeting, submit your questions during the meeting and vote your shares electronically at the meeting by visiting www.virtualshareholdermeeting.com/ESTA2021. To participate in the Annual Meeting, you will need the control number included on your Notice or proxy card. The Annual Meeting webcast will begin promptly at 8:00 a.m. Eastern Time. We encourage you to access the meeting prior to the start time. Online check-in will begin at 7:45 a.m. Eastern Time, and you should allow ample time for the check-in procedures.
Q: How do I submit shareholder proposals to be brought before the Annual Meeting or future annual meetings?shareholders?
A: Our amended and restated memorandum and articles of association provide that, for nominations of persons for election to our Board or other proposals to be considered at an annual meeting of shareholders, a shareholder must give written notice to Renee M. Gaeta, Chief Financial Officer,our Corporate Secretary, at Establishment Labs Holdings Inc., Building B25, Coyol Free Zone, Alajuela 20113, Costa Rica, not later than the close of business on theMarch 19, 2023 (the ninetieth (90th) day prior to the one-year anniversary of this year’s Annual Meeting) nor earlier than theFebruary 17, 2023 (the close of business on the one hundred twentieth (120th) day prior to the one-year anniversary of the precedingthis year’s annual meeting.Annual Meeting). However, our amended and restated memorandum and articles of association also provide that in the event the date of the 2023 annual meeting of shareholders is more than thirty (30) days before or more than sixty (60) days after such anniversary date, or if no annual meeting were held in the preceding year, notice must be received by Renee M. Gaeta,our Corporate Secretary, not later than the close of business on the later of the ninetieth (90th) day prior to the scheduled date
of such 2023 annual meeting of shareholders or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. Any nomination must include all information relating to the nominee that is required to be disclosed in solicitations of proxies for election of directors in election contests or is otherwise required under Regulation 14A under the Securities Exchange Act of 1934, as amended, or the Exchange Act, the person's written consent to be named in the proxy statement and to serve as a director if elected, and such information as we might reasonably require to determine the eligibility of the person to serve as a director. As to other business, the notice must include a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest of such shareholder (and the beneficial owner) in the proposal. The proposal must be a proper subject for shareholder action. In addition, to make a nomination or proposal of other business to be considered at the 2023 annual meeting of shareholders, the shareholder must be a shareholder of record at the time the notice is made and must provide certain information regarding itself (and the beneficial owner), including the name and address, as they appear on our books, of the shareholder proposing such business, the number of our shares which are, directly or indirectly, owned beneficially or of record by the shareholder proposing such business or its affiliates or associates (as defined in Rule 12b-2 promulgated under theSecurities Exchange Act)Act of 1934, as amended (the “Exchange Act”)) and certain additional information.information as set forth in our amended and restated memorandum and articles of association.
In addition, a shareholder who intends to solicit proxies in support of director nominees other than the Company’s nominees at the 2023 annual meeting of shareholders must provide written notice to our Corporate Secretary setting forth the information required by Rule 14a-19 under the Exchange Act, unless the required information has been provided in a preliminary or definitive proxy statement previously filed by the shareholders. Such written notice must be provided in accordance with Rule 14a-19 no later than April 18, 2023 (i.e., 60 calendar days before June 17, 2023, the anniversary of this year’s Annual Meeting). If we change the date of the 2023 annual meeting of shareholders by more than 30 days from the date of this year’s Annual Meeting, your written notice must be received by the later of 60 days prior to the date of the 2023 annual meeting of shareholders or the 10th calendar day following the day on which public announcement of the date of the 2023 annual meeting is first made. The notice requirement under Rule 14a-19 is in addition to the applicable notice requirements under our amended and restated memorandum and articles of association as noted above.
Availability of Amended and Restated Memorandum of Association and Articles of Association
A copy of our amended and restated memorandum of association and articles of association is available via the SEC’s website at http://www.sec.gov. You may also contact Renee M. Gaeta, our Chief Financial Officer,Corporate Secretary, at the address set forth above, or the registered agent of the company
at Overseas Management Company Trust (B.V.I.) Ltd. of OMC Chambers, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands for a copy of the relevant articles provisions regarding the requirements for making shareholder proposals and nominating director candidates
Q: How may a shareholder nominate a candidate for election to the Board during the Annual Meeting?
A: The advance notice requirements for the Annual Meeting described above apply to director nominations for the Annual Meeting. Director nominees for the Annual Meeting may be nominated by shareholders by sending a written notice to the corporate office to the attention of Renee M. Gaeta, the Chief Financial Officer for Establishment Labs. Pursuant to our amended and restated memorandum and articles of association, all nominations must be received no later than 90 days prior to the Annual Meeting or the tenth day following the date of public announcement. The notice of nomination is required to contain certain representations and information about the nominee, which are described in our amended and restated memorandum and articles of association and summarized above.candidates.
Q: When are the shareholder proposals to be included in the proxy materials for the next2023 annual meeting of shareholders due?
A: In addition to the requirements stated above, allAll shareholder proposals to be considered for inclusion in next year's proxy statement pursuant to Rule 14a-8 promulgated under the Exchange Act must be submitted in writing to Renee M. Gaeta,Rajbir S. Denhoy, Chief Financial Officer, at Establishment Labs Holdings Inc., Building B25, Coyol Free Zone, Alajuela 20113, Costa Rica, by December 15, 2021.
Explanatory Note
We are an emerging growth company, as defined in Section 2(a)(19) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), (2) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (3) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
We could be an emerging growth company for up to five years after our initial public offering in July 2018, although circumstances could cause us to lose that status earlier, including if the market value of our common shares held by non-affiliates exceeds $700 million as of the end of the second fiscal quarter in any fiscal year before that time or if we have total annual gross revenues of $1.07 billion (as inflation-adjusted by the SEC from time to time) or more during any fiscal year before that time, in which case we would no longer be an emerging growth company as of the following fiscal year end.January 6, 2023.
PROPOSAL 1: ELECTION OF DIRECTOR
Our business and affairs are managed under the direction of our Board. The number of directors is fixed by our Board, subject to the terms of our amended memorandum and articles of association. Our Board currently consists of sixeight directors, four of whom qualify as "independent" under Nasdaq listing standards. From and after the Annual Meeting, our Board will consist of six directors, four of whom qualify as "independent" under the listing standards of The Nasdaq listing standards. David Hung, M.D. was a Class III director until his resignation from the Board of Directors in February 2021. The resignation was a result of Dr. Hung limiting his public board work in anticipation of the public listing of Nuvation Bio, Inc.'s stock, for which he serves as Chief Executive Officer. The Company is currently searching for a replacement for Dr. Hung.Stock Market LLC (“Nasdaq”).
In accordance with our memorandum and articles of association, our Board is divided into three classes with staggered three-year terms. Only one class of directors will be elected at each annual meeting of our shareholders, with the other classes continuing for the remainder of their respective three-year terms. Our directors are divided among the three classes as follows:
• The Class III director is Lisa Gersh, and her term will expire at the Annual Meeting;
• The Class I directors are Juan José Chacón Quirós, Nicholas Lewin and Edward Schutter, and each of their terms will expire at the annual meeting of shareholders to be held in 2022; andAnnual Meeting;
•The Class II directors are Lisa N. Colleran, and Dennis Condon and Leslie Gillin, and each of their terms will expire at the annual meeting of shareholders to be held in 2023.2023; and
•The Class III directors are Ann Custin and Bryan Slotkin, and each of their terms will expire at the Annual Meeting annual meeting of shareholders to be held in 2024.
Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one third of the directors.
Each director named below is currently a director of Establishment Labs. The ages shown are as of April 14, 2021, the date of this proxy statement. TheEach director nominee has agreed to serve as a director if elected. If the nominee becomes unavailableis unable for election,any reason or unwilling for good cause to serve at the time of the Annual Meeting, the remaining members of the Board will, in their sole discretion and pursuant to authority granted by the Establishment Labs amended memorandum and articles of association, nominate and vote for a replacement director or reduce the authorized numbersize of directors.the Board.
| | Name | Name | | Age | | Class | | Position | | Term Expiring | Name | | Age | | Class | | Position | | Term Expiring |
| Juan José Chacón Quirós | Juan José Chacón Quirós | | 49 | | I | | Chief Executive Officer and Director | | 2022 | Juan José Chacón Quirós | | 50 | | I | | Chief Executive Officer and Director | | 2022 - Nominated for re-election |
| Lisa N. Colleran | Lisa N. Colleran | | 63 | | II | | Director | | 2023 | Lisa N. Colleran | | 64 | | II | | Director | | 2023 |
| Dennis Condon | | Dennis Condon | | 73 | | II | | Director | | 2023 |
| Ann Custin | | Ann Custin | | 62 | | III | | Director | | 2024 |
| Leslie Gillin | | Leslie Gillin | | 52 | | II | | Director | | 2023 |
| Nicholas Lewin | | Nicholas Lewin | | 45 | | I | | Chairman | | 2022 - Nominated for re-election |
| Edward Schutter | Edward Schutter | | 69 | | I | | Director | | 2022 | Edward Schutter | | 70 | | I | | Director | | 2022 - Nominated for re-election |
| Bryan Slotkin | | Bryan Slotkin | | 49 | | III | | Director | | 2024 |
| | Nicholas Lewin | | 43 | | I | | Chairman | | 2022 | |
| Lisa Gersh | | 62 | | III | | Director | | 2021 Nominated for re-election | |
| Dennis Condon | | 72 | | II | | Director | | 2023 | |
NomineeNominees for Election at the 20212022 Annual Meeting - Class III Director (Term Expires in 2024)
Lisa Gersh Director Since 2019
Age 62I Directors
Ms. GershJuan José Chacón QuirósDirector Since 2013
Mr. Chacón Quirós founded Establishment Labs, S.A. in 2004 and has been a director and the Chief Executive Officer of Establishment Labs since its inception in 2013. Mr. Chacón Quirós has been involved in several sectors of the aesthetics industry, including serving for almost a decade as General Manager of an aesthetic medical device distribution business in Latin America, and prior to that as Business Development Manager of a plastic and reconstructive surgery clinic in Costa Rica. He also served as President of the Rugby Federation of Costa Rica from 2009 to 2015. Mr. Chacón Quirós received his Baccalaureate at the Academie de Poitiers (Economics) and attended the University of Massachusetts at Amherst. He holds the MIT Sloan Advanced Certificate for Executives (ACE) in Management, Innovation and Technology and Board Director Diploma from IMD business school in Switzerland. We believe Mr. Chacón Quirós is qualified to serve on our Board due to his service as an executive officer of our company, extensive knowledge of aesthetic medical device company operations, and extensive experience working with companies, regulators and other stakeholders in the aesthetic medical device industry.
Nicholas LewinDirector Since 2015
Mr. Lewin has served on our Board since June 2019. She servedSeptember 2015, and as the Chief Executive OfficerChairman since December 2017. He has been a Managing Partner at Crown Predator Holdings since 2000 and has been a private investor since 2000. He has invested across multiple industries, with a particular focus on companies with innovative technologies and strong intellectual property, including activist situations that require working with management. He has been a director of Alexander Wang (a global fashion brand) from October 2017 to October 2018. Ms. Gersh served as the Chief Executive OfficerHalo Maritime Defense Systems, a privately held provider of Goop, Inc. (a lifestyle publication curated by Gwyneth Paltrow) from 2014 to 2016. Ms. Gersh served as Presidentmaritime security product and Chief Executive Officer of Martha Stewart Living Omnimedia, Inc. (an integrated media and merchandising company) from 2012 to 2013. Prior thereto, she served as President and Chief Operating Officer of Martha Stewart Living Omnimedia, Inc. from 2011 to 2012. Ms. Gershsolutions, since 2007. Mr. Lewin also served as a director of Martha Stewart Living Omnimedia, Inc.Dura Medic, LLC a durable medical equipment provider from 20112006 to 2013 and has served as2018. Mr. Lewin holds a director of Hasbro, Inc. since 2010. Ms. Gersh received a B.A.bachelor’s degree in Political Science from SUNY Binghamton in 1980 and a JD from Rutgers School of Law in 1983.Johns Hopkins University. We believe that Ms. GershMr. Lewin is qualified to serve on theour Board becausedue to his experience as an investor in, and director of, her years of operational and executive leadership experience, her expertise in operatinginnovative companies, that market to women, as well as her experience on corporate boards.including health care companies.
Edward Schutter Director Since 2015
OUR BOARD RECOMMENDS A VOTE Mr. Schutter has served on our Board since September 2015. He was Chief Executive Officer of Arbor Pharmaceuticals from 2010 to 2021. Prior to Arbor, Mr. Schutter served as President of Sciele (Shionogi U.S.) Pharmaceuticals. Prior to Sciele, he served as Vice President of Global Business development at Solvay Pharmaceuticals based in Basel, Switzerland. He has also held several senior management roles at the U.S. subsidiary of Solvay during his twenty years with the organization. He began his pharmaceutical career with Reid-Provident Labs, a small entrepreneurial pharmaceutical company based in Atlanta, GA. Mr. Schutter is a registered pharmacist with a BS degree in Pharmaceutical Sciences from Mercer University, an MBA from Kennesaw State University and has completed graduate studies in International Business at Njienrode University, Amsterdam, Netherlands. He is currently a board member of Terrascend (TER.CN:CNQ), Vitruvias Therapeutics, and Intrance Medical and has been a previous board member of several other public, private and non-profit organizationsFOR
. THE ABOVE DIRECTOR NOMINEE.We believe Mr. Schutter is qualified to serve on our Board due to his experience as a chief executive officer and director in the health care industry.
