SECURITIES AND EXCHANGE COMMISSION
Proxy Statement Pursuant to Section 14(a) of the
the Securities Exchange Act of 1934
Filed by the Registrant ☑
Filed by a Party other than the Registrant ☐
Check the appropriate box:
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þ | | Preliminary Proxy Statement |
| | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☐ | | Definitive Proxy Statement |
| ☐ | | Definitive Additional Materials |
| ☐ | | Soliciting Material Pursuant to §240.14a-12§240.14a-12 |
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CONMED CORPORATION |
(Name of Registrant as Specified In Its Charter) |
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
| ☐ | | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| | (1) | | Title of each class of securities to which transaction applies: |
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| | (2) | | Aggregate number of securities to which transaction applies: |
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| | (3) | | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
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| | (4) | | Proposed maximum aggregate value of transaction: |
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| | (5) | | Total fee paid: |
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☐ | | Fee paid previously with preliminary materials. |
| ☐ | | Check box if any part of the fee is offset as providedFee computed on table in exhibit required by Item 25(b) per Exchange Act Rule 0-11(a)(2) Rules14a-6(i)(1) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.0-11 |
Notice of Annual Meeting of Stockholders
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(1) | | Amount Previously Paid: |
| Date and Time: | | Location: |
Wednesday, May 24, 2023 at 1:30 p.m. (EDT) | | CONMED Headquarters: 11311 Concept Blvd Largo, FL 33773 And the Meeting Website: www.proxydocs.com/CNMD |
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| Record Date: | | (2)Proxy Mail Date: |
| March 28, 2023 | | Form, ScheduleOn or Registration Statement No.: |
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| | (3) | | Filing Party: |
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| | (4) | | Date Filed: |
| | | | about April 11, 2023 |
PRELIMINARY PROXY STATEMENT
SUBJECT TO COMPLETION - DATED MARCH 16, 2020
CONMED CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of ShareholdersStockholders of CONMED Corporation (the “Company”) will be held on Wednesday, May 24, 2023, at 1:30 p.m. EDT at the offices of the Company at 525 French Road, Utica, New York 13502 on [Thursday, May 21, 2020 at 1:30 p.m (New York time)],11311 Concept Boulevard, Largo FL 33773, and remotely through the internet forthe following purposes:
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| (1) | To elect tennine directors to serve on the Company’s Board of Directors; |
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| (2) | To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020;2023; |
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| (3) | To hold an advisory vote on named executive officer compensation; |
| (4) | To hold an advisory vote on the frequency of future advisory votes on named executive officer compensation; |
(4) | (5) | To approve the reincorporation of the Company from New York to Delaware (the “Reincorporation”), including adoption of the Agreement and Plan of Merger required to effect the Reincorporation and approval ofamend the Company’s proposed Delaware Certificate of Incorporation andto reflect new Delaware By-laws;law provisions regarding officer exculpation; and |
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(5)(6) | To approve procedural matters with respect to shareholder action by written consent to be included in the Delaware Certificate of Incorporation in connection with the Reincorporation; |
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(6) | To approve an exculpation provision eliminating director liability for monetary damages to be included in the Delaware Certificate of Incorporation in connection with the Reincorporation; |
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(7) | To approve the Amended and Restated 2020 Non-Employee Director Equity Compensation Plan; |
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(8) | To approve amendments to the Company’s Employee Stock Purchase Plan; and |
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(9) | To transact such other business as may properly be brought before the meeting or any adjournment or postponement thereof. |
The shareholdersstockholders of record at the close of business on [April 3, 2020],March 28, 2023, are entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof.
Even if you plan toThis year’s Annual Meeting will be a “hybrid” meeting. Stockholders may attend the Annual Meeting in person or virtually. Stockholders attending virtually will be able to attend the annual meeting, submit questions and vote during the live webcast by visiting www.proxydocs.com/CNMD (the “Meeting Website”) and entering the 16-digit control number included on their Notice of Internet Availability, their proxy card or their voting instruction form. Details on how to register for and participate in the Annual Meeting remotely by means of the Meeting Website accompany this Proxy Statement and are available on the Company’s website on the Annual Meeting page of the investor relations section.
Even if you plan to participate in the Annual Meeting, we request that you mark, date, sign and return your proxy in the enclosed self-addressed envelope as soon as possible so that your shares may be certain of being represented and voted at the meeting. Any proxy given by a shareholderstockholder may be revoked by that shareholderstockholder at any time prior to the voting of the proxy.
The Company is actively monitoring the coronavirus (COVID-19) and is sensitive to the public health and travel concerns shareholders may have as well as the protocols that federal, state, and local governments may impose. While the Company continues to expect to hold the Annual Meeting and expects at a minimum to hold a “hybrid” meeting in which shareholders are permitted and encouraged to participate remotely by means of electronic communication, in the event it is not possible to allow in-person attendance at the meeting, the Company will announce alternative arrangements as promptly as practicable, and will issue a press release with details on how to do so. The press release will be posted on the Company’s website and filed with the SEC as additional proxy materials. If you are planning to participate in the Annual Meeting, please check the Company’s website prior to the meeting date. As always, you are encouraged to vote your shares prior to the Annual Meeting.
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| | By Order of the Board of Directors, |
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| | Daniel S. Jonas Special Counsel and Corporate Secretary |
April 11, 2023
Meeting Instructions
Participating in the Annual Meeting
For Stockholders Who Are Registered Holders
Stockholders of record at the close of business on the record date of March 28, 2023, may attend the Annual Meeting in person, or may participate in the Annual Meeting remotely by accessing the online meeting platform at www.proxydocs.com/CNMD (the “Meeting Website”), clicking on the “I have a login” button and entering the 16-digit control number found on their proxy card. Once admitted to the Annual Meeting, stockholders will be able to ask questions and vote during the Annual Meeting by following the instructions provided on the online platform and described below. We urge stockholders who plan to attend in person to arrive 15 minutes beforehand, and for those who plan to participate remotely to log on 15 minutes prior to the start of the Annual Meeting:
Stockholders will also be able to view a List of Stockholders on the Meeting Website.
For Stockholders Whose Shares Are Held by a Broker (in Street Name)
Stockholders who hold shares through a broker, bank or other nominee (“Beneficial Holders”), may join the Annual Meeting remotely in one of two ways:
Beneficial Holders may join as a “Guest” in listen-only mode by accessing the Meeting Website using the link and password provided above, clicking on the “I am a guest” button and entering the requested information on the following screen. Beneficial Holders who login as guests will not be permitted to ask questions or vote.
| • | | Beneficial Holders who have obtained a legal proxy from the record holder and who wish to ask questions or vote, may join as a “Stockholder” but must register in advance by emailing an image of the legal proxy, in the Beneficial Holder’s name, from the broker, bank or other nominee that holds the shares as well as the Beneficial Holder’s address to legalproxy@computershare.com. A legal proxy can be obtained either by logging into the voting site listed on the previously provided Voter Instruction Form and clicking on “Vote in person at the meeting” or by requesting one through the broker, bank or other nominee who is the registered holder of the shares. After completing this process, Computershare will provide the Beneficial Holder with a 16-digit control number that can be used to log in to Meeting Website using the link and password described above to ask questions or vote at the Annual Meeting. |
For Guests
Individuals who are not stockholders of record as of the close of business on the record date of March 28, 2023 or registered Beneficial Holders may attend the Annual Meeting in person, or may attend remotely as a “Guest” in listen-only mode by accessing the Meeting Website using the link provided above, clicking on the “I am a Guest” button and entering the requested information on the following screen. In order to ensure that there is sufficient time to respond to questions from stockholders, guests will not be permitted to ask questions.
Voting Shares In Person or Remotely
All stockholders are urged to vote and submit proxies in advance of the Annual Meeting by one of the methods described in this Proxy Statement. Stockholders are also encouraged to submit proxies as early as possible to avoid processing delays.
Stockholders who have not voted their shares prior to the Annual Meeting or who wish to change their vote, may vote their shares in person at the Annual Meeting, or electronically during the Annual Meeting by clicking on the “[Vote Here]” field on the Meeting Website.
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 2023 Proxy Statement
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Asking Questions Remotely
An opportunity will be provided to present questions and comments during the Question and Answer session of the Annual Meeting, which will include both questions submitted in advance and questions submitted live. Only stockholders of record as of the close of business on the record date of March 28, 2023 and Beneficial Holders who have registered (as described above) may submit questions for the Annual Meeting.
Questions may be submitted both in advance of and during the Annual Meeting either in person, or by accessing the Meeting Website using the link and password provided above, logging in as a “Stockholder” (as described above) and submitting the question through the “Ask a Question” field.
The Question and Answer session will be limited in time. Only questions pertinent to meeting matters will be answered during the Annual Meeting, subject to time constraints. Questions and answers, including answers to any pertinent questions that are not addressed during the meeting due to time constraints, will be posted after the meeting at the Meeting Website. The questions and answers will be available as soon as reasonably practicable after the Annual Meeting and will remain available until one week after posting.
Please see CONMED’s Rules of Meeting Conduct, which are posted on the Meeting Website as well as on CONMED’s Investor Relations webpage at https://www.conmed.com/en-us/investor-relations, for additional information about the rules and procedures for submitting questions.
Additional Information
Please visit the Meeting Website or CONMED’s Investor Relations webpage at https://www.conmed.com/en-us/investor-relations to access the proxy statement and Annual Report as well as CONMED’s Rules of Meeting Conduct, which provides more information about the conduct of the Annual Meeting, including the Q&A process and how stockholders may have access to management and board members during the Annual Meeting.
Technical assistance will be available through the online platform during the Annual Meeting.
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| | | | 2023 Proxy Statement |
Table of Contents
Executive Vice President, Legal Affairs, General Counsel & Secretary
[April 10, 2020]
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2020 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD [MAY 21, 2020]
The Company’s CONMED CORPORATION
Proxy Statement for the 2020
Annual Meeting of Shareholders, the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2019 and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 are available at
www.investorvote.com/CNMD.
TABLE OF CONTENTS
CONMED CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
[StockholdersMAY 21, 2020]
24, 2023The enclosed proxy is solicited by and on behalf of the Board of Directors of CONMED Corporation (the “Company”) for use at the Annual Meeting of ShareholdersStockholders to be held on [Thursday,Wednesday, May 21, 202024, 2023 at 1:30 p.m. (New York time)](EDT), at the offices of the Company at 525 French Road, Utica, New York 13502, and during any adjournment or postponement thereof (the “Annual Meeting”). Stockholders will be able to attend the Annual Meeting in person, or to participate remotely and submit questions and vote by visiting www.proxydocs.com/CNMD (the “Meeting Website”) and entering the 16-digit control number included on their Notice of Internet Availability, their proxy card or their voting instruction form. The matters to be considered and acted upon at the Annual Meeting are described in the foregoing notice of the meeting and this proxy statement.Proxy Statement. This proxy statement,Proxy Statement, the related form of proxy and the Company’s Annual Report to Shareholders,Stockholders, including the Company’s Annual Report on Form 10-K, are being mailedposted to the internet on or about [April 10, 2020]April 11, 2023 to all shareholdersstockholders of record on [April 3, 2020],March 28, 2023, which is the record date for the Annual Meeting.
Shares of the Company’s common stock, par value $.01 per share (“Common Stock”), represented in person, remotely via the Meeting Website or by proxy will be voted as described in this proxy statementProxy Statement or as otherwise specified by the shareholder.stockholder. Any proxy given by a shareholderstockholder may be revoked by the shareholderstockholder at any time prior to the voting of the proxy by executing and delivering a later-dated proxy, by delivering a written notice to the Secretary of the Company or by attending the meetingAnnual Meeting and voting in person.
remotely.The personsperson named as proxies areproxy is Daniel S. Jonas, and Sarah M. Oliker, who are, respectively,is the Executive Vice President, Legal Affairs, General Counsel & Secretary, and Assistant GeneralSpecial Counsel and AssistantCorporate Secretary of the Company. The cost of preparing, assembling and mailing the proxy, this proxy statementProxy Statement and other material enclosed, and all clerical and other expenses of the solicitation of proxies on the Company’s behalf, will be borne by the Company. In addition to the solicitation of proxies on behalf of the Company by use of mail, directors and officers of the Company and its subsidiaries may solicit proxies for no additional compensation by telephone, telegram, e-mail or personal interview. The Company also will request brokerage houses and other custodians, nominees and fiduciaries to forward soliciting material to the beneficial owners of Common Stock held of record by such parties and will reimburse such parties for their expenses in forwarding soliciting material.
Votes at the Annual Meeting will be tabulated by a representative of Computershare,Mediant Communications, which has been appointed by the Company’s Board of Directors to serve as the inspector of election.
As partThe Company is holding the Annual Meeting of our precautions regardingStockholders in person at the coronavirus (COVID-19),offices of the Company is planning to permit shareholders to participate in the Annual Meetingat 11311 Concept Boulevard, Largo, FL 33773, and by means of remote communication. When we complete our planning, we will announce theThe details on how to participate remotely and these details will beare available within this proxy statement, or at https://www.conmed.com/en/about-us/investors/investor-relationswww.proxydocs.com/CNMD, and filed with the SEC.
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
SEC and described further below.Proposals to be Voted On at the Annual Meeting
There are eightfive proposals expected to be submitted for shareholderstockholder approval at the Annual Meeting, onetwo of which isare advisory in nature. The first proposal concerns the election of directors. The second proposal concerns ratifying the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm. The third proposal concerns the advisory vote on named executive compensation. The fourth proposal concerns reincorporation in Delaware.the advisory vote on the frequency of future advisory votes on named executive officer compensation. The fifth proposal concerns procedural matters with respectan amendment to shareholder action by written consent to be included in the DelawareCompany’s Certificate of Incorporation in connection with the Reincorporation. The sixth proposal concerns an exculpation provision eliminating director liability for monetary damages to be included in thereflect new Delaware Certificate of Incorporation in connection with the Reincorporation. The seventh proposal concerns amendments to reserve additional shares for the equity plan for non-employee directors. The eighth proposal concerns amendments to the employee stock purchase plan.law provisions on officer exculpation. These proposals are more fully described below.