Continuing Directors
Juan José Chacón QuirósDirector Since 2013
Age 49
Mr. Chacón Quirós founded Establishment Labs, S.A. in 2004 and has been a director and the Chief Executive Officer of Establishment Labs since its inception in 2013. Mr. Chacón Quirós has been involved in several sectors of the aesthetics industry, including serving for almost a decade as General Manager of an aesthetic medical device distribution business in Latin America, and prior to that as Business Development Manager of a plastic and reconstructive surgery clinic in Costa Rica. He also served as President of the Rugby Federation of Costa Rica from 2009 to 2015. Mr. Chacón Quirós received his Baccalaureate at the Academie de Poitiers (Economics) and attended the University of Massachusetts at Amherst. He holds the MIT Sloan Advanced Certificate for Executives (ACE) in Management, Innovation and Technology and Board Director Diploma from IMD business school in Switzerland. We believe Mr. Chacón Quirós is qualified to serve on our Board due to his service as an executive officer of our company, extensive knowledge of aesthetic medical device company operations, and extensive experience working with companies, regulators and other stakeholders in the aesthetic medical device industry.
Lisa N. Colleran Director Since 2015
Age 63
Ms. Colleran has served on our Board since November 2015. She served as Global President of LifeCell Corporation from August 2008 to January 2012 after the company was acquired by Kinetic Concepts, Inc. In January 2012, Ms. Colleran was appointed Chief Executive Officer and Director of LifeCell Corporation, a position she held until April 2013. Ms. Colleran originally joined LifeCell in 2002 as the Vice President of Marketing and Business Development and later served as Senior Vice President of Commercial Operations. Prior to joining LifeCell, Ms. Colleran spent 20 years at Baxter Healthcare Corporation in various sales, marketing, business development and general management roles with international experience. She was appointed Vice President, Marketing for Baxter's U.S. Renal business in 1997 and served in that role until 2001 when she was promoted to Vice President/General Manager of the company's Renal Pharmaceuticals
business. Ms. Colleran has served on the Board of Directors of Rockwell Medical,Tela Bio, Inc. since March 2018April 2020, and hasshe previously served on the Board of Rockwell Medical, Inc. from March 2018 to April 2020, NOVADAQ Technologies Inc. from January 2017 to August 2017 and AxoGen Corporation from July 2018 to October 2018. Ms. Colleran received her Bachelor of Science from Molloy College and an M.B.A. from Loyola University of Chicago. We believe Ms. Colleran is qualified to serve on our Board due to her years of international operational experience, including sales and marketing, surgeon education and new product launches, and her extensive experience at large, growing companies.
Dennis Condon Director Since 2017
Age 72
Mr. Condon has served on our Board since December 2017. He was President and Chief Executive Officer of Merz AetheticsAesthetics (formerly BioForm Medical) from July 2007 to January 2013. From March 2006 to May 2007, Mr. Condon was President and Chief Executive Officer of Aspara Medical, and was President and Chief Executive Officer of Reliant Technology from January 2005 to February 2006. Prior to joining Reliant Technology, Mr. Condon held various roles at Spa Medicus, The Plastic Surgery Company and Mentor Corporation. Mr. Condon has served on the Board of Directors of Suneva Medical since September 2016 and AirXpanders Inc from 2012 to July 2019. Mr. Condon holds a bachelor’s degree in Biological Science from University of California, Davis. We believe Mr. Condon is qualified to serve on our Board due to his years of operational and executive leadership experience, and his experience at large, growing companies.
Nicholas LewinAnn Custin Director Since 20152020
Age 43
Mr. LewinMs. Custin has served on our Board since July 2020. She served as Chief Financial Officer and on the board of directors of Siemens Medical Solutions Inc. from February 2012 to December 2019. Ms. Custin previously served as Chief Operating and Financial Officer of Scient’x and President and CEO USA of Draeger Medical Systems from 2004 to 2008. She has served on the Board of Directors of Mayne Pharma Group since March 2022 and Volpara Health Tech since September 2015,2021. Ms. Custin holds a B.A. in Accounting from Queens College, CUNY. We believe Ms. Custin is qualified to serve on our Board due to her extensive career in healthcare across Europe, the Americas, and Asia.
Leslie Gillin Director Since 2020
Mr. Gillin has served on our Board since December 2020. Ms. Gillin is the Chief Growth Officer of Pagaya Technologies LTD, a position she has held since October 2021, where she oversees business development, partnerships, marketing, and leads growth for the company and its partners. Previously, Ms. Gillin served as Chief Marketing Officer of JPMorgan Chase & Co. from January 2020 to April 2021 and as ChairmanPresident, Co-Brand Cards from February 2017 to January 2020. Ms. Gillin has over 25 years of experience in senior executive leadership roles at Bank of America, Citi, and JP Morgan Chase. Ms. Gillin holds a B.A. in International Relations and Affairs from University of Delaware. We believe Ms. Gillin is qualified to serve on our Board due to her extensive experience in marketing and product and business development in large corporations.
Bryan Slotkin Director Since 2020
Mr. Slotkin has served on our Board since December 2017.July 2020. He is a partner with PJT Partners, a global advisory-focused investment bank, a position he has beenheld since June 2018. Mr. Slotkin was a Partner with Discovery Land Company from July 2017 to June 2018 and a Managing Partner at Crown Predator Holdings since 2000 and has been a private investor since 2000. He has invested across multiple industries,Director with a particular focus on companies with innovative technologies and strong intellectual property, including activist situations that require working with management. He has been a director of Halo Maritime Defense Systems, a privately held provider of maritime security product and solutions,Goldman Sachs from May 2007 to 2020, and Dura Medic, LLC a durable medical equipment provider from 2006 to 2018.June 2017. Mr. LewinSlotkin holds a bachelor’s degreeB.S. in Political ScienceFinance from Johns HopkinsRutgers College, and a J.D. and M.B.A. from George Washington University. We believe Mr. LewinSlotkin is qualified to serve on our Board due to his experience as an investor in the financial industry.
Vote Required and directorBoard Recommendation
Directors shall be elected by the affirmative vote of innovative companies, including health care companies.
Edward Schutter Director Since 2015
Age 69
Mr. Schutter has serveda simple majority of the votes of those shareholders entitled to vote and voting on our Board since September 2015. He has over thirty yearsthe election of pharmaceutical industry experience and has served as the Chief Executive Officer of Arbor Pharmaceuticals, Inc. since April 2010. Prior to joining Arbor Pharmaceuticals Inc., Mr. Schutter served in various roles at Sciele Pharma, Inc., a subsidiary of Shionogi & Co., Ltd., including as President and Chief Operating Officer from 2007 to 2009. Prior to Shionogi he was Vice President of Global Business Development at Solvay Pharmaceuticals based in Basel, Switzerland. He also held several senior management roles in commercial operationssuch nominee at the U.S. subsidiaryAnnual Meeting (meaning the number of Solvay during his twenty years withshares voted "for" a nominee must exceed the organization. Mr. Schutter began his pharmaceutical career with Reid-Provident Laboratories, Inc., a pharmaceutical company that was based in Atlanta, Georgia which was later acquired by Solvay. He also servesnumber of shares voted "against" such nominee). Abstentions and broker non-votes are not considered votes cast for the foregoing purpose and will have no effect on the boardelection of Vitruvias Therapeutics Inc. and has previously served on the boards of Mercer University, Vensun Pharmaceuticals, Knight Therapeutics (GUD.TO), Georgia Bio, Emory University new venture advisory board and several charitable organizations. Mr. Schutter has a bachelor’s degree in Pharmaceutical Sciences from Mercer University and an M.B.A. from Kennesaw State University. We believe Mr. Schutter is qualified to serve on our Board due to his experience as a chief executive officer and director in the health care industry.nominees.
OUR BOARD RECOMMENDS A VOTE FOR THE THREE CLASS I DIRECTOR NOMINEES.
CORPORATE GOVERNANCE
Corporate Governance
Our Board believes that sound corporate governance is fundamental to the overall success of Establishment Labs and believes that it has adopted corporate governance practices that are aligned with the interests of our shareholders and our corporate business strategy and the opinions expressed by recognized corporate governance authorities.strategy. It is our policy to have our Board regularly review our corporate governance practices for compliance with applicable rules, listing standards and regulations, as well as best practices suggested by recognized corporate governance authorities, and modify our practices as warranted.
Corporate Governance Guidelines and Other Documents
Our Amended and Restated Corporate Governance Guidelines, which were adopted by our Board, along with the charters for the standing committees of the Board and our Code of Business Conduct and Ethics serve to guide the operation and direction of the Board and its committees. These documents are published under "Corporate Governance" in the Investors section of our website at https://establishmentlabs.com.
The Board
The Board’s primary functions are to:
• Oversee management performance on behalf of our shareholders;
• Advocate on behalf of the long-term interests of our shareholders;
• Monitor adherence to Establishment Labs’ established procedures, standards and policies;
• Be actively involved in the oversight of risk that could affect Establishment Labs;
• Promote the exercise of sound corporate governance; and
• Carry out other duties and responsibilities as may be required by applicable state, federal and foreign laws, as well as the Nasdaq Rules.
Board Meetings
During 2020,2021, the Board met 812 times and took action by written consent once.four times. In 2020,2021, all of the directors attended at least 75% of the meetings of the Board and the standing committees of which they were members during the period which such director served on the Board, either in person or by phone.
Director Attendance at Annual Meetings
We strongly encourage all directors to attend the Annual Meeting. In 2021, all of our then-current directors attended the Annual Meeting.
Director Independence
Under the rules of Nasdaq, independent directors must comprise a majority of a listed company’s board of directors within a specified period of time after the completion of such company’s initial public offering. In addition,the applicable Nasdaq listing standards require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent.directors. Under the applicable Nasdaq listing standards, a director will only qualify as an “independent director” if, in the opinion of that listed company’s board of directors, that director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Audit Committee members must also satisfy the additional independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the applicable Nasdaq listing standards. Compensation Committee members must also satisfy the additional independence criteria set forth in Rule 10C-1 under the Exchange Act and the applicable Nasdaq listing standards.
Our Board has undertaken a review of the independence of each director. Based on information provided by each director concerning his or her background, employment and affiliations, ourOur Board has determined that Mss.Mses. Colleran, Custin and Gersh,Gillin, and Messrs. Schutter, Condon and CondonSlotkin do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the listing standards of Nasdaq. In making these determinations, our Board considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances
our Board deemed relevant in determining their independence, including the beneficial ownership of our capital sharecommon shares by each non-employee director, and the transactions involving them described in the section titled “Certain Relationships and Related Party Transactions.” In addition, our Board previously determined that Dr. David Hung and Ms. Lisa Gersh were each an independent director during his or her service on the Board through February 2021 and March 2022, respectively. Our Board has determined that Mr. Chacón Quirós and Mr. Lewin are not independent directors.
Board Leadership Structure
Our Board does not have a policy on whether the offices of Chairman of the Board and Chief Executive Officer should be separate and, if they are to be separate, whether the Chairman of the Board should be selected from among the independent directors. Our Board believes that it should have the flexibility to make these determinations at any given time in the way it believes best to provide appropriate leadership for us at that time. Our Board has reviewed our current Board leadership structure in light of the composition of the Board, our size, the nature of our business, the regulatory framework under which we operate, and other relevant factors. Considering these factors, Mr. Chacón Quirós serves as our Chief Executive Officer, and Mr. Lewin serves as our Chairman and has authority, among other things, to preside over Board meetings, and to call special meetings of the Board. However, no single leadership model is right for all companies and at all times. Our Board recognizes that depending on the circumstances, other leadership models might be appropriate in the future. As a result, our Board may periodically review its leadership structure.
Board Role in Risk Oversight
Our Board is primarily responsible for the oversight of our risk management activities and has delegated to the Audit Committee the responsibility to assist our Board in this task. The Audit Committee also monitors our system of disclosure controls and procedures and internal control over financial reporting and reviews contingent financial liabilities. The Audit Committee, among other things, reviews and discusses with management reports regarding our enterprise risk management activities, including management’s assessment of our major risk exposures and the steps taken to monitor and manage those exposures. As part of its review of our enterprise risk management activities, the Audit Committee also reviews and discusses with management risks related to information technology and cybersecurity matters.
While our Board oversees our risk management, our management is responsible for day-to-day risk management processes. Our Board expects our management to consider risk and risk management in each business decision, to proactively develop and monitor risk management strategies and processes for day-to-day activities and to effectively implement risk management strategies adopted by the Board. We believe this division of responsibilities is the most effective approach for addressing the risks we face.