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2023 Proxy Statement | | | | 1 |
VOTING RIGHTS
Voting Rights
The holders of record of the [•]30,560,476 shares of Common Stock outstanding on [April 3, 2020]March 28, 2023 will be entitled to one vote for each share held on all matters coming before the meeting. The holders of record of a majority of the outstanding shares of Common Stock present in personremotely via the online platform or by proxy will constitute a quorum for the transaction of business at the meeting. Abstentions and “broker non-votes,” as further described below, will be counted for purposes of determining whether there is a quorum for the transaction of business at the meeting. ShareholdersStockholders are not entitled to cumulative voting rights. Under the rules of the Securities and Exchange Commission or the SEC,(the “SEC”), boxes and a designated blank space are provided on the proxy card for shareholdersstockholders if they wish either to abstain on one or more of the proposals or to withhold authority to vote for one or more nominees for director. In accordance with New YorkDelaware law, such abstentions are not counted in determining the votes cast at the meeting.
The voting requirements for each proposal are as follows:
For Proposal (1) (Election of Directors), under New York law the director nominees who receive the greatest number of votes at the meeting will be elected to the Board of Directors of the Company (subject to the Company’s majority voting principles described below on page 4 under the heading (Proposal One: Election of Directors). Votes against, and votes withheld in respect of, a candidate have no legal effect, except in the case of votes withheld to the extent they revoke earlier dated proxy cards.
Proposal (2) (Ratification of PricewaterhouseCoopers LLP as independent registered public accounting firm) requires the affirmative vote of the holders of a majority of the votes cast at the meeting in order to be approved by the shareholders.
Proposal (3) (Advisory Vote on Named Executive Officer Compensation) seeks the favorable vote of a majority of the votes cast at the meeting required for approval, on an advisory basis.
Proposal (4) (Reincorporation) requires the affirmative vote of the holders of at least two-thirds of the Company’s outstanding shares entitled to vote on the proposal in order to be approved by the shareholders.
Proposal (5) (Written Consent Procedural Provision) requires the affirmative vote of the holders of a majority of the Company’s outstanding shares entitled to vote on the provision in order to be approved by the shareholders.
Proposal (6) (Director Exculpation Provision) requires the affirmative vote of the holders of a majority of the Company’s outstanding shares entitled to vote on the provision in order to be approved by the shareholders.
Proposal (7) (amendment to Non-Employee Director Plan) requires the affirmative vote of the holders of a majority of the votes cast at the meeting in order to be approved by the shareholders; and
Proposal (8) (amendment to Employee Stock Purchase Plan) requires the affirmative vote of the holders of a majority of the votes cast at the meeting in order to be approved by the shareholders.
| • | | For Proposal 1 (Election of Directors), under Delaware law the director nominees who receive the greatest number of votes at the meeting will be elected to the Board of Directors of the Company (subject to the Company’s majority voting principles described below on page 5 under the heading (Proposal One: Election of Directors). Votes against, and votes withheld in respect of, a candidate have no legal effect, except in the case of votes withheld to the extent they revoke earlier dated proxy cards. |
| • | | Proposal 2 (Ratification of PricewaterhouseCoopers LLP as independent registered public accounting firm) requires the affirmative vote of the holders of a majority of the votes cast at the meeting in order to be approved by the stockholders. |
| • | | Proposal 3 (Advisory Vote on Named Executive Officer Compensation) seeks the favorable vote of a majority of the votes cast at the meeting required for approval, on an advisory basis. |
| • | | Proposal 4 (Advisory Vote on the Frequency of Future Advisory Votes on Named Executive Officer Compensation) seeks the favorable vote of a majority of the votes cast at the meeting required for approval, on an advisory basis. |
| • | | Proposal 5 (Amend Certificate of Incorporation to Reflect New Delaware Law Provisions on Officer Exculpation) requires a majority of the votes of the outstanding shares, in order to be approved by the stockholders. |
When properly executed, a proxy will be voted as specified by the shareholder.stockholder. If no choice is specified by the shareholder,stockholder, a proxy will be voted “for all” portions of Proposal (1), “for” Proposals (2), (3), (4), and (5), (6), (7) and (8) and in the proxies’proxy’s discretion on any other matters coming before the meeting.
Under the rules of the New York Stock Exchange, which effectively govern the voting by any brokerage firm holding shares registered in its name or in the name of its nominee on behalf of a beneficial owner, Proposals (1), (3), (4), and (5), (6), (7) and (8) are considered “non-discretionary”“non-discretionary” items and shareholders whoif stockholders do not submit any voting instructions to their brokerage firm, then such stockholder’s broker does not have the authority to vote on these proposals. This is known as a “broker non-vote.” Broker non-voteswill not have their sharesbe counted in determining the outcome of these proposalsProposals (1), (3) and (4) at the Annual Meeting. This is knownBroker non-votes will count as a “broker non-vote.”votes against Proposal (5) at the Annual Meeting. The broker non-votes are counted as votes present for purposes of determining a quorum but are not considered votes cast. Proposal (2) (independent registered public accounting firm) will be considered a “discretionary” item upon which brokerage firms may vote in their discretion on behalf of their clients if such clients have received proxy materials only from the Company and have not furnished voting instructions within ten days prior to the Annual Meeting.
Notice of Internet Availability of Proxy Materials
We are furnishing proxy materials to our stockholders primarily via the Internet in accordance with the notice and access rules of the SEC. On April 11, 2023, we sent to stockholders of record at the close of business on March 28, 2023, a Notice of Internet Availability of Proxy Materials (a “Notice of Internet Availability”) containing instructions on how to access our 2023 Proxy Statement and 2022 Annual Report online, and how to vote in person or online for the 2023 Annual Stockholder Meeting. This process is designed to expedite stockholders’ receipt of proxy materials, lower the cost of the Annual Meeting and help conserve natural resources.
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| 2 | | | | 2023 Proxy Statement |
If you received the Notice of Internet Availability and would like to receive a printed copy of our proxy materials, please follow the instructions for requesting such materials included in the Notice of Internet Availability.
This 2023 Proxy Statement and our 2022 Annual Report to Stockholders, including our Annual Report on Form 10-K, are available at www.proxydocs.com/CNMD.
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2023 Proxy Statement | | | | 3 |
GOVERNANCE HIGHLIGHTS
Governance Highlights
We have implemented several governance best practices, and we are proposing additional best practices in connection with reincorporating to Delaware:
practices: |
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Effective Board
Leadership and Independent Oversight | | | | | | | | Highly Independent Board: 9independent Board, with 8 out of 109 directors being independent (see page 31) 5).• All Committees other than the Pricing Committee are 100% Independentindependent (see pages 35) 25-26).• Regular Executive Sessionsexecutive sessions of Independent Directors independent directors.Annual Board and Committee Review Processreview process (see page 34)20). Robust Independent Board Chair orand defined Lead Independent Director Rolerole (see page 35 and 36)23). Enterprise Risk Management Process,process in place, including oversight of cyber-security, overseen by the full Board of Directors, with annual in-depth review and regular updates on key risks (see page 36)24). Corporate Social Responsibility, including entity-wide environmental, social and social policies,governance strategy, overseen by Corporate Governance and Nominating Committeefull Board of Directors (see page 41)pages 20-21). |
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Board Diversity
and Refreshment | | | | | | | | Strong Ongoing Refreshment Practice,ongoing refreshment practice, with 5 new directors since 2015 (see page 5)18). Average Board Tenuretenure of approximately 5Nominees as of December 31, 2022: • Average Age: 61.8 • Average Tenure: 7.4 years for nominees • Diversity: o 33% women o 11% African American Use of Director skills matrix designed to ensure board has requisite skills (see page 5) Average Age19).Maximum Board tenure limit of Independent Directors is 59 (see page 5). Commitment to Diversity, with all three most recently added directors being women, including one African-American woman (See page 5).
Board Directors Nominated Based on Skills Matrix Designed to Ensure Board Has Requisite Skills (see page 34).
12 years |
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Focus on Shareholder
Stockholder Rights | | | | | | | | Majority Voting Standardvoting standard for Uncontested Director Electionsuncontested director elections (see page 4) Reincorporation Will Provide.By-Laws provide for Proxy Access, Shareholder Actionproxy access, stockholder action by Written Consentwritten consent and Shareholder Abilitystockholder ability to Call Special Meetingcall special meeting (see page 8 and 9) Reincorporation Will Remove Supermajority Voting Requirements22).Recently removed supermajority voting requirements for Certain Fundamental Transactions (Including Mergers) (see page 8) |
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Transparency and
Accountability | | | | | | | | Annual Electionelection of All Directors all directorsSignificant Stock Ownership Requirementsstock ownership requirements for Officersofficers and Directorsdirectors (see page 52, 53pages 41 and 69) Regular Engagement With Shareholders to Seek Feedback
56) Members of Boardboard of Directorsdirectors and Executive Officers Are Not Permittedexecutive officers are not permitted to Hedge Their Stock Ownership,hedge their stock ownership, or To Pledge Theirto pledge their CONMED Stockstock as Collateralcollateral for a Loanloan (see page 53pages 34, 41 and 69)56). |
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| 4 | | | | 2023 Proxy Statement |
PROPOSAL ONE:
ELECTION OF DIRECTORS Election of DirectorsAs a result of the Board’s thoughtful approach to board composition, including its commitment to diversity and refreshment, our Board ishad previously been comprised of tennine highly-qualified individuals who provide the Board with a well-rounded variety of skills, experience and diversity, and represent an effective mix of fresh perspectives and deep Company knowledge. Our directors include international business leaders, financial experts, and individuals with extensive backgrounds in healthcare, technology and talent development. Each director is individually qualified to make unique and substantial contributions to the Board, and, collectively, our directors’ diverse viewpoints and skill sets ensure that our Board is well-suited to provide the Company with valuable insight and effective oversight with respect to its business, overall performance and strategic direction. To further convey the diverse skills of our Board, we have a skills matrix and have identifiedlocated on page 3419 that summarizes certain of the key skills and qualifications that our Board has identified as particularly valuable to the effective oversight of the Company and illustrates how each of our directors possess that contributed to his or her nomination toand the Board.
current composition of our Board, taken as a whole, meets these needs.At the Annual Meeting, tennine directors are towill be elected to serve on the Company’s Board. Each of the nominees proposed for election at the Annual Meeting is presently a member of the Board of Directors. The shares represented by proxies will be voted as specified by the shareholder.stockholder. If the shareholderstockholder does not specify his or her choice, the shares will be voted in favor of the election of all of the nominees listed on the proxy card. Each director nominee listed below has consented to being named in this proxy statement and has agreed to serve if elected. The Company has no reason to believe that any Board-nominated director nominee will be unavailable or will decline to serve. However, in the event that any nominee named in this proxy statement is unable to serve or for good cause will not serve, the shares represented by proxies will be voted for the election of such substitute nominee as the Corporate Governance and Nominating Committee of the Board of Directors may recommend, to the extent this is not prohibited by the Company’s by-lawsBy-laws and applicable law. The tennine director nominees who receive the greatest number of votes “for” at the meeting will be elected to the Board, of Directors of the Company, subject to the majority voting standard adopted by the Board of Directors and reflected in the Corporate Governance Principles, as described below. Votes
against, and votes withheld in respect of, a candidatedirector nominee will have no effect on the outcome of the election of directors, except in the case of votes withheld to the extent they revoke earlier dated proxy cards. ShareholdersStockholders are not entitled to cumulative voting rights.
Notwithstanding the plurality voting standard for election of directors, under Section IV of our Corporate Governance Principles, if the election of directors is uncontested, a director nominee who does not receive the vote of at least the majority of the votes cast with respect to such director’s election or re-electionreelection is expected to tender his or her resignation to the Board of Directors. The Corporate Governance and Nominating Committee will recommend to the Board whether to accept or to reject the tendered resignation within 90 days after the certification of the election results. The Board will act on the resignation, taking into account the Corporate Governance and Nominating Committee’s recommendation, and will publicly disclose the decision and the rationale behind it. If the Board does not accept the director nominee’s resignation, the director will continue to serve until his or her successor is duly elected or any earlier resignation, removal or separation. If the Board accepts the director nominee’s resignation, then the Board may, in its sole discretion, fill any resulting vacancy or decrease the size of the Board pursuant to our Certificate of Incorporation, by-laws and applicable corporate law.
The Board of Directors presently consists of ten directors. Directors generally hold office for terms expiring at the next annual meeting of shareholdersstockholders and until their successors are duly elected and qualified. Each of the nominees proposed for election at the Annual Meeting is presently a member of the Board of Directors. The Company has a policy in its Corporate Governance Principles under which non-executiveindependent directors are expected to offer not to stand for reelection upon having completed 15 years of service as a director. For directors who have completed 1512 years of service as a director during their terms, the expectation is that they will offer notin order to stand for reelection but will complete their terms. Notwithstanding the foregoing, thepromote Board Refreshment. The expected retirementtenure limit can be waived if the Corporate Governance and Nominating Committee determines that there is good cause for such a waiver and that a waiver would be in the best interests of the Company. ExecutiveNon-independent directors are not subject to the 15-year12-year tenure limit.