Annual Board and Committee Evaluations
Our Nominating and Corporate Governance Committee oversees an annual self-evaluation by the Board, each committee of the Board and each Board member. The Nominating and Corporate Governance Committee utilizes the results of this Board evaluation process in assessing and determining the characteristics and critical skills required of prospective candidates for election to the Board and for current directors seeking re-election in an effort to further the interests of the Company and its shareholders in a manner consistent with the Company’s mission and core values.
Code of Business Conduct and Ethics
Our Board has adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors, including our chief executive officer, and other executive and senior financial officers. A copy of the code is posted under "Corporate Governance" in the Investors section of our website at https://establishmentlabs.com. If we make any substantive amendments to, or grant any waivers from, the Code
of Business Conduct and Ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K.
8-K to the extent required by applicable law.Insider Trading, Anti-Pledging, Anti-Hedging
In connection with our initial public offering, we amended our Insider Trading Policy and Guidelines with Respect to Certain Transactions in Securities, which together constitute our company's insider trading policy. This policy governs the trading in our securities by directors, officers and employees, their family members, other members of their household, entities controlled by a person covered by the policy, and designated outsiders who have or may have access to our material nonpublic information (collectively referred to as "Insiders"). In addition to other prohibited activities, the policy states that, absent an exception approved by our Chief Financial Officer, in consultation with our Board or an independent committee of the Board, (i) no employee, including Insiders, may trade in Establishment Labs securities while in the possession of material nonpublic information concerning our company; (ii) no Insider may trade in Establishment Labs securities during designated black-out periods; (iii) certain Insiders are required to obtain pre-clearance to trade in Establishment Labs securities; (iv) no Insider may usehold any Establishment Labs securities as collateral in a margin account or pledge any of ourEstablishment Labs securities as collateral for a loan; (v) no Insider may buy or sellengage in transactions in publicly-traded options, such as puts and calls, and other derivative securities or any derivative securities that provide the economic equivalent of ownership of any of our securities or an opportunity, direct or indirect, to profit from any change in the value of our securities or engage in any other hedging transaction with respect to ourEstablishment Labs securities, which such prohibition extends to any hedging or similar transaction, such as the purchase of financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) designed to hedge or offset any decrease in the market value of Establishment Labs securities; and (vi) no Insider may at any time sell any of our securities that are not owned by such Insider at the time of the sale.
Director Share Ownership Policy
The Board has adopted a share ownership policy that is applicable to our non-employee directors. The policy requires each non-employee director to own common shares having a value equal to the lesser of (i) the number of common shares having a market value equal to $150,000 (i.e., three times the annual cash retainer to our non-employee directors) determined as of a particular date based on the closing price of our common shares on Nasdaq, or (ii) the number of common shares, calculated as of the most recent January 1, determined by dividing $150,000 by the average closing price of our common stock on Nasdaq for the 30 consecutive trading days ending on the trading day immediately preceding the applicable January 1 determination date. Our non-employee directors are required to be in compliance with this ownership level by the later of January 1, 2025 or five years from the date he or she is appointed to the Board, and are required to retain at least 25% of the shares received in respect of equity awards until they are in compliance.
Clawback Policy
The Board has adopted a compensation recoupment policy whereby in the event of a restatement of our financial statements due to material noncompliance with any financial reporting requirement under applicable securities laws, the Board is required to review our incentive compensation awards and may, if it determines appropriate, require the reimbursement of incentive compensation that a ‘covered person’ received as a result of the incorrect financial results. For purposes of the policy, the term ‘covered person’ includes any current or former employee at the Vice President level or higher, any current or former consultant who has received awards under our equity plans and any other key employees designated by the Board as subject to the policy. Performance bonuses, stock options, restricted stock units, performance stock units (including any amounts deferred) or any type of awards that may be issued under our equity plans are each subject to the terms of this clawback policy.
Communications to Directors
Shareholders and other interested parties may address written communications to individual directors, including directors, or to the Board as a whole, by writing to the Chairman of the Board at Establishment Labs Holdings Inc., Building B25, Coyol Free Zone, Alajuela 20113, Costa Rica. All communications from shareholders must includeshould set forth (i) the name and address of the shareholder as it appears on the record books of Establishment Labs and, if the shareholder’s common shares are held by a bank, broker or other nominee, the name and address of the beneficial owner, if any, on whose behalf the communication is submitted.submitted and (ii) the number of common shares that are owned of record by the record holder and beneficially owned by the beneficial owner, as applicable. The Chairman will compile such communications and forward them to the directors on a periodic basis. However, the Chairman has authority to disregard any communication that is primarily an advertisement or solicitation, relates to matters of a personal nature not relevant for the Board to consider, or is threatening, obscene, or similarly inappropriate in nature. Communications that have been disregarded for these reasons may be reviewed by any director upon request.
Director Attendance at Annual Meetings
We encourage all directors to attend the Annual Meeting. In 2020, all of our directors attended the Annual Meeting.
Majority Voting for Directors
Our directors are elected by a majority vote.
To be elected, the votes “for” a director must exceed 50% of the votes actually cast with respect to the director’s election. Votes actually cast exclude votes where banks, brokers or others who hold shares in street name for a client return a proxy but provide no instructions as to how shares should be voted on a particular matter (also known as broker non-votes) and exclude abstentions with respect to that director’s election. Therefore, abstentions and any broker non-votes will have no effect on the election of directors. If an incumbent director is not re-elected, such director’s term ends at the Annual Meeting, and the Board, in its sole discretion, may, pursuant to our amended and restated memorandum and articles of association, fill any resulting vacancy or may decrease the size of the Board.
COMMITTEES OF THE BOARD
Our Board has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The composition and responsibilities of each of the committees of our Board are described below. Members will serve on these committees until their resignation or until as otherwise determined by our Board.
Audit Committee
Our Audit Committee is a standing committee of the Board and is comprised of threefour of our independent directors, as defined under and required by Rule 10A-3 of the Exchange Act and the Nasdaq rules, (Ms. Colleran, Ms. GershCustin, Mr. Schutter and Mr. Schutter)Slotkin), with Ms. Colleran serving as committee chair. In addition, our Board has determined that each of Ms. Colleran, Ms. GershCustin, Mr. Schutter and Mr. SchutterSlotkin is an “Audit Committee financial expert” within the meaning of Item 407(d) of Regulation S-K under the United States Securities Act of 1933, as amended, or the Securities Act.amended. Our Audit Committee will beis responsible for, among other things:
• selecting and hiring our registered public accounting firm;
• evaluating the performance and independence of our registered public accounting firm;
• approving the audit and pre-approving any non-audit services to be performed by our registered public accounting firm;
• reviewing our financial statements and related disclosures and reviewing our critical accounting policies and practices;
• reviewing the adequacy and effectiveness of our internal control policies and procedures and our disclosure controls and procedures;
• overseeing procedures for the treatment of complaints on accounting, internal accounting controls or audit matters;
• reviewing and discussing with management and the independent registered public accounting firm the results of our annual audit, our quarterly financial statements and our publicly filed reports; and
• reviewing and approving in advance any proposed related person transactions.
The Audit Committee is responsible for appointing theour independent auditor,registered public accounting firm, approving engagement fees and engagements, and reviewing the independence and quality of the independent auditor.registered public accounting firm. The Audit Committee is also responsible for reviewing audit plans, audit reports, and recommendations of the independent auditorregistered public accounting firm and, once established, any internal audit function. The Audit Committee reviews systems of internal accounting controls and audit results. The Audit Committee also reviews and discusses with management, Establishment Labs’ financial statements, earnings releases and earnings guidance. In addition, the Audit Committee reviews Establishment Labs’ compliance with regulatory requirements and the Establishment Labs' Code of Business Conduct and Ethics.
The Audit Committee met 12six times during the fiscal year ended December 31, 2020.2021. Our Audit Committee operates under a written charter that satisfies the applicable rules of the SEC and the listing standards of the Nasdaq. A complete copy of the Audit Committee Charter is available under "Corporate Governance" in the Investors section of our website at https://establishmentlabs.com.
Compensation Committee
The Compensation Committee is a standing committee of the Board and establishes executive compensation policies and reviews and approves senior executive compensation. The Chief Executive
Officer recommends to the Compensation Committee the form and level of compensation for each named
executive officer other than himself. The Compensation Committee reviews and approves corporate goals and objectives relevant to the Chief Executive Officer's compensation, evaluates the Chief Executive Officer's performance against those objectives, and makes recommendations to the Board regarding the Chief Executive Officer's compensation. The Compensation Committee does not delegate authority to perform any of the foregoing functions with respect to the compensation of any named executive officer. In addition, the Compensation Committee reviews director compensation periodically and makes recommendations regarding director compensation to the Board for approval.
Our Compensation Committee is comprised of twothree of our independent directors, as defined under and required by Rule 10C-1 of the Exchange Act and the Nasdaq rules (Mr. Condon(Mses. Custin and Gillin and Mr. Schutter), with Mr. Schutter serving as committee chair. Dr. Hung served onIn addition, in determining the independence of each of Mses. Custin and Gillin and Mr. Schutter, the Board considered whether each director has a relationship with the company that is material to the director’s ability to be independent from management in connection with the duties of a member of the Compensation Committee until his resignation from the Board of Directors in February 2021.Committee. Each member of the Compensation Committee is also a non-employee director (as defined pursuant to Rule 16b-3 promulgated under the Exchange Act) and an outside director (as defined pursuant to Section 162(m) of the United States Internal Revenue Code of 1986, or the Code). The purpose of our Compensation Committee is to discharge the responsibilities of our Board relating to compensation of our executive officers. Our Compensation Committee is responsible for, among other things:
• reviewing and approving our Chief Executive Officer’s and other executive officers’ annual base salaries, incentive compensation plans, including the specific goals and amounts, equity compensation, employment agreements, severance arrangements and change in control agreements and any other benefits, compensation or arrangements;
• administering our equity compensation plans; and
• overseeing our overall compensation philosophy, compensation plans and benefits programs.
The Compensation Committee met 8seven times and took action by written consent once during the fiscal year ended December 31, 2020.2021. Our Compensation Committee operates under a written charter that satisfies the applicable rules of the SEC and the listing standards of the Nasdaq. A complete copy of the Compensation Committee Charter is available under "Corporate Governance" in the Investors section of our website at https://establishmentlabs.com.
Compensation Committee Interlocks and Insider Participation
None of the members of our Compensation Committee has ever been an officer or employee of the Company. None of our executive officers serve, or have served during the last fiscal year, as a member of a board of directors, Compensation Committee or other board committee performing equivalent functions of any entity that has one or more executive officers serving on our Board or on our Compensation Committee.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee is a standing committee of the Board and consists of Ms. Colleranthree independent directors as defined under Nasdaq rules (Ms. Gillin and Ms. Gersh,Messrs. Condon and Slotkin), with Ms. GershMr. Condon serving as the committee chair. Dr. Hung served on the Nominating and Corporate Governance Committee until his resignation from the Board of Directors in February 2021. The composition of our Nominating and Corporate Governance Committee meets the requirements for independence under Nasdaq listing standards and SEC rules and regulations. Our Nominating and Corporate Governance Committee is responsible for, among other things:
• evaluating and making recommendations regarding the composition, organization and governance of our Board and its committees;
• evaluating and making recommendations regarding the creation of additional committees or the change in mandate or dissolution of committees;
• reviewing and making recommendations with regard to our corporate governance guidelines and compliance with laws and regulations; and
• reviewing and approving conflicts of interest of our directors and corporate officers, other than related person transactions reviewed by the Audit Committee.
The Nominating and Corporate Governance Committee met 54 times during the fiscal year ended December 31, 2020.2021. The Nominating and Corporate Governance Committee operates under a written charter that satisfies the applicable listing requirements and rules of the Nasdaq. A complete copy of the Nominating and Corporate Governance Committee Charter is available under "Corporate Governance" in the Investors section of our website at https://establishmentlabs.com.
Identifying and Evaluating Director Nominees
The Board has delegated the director selection and nomination process to the Nominating and Corporate Governance Committee, with the expectation that other members of the Board, and of management, will be requested to take part in the process as appropriate.
Generally, the Nominating and Corporate Governance Committee is responsible for identifying candidates for director nominees in consultation with management, through the use of search firms or other advisors, through the recommendations submitted by shareholders or through such other methods as the Nominating and Corporate Governance Committee deems to be helpful to identify candidates. Once candidates have been identified, it is our policy that the Nominating and Corporate Governance Committee confirm that the candidates meet all of the minimumdesired qualifications, for director nomineesexpertise and characteristics sought of Board members and established by the Nominating and Corporate Governance Committee.Committee and the Board from time to time as discussed below. The Nominating and Corporate Governance Committee may gather information about the candidates through interviews, detailed questionnaires, comprehensive background checks or any other means that the Nominating and Corporate Governance Committee deems to be appropriate in the evaluation process. The Nominating and Corporate Governance Committee would then meet as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of the Board. Based on the results of the evaluation process, the Nominating and Corporate Governance Committee would recommend candidates for the Board's approval as director nominees for election to the Board.Board at an annual meeting of shareholders or to fill any vacancy on the Board occurring between annual meetings of shareholders.