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2023 Proxy Statement | | | | 5 |
Nominees for Election at the Annual Meeting
The following table sets forth certain information regarding the members of, and nominees for, the Board of Directors:
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Director
Since | | Principal Occupation or Position with the Company |
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David Bronson | | 70 | | 2015 | | Former Executive Vice President and Chief Financial Officer of PSS World Medical, Inc.; Director of the Company. As noted below, the Board of Directors has determined that Mr. Bronson is independent and is an audit committee financial expert. |
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Brian P. Concannon | | 65 | | 2013 | | Former President and Chief Executive Officer of Haemonetics Corporation (NYSE: HAE); Director of the Company. As noted below, the Board of Directors has determined that Mr. Concannon is independent. |
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LaVerne Council | | 61 | | 2019 | | Chief Executive Officer Emerald One, LLC. Former National Managing Principal, Enterprise Technology Strategy & Innovation for Grant Thornton LLP, former Assistant Secretary for Information & Technology and Chief Information Officer for the United States Department of Veteran Affairs, and former executive with Johnson & Johnson and DELL, Inc. Ms. Council is also a director on the Board of Concentrix (Nasdaq: CNXC) as well as the Board of Thomson Reuters (NYSE: TRI). As noted below, the Board of Directors has determined that Ms. Council is independent and is an audit committee financial expert. |
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Charles M. Farkas | | 71 | | 2014 | | Advisory Partner at Bain & Company; former Global Co-Head of Bain’s Healthcare Practice; Director of the Company. Mr. Farkas is on the boards of Intuitive Healthcare, United Bridge Partners and Chairman of the Board of Medicinal Genomics. As noted below, the Board of Directors has determined that Mr. Farkas is independent. |
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Martha Goldberg Aronson | | 55 | | 2016 | | Lead Independent Director. Former Executive Vice President and President of Global Healthcare for Ecolab, Inc. (NYSE: ECL); Former President of North America, Hill-Rom Holdings, Inc. (NYSE: HRC); Former Senior Vice President, Medtronic (NYSE: MDT); Director of Cardiovascular Systems, Inc. (NASDAQ: CSII); Director since February 2020 through October 2022, chair since February 2021 through February 2022, and Interim Chief Executive Officer of Beta Bionics, Inc. from February to August 2022; Director of Methode Electronics, Inc. (NYSE: MEI) through September 2019; Director Clinical Innovations, LLC through December 2019; and Director of the Company. As noted below, the Board of Directors has determined that Ms. Goldberg Aronson is independent. |
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Curt R. Hartman | | 59 | | 2014 | | Chair of the Board, President & Chief Executive Officer of the Company; former Interim Chief Executive Officer and Vice President, Chief Financial Officer of Stryker (NYSE: SYK). |
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Jerome J. Lande | | 47 | | 2014 | | Deputy CIO of Scopia Capital Management L.P., having previously served as Head of Special Situations for Scopia and having previously served as Managing Partner of Coppersmith Capital; formerly a Partner at MCM Capital Management; Director of the Company; Director for Itron, Inc. (NASDAQ: ITRI) and Indivior (LSE: INDV). As noted below, the Board of Directors has determined that Mr. Lande is independent. |
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Barbara J. Schwarzentraub | | 57 | | 2019 | | Former Director and Divisional Chief Financial Officer for the Global Information Services Division of Caterpillar, Inc. (NYSE: CAT) from 2017 through February 2020. As noted below, the Board of Directors has determined that Ms. Schwarzentraub is independent and is an audit committee financial expert. |
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John L. Workman | | 71 | | 2015 | | Former Chief Executive Officer of Omnicare, Inc. and also former President, Chief Financial Officer and Executive Vice President; Director of the Company. Director of Agiliti, Inc. (formerly Universal Hospital Services); Director of Federal Signal Corp. (NYSE: FSS) and former Director for Care Capital Properties (NYSE: CCP). As noted below, the Board of Directors has determined that Dr. Workman is independent and is an audit committee financial expert. |
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| 6 | | | | 2023 Proxy Statement |
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
|
| | | | | | |
| Name | | Age | | Served as
Director
Since | | Principal Occupation or
Position with the Company |
| David Bronson | | 67 | | 2015 | | Former Executive Vice President and Chief Financial Officer of PSS World Medical, Inc.; Director of the Company. As noted below, the Board of Directors has determined that Mr. Bronson is independent, and is an audit committee financial expert. |
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| Brian P. Concannon | | 62 | | 2013 | | Former President and Chief Executive Officer of Haemonetics Corporation (NYSE: HAE); Director of the Company. As noted below, the Board of Directors has determined that Mr. Concannon is independent. |
| | | | | | | |
| LaVerne Council | | 58 | | 2019 | | Former National Managing Principal, Enterprise Technology Strategy & Innovation for Grant Thornton LLP. As noted below, the Board has determined that Ms. Council is independent. |
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| Charles M. Farkas | | 68 | | 2014 | | Advisory Partner at Bain & Company; former Global Co-Head of Bain’s Healthcare Practice; Director of the Company. As noted below, the Board of Directors has determined that Mr. Farkas is independent. |
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| Martha Goldberg Aronson | | 52 | | 2016 | | Former Executive Vice President and President of Global Healthcare for Ecolab, Inc. (NYSE: ECL); Former President of North America, Hill-Rom Holdings, Inc. (NYSE: HRC); Former Senior Vice President, Medtronic (NYSE: MDT); Director of Cardiovascular Systems, Inc. (NASDAQ: CSII); Director of Beta Bionics, Inc. since February 2020; Director of Methode Electronics, Inc. (NYSE: MEI) through September 2019; Director Clinical Innovations, LLC through December 2019; and Director of the Company. As noted below, the Board of Directors has determined that Ms. Goldberg Aronson is independent. |
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| Curt R. Hartman | | 56 | | 2014 | | President & Chief Executive Officer of the Company; Director of the Company; former Interim Chief Executive Officer and Vice President, Chief Financial Officer of Stryker (NYSE: SYK). |
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| Jerome J. Lande | | 44 | | 2014 | | Partner and Head of Special Situations for Scopia Capital Management L.P.; Former Managing Partner of Coppersmith Capital; formerly a Partner at MCM Capital Management; Director of the Company; Director for Itron, Inc. (NASDAQ: ITRI). As noted below, the Board of Directors has determined that Mr. Lande is independent. |
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| Barbara J. Schwarzentraub | | 53 | | 2019 | | Director and Divisional Chief Financial Officer for the Global Information Services Division of Caterpillar, Inc. (NYSE: CAT) through February 2020. As noted below, the Board of Directors has determined that Ms. Schwarzentraub is independent and is an audit committee financial expert. |
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| Mark E. Tryniski | | 59 | | 2007 | | President and Chief Executive Officer of Community Bank System, Inc. (NYSE: CBU); former partner of PricewaterhouseCoopers LLP; Chair of the Board of the Company and previous Lead Independent Director; Director of New York Bankers Association; and Director of the New York Business Development Corporation. As noted below, the Board of Directors has determined that Mr. Tryniski is independent, and is an audit committee financial expert. |
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| Dr. John L. Workman | | 68 | | 2015 | | Former Chief Executive Officer of Omnicare, Inc. and also former President, Chief Financial Officer and Executive Vice President; Director of the Company. Director of Agiliti, Inc. (formerly Universal Hospital Services); Director of Federal Signal Corp. (NYSE: FSS) and former Director for Care Capital Properties (NYSE: CCP). As noted below, the Board of Directors has determined that Mr. Workman is independent, and is an audit committee financial expert. |
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Nominees for Election at the Annual Meeting |
More information concerning the directors and nominees is set forth below under the heading “Corporate Governance Matters – Directors, Executive and Other Officers and Nominees for the Board of Directors.”
The Board of Directors unanimously recommends a vote “FOR ALL” for this proposal.
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2023 Proxy Statement | | | | 7 |
PROPOSAL TWO:
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Independent Registered Public Accounting FirmThe independent registered public accounting firm for the Company has been PricewaterhouseCoopers LLP since 1982. The Audit Committee appointed PricewaterhouseCoopers LLP to be nominated as our independent registered public accounting firm for 2020,2023, subject to shareholderstockholder ratification.