Minimum Qualifications
In evaluating proposed director candidates, the Nominating and Corporate Governance Committee may consider all facts and circumstances that it deems appropriate or advisable, including, among other things, the candidate’s character, professional ethics and integrity, judgment, business acumen, proven achievement and competence in one’s field, the ability to exercise sound business judgment, skills of the proposed director candidate, his or her depth and breadth of professional experience or other background characteristics, his or her independence, the current size and composition of our Board and the needs of our Board and its respective committees. At a minimum, the nominee must have the highest personal and professional integrity, have demonstrated exceptional ability and judgment, and be most effective, in conjunction with the other nomineesthat are complementary to the Board, in collectively serving the long-term interestsan understanding of our shareholders.business, an understanding of the responsibilities that are required of a member of the Board, other time commitments, diversity with respect to professional background, education, race, ethnicity, gender, age and geography, as well as other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the Board. In addition, our Nominating and Corporate Governance Committee shall recommend that the Board select persons for nomination to help ensure that a majority of our Board is "independent" under applicable rules of Nasdaq Rules and that theall members of theeach of our standings committees of our Board are "independent." Some of the additional qualifications that our Nominating and Corporate Governance Committee may consider include diversity of experience, expertise, business acumen, understanding of our business and industry, potential conflicts of interest and other commitments. Our Nominating and Corporate Governance Committee may also consider whether director nominees have proven achievement and competence in their field and the ability to provide guidance to our management team and make significant contributions to our success, and an understanding of the fiduciary responsibilities that are required of a director. Our Nominating and Corporate Governance Committee also considers
whether our director candidates have sufficient time available to perform all Board and committee responsibilities. Members of our Board are expected to prepare for, attend, and participate in all Board and applicable committee meetings.
Shareholder Recommendations
Shareholders may submit recommendations for director candidates to the Nominating and Corporate Governance Committee by sending the individual's name and qualifications to Renee M. Gaeta, Chief Financial Officer,our Corporate Secretary, at Establishment Labs Holdings Inc., Building B25, Coyol Free Zone, Alajuela 20113, Costa Rica. The Nominating and Corporate Governance Committee will evaluate any candidates recommended by shareholders against the same criteria and pursuant to the same policies and procedures applicable to the evaluation of candidates proposed by directors or management.
NON-EMPLOYEE DIRECTOR COMPENSATION
We believe that granting equity and cash compensation to members of the Board represents an effective tool to attract, retain, and reward directors who are not Establishment Labs’ employees. Our policy has been and will continue to be to reimburse our directors for their travel, lodging and other reasonable expenses incurred in attending meetings of our Board and committees of the Board. We have adopted a formal policy pursuant to which our non-employee directors will be eligible to receive compensation for service on our Board and committees of our Board.
2021 Compensation Policy
| | | | | |
| Annual Retainer |
Board of Directors: | |
| Members | $ | 35,000 | |
| Additional retainer for Chairman of the Board | $ | 25,000 | |
Audit Committee: | |
| Chair | $ | 15,000 | |
| Non-Chair members | $ | 7,500 | |
Compensation Committee: | |
| Chair | $ | 12,000 | |
| Non-Chair members | $ | 6,000 | |
Nominating and Corporate Governance Committee: | |
| Chair | $ | 8,000 | |
| Non-Chair members | $ | 4,000 | |
Each such non-employee director will be granted an initial award of 12,000 shares of nonqualified share options which will vest as to 1/3 of the shares subject to the initial award on the yearly anniversary of the date of grant, provided that the director continues to serve as a non-employee director through the applicable vesting date. In addition, the non-employee directors will be granted an annual award of 10,000 shares of nonqualified share options, which will be granted upon the earlier of the one (1) year anniversary of the grant date or the day prior to the next annual meeting occurring after the grant date, in each case, provided that the non-employee director continues to serve as an non-employee director through the applicable vesting date.
2022 Compensation Policy
| | | | | |
| Annual Retainer |
Board of Directors: | |
| Members | $ | 50,000 | |
| Additional retainer for Chairman of the Board | $ | 50,000 | |
Audit Committee: | |
| Chair | $ | 20,000 | |
| Non-Chair members | $ | 10,000 | |
Compensation Committee: | |
| Chair | $ | 15,000 | |
| Non-Chair members | $ | 7,500 | |
Nominating and Corporate Governance Committee: | |
| Chair | $ | 10,000 | |
| Non-Chair members | $ | 5,000 | |
Each such non-employee director will be granted an initial award of restricted share units having a grant date value equal to $125,000 which will vest as to 1/3 of the shares subject to the initial award on the yearly anniversary of the date of grant, provided that the director continues to serve as a non-employee director through the applicable vesting date. In addition, the non-employee directors will be granted an annual award of restricted share units having a grant date value equal to $125,000, which will be vested upon the earlier of the one (1) year anniversary of the grant date or the day prior to the next annual meeting occurring after the grant date, in each case, provided that the non-employee director continues to serve as an non-employee director through the applicable vesting date. In addition to the initial award described above, upon initial appointment to the Board each non-employee director will also receive a pro-rata annual equity award covering the time between the non-employee director’s initial appointment to the Board and the next annual meeting of shareholders.
2021 Non-Employee Director Compensation
The following table presents the total compensation for each person who served as a non-employee member of our Board during 2020:2021:
| | Name | Name | | Fees Earned or Paid in Cash1 | | Option Awards | | Total | Name | | Fees Earned or Paid in Cash | | Option Awards (1) (3) | | Total |
| Lisa N. Colleran | Lisa N. Colleran | | $ | 40,500 | | | $ | 100,358 | | | $ | 140,858 | | Lisa N. Colleran | | $ | 40,777 | | | $ | 438,795 | | | $ | 479,572 | |
| Dennis E. Condon | Dennis E. Condon | | $ | 35,250 | | | $ | 100,358 | | | $ | 135,608 | | Dennis E. Condon | | $ | 31,486 | | | $ | 438,795 | | | $ | 470,281 | |
| David Hung, M.D. | | $ | 33,750 | | | $ | 100,358 | | | $ | 134,108 | | |
| Nicholas Lewin | | $ | 45,000 | | | $ | 100,358 | | | $ | 145,358 | | |
| Ann Custin | | Ann Custin | | $ | 10,280 | | | $ | 469,038 | | | $ | 479,318 | |
| Lisa Gersh | | Lisa Gersh | | $ | 37,738 | | | $ | 438,795 | | | $ | 476,533 | |
| Leslie Gillin | | Leslie Gillin | | $ | — | | | $ | 469,038 | | | $ | 469,038 | |
Nicholas Lewin (2) | | Nicholas Lewin (2) | | $ | 44,837 | | | $ | 1,212,755 | | | $ | 1,257,592 | |
| Edward J. Schutter | Edward J. Schutter | | $ | 36,375 | | | $ | 100,358 | | | $ | 136,733 | | Edward J. Schutter | | $ | 40,727 | | | $ | 438,795 | | | $ | 479,522 | |
| Lisa Gersh | | $ | 37,875 | | | $ | 100,358 | | | $ | 138,233 | | |
1 Q2 2020 payment was voluntarily foregone by the board members due to COVID-19 as a cost containment measure. | |
| Bryan Slotkin | | Bryan Slotkin | | $ | — | | | $ | 469,038 | | | $ | 469,038 | |
(1) The aggregate grant date fair value of these awards was computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 and excludes the effects of estimated forfeitures. The reported award values have been determined using the assumptions described in Note 10 to the Consolidated Financial Statements included in our 2021 Annual Report.
(2) For Mr. Lewin, the amounts reported in the option awards column include a stock option award for 20,000 options with a grant date fair value of $38.70 per option that was granted to him on February 15, 2021 in consideration for consulting services he performs for us in addition to his services as a non-employee director.
(3) The following chart sets forth the number of outstanding stock options held by each non-employee director as of December 31, 2021. None of the non-employee directors held restricted share or restricted share unit awards as of December 31, 2021.
| | | | | | | | |
| Name | | Outstanding Stock Options |
| Lisa N. Colleran | | 10,000 | |
| Dennis E. Condon | | 10,000 | |
| Ann Custin | | 12,000 | |
| Lisa Gersh | | 14,000 | |
| Leslie Gillin | | 12,000 | |
| Nicholas Lewin | | 92,500 | |
| Edward J. Schutter | | 10,000 | |
| Bryan Slotkin | | 12,000�� | |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Other than compensation arrangements for our directors and named executive officers, which are described elsewhere in the "Executive Compensation" section of this proxy statement, below we describe transactions since January 1, 2020 to which we were a party or will be a party, in which:
• the amounts involved exceeded or will exceed $120,000; and
• any of our directors, executive officers or holders of more than 5% of our share capital, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest.
Our Audit Committee has the primary responsibility for reviewing and approving or disapproving "related party transactions," which are the transactions described above. Our Code of Business Conduct and Ethics and our Audit Committee charter provide that the Audit Committee shall review and approve or disapprove any related party transactions.
We have entered into employment arrangements with certain current executive officers. See “Executive Compensation" section.
Related Party Transactions
During the years ended December 31, 2020 and 2019, we recorded revenue of $0.9 million and $0.7 million, respectively, for product sales to Herramientas Medicas, S.A., a distribution company owned by a family member of our Chief Executive Officer. Accounts receivable owed to us from this distribution company amounted to approximately $0.2 million as of each of December 31, 2020 and 2019.
In 2016, we entered into a scientific board advisory agreement with Dr. Manuel Enrique Chacón Quirós, the brother of our Chief Executive Officer, Juan José Chacón Quirós, pursuant to which Dr. Chacón Quirós joined our Scientific Advisory Board, provided general scientific advice, and served as a clinical investigator, among other services. In exchange for these services, Dr. Chacón Quirós was granted options to purchase 20,580 shares. The grant vested over four years in equal annual installments. Dr. Chacón Quirós resigned from our Scientific Advisory Board in November 2019.
In 2016, we also entered into a separate agreement with Dr. Chacón Quirós to maintain his clinic in Costa Rica as a MotivaImagine Excellence Center and to host and train physicians in the use of our products in relevant procedures, among other services, in exchange for cash reimbursement of up to $4,500 per day that such services are rendered. In December 2020, Dr. Chacón Quirós was granted options to purchase 22,068 shares vesting over four years in equal annual installments, provided that he continues to provide these services at such times. During the years ended December 31, 2020 and 2019, we paid Dr. Chacón Quirós approximately $114,000 and $145,000, respectively, for services rendered.
Policies and Procedures for Related Party Transactions
We have adopted a formal written policy providing thatregarding the approval of any ‘related party transaction,’ which is any transaction, arrangement or relationship in which we are a participant and in which any ‘related person’ has, had or will have a director or indirect material interest and the aggregate amount exceeds $120,000. A ‘related person’ is defined as our executive officers, directors, nominees for election as directors, beneficial owners of more than 5% of any class of our common shares and any member of the immediate family of any of the foregoing persons, is not permitted to enter into a related-party transaction with us withoutpersons. Under the consent ofpolicy, our Audit Committee will review and approve, disapprove or ratify all related party transactions, subject to the exceptions described below.
In approvingdetermining whether to approve or rejecting any such proposal,ratify a related party transaction, our Audit Committee is towill consider the relevant facts and circumstances available and deemed relevant to our Audit Committee, including, among other things, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, and the extent of the related party’s interest in the transaction. Our Audit Committee has also determined that certain transactions will not requireshall be deemed to be pre-approved by the Audit Committee, approval, including
certain employment arrangements of executive officers, director compensation, transactions with another company at which a related party’s only relationship is as a non-executive employee, director or beneficial owner of less than 10% equity interest in such company and the aggregate amount involved does not exceed the greater of $200,000 or 2% of the recipient’s consolidated gross revenues, transactions where a related party’s interest arises solely from the ownership of a class of our equity securities, and all holders of our common shares received the same benefit on a pro rata basis and transactions available to all employees generally.
It is our intention to ensure that all future transactions between us and our officers, directors and principal shareholders and their affiliates, are approved by the Audit Committee of our Board and are on terms no less favorable to us than those that we could obtain from unaffiliated third parties.
Below we describe all related party transactions required to be disclosed pursuant to Item 404 of Regulation S-K since January 1, 2021.
Related Party Transactions
On April 1, 2022, we entered into a consulting agreement with Lisa Gersh, who served on our Board of Directors until March 31, 2022. Pursuant to the consulting agreement, Ms. Gersh will perform consulting services as requested by us, with the expectation that she will advise our Board on elements of corporate leadership and governance. As payment for Ms. Gersh’s consulting services, we will pay Ms. Gersh a consulting fee of $175,000 per year in equal quarterly installments and her outstanding equity awards granted during her term as a member of the Board of Directors will continue to vest in accordance with their terms. The consulting agreement terminates on March 31, 2024.
During the year ended December 31, 2021, the Company recorded revenue of $1.4 million for product sales to Herramientas Medicas, S.A., a distribution company owned by a family member of the Chief Executive Officer of the Company. Accounts receivable owed to the Company from this distribution company amounted to approximately $0.4 million as of December 31, 2021.
During 2021, we also paid $171,000 to Catalyze Work, LLC, the company owned by Pratip Dastidar, Head of Global Operations for consulting services regarding business architecture, governance and value assistance to clients.
In 2016, the Company also entered into a separate agreement with Dr. Chacón Quirós, the brother of the Company’s Chief Executive Officer Juan José Chacón Quirós, to maintain his clinic in Costa Rica as a MotivaImagine Excellence Center and to host and train physicians in the use of the Company products in
relevant procedures, among other services, in exchange for cash reimbursement of up to $4,500 per day that such services are rendered. During the year ended December 31, 2021, the Company paid Dr. Chacón Quirós approximately $0.4 million for services rendered.
Registration Rights
We are party to an investors’ rights agreement with certain of our shareholders. The investors’ rights agreement grants such shareholders certain registration rights, which include demand registration rights, piggyback registration rights and short-form registration rights, with respect to our common shares.
Limitation of Liability and Indemnification of Officers and Directors
Our amended and restated memorandum and articles of association contain provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by British Virgin Islands law. Further, we have entered into indemnification agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions contained under British Virgin Islands law. These indemnification agreements require us, among other things, to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnification agreements also require us to advance all expenses incurred by the directors and executive officers in investigating or defending any such action, suit, or proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Proposal
Marcum LLP has served as our independent auditorregistered public accounting firm since 2016 and has been appointed by the Audit Committee to continue as our independent auditorregistered public accounting firm for 2021.2022. We are not required to submit the appointment of Marcum LLP as our independent registered public accounting firm for shareholder approval. However, we are submitting the appointment for ratification as a matter of good corporate practice. In the event that ratification of the appointment of Marcum LLP as our independent auditorregistered public accounting firm for 20212022 is not approved by the shareholders at the Annual Meeting, the Board will reviewreconsider whether or not to retain Marcum LLP. Even if the appointment of Marcum LLP is ratified, the Audit Committee's future selectionCommittee, in its discretion, may appoint a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of independent auditors.the Company and our shareholders.
A representative of Marcum LLP is expected to participate in the Annual Meeting to respond to appropriate questions and to make any other statement deemed appropriate. The representatives will also be afforded an opportunity to make such statements as they desire.
Independent Registered Public Accounting Firm—Fee Information
The following table presents fees for professional audit services and other services rendered by Marcum LLP for our fiscal years ended December 31, 20202021 and 2019.2020.
| | | 2020 | | 2019 | | 2021 | | 2020 |
Audit Fees (1) | Audit Fees (1) | $ | 390,000 | | | $ | 390,000 | | Audit Fees (1) | $ | 730,000 | | | $ | 390,000 | |
Audit-Related Fees (2) | Audit-Related Fees (2) | $ | 25,000 | | | $ | 49,440 | | Audit-Related Fees (2) | $ | 10,000 | | | $ | 25,000 | |
Tax Fees (3) | Tax Fees (3) | $ | — | | | $ | — | | Tax Fees (3) | $ | — | | | $ | — | |
All Other Fees (4) | All Other Fees (4) | $ | — | | | $ | — | | All Other Fees (4) | $ | — | | | $ | — | |
| Total Fees | Total Fees | $ | 415,000 | | | $ | 439,440 | | Total Fees | $ | 740,000 | | | $ | 415,000 | |
|
(1)Audit Fees consist of professional services rendered in connection with the audit of our annual consolidated financial statements, including audited financial statements presented in our Annual Report on Form 10-K, including the audit of the Company's internal control over financial reporting, and for reviews of the financial statements included in our quarterly reports on Form 10-Q if applicable, for services that are normally provided by the independent registered public accountants in connection with statutory and regulatory filings or engagements for those fiscal years.
(2)Audit-Related Fees consist of fees for professional services for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services could include accounting consultations concerning financial accounting and reporting standards, due diligence procedures in connection with acquisition and procedures related to other attest services. Fees for fiscal 2021 consisted of professional services rendered in connection with auditing our Registration Statement on Form S-8. Fees for fiscal 2020 consisted of professional services rendered in connection with auditing the adoption of ASC 842, Leases, and the Registration Statement on Form S-8. Fees for fiscal 2019 consisted of professional services rendered in connection with our follow-on public offering in February 2020 and Registration Statement on Form S-8.
(3)Tax Fees consist of fees for professional services for tax compliance, tax advice and tax planning. These services include consultation on tax matters and assistance regarding federal, state and international tax compliance.
(4)All Other Fees consist of permitted services other than those that meet the criteria above.
Pre-Approval Policies and Procedures
It is the policy of the Audit Committee to pre-approve all services, audit and non-audit, to be provided to us by our independent registered public accounting firm. Under the policy, the Audit Committeefirm, except where pre-approval is generallynot required to pre-approve the provision by our independent registered public accounting firm of specific audit, audit-related, tax and other non-audit services, subject to the fee limits established from time to time by the Audit Committee, as being consistent with auditor independence.
Sincebecause such non-audit services are de minimis under the adoptionrules of ourthe SEC, in which case subsequent approval may be obtained. In addition, the Audit Committee may delegate to one or more designated members of the Audit Committee the authority to pre-approve audit and permissible non-audit services, provided such pre-approval policy, alldecision is presented to the full Audit Committee at its scheduled meetings.
All services provided by Marcum LLP as our independent registered public accounting firm as disclosed above under “Independent Registered Public Accounting Firm – Fee Information” were pre-approved by the Audit Committee.
Vote Required and Board Recommendation
Approval of this proposal requires the affirmative vote of a simple majority of the votes of the common shares entitled to vote. Common shares that constitute broker non-votes are counted as shares entitled to vote and voting on this Proposal No. 2. Abstentions will have no effect on voting for this proposal. No broker non-votes are expected on Proposal 2.
OUR BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF MARCUM LLP AS ESTABLISHMENT LABS' INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2021.2022.
REPORT OF THE AUDIT COMMITTEE
Our Audit Committee is composed of threefour directors, all of whom the Board has determined to be independent within the meaning of the Nasdaq and SEC Rules, and all of whom meet the requirements for financial literacy under applicable rules and regulations of the Nasdaq and the SEC and otherwise meet the requirements for service on audit committees pursuant to such rules and regulations. The Board has determined that each of Ms. Colleran, Ms. GershCustin, Mr. Schutter and Mr. SchutterSlotkin is an "Audit Committee financial expert" as defined under the applicable rules of the SEC. The Audit Committee assists the Board in general oversight of our financial accounting and reporting process, system of internal control and audit process.
Our management has primary responsibility for our consolidated financial statements and for maintaining effective internal control over financial reporting. Our independent auditors,registered public accounting firm, Marcum LLP, are responsible for expressing an opinion on our consolidated financial statements as to whether they present fairly, in all material respects, our consolidated financial position, results of operations and cash flows, in conformity with GAAP. This opinion is based on their audits.
In this context, the Audit Committee reports as follows:
1. The Audit Committee has reviewed and discussed the audited consolidated financial statements with our management;
2. The Audit Committee has discussed with theour independent auditorsregistered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board Auditing Standard 1301, “Communications with Audit Committees”;and the SEC;
3. The Audit Committee has received the written disclosures and the letter from theour independent auditorsregistered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor'sregistered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent auditors theirregistered public accounting firm its independence; and
4. Based on the review and discussion referred to in the above paragraphs, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10‑K for the fiscal year ended December 31, 20202021 for filing with the SEC.
The Audit Committee has also appointed Marcum LLP as our independent registered public account firm, and our Board has recommended that our shareholders ratify such appointment, to audit our consolidated financial statements for the year ending December 31, 2021,2022, and to provide review services for each of the quarters in the year ending December 31, 2021.2022.
Submitted by the Audit Committee
Lisa N. Colleran (Chair)
Lisa GershAnn Custin
Edward Schutter
Bryan Slotkin
The information contained in the above Report of the Audit Committee Report shall not be deemed “soliciting material” or “filed” with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically incorporate it by reference into such filings.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our common shares as of March 31, 20212022 (unless otherwise indicated) by:
• each person known to us to beneficially own more than five percent of our outstanding common shares based solely on our review of SEC filings;shares;
• each of our named executive officers;
• each of our directors; and
• all directors and executive officers as a group.
We have based our calculation of the percentage of beneficial ownership on 23,728,66624,194,086 common shares as of March 31, 2021.2022. We have deemed our common shares subject to share options that are currently exercisable or exercisable within 60 days of March 31, 20212022 to be outstanding and to be beneficially owned by the person holding the share option for the purpose of computing the percentage ownership of that person. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
| | | Shares Beneficially Owned | | Shares Beneficially Owned |
Name of Beneficial Owner (1) | Name of Beneficial Owner (1) | | Number of Shares | | Percentage (%) | Name of Beneficial Owner (1) | | Number of Shares | | Percentage (%) |
| Greater than 5% Shareholders | Greater than 5% Shareholders | | | | | Greater than 5% Shareholders | | | | |
JW Partners, LP (2)(1) | JW Partners, LP (2)(1) | | 3,117,485 | | | 13.14 | | JW Partners, LP (2)(1) | | 3,177,485 | | | 12.89 | |
RTW Investments, LP (3)(2) | RTW Investments, LP (3)(2) | | 2,319,138 | | | 9.77 | | RTW Investments, LP (3)(2) | | 2,319,138 | | | 9.59 | |
Nantahala Capital Management, LLC (4)(3) | Nantahala Capital Management, LLC (4)(3) | | 2,042,099 | | | 8.61 | | Nantahala Capital Management, LLC (4)(3) | | 2,151,454 | | | 8.89 | |
Brown Advisory Incorporated (5)(4) | Brown Advisory Incorporated (5)(4) | | 1,501,290 | | | 6.33 | | Brown Advisory Incorporated (5)(4) | | 1,668,969 | | | 6.90 | |
Pura Vida Investments, LLC (5) | | Pura Vida Investments, LLC (5) | | 1,319,398 | | | 5.45 | |
| | Named Executive Officers: | Named Executive Officers: | | | Named Executive Officers: | | |
Juan José Chacón Quirós (6) | Juan José Chacón Quirós (6) | | 1,342,504 | | | 5.66 | | Juan José Chacón Quirós (6) | | 1,371,818 | | | 5.67 | |
Salvador Dada Santos (7) | | 108,410 | | | * | |
Renee M. Gaeta (8) | | 110,340 | | | * | |
Pratip Dastidar (7) | | Pratip Dastidar (7) | | 27,971 | | | * |
Rajbir S. Denhoy (8) | | Rajbir S. Denhoy (8) | | 25,000 | | | * |
| | Directors: | Directors: | | Directors: | |
Dennis Condon (9) | Dennis Condon (9) | | 47,585 | | | * | Dennis Condon (9) | | 39,780 | | | * |
Edward Schutter (10) | Edward Schutter (10) | | 290,315 | | | 1.22 | | Edward Schutter (10) | | 365,342 | | | 1.51 | |
Lisa N. Colleran (11) | Lisa N. Colleran (11) | | 99,711 | | | * | Lisa N. Colleran (11) | | 109,711 | | | * |
Lisa Gersh (12) | | 14,000 | | | * | |
| Ann Custin | | Ann Custin | | — | | | * |
Bryan Slotkin (12) | | Bryan Slotkin (12) | | 9,250 | | | * |
| Leslie Gillin | | Leslie Gillin | | — | | | * |
Nicholas Lewin (13) | Nicholas Lewin (13) | | 962,593 | | | 4.06 | | Nicholas Lewin (13) | | 1,048,533 | | | 4.33 | |
All current directors and executive officers as a group (8 persons) (14) | | 3,104,202 | | | 13.08 | | |
All current directors and executive officers as a group (10 persons) (14) | | All current directors and executive officers as a group (10 persons) (14) | | 2,997,405 | | | 12.39 | |
* Indicates beneficial ownership of less than one percent.
(1)A “beneficial owner”Beneficial ownership information is as of April 13, 2022 and is based on information reported on a security is determined in accordanceForm 4 filed by JW Asset Management, LLC with Rule 13d-3 under the Exchange Act and generally means any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares: voting power which includes the power to vote, or to direct the voting of, such security; and/or investment power which includes the power to dispose, or to direct the disposition of, such security.
(2)SEC on April 14, 2022. The business address of JW Partners, LP is 489 Fifth Avenue, 29th Floor, New York, NY 10017.
(3)(2)Beneficial ownership information is as of December 31, 2021 and is based on information reported on a Schedule 13G/A filed by RTW Investments, LP with the SEC on February 14, 2022. The Schedule 13G/A indicates that RTW Investments, LP and Roderick Wong have shared dispositive power over 2,319,138 of our common shares and shared dispositive power over 2,319,138 of our common shares. Roderick Wong is the managing partner and Chief Investment Officer of RTW Investments, LP. The business address for RTW Investments, LP is 412 West 15th Street,40 10th Avenue, Floor 97, New York, NY 10011.10014.