Unless otherwise specified, shares represented by proxies will be voted for the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2020.2023. Neither our certificate of incorporation nor our by-laws require that shareholdersstockholders ratify the appointment of our independent registered public accounting firm. We are doing so because we believe it is a matter of good corporate governance. The affirmative vote of a majority of votes cast at the meeting is the threshold for shareholderstockholder ratification of the appointment for 2020.2023. If the shareholdersstockholders do not ratify the appointment, the Audit Committee will reconsider whether to retain PricewaterhouseCoopers LLP, but may elect to retain them. Even if the appointment is ratified, the Audit Committee in its discretion may change the appointment at any time during the year if it determines that such change would be in the best interests of the Company and its shareholders.
stockholders.Representatives of PricewaterhouseCoopers LLP are expected to be present at the meeting.meeting either in-person or remotely via the online platform. Those representatives will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.
The Board of Directors unanimously recommends a vote “FOR” this proposal.
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| 8 | | | | 2023 Proxy Statement |
PROPOSAL THREE:
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION Advisory Vote to Approve Named Executive Officer CompensationIn accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Board requests your advisory vote on named executive officer compensation.
The Compensation Discussion and Analysis (“CD&A”) beginning on page 4330 describes the Company’s compensation philosophy and pay practices relative to the Named Executive Officers (“NEOs”). As described in the CD&A, compensation paid to the NEOs is heavily influenced by the Company’s financial performance, balancing the incentives to drive short-term and long-term goals. Further, the Compensation Committee and the Board of Directors believe that the Company’s compensation policies, procedures and philosophy serve to attract, retain and motivate the NEOs to achieve value for our shareholders.
stockholders.The Board encourages shareholdersstockholders to read the CD&A for a more complete description of the Company’s executive compensation policies and practices, as well as the Summary Compensation Table and other related compensation tables and narratives. The Compensation Committee and the Board of Directors believe the Company’s policies and procedures are effective in achieving our goals and that the compensation of our NEOs reported in this proxy statement reflects and supports these compensation policies and procedures.
Accordingly, we are asking shareholdersstockholders to approve the following non-binding resolution:
RESOLVED, that the shareholdersstockholders of the Company approve, on an advisory basis, the compensation of the Company’s Named Executive Officers disclosed pursuant to Item 402 of Regulation S-K in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables and narrative disclosure in the proxy statement.
This advisory resolution, commonly referred to as a “say-on-pay”“say-on-pay” resolution, is non-binding on the Board of Directors. Although non-binding, the Compensation Committee and the Board of Directors will review and consider the voting results when evaluating our executive compensation programs.
The Company’s current policy is to provide shareholdersstockholders with an opportunity to approve, on an advisory basis, the compensation of the NEOs each year at the annual meeting of shareholders.stockholders. The next advisory vote on the compensation of our NEOs willis expected occur at the Company’s 2021 annual meeting2024 Annual Meeting of shareholders.
Stockholders.The Board of Directors unanimously recommends a vote “FOR” this advisory resolution.
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2023 Proxy Statement | | | | 9 |
OVERVIEW OF PROPOSALS FOUR, FIVE AND SIX
Proposal 4 (the “Reincorporation Proposal”) isPROPOSAL FOUR: Advisory Vote on the Frequency of Future Votes on Named Executive Officer Compensation
In accordance with Section 14A of the Exchange Act, the Board requests your vote on a proposal, commonly known as a “say on pay frequency” proposal, which gives our shareholders the opportunity to changeadvise the Board on how often we should conduct an advisory shareholder vote on the compensation of our named executive officers. We are required to seek an advisory shareholder vote on the frequency of future say on pay votes at least once every six years, although we may seek shareholder input more frequently. As this is an advisory vote, the result will not be binding, however, our Board values the opinions that our shareholders express in their votes and will take into account the outcome of the vote when considering how frequently we should conduct an advisory vote on the compensation of our named executive officers.
Accordingly, we are asking stockholders to approve the following non-binding resolution:
RESOLVED, that a non-binding advisory vote of the Company’s shareholders to approve the compensation of the Company’s named executive officers shall be held at an annual meeting of stockholders, beginning with the 2023 annual meeting of stockholders, (i) every year, (ii) once every two years or (iii) once every three years.
The enclosed proxy card gives you four choices for voting on this item. You can choose whether the say on pay vote should be conducted annually (every year), biennially (every two years) or triennially (every three years). You may also abstain from voting on this item. You are not voting to approve or disapprove the Board’s recommendation on this item.
Our Board believes that an annual advisory vote on the compensation of our named executive officers is an important aspect of shareholder engagement. An annual say on pay vote facilitates direct and regular shareholder feedback on our compensation policies, which our Compensation Committee values in determining our compensation philosophy and evaluating the effectiveness of our compensation principles and practices.
The Board of Directors unanimously recommends a vote for conducting an annual advisory vote on the
compensation of our Named Executive Officers every year.
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| 10 | | | | 2023 Proxy Statement |
PROPOSAL FIVE: Amend the Company’s Certificate of Incorporation to Reflect New Delaware Law Provision Regarding Officer Exculpation
In August 2022, the State of Delaware, which is the Company’s state of incorporation, amended Section 102(b)(7) of the Delaware General Corporation Law (“DGCL”) to enable Delaware companies to limit the monetary liability of certain of their officers for certain fiduciary duty breaches in limited circumstances. This is referred to as “exculpation.” Delaware has long permitted exculpation of a company’s Directors and, when the Company changed its state of incorporation from New York to Delaware. As described furtherDelaware in Proposal 4, if the Reincorporation is2020, stockholders approved bya provision in the Company’s shareholderscharter for exculpation of directors with 93.8% of the shares voted in favor of the provision. At the time, however, exculpation of officers was not authorized under Delaware law.
In light of the August 2022 amendment to Section 102(b)(7) of the DGCL to allow for exculpation of eligible officers, we are proposing to amend the Company’s Amended and implementedRestated Certificate of Incorporation (the “Certificate of Incorporation”) to add a provision exculpating the eligible Company officers from liability in specific circumstances, to align with Delaware law. Amended Section 102(b)(7)only permits, and our proposed amendment would only permit, exculpation for direct claims (as opposed to derivative claims made by the Company or by stockholders on behalf of the Company’s current New York charterCompany) and by-laws will be replaced by a new Delaware charter and by-laws. The new Delaware charter will implement certain governance changes (described further below) as compared to the Company’s current New York charter, including the subject matter covered in Proposal 5 (Written Consent) and Proposal 6 (Exculpation) (together, the “Delaware Charter Provision Proposals”). After a careful and thorough review of governance practices and trends, the Board made decisionswould not permit exculpation with respect to proposing governance practicesbreaches of the duty of loyalty, acts or omissions not in good faith or those that promote shareholder democracy, Board accountability and responsiveness to shareholders while preserving appropriate flexibility forinvolve intentional misconduct or a knowing violation of law, or any transaction in which the Board to make value-maximizing decisions, all considered over the long term. As a practical matter, and as a matter of Delaware Law, the Board is presenting a single charter and set of by-laws for shareholder approval, in order for the Reincorporation Proposal to be effective under Delaware Law. After conducting this review, theofficer derived an improper personal benefit. The Board believes that includingproviding exculpation to eligible officers (to the provisions set forthextent permitted by Delaware law) will strike a balance between stockholders’ interest in accountability and their interest in the Company being able to attract and retain quality officers to work on its behalf.