(4)(3)Beneficial ownership information is as of December 31, 2021 and is based on information reported on a Schedule 13G/A filed by Nantahala Capital Management with the SEC on February 14, 2022. The Schedule 13G/A indicates that (i) Nantahala Capital Management and Wilmot B. Harkey have shared dispositive power over 2,123,236 of our common shares and shared dispositive power over 2,123,236 of our common shares, and (ii) Daniel Mack has sole voting power over 28,218 of our common shares, shared voting power over 2,123,236 of our common shares, sole dispositive power over 28,218 of our common shares and shared dispositive power over 2,123,236 of our common shares. Each of Messrs. Harkey and Mack are managing members of Nantahala Capital Management, an investment advisor that holds our common shares through funds and separately managed accounts. The business address for Nantahala Capital Management, LLC is 130 Main St. 2nd Floor, New Canaan, CT 06840.
(5)(4)Beneficial ownership information is as of December 31, 2021 and is based on information reported on a Schedule 13G/A filed by Brown Advisory Incorporated with the SEC on February 7, 2022. The Schedule 13G/A indicates that (i) Brown Advisory Incorporated has sole voting power over 1,441,994 of our common shares and shared dispositive power over 1,668,969 of our common shares, (ii) Brown Investment Advisory & Trust Company has sole voting power over 8,800 of our common shares and shared dispositive power over 8,800 of our common shares, and (iii) Brown Advisory LLC has sole voting power over 1,433,194 of our common shares and shared dispositive power over 1,660,169 of our common shares. The business address for Brown Advisory Incorporated is 901 South Bond Street, Suite #400, Baltimore, Maryland 21231.
(5)Beneficial ownership information is as of December 31, 2021 and is based on information reported on a Schedule 13G/A filed by Pura Vida Investments, LLC with the SEC on February 14, 2022. The Schedule 13G/A indicates that Pura Vida Investments, LLC and Efrem Kamen have shared voting power over 1,319,398 of our common shares and shared dispositive power over 1,319,398 of our common shares. Efrem Kamen is managing member of Pura Vida Investments, LLC. The address of Pura Vida Investments, LLC is 888 7th Avenue 6th Floor New York, New York 10106.
(6)Consists of (a) 194,240 common shares held by Mr. Chacón Quirós, (b) 20,00049,314 common shares issuable pursuant to outstanding share options exercisable within 60 days of March 31, 20212022 and (c) 1,128,264 common shares held by Sariel LLC. Mr. Chacón Quirós, our Chief Executive Officer, is a shareholder of Sariel LLC and has voting and dispositive power over the common shares owned by Sariel LLC. In 2019, Mr. Chacon pledged his common shares to obtain a personal loan. As of March 31, 2021, 192,240 common shares and 1,128,264 common shares held by Sariel LLC are still pledged.
(7)Consists of (a) 97,1204,471 common shares and (b) 8,75023,500 common shares issuable pursuant to outstanding share options exercisable within 60 days of March 31, 2021.2022.
(8)Consists of 110,34025,000 common shares issuable pursuant to outstanding share options exercisable within 60 days of March 31, 2021.2022.
(9)Consists of 47,58539,780 common shares issuable pursuant to outstanding share options exercisable within 60 days of March 31, 2021.2022.
(10)Consists of (a) 233,535298,562 common shares and (b) 56,78066,780 common shares issuable pursuant to outstanding share options exercisable within 60 days of March 31, 2021.2022.
(11)Consists of (a) 42,931 common shares and (b) 56,78066,780 common shares issuable pursuant to outstanding share options exercisable within 60 days of March 31, 2021.2022.
(12)ConsistConsists of 14,0009,250 common shares.
(13)Consists of (a) 780,463 common shares held by Mr. Lewin, (b) 8,790 shares held by Mr. Lewin's spouse and (b) 259,280 common shares issuable pursuant to outstanding share options exercisable within 60 days of March 31, 2021.2022.
(13)(14)Consists of (a) 780,4632,140,731 common shares held by Mr. Lewin, (b) 350 shares held by Mr. Lewin's spouse and (b) 181,780856,674 common shares issuable pursuant to outstanding share options exercisable within 60 days of March 31, 2021.
(14)Consists of (a) 2,063,457 common shares and (b) 1,040,745 common shares issuable pursuant to outstanding share options exercisable within 60 days of March 31, 2021.2022.
EXECUTIVE OFFICERS
The following table sets forth certain information about our executive officers as of the date of this proxy statement:
| | | | | | | | | | | | | | |
| Name | | Age | | Position |
| Juan José Chacón Quirós | | 4950 | | Chief Executive Officer and Director |
Salvador Dada Santos | | 38 | | Chief Operating Officer |
Renee M. GaetaRajbir S. Denhoy | | 4052 | | Chief Financial Officer |
| Pratip Dastidar | | 59 | | Head of Global Operations |
Please refer to “Proposal 1: Election of Directors” for the biography for Mr. Chacón Quirós.s.
Salvador Dada Santos
Rajbir S. Denhoy, 38, was appointedhas served as our Chief OperatingFinancial Officer since December 2021 and previously served as our Interim Chief Financial Officer from August 2021 to December 2021. Prior to such time, Mr. Denhoy served as our Head of Strategy and Investor Relations from February 2021 to December 2021. Prior to joining the Company in February 2016 and has2021, Mr. Denhoy served as a managerManaging Director of operationsthe Jefferies Group, LLC from December 2009 until February 2021. Mr. Denhoy holds a bachelor’s degree in biology from UC Berkeley, a master’s degree in physiology from Georgetown University, and manufacturingan MBA from Cornell University.
Pratip Dastidar, has been our Head of Global Operations since April 2009.May 2021. Mr. Dada servedDastidar has provided consulting services in various engineering rolesdigital transformation for the Company since October 2020. From January 2018 to June 2020, he was the Senior Vice President and Chief Transformation Officer of Service Master. From 2015 until 2017, he led process innovation that enabled operational scale-up at Allergan Medical from 2007 to 2009Salesforce. He previously held executive positions at Hewlett-Packard, Amazon, Applied Materials, WABCO and others. He was also previously a consultant with McKinsey & Company. Mr. Dastidar holds a Ph.D. in various production and manufacturing roles at Establishment Biotech, S.A. from 2004 to 2006. Mr. Dada received undergraduate and licentiate degrees in IndustrialMechanical Engineering from the University of Costa Rica.
Renee M. Gaeta, 40, has been our Chief Financial Officer since July 2017. Since February 2019, Ms. Gaeta has served asMassachusetts, Amherst, and a board member of SeaSpine Holdings Inc. From August 2014 to June 2017, she was Vice President and Corporate Controller at Sientra, Inc., a global medical aesthetics company. Prior to that, from 2004 to 2014, Ms. Gaeta held various positions at KPMG LLP, most recently as an Advisory Director in the Transactions & Restructuring Group. Ms. Gaeta received her Bachelor of Science, cum laude,Technology in Mechanical Engineering from Loyola Marymount University.Indian Institute of Technology, Kharagpur.
EXECUTIVE COMPENSATION
Processes and Procedures for Compensation Decisions
Our Compensation Committee is responsible for the executive compensation programs for our executive officers and reports to our Board on its discussions, decisions and other actions. Our Compensation Committee reviews and approves corporate goals and objectives relating to the compensation of our Chief Executive Officer, evaluates the performance of our Chief Executive Officer in light of those goals and objectives and determines and approves the compensation of our Chief Executive Officer based on such evaluation. Our Compensation Committee reviews and makes recommendations to the Board regarding our Chief Executive Officer’s compensation and the compensation of our directors. In addition, our Compensation Committee, in consultation with our Chief Executive Officer, reviews and approves all compensation for other officers. Our Chief Executive Officer and Chief Financial OfficerHead of Human Resources also make compensation recommendations for our other executive officers and initially propose the corporate and departmental performance objectives under our Executive Incentive Compensation Plan to the Compensation Committee.
The Compensation Committee is authorized to retain the services of one or more executive compensation and benefits consultants or other outside experts or advisors as it sees fit, in connection with the establishment of our compensation programs and related policies. During 2021, we used Frederic W. Cook & Co., Inc. ("FW Cook") to advise us on our compensation practices. FW Cook did not perform any other services to the Company and, as such, no conflicts of interest were raised.
Summary Compensation Table for Fiscal Year 20202021
The following table provides information regarding the total compensation for services rendered in all capacities that was or paid tofor our named executive officers ("NEOs") for the years ended December 31, 2021 and 2020, and 2019.as applicable.
| | Name and Principal Position | Name and Principal Position | | Year | | Salary | | Non-equity Incentive Plan(1) | | All Other Compensation(2) | | Total | Name and Principal Position | | Year | | Salary | | Option Awards ($) (1) | | Non-equity Incentive Plan(2) | | All Other Compensation(3) | | Total |
| Juan José Chacón Quirós | Juan José Chacón Quirós | | 2020 | | $ | 337,238 | | $ | 218,920 | | | $ | 42,000 | | | $ | 598,158 | | Juan José Chacón Quirós | | 2021 | | $ | 435,000 | | $ | 1,441,771 | | | $ | 362,250 | | | $ | 44,070 | | | $ | 2,283,091 | |
| Chief Executive Officer | Chief Executive Officer | | 2019 | | $ | 367,000 | | $ | 180,000 | | | $ | 42,000 | | | $ | 589,000 | | Chief Executive Officer | | 2020 | | $ | 337,238 | | $ | — | | | $ | 218,920 | | | $ | 42,000 | | | $ | 598,158 | |
| Salvador Dada Santos | | 2020 | | $ | 293,824 | | $ | 137,592 | | | $ | 37,200 | | | $ | 468,616 | | |
| Chief Operating Officer | | 2019 | | $ | 306,000 | | $ | 98,700 | | | $ | 37,200 | | | $ | 441,900 | | |
| Rajbir S. Denhoy | | Rajbir S. Denhoy | | 2021 | | $ | 253,462 | | $ | 3,871,150 | | | $ | 127,397 | | | $ | 17,500 | | | $ | 4,269,509 | |
| Chief Financial Officer | | Chief Financial Officer | | | |
| | Renee M. Gaeta | | 2020 | | $ | 299,688 | | $ | 137,592 | | | $ | 43,110 | | | $ | 480,390 | | |
| Chief Financial Officer | | 2019 | | $ | 315,000 | | $ | 100,913 | | | $ | 45,293 | | | $ | 461,206 | | |
| Pratip Dastidar | | Pratip Dastidar | | 2021 | | $ | 212,200 | | $ | 2,168,030 | | | $ | 106,192 | | | $ | — | | | $ | 2,486,422 | |
| Head of Global Operations | | Head of Global Operations | | | |
(1)Amounts reported represent the aggregate grant date fair value of the stock option awards granted to the NEOs in 2021. The aggregate grant date fair value of these awards was computed in accordance with FASB ASC Topic 718 and excludes the effects of estimated forfeitures. The reported award values have been determined using the assumptions described in Note 10 to the Consolidated Financial Statements included in our 2021 Annual Report. The options granted vest in four substantially equal annual installments, subject to the NEOs’ continued employment through the vesting date.
(2)Consists solely of bonus paid upon the achievement of certain personal and Company performance objectives. Please see the discussion of our 2021 incentive program below.
(2)(3)The components of the column entitled “All Other Compensation” isare set forth in the following table:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | | Year | | Vehicle Allowance | | Life Insurance Premiums | | Housing Allowance | | Vacation Payout | | Other | | Total |
| Juan José Chacón Quirós | | 2020 | | $ | 24,000 | | $ | 9,000 | | | $ | — | | | $ | — | | | $ | 9,000 | | | $ | 42,000 | |
| Chief Executive Officer | | 2019 | | $ | 24,000 | | $ | 9,000 | | | $ | — | | | $ | — | | | $ | 9,000 | | | $ | 42,000 | |
| Salvador Dada Santos | | 2020 | | $ | 21,000 | | $ | 7,200 | | | $ | — | | | $ | — | | | $ | 9,000 | | | $ | 37,200 | |
| Chief Operating Officer | | 2019 | | $ | 21,000 | | $ | 7,200 | | | $ | — | | | $ | — | | | $ | 9,000 | | | $ | 37,200 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Renee M. Gaeta | | 2020 | | $ | 21,090 | | $ | — | | | $ | 22,020 | | | $ | — | | | $ | — | | | $ | 43,110 | |
| Chief Financial Officer | | 2019 | | $ | 21,293 | | $ | — | | | $ | 24,000 | | | $ | — | | | $ | — | | | $ | 45,293 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | | Year | | Vehicle Allowance | | Life Insurance Premiums | | Housing Allowance | | Vacation Payout | | Other | | Total |
| Juan José Chacón Quirós | | 2021 | | $ | 24,000 | | $ | 11,070 | | | $ | — | | | $ | — | | | $ | 9,000 | | | $ | 44,070 | |
| Chief Executive Officer | | 2020 | | $ | 24,000 | | $ | 9,000 | | | $ | — | | | $ | — | | | $ | 9,000 | | | $ | 42,000 | |
| Rajbir S. Denhoy | | 2021 | | $ | 17,500 | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 17,500 | |
| Chief Financial Officer | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Pratip Dastidar | | 2021 | | $ | — | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Head of Global Operations | | | | | | | | | | | | | | |
Non-Equity Incentive Plan Compensation
Executive Incentive Compensation Plan
In December 2016,2021, our Board adopted an Executive Incentive Compensation Plan,Committee approved a performance-based incentive plan in which we referall of the NEOs were eligible to as our Bonus Plan. Our Bonus Plan will allow its administrator to provide cash incentive awards to selected employees, including our NEOs, based upon performance goals established by the administrator. Pursuant to the Bonus Plan, the administrator, in its sole discretion, will establishparticipate.Each NEO had a target awardbonus opportunity for 2021 as follows:Mr. Chacón Quirós’ target bonus was equal to 75% of his base salary, Mr. Denhoy’s target bonus was equal to 50% of his base salary and Mr. Dastidar’s target bonus was equal to 50% of his base salary.
For 2021, the Compensation Committee established four separate performance metrics for our NEOs’ incentive compensation opportunity, each participant and a bonus pool, with actual awards payable from such bonus pool, with respect to the applicable performance period.
Under the Bonus Plan, the administrator, in its sole discretion, will determine the performance goals applicable to awards, which goals may include, without limitation, attainment of research and development milestones, bookings, business divestitures and acquisitions, cash flow, cash position, contract awards or backlog, customer renewals, customer retention rates from an acquired company, subsidiary, business unit or division, earnings (which may include earnings before interest and taxes, earnings before taxes, and net taxes), earnings per share, expenses, gross margin, growth in shareholder value relative to the moving average of the S&P 500 Index or another index, installs, internal rate of return, market share, net income, net profit, net sales, new product development, new product invention or innovation, number of customers, operating cash flow, operating expenses, operating income, operating margin, overhead or other expense reduction, product defect measures, product release timelines, productivity, profit, retained earnings, return on assets, return on capital, return on equity, return on investment, return on sales, revenue, revenue growth, sales results, sales growth, share price, time to market, total shareholder return, working capital, unadjusted or adjusted actual contract value, unadjusted or adjusted total contractual value, and individual objectives such as peer reviews or other subjective or objective criteria. As determined by the administrator, performance goals that include our financial results may be determined in accordance with generally accepted accounting principles ("GAAP"), or such financial results may consist of non-GAAP financial measures and any actual results may be adjusted by the administrator for one-time items or unbudgeted or unexpected items and/or payments when determining whether the performance goals have been met. separate weightings.The goals may be on the basis of any factors the administrator determines relevant, and may be on an individual, divisional, business unit, segment, or company-wide basis. The performance goals may differ from participant to participant and from award to award.
The administrator may, in its sole discretion and at any time, increase, reduce or eliminate a participant’s actual award, or increase, reduce or eliminate the amount allocated to the bonus pool for a particular performance period. The actual award may be below, at or above a participant’s target award, in the administrator’s discretion. The administrator may determine the amount of any reduction on the basis of such factors as it deems relevant, and it is not required to establish any allocation or weighting with respect to the factors it considers.
Actual awards are paid in cash in a single lump sum as soon as practicable after the endfollowing chart describes each of the performance period during which they are earnedmetrics, the applicable weightings and after they are approved by the administrator, but in no event later than the later of March 15 of the following calendar year or the 15th day of the third month of the following fiscal year. Unless otherwise determined by the administrator, to earn anour actual award, a participant must be employed by us (or an affiliate of ours) through the date the award is paid.performance results achieved for each metric.
Our board of directors or the administrator, in their sole discretion, may alter, suspend, or terminate the Bonus Plan, provided such action does not, without the consent of the participant, alter or impair the rights or obligations under any award already earned by such participant.
| | | | | | | | | | | | | | |
| Performance Metric | | Weighting | | Achievement |
Grow New and Existing Products •NEOs were required to generate total revenues between $114 million and $120 million •NEOs were also required to commence market development initiatives | | 45.5% | | 46.55% Total achieved revenues were $126.7 million and our market development initiatives were achieved in full |
Optimize Organizational Capabilities •Implement digital operating model and organizational success model •Complete cold shell phase of new manufacturing facility | | 20% | | 19.5% We successfully implemented our models and substantially completed our new manufacturing facility objectives |
| | | | | | | | | | | | | | |
| Performance Metric | | Weighting | | Achievement |
Expand Geographic Footprint •Prepare for US market entry •Achieve certain clinical objectives | | 18.5% | | 18.1% We made substantial progress on each of these objectives in 2021 |
Maintain Core Business •Achieve business expense and cash burn-rate objectives •Maintain global regulatory compliance | | 16% | | 16.1% We achieved our expense and cash-flow objectives and achieved our regulatory compliance goals |
Based on our performance in 2021 against the performance metrics described above, each NEO earned an incentive payment for 2021 equal to approximately 100% of his target bonus.The incentive payments earned by the NEOs were as follows:Mr. Chacón Quirós ($362,250), Mr. Denhoy ($127,397) and Mr. Dastidar ($106,192).
Executive Officer Employment Agreements
Employment Agreements with Establishment Labs Holdings Inc.
On December 23, 2018, Establishment Labs Holdings Inc. entered into an employment agreement that became effective on December 26, 2018 with each of Juan José Chacón Quirós, our Chief Executive Officer, and Salvador Dada Santos, our Chief Operating Officer. On August 10, 2018,February 8, 2021, Establishment Labs Holdings Inc. entered into an employment agreement that became effective on August 10, 2018February 24, 2021 with Renee M. Gaeta,Rajbir S. Denhoy, our Chief Financial Officer.Officer, for his former role as Head of Strategy and Investor Relations. On May 17, 2021, we entered into an employment agreement with Pratip Dastidar, our Head of Global Operations.
Each employment agreement has no specific term and provides that the executive officer is an at-will employee. If a Change in Control (as defined in the 2018 Equity Incentive Plan) occurs before the termination of executive officer's employment, 100% accelerated vesting of executive officer's outstanding equity awards and, in the case of an equity award with performance-based vesting, all performance goals and other vesting criteria generally will be deemed achieved at 100% of target levels and all other terms and conditions met.
If an executive officer’s employment is terminated outside the period beginning on the date of a Change in Control and ending 12 months following that Change in Control (the “Change in Control Period”) either (1) by Establishment Labs or any of its parents and subsidiaries (the “ESTA Group”) without Cause (excluding by reason of death or disability) or (2) by the executive officer for Good Reason (as such terms are defined in the executive officer’s employment agreement), the executive officer will receive the following benefits if he timely signs and does not revoke a release of claims in our favor and continues to comply with the executive officer’s employee confidentiality agreement and noncompetition, nondisclosure and inventions agreement with Establishment Labs’ (collectively, the “Related Agreements”) and the employment agreement:
•a lump-sum payment equal to a specified number of months (12 months for Mr. Chacón Quirós and 9 months for Mr. Dada,Dastidar, and Ms. Gaeta)Mr. Denhoy) of the executive officer’s annual base salary as in effect immediately prior to such termination (or if such termination is due to a resignation for Good Reason based on a material reduction in base salary, then as in effect immediately prior to the reduction); and
•a lump-sum payment equal to a pro-rated amount (based on the period of time the executive officer had been employed during the year of termination) of the annual bonus the executive officer would have received for the year of termination had the executive officer remained employed with Establishment Labs through the date the executive officer was required to continue employment to receive the bonus.
If, within the Change in Control Period, the executive officer’s employment is terminated either (1) by any ESTA Group member without Cause (excluding by reason of death or disability) or (2) by the executive officer for Good Reason, the executive officer will receive the following benefits if the executive officer timely signs and does not revoke a release of claims in our favor and continues to comply with his Related Agreements and the employment agreement:
•a lump-sum payment equal to a specified number of months (18 months for Mr. Chacón Quirós and 12 months for Mr. DadaDastidar and Ms. Gaeta)Mr. Denhoy) of the executive officer’s annual base salary as in effect immediately prior to such termination (or if such termination is due to a resignation for Good Reason based on a material reduction in base salary, then as in effect immediately prior to the reduction) or if greater, at the level in effect immediately prior to the Change in Control;
•a lump-sum payment equal to 100% of the executive officer’s target annual bonus as in effect for the fiscal year in which such termination occurs; an
•100% accelerated vesting of the executive officer’s outstanding equity awards.
The severance payments and benefits each executive officer would otherwise be entitled under his employment agreement will be reduced by any liability Establishment Labs may have to him for any severance payments or benefits required under any applicable statute, law, or regulation to the extent permitted by applicable law.
If any of the payments and benefits provided for under these employment agreements or otherwise payable to the executive officersofficer would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code and could be subject to the related excise tax, the executive officer would be entitled to receive either full payment of the payments and benefits under his employment agreement or such lesser amount which would result in no portion of the payments and benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to the executive officer. The employment agreements do not require us to provide any tax gross-up payments.
In addition, each employment agreement includes a non-competition covenant during the 12-month period following termination of the executive officer’s employment and a non-solicitation covenant during the 2-year period following termination of the executive officer’s employment.
Employment Agreements with Establishment Labs Holdings S.A.
In addition to the employment agreements with Establishment Labs, on December 23, 2018, Establishment Labs S.A. (“ELSA”), a Costa Rican corporation and wholly-owned subsidiary of Establishment Labs, entered into an employment agreement that became effective on December 26, 2018 with each of Mr. Chacón Quirós,, ELSA’s General Manager, and Mr. Dada, ELSA’s Operations Manager.
EachThe employment agreement has no specific term and provides that the executive officer is an at-will employee.
If an executive officer’s employment is terminated outside the Change in Control Period either (1) by ELSA or any of its parents and subsidiaries (the “ELSA Group”) without Cause (excluding by reason of death or disability) or (2) by the executive officer for Good Reason (as such terms are defined in the executive officer’s employment agreement), the executive officer will receive the following benefits if he timely signs and does not revoke a release of claims in our favor:
•a lump-sum payment equal to a specified number of12 months (12 months for Mr. Chacón Quirós and 9 months for Mr. Dada) of the executive officer’s annual base salary as in effect immediately prior to such termination (or if such termination is due to a resignation for Good Reason based on a material reduction in base salary, then as in effect immediately prior to the reduction); and
•payment of premiums for the executive officer and his eligible dependents to continue healthcare coverage at the rates then in effect for active employees, subject to any subsequent changes in rates that are generally applicable to ELSA’s active employees, for up to a specified number of months (12 months for Mr. Chacón Quirós and 9 months for Mr. Dada).12 months.
If, within the Change in Control Period, the executive officer’s employment is terminated either (1) by any ELSA Group member without Cause (excluding by reason of death or disability) or (2) by the executive officer for Good Reason, the executive officer will receive the following benefits if the executive officer timely signs and does not revoke a release of claims in our favor:
•a lump-sum payment equal to a specified number of18 months (18 months for Mr. Chacón Quirós and 12 months for Mr. Dada) of the executive officer’s annual base salary as in effect immediately prior to such termination (or if such termination is due to a resignation for Good Reason based on a material reduction in base salary, then as in effect
immediately prior to the reduction) or if greater, at the level in effect immediately prior to the Change in Control); and
•payment of premiums for the executive officer and his eligible dependents to continue healthcare coverage at the rates then in effect for active employees, subject to any subsequent changes in rates that are generally applicable to ELSA’s active employees, for up to a specified number of months (18 months for Mr. Chacón Quirós and 12 months for Mr. Dada).18 months.
The severance payments and benefits each executive officer would otherwise be entitled under his employment agreement will be reduced by any liability ELSA may have to him for any severance payments or benefits required under any applicable statute, law, or regulation to the extent permitted by applicable law.
If any of the payments and benefits provided for under thesethe employment agreementsagreement or otherwise payable to the executive officers would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code and could be subject to the related excise tax, the executive officer would be entitled to receive either full payment of the payments and benefits under his employment agreement or such lesser amount which would result in no portion of the payments and benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to the executive officer. The employment agreements doagreement does not require us to provide any tax gross-up payments.
In addition, each employment agreement includes a non-competition covenant during the 12-month period following termination of the executive officer’s employment and a non-solicitation covenant during the 2-year period following termination of the executive officer’s employment.
Our employment agreements with our executive officers may require us to pay severance benefits to any of those persons who are terminated in connection with a change in control of us, which could harm our financial condition or results.
Certain of our executive officers are parties to employment agreements that contain change in control and severance provisions providing for aggregate cash payments of up to approximately $2.5 million for severance and other benefits and acceleration of vesting of share options in the event of a termination of employment in connection with a change in control of our company. The accelerated vesting of options could result in dilution to our existing shareholders and harm the market price of our common shares. The payment of these severance benefits could harm our financial condition and results. In addition, these potential severance payments may discourage or prevent third parties from seeking a business combination with our company.
Pension Benefits and Nonqualified Deferred Compensation
Aside from our 401(k) Plan, we do not maintain any pension plan or arrangement under which our named executive officers are entitled to participate or receive post-retirement benefits.