The Nominating and Corporate Governance Committee believes that exculpation provisions for eligible officers aligned with Delaware Charter Provision Proposalslaw would, consistent with the exculpation provisions applicable to our directors, enhance our officers’ ability to exercise their business judgement to make value-enhancing decisions for stockholders, unconstrained by concerns about risk of personal financial ruin. The Company’s officers are often called upon to quickly respond to time-sensitive challenges and opportunities which, in the Company’s Delaware governing documents in connectioncurrent litigious environment, carry with them a risk of costly claims, actions, suits or proceedings, which will employ company resources and time to address, regardless of the merit of the claims. Further, the Nominating and Corporate Governance Committee notes that the proposed Reincorporationamendment would not negatively impact stockholder rights, but rather would empower officers to efficiently make critical decisions in furtherance of stockholder interests. Therefore, taking into account the narrow class and type of claims for which officers’ liability would be exculpated under Delaware law, and the benefits the Nominating and Corporate Governance Committee believes would accrue to the Company and its stockholders in the form of an enhanced ability to attract and retain talented officers, the Nominating and Corporate Governance Committee recommended to the Board an amendment to the Certificate of Incorporation to provide such exculpation to the extent permitted by Delaware law. Based on this recommendation, the Board determined that it is in the best interests of the Company and its shareholders.
The Company’s shareholders are being askedour stockholders to
consider andamend the Certificate of Incorporation as described herein.Accordingly, we ask our stockholders to vote separately on the Delaware Charter Provision Proposalsfollowing resolution:
“RESOLVED, that the Company’s stockholders approve an amendment to the Company’s amended and restated certificate of incorporation to revise Article EIGHTH, which shall read in order to comply withits entirety as follows (with the SEC’s guidance on the “unbundling” of proxy statement proposals under Rule 14a-4(a)(3), which requiresnewly added language reflected as underlined, and a company to present separately for shareholder approval proposed changes to a company’s charter in connection with a transaction (such as the Reincorporation) when such changes would require shareholder approval if proposed in the absencecomplete set of the transaction. Notwithstanding that eachproposed, amended Certificate of Proposals 4, 5 and 6 is subject to a separate vote of the Company’s shareholders, these three proposals are being submitted to shareholders as a package and are each cross-conditioned on the approval of the others, for the reasons outlined above. Accordingly, if any of Proposals 4, 5 or 6 is not approved by shareholders, then the Company will not pursue the Reincorporation, at this time, and will continue to be incorporated in New York and governed by its current New York charter and by-laws.
PROPOSAL FOUR: REINCORPORATION OF THE COMPANY FROM NEW YORK TO DELAWARE
Our Board has unanimously approved and recommends to our shareholders this proposal to change the Company’s state of incorporation from New York to Delaware (the “Reincorporation”), subject to shareholder approval. The Reincorporation would be effected pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and between the Company and CONMED Corporation, a wholly-owned subsidiary of the Company incorporated in Delaware (“Newco”), in the formIncorporation attached to this proxy statement under Exhibit A. Following the Reincorporation, the Company will no longer be a New York corporation governed by the Company’s current Certificate of Incorporation (the “New York Charter”) and its current By-laws (the “New York By-laws” and, together with the New York Charter, the “New York Governing Documents”) and will instead be a Delaware corporation governed by the proposed Delaware Certificate of Incorporation (the “Delaware Charter”) and the proposed Delaware By-laws (the “Delaware By-laws” and, together with the Delaware Charter, the “Delaware Governing Documents”), each in the form attached to this proxy statement under Exhibits B and C, respectively. These forms assume that the proposed provisions described in Proposals 5 and 6 are approved. Our Board has determined that the terms of the Merger Agreement, the Merger, the Delaware Charter and the Delaware By-laws are fair to, and in the best interests of, the Company and our shareholders.
For the reasons discussed below, the Board of Directors recommends that the shareholders vote FOR the Reincorporation Proposal. Approval of the Reincorporation Proposal will constitute adoption of the Merger Agreement and approval of the Delaware Charter (other thanProxy Statement as set forth in Proposals 5 and 6) and Delaware By-laws. As discussed above, if either of the Delaware Charter provisions contemplated by Proposals 5 or 6 are not approved by shareholders, we will not proceed with the Reincorporation.
Reasons for the Reincorporation
Prominence, Predictability and Flexibility of Delaware LawAnnex At): For many years, Delaware has followed a policy of encouraging incorporation in that state and, in furtherance of that policy, has been a leader in adopting, construing and implementing comprehensive, modern and flexible corporate laws which are revised regularly to meet the changing legal and business needs of corporations organized in Delaware. To take advantage of Delaware’s flexible and responsive corporate laws, many corporations initially choose Delaware for their domicile or subsequently reincorporate there in a manner similar to that proposed by the Company. The Reincorporation will enable the Company and our shareholders to take advantage of the following benefits of incorporation in Delaware:
[Article] EIGHTH
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◦(a) | the Delaware General Assembly, which each year considers and adopts statutory amendments that are designed to meet changing business needs; |
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◦ | the General Corporation LawA director of the State of Delaware (the “DGCL”), which is generally acknowledged toCorporation shall not be the most advanced and flexible corporate statute in the country; |
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◦ | a well-established body of case law construing the DGCL, which has been developed over the last century, will provide a greater measure of predictability than exists in any other jurisdiction; |
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◦ | the Delaware Court of Chancery, which brings to its handling of complex corporate issues a level of experience, a speed of decision, and a degree of sophistication and understanding unmatched by any other court in the country, as well as the highly regarded Delaware Supreme Court; |
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◦ | the responsiveness and efficiency of the Division of Corporations of the Secretary of State of Delaware; |
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◦ | the certainty afforded by the well-established principles of corporate governance under Delaware law, which will, among other benefits, assist the Company in continuing to attract and retain outstanding directors and officers; and |
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◦ | the ability to secure insurance for a broader range of risks (including punitive damages awards) under Delaware law than is permitted by New York law. |
Increased Certainty of Law Concerning Exculpation Enhances Opportunity for Directors and Officers to Make Strategic, Value-Enhancing Decisions: The vast majority of public companies are incorporated in Delaware, whose corporate law is more familiar to directors and officers, and offers greater certainty and stability from the perspective of those who serve as corporate officers and directors. Additionally, although both New York and Delaware law permit a corporation to include a provision in the charter to reduce or eliminate the monetary liability of directors for breaches of fiduciary duty in certain circumstances, the Company’s New York Charter does not include this provision and the parameters of director and officer liability are more extensively addressed in Delaware court decisions and are therefore better defined and understood than under New York law. The Board of Directors believes that the Reincorporation will enhance our ability to allow directors and officers to continue to make independent, value-enhancing decisions in good faith on behalf of the Company. We are in a competitive industry and compete to secure transactions and to take advantage of strategic opportunities. We believe our ability to make good decisions quickly is a competitive advantage. This is important given that the growing frequency of claims and litigation pursued against directors and officers has greatly expanded the risks facing directors and officers of corporations in carrying out their respective duties. The amount of time and money required to respond to and defend against such claims, regardless of the merit or the lack thereof, can be substantial. As a result, we believe that the better understood and comparatively stable corporate environment afforded by Delaware law will enable us to compete more effectively by creating more certainty around our decision-making, and that as more fully described in Proposal 6, the Reincorporation will help ensure that concerns about exposure to personal liability will not adversely affect the ability to make the difficult, potentially value-maximizing business decisions that are necessary in today’s highly competitive business environment.