We do not maintain any non-qualified deferred compensation plans or arrangements under which our named executive officers participate.
Outstanding Equity Awards at 20202021 Year-End
The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2020:2021:
| | Named Executive Officer | Named Executive Officer | | Grant Date | | Option Awards - Number of Securities Underlying Unexercised Options Exercisable | | Option Awards - Number of Securities Underlying Unexercised Options Unexercisable | | Option Awards - Option Exercise Price | | Option Awards - Option Expiration Date | | Stock Awards - Number of Shares That Have Not Vested | | Stock Awards - Market Value of Shares or Units of Stock That Have Not Vested | Named Executive Officer | | Grant Date | | Option Awards - Number of Securities Underlying Unexercised Options Exercisable | | Option Awards - Number of Securities Underlying Unexercised Options Unexercisable | | Option Awards - Option Exercise Price | | Option Awards - Option Expiration Date | | Stock Awards - Number of Shares That Have Not Vested | | Stock Awards - Market Value of Shares or Units of Stock That Have Not Vested |
| Juan José Chacón Quirós | Juan José Chacón Quirós | | 4/25/2019 | | — | | | 80,000 | | | $ | 25.25 | | | 4/25/2029 | | — | | | $ | — | | Juan José Chacón Quirós | | 4/25/2019 | | 20,000 | | | 60,000 | | | $ | 25.25 | | | 4/25/2029 | | — | | | $ | — | |
| Salvador Dada Santos | | 4/25/2019 | | — | | | 35,000 | | | $ | 25.25 | | | 4/25/2029 | | — | | | $ | — | | |
| | | Renee M. Gaeta | | 3/13/2018 | | 110,340 | | | 36,780 | | | $ | 10.19 | | | 3/13/2028 | | — | | | $ | — | | |
| 6/26/2020 | | — | | | 35,000 | | | $ | 17.03 | | | 6/26/2030 | | — | | | $ | — | | |
| Juan José Chacón Quirós | | Juan José Chacón Quirós | | 2/15/2021 | | — | | | 37,257 | | | $ | 69.49 | | | 2/15/2031 | | — | | | $ | — | |
| | 2/28/2021 | | — | | | 100,000 | | | $ | 69.03 | | | 2/28/2031 | | — | | | $ | — | |
| Pratip Dastidar | | Pratip Dastidar | | 5/24/2021 | | — | | | 50,000 | | | $ | 77.11 | | | 5/24/2021 | | — | | | $ | — | |
| | 12/14/2020 | | 11,000 | | | — | | | $ | 31.50 | | | 12/14/2030 | | — | | | $ | — | |
The options granted vest in four substantially equal annual installments, subject to the NEOs’ continued employment through the vesting date.
Employee Benefit Plans
Our NEOs are eligible to participate in our employee benefit plans, including our medical, dental, vision, group life, and accidental death and dismemberment insurance plans, in each case, on the same basis as all of our other employees. We maintain a 401(k) plan for the benefit of our eligible employees, including our NEOs, as discussed in the section below.
401(k) Plan
We maintain a tax-qualified retirement plan, or our 401(k) plan, that provides eligible employees with an opportunity to save for retirement on a tax-advantaged basis. Participants are able to defer up their eligible compensation subject to applicable annual Internal Revenue Service limits. All participants’ interests in their deferrals are 100% vested when contributed. Our 401(k) plan permits us to make matching contributions and discretionary contributions to eligible participants.
Risks Related to Compensation Policies and Practices
The Compensation Committee regularly monitors and considers whether our overall compensation programs, including our executive compensation program, create incentives for employees to take excessive or unreasonable risks that could materially harm our Company. Although risk-taking is a necessary part of any business, the Compensation Committee focuses on aligning the Company’s compensation policies with the long-term interests of the Company and its stockholders and avoiding short-term rewards for management decisions that could pose long-term risks to the Company. We believe our 2021 compensation programs do not create risks that are reasonably likely to have a material adverse effect on our Company.
REPORT
PROPOSAL 3: ADVISORY APPROVAL OF THENAMED EXECUTIVE OFFICER COMPENSATION COMMITTEE
In accordance with Section 14A of the Exchange Act, which was amended pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are asking shareholders to approve a non-binding advisory resolution approving our executive compensation as reported in this proxy statement.
As described above in this proxy statement, our executive compensation program is designed to motivate the Company’s NEOs to create long-term value for our shareholders and is weighted towards both short-and long-term performance-based compensation.
We urge shareholders to read the “Executive Compensation” section, which describes in more detail our executive compensation objectives and the key elements of our executive compensation program. The Compensation Committee has reviewed and discussed the foregoingBoard believe that our executive compensation section with management. Basedprogram is appropriately designed to achieve the objectives of our executive compensation philosophy.
We are asking shareholders to approve the following advisory resolution at the Annual Meeting:
RESOLVED, that the shareholders of the Company approve, on an advisory basis, the compensation of our named executive officers as set forth under “Executive Compensation” and the related compensation tables and narratives in the proxy statement for the 2022 annual meeting of shareholders.
This proposal to approve the compensation paid to our NEOs is advisory only and will not be binding on the review and discussions,Company, the Board or the Compensation Committee, recommended toand will not be construed as overruling a decision by, or creating or implying any additional fiduciary duty for, the Company, the Board that suchor the Compensation Committee. However, the Compensation Committee, which is responsible for designing and administering the Company’s executive compensation section beprogram, values the opinions expressed by shareholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our named executive officers.
We have included in this Proxy Statement.proxy statement a proposal to approve the frequency of future non-binding advisory votes on the compensation of our NEOs. Our Board of Directors recommends that we hold such a vote every year. Accordingly, if shareholders approve 1 YEAR as the preferred frequency option in Proposal 4, we expect the next non-binding advisory vote on the compensation of our NEOs will occur at the 2023 annual meeting of shareholders.
Compensation CommitteeVote Required and Board Recommendation
Edward Schutter (Chair)Approval of this proposal requires the affirmative vote of a simple majority of the votes of the common shares entitled to vote and voting on this Proposal 3. Abstentions and broker non-votes will have no effect on voting for this proposal.
Dennis Condon
OUR BOARD RECOMMENDS A VOTE FOR THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
The information contained in the above Compensation Committee Report shall not be deemed “soliciting material” or “filed”
PROPOSAL 4: ADVISORY APPROVAL OF THE FREQUENCY OF EXECUTIVE COMPENSATION ADVISORY VOTES
In accordance with the SEC, or subject to the liabilitiesrequirements of Section 1814A of the Exchange Act exceptand the related rules of the SEC, we are asking shareholders to vote, on a non-binding, advisory basis, for their preference as to how frequently we should seek future advisory votes on the extentcompensation of our NEOs. Under SEC rules, we are required to hold a new say-on-frequency vote at least every six years.
By voting with respect to this Proposal 4, shareholders may indicate whether they would prefer that we specifically incorporateconduct future advisory votes on executive compensation once every 1, 2 or 3 years. Shareholders also may, if they wish, abstain from voting on this proposal.
Our Board believes that advisory votes on executive compensation should be conducted every year so that our shareholders may annually express their views on our executive compensation program.
This vote is advisory and not binding on us or the Board. However, the Board will take into account the outcome of the vote when considering the frequency of future advisory votes on executive compensation. The Board may decide that it is in the best interests of shareholders and the Company to hold an advisory vote on executive compensation more or less frequently than the frequency receiving the most votes cast by reference into such filings.shareholders.
Shareholders will have with the opportunity to choose among four options (holding the vote every 1, 2 or 3 years, or abstaining) and, therefore, shareholders will not be voting to approve or disapprove the recommendation of the Board.
Vote Required and Board Recommendation
Approval of this proposal requires the affirmative vote of a simple majority of the votes of the common shares entitled to vote and voting on this Proposal 4. Abstentions and broker non-votes will have no effect on voting for this proposal. If no frequency option receives the affirmative vote of a simple majority of the votes cast at the Annual Meeting, our Board will consider the option receiving the highest number of votes cast as the preferred frequency option of our shareholders.
OUR BOARD RECOMMENDS A VOTE 1 YEAR FOR THE FREQUENCY OF FUTURE OF FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION.
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes our equity compensation plan information as of December 31, 2020.2021. Information is included for equity compensation plans approved by our shareholders. We do not have any equity compensation plans not approved by our shareholders.
| | Plan Category | Plan Category | | (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (2) | | (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (3) | | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (4) | Plan Category | | (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (2) | | (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (3) | | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (4) |
Equity compensation plans approved by stockholders(1) | | 2,061,584 | | | $ | 16.71 | | | 2,115,112 | | |
| Equity compensation plans not approved by stockholders | | — | | | $ | — | | | — | | |
Equity compensation plans approved by shareholders(1) | | Equity compensation plans approved by shareholders(1) | | 2,102,069 | | | $ | 37.49 | | | 2,441,687 | |
| Equity compensation plans not approved by shareholders | | Equity compensation plans not approved by shareholders | | — | | | $ | — | | | — | |
| Total | Total | | 2,061,584 | | | $ | 16.71 | | | 2,115,112 | | Total | | 2,102,069 | | | $ | 37.49 | | | 2,441,687 | |
(1)Includes the following plans: 2015 Equity Incentive Plan (“2015 Plan”), 2018 Equity Incentive Plan (“2018 Plan”) and 2018 Employee Stock Purchase Plan (“2018 ESPP”).
Concurrent with the closing of the IPO, the Board of Directors terminated the 2015 Plan and approved the 2018 Plan, with an initial reserve of 1,500,000 shares of the Company’s common shares for issuance under the 2018 Plan.
Pursuant to the “evergreen” provision contained in the 2018 Plan, the number of common shares reserved for issuance under the 2018 Plan automatically increases on first day of each fiscal year, commencing on January 1, 2019, in an amount equal to the least of (1) 750,000 shares, (2) 4% of the total number of the Company’s common shares outstanding on the last day of the preceding fiscal year, or (3) a number of common shares as may be determined by the Company’s Board of Directors prior to any such increase date. On January 1, 2019, 2020 and 2020,2021, the number of common shares authorized for issuance increased automatically by 750,000 shares in accordance with the evergreen provision, increasing the number of common shares reserved under the 2018 Plan to 3,000,000.3,750,000.
Similarly, effective January 1, 2019, 2020 and 2020,2021, given no action by the Board of Directors, the number of common shares reserved for issuance under the ESPP automatically increased by 1% of the total number of the Company’s common shares outstanding on the last day of the preceding fiscal year, increasing the number of common shares authorized for issuance under ESPP to 474,000.661,000.
(2)This number includes 48,6243,982 shares subject to restricted stock units and 2,012,9602,098,087 options outstanding.
(3)The weighted average exercise price relates solely to outstanding stock option shares since shares subject to the restricted stock units have no exercise price.
(4)This number includes 1,641,1121,780,687 common shares available for grant under the 2018 Plan and 474,000661,000 common shares available under the 2018 ESPP.
OTHER MATTERS
Transaction of Other Business
The Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, the persons appointed in the accompanyingas proxy holders intend to vote the shares represented thereby in accordance with their best judgment on such matters, under applicable laws.
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Exchange Act requires that our executive officers, directors and 10% stockholdersshareholders file reports of ownership and changes of ownership with the SEC. Such directors, executive officers and 10% stockholdersshareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
SEC regulations require us to identify in this proxy statement anyone who filed a required report late during the most recent fiscal year. Based on our review of forms we received and written representations of our executive officers, directors and 10% stockholders,shareholders and except as previously disclosed, we believe that during our fiscal year ended December 31, 2020,2021 or prior fiscal years, all Section 16(a) filing requirements were satisfied on a timely basis.basis except for a Form 4 filing for Mr. Lewin to report two purchase transactions of our common shares by his spouse.
Fiscal Year 20202021 Annual Report and SEC Filings
Our financial statements for our fiscal year ended December 31, 20202021 are included in our Annual Report on Form 10-K, which we will make available to shareholders at the same time as this proxy statement. This proxy statement and our annual report are posted on our website at https://investors.establishmentlabs.com/financial-information and are available from the SEC at its website at www.sec.gov. You may also obtain a copy of our annual report without charge by sending a written request to address below:
Establishment Labs Holdings Inc.
Attention: Investor Relations
Building B25
Coyol Free Zone
Alajuela 20113, Costa Rica
* * *
The Board does not know of any other matters to be presented at the Annual Meeting. If any additional matters are properly presented at the Annual Meeting, the persons named in the enclosed proxy card will have discretion to vote the common shares they represent in accordance with their own judgment on such matters.
It is important that your shares be represented at the Annual Meeting, regardless of the number of shares that you hold. You are, therefore, urged to vote by telephone or by using the Internet as instructed on the enclosed proxy card or executevoting instruction form or, if you received a printed copy of the proxy materials, by mail by executing and return,returning the enclosed proxy card or voting instruction, at your earliest convenience, the enclosed proxy card in the preaddressed, prepaid envelope that has also been provided.
THE BOARD OF DIRECTORS
Alajuela, Costa Rica
April 14, 202129, 2022