Shareholder Friendly Governance Changes: If the Reincorporation is effected, shareholders will continue to elect all directors on an annual basis under a plurality voting standard (subject to a resignation policy for directors that do not receive a majority of votes cast in uncontested elections, as further described under Proposal 1). Additionally, in connection with the Reincorporation the Company plans to make the following changes to the corporate governance provisions in the Company’s current charter and by-laws in order to promote shareholder participation and enhance corporate democracy (all of which are discussed in more detail below):
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◦ | Elimination of Supermajority Voting Requirements for Certain Transactions. The Board believes that majority shareholder approval for corporate transactions is consistent with the principles of corporate democracy. Under New York law and the Company’s New York Charter, two-thirds supermajority approval is required for mergers not involving interested shareholders or subsidiaries of the company. A two-thirds supermajority approval requirement allows a minority of the Company’s shareholders to block approval of transactions that may otherwise have the support of a majority of the Company’s shareholders. In contrast, under Delaware law and the Delaware Charter, only majority shareholder approval will be required for such mergers.
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◦ | Creation of Shareholder Special Meeting Rights: The Board believes that shareholders benefit from being able to call meetings of shareholders between annual meetings to consider matters that require prompt attention, subject to appropriate procedures to prevent abuse and a waste of corporate resources by a small minority of shareholders. While the Company’s New York By-laws do not permit shareholders to call special meetings, the Delaware By-laws will.
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◦ | Action by Written Consent: The Board believes that shareholder participation and corporate democracy are enhanced if shareholders, subject to reasonable safeguards, have the right to take action without a meeting by written consent. The New York By-laws require unanimous written consent, which, as a practical matter, makes acting by written consent extremely difficult. As a result of the Reincorporation, the threshold for shareholder action by written consent will be loweredliable to the minimum number of votes necessary to take the action (generally, a majority). Additionally, as further described in Proposal 5, this right to act by written consent will be subject to reasonable requirements to protect against abuse and the disenfranchisement of minority shareholders by ensuring, among other things, that all shareholders are given the opportunity to consider any proposed action, express their views and vote on the proposed action.
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◦ | Adoption of Proxy Access: Proxy access allows shareholders who meet certain requirements to nominate directors on the company’s proxy card, which makes it easier and more cost effective for a shareholder to nominate a director to the board. The Company’s New York By-Laws do not contain a proxy access provision, however, the Delaware By-Laws will.
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While the Board of Directors believes that the Reincorporation is in the best interests of the Company and its shareholders, it should be noted that the interests of the Board, management and affiliated shareholders in voting on the Reincorporation may not be the same as those of unaffiliated shareholders. Delaware law does not afford minority shareholders all of the same substantive rights and protections available under New York law. On the other hand, Delaware law allows a majority of shareholders to take certain actions that New York law only allows to be taken if all shareholders unanimously agree. For a comparison of shareholders’ rights under Delaware and New York law, see the section entitled “Comparison of Shareholder Rights Before and After the Reincorporation” below.
The Reincorporation Process
The following discussion is qualified in its entirety by reference to the Merger Agreement and by the applicable provisions of New York law and Delaware law.
The Reincorporation will effect only a change in the legal domicile of the Company and other changes of a legal nature. The Reincorporation will not result in any change in the name, business, management, fiscal year, accounting, location of the principal executive offices, assets or liabilities of the Company. The current officers and directors of the Company will continue as officers and directors of Newco.
If this Reincorporation Proposal and the Delaware Charter Provision Proposals are approved, then in order to effect the Reincorporation, at the effective time (the “Effective Time”):
the Company will merge with and into Newco (the “Merger”) and Newco will be the surviving entity and the Company will cease to exist as a separate entity;
the shareholders of the Company will become the shareholders of Newco;
the outstanding shares of the Company’s Common Stock will automatically convert on a one-to-one basis into shares of the common stock of Newco (“Newco Common Stock”);
each outstanding option to purchase shares of the Company’s Common Stock will be converted into an option to acquire an equal number of shares of Newco Common Stock, with no change in the exercise price or other terms or provisions of the option;
each other equity award relating to the Company’s Common Stock will be deemed to be an equity award for the same number of shares of Newco Common Stock, with no change in the terms or provisions of the equity award;
Newco will possess all of the assets, liabilities, rights, privileges and powers of the Company and Newco;
Newco will be governed by the applicable laws of Delaware and by the Delaware Charter and Delaware By-laws;
the officers and directors of the Company will become the officers and directors of Newco; and
Newco will operate under the name CONMED Corporation and the Newco Common Stock will be listed on the New York Stock Exchange with the ticker symbol of CNMD.
Certain material differences between the corporate laws of New York and Delaware, and between the Company’s current New York Governing Documents and the Delaware Governing Documents that Newco will be governed by, are discussed further below under the heading “Comparison of Shareholders Rights Before and After the Reincorporation.” A copy of the existing certificate of incorporation and by-laws of the Company are available for inspection by our shareholders upon reasonable notice during regular business hours, at the Company’s principal executive offices located at 525 French Road, Utica New York.
The Reincorporation will become effective upon the filing of the certificate of ownership and merger (the “Delaware Certificate of Merger”) with the Secretary of State of Delaware and the certificate of merger (the “New York Certificate of Merger”) with the Secretary of State of New York. These filings are anticipated to be made as soon as practicable after receiving the requisite shareholder approval and all other necessary approvals (if any). Nonetheless, the Board will have the right, at any time prior to the Effective Time, to abandon the Merger and thus the Reincorporation and take no further action towards reincorporating the Company in Delaware, even after shareholder approval, if for any reason the Board determines that it is not advisable to proceed with the Reincorporation.
Regulatory Approvals and Third-Party Consents
Other than receipt of shareholder approval and the filing of the Delaware Merger Certificate with the Delaware Secretary of State and the New York Merger Certificate with the New York Secretary of State, to our knowledge there are no federal or state regulatory requirements or approvals that must be obtained in order for us to consummate the Reincorporation. Although the Reincorporation will require a technical relisting of our CONMED stock on the New York Stock Exchange following the Reincorporation, our common stock will continue to be traded on the New York Stock Exchange under the same ticker symbol, “CNMD.” To the extent the Reincorporation will require the consent or waiver of a third party (for example, the consent of the Company’s primary lender), the Company will use commercially reasonable efforts to obtain such consent or waiver before completing the Reincorporation. If a material consent cannot be obtained, the Company may determine not to proceed with the Reincorporation.
Employee and Director Benefit Matters
All employee benefit plans of the Company will be continued by the Newco. The Company’s other employee benefit arrangements will also be continued by Newco upon the terms and subject to the conditions in effect prior to the Reincorporation. The Reincorporation will not accelerate the time of payment or vesting, or increase the amount of compensation or benefits under, any of the Company’s agreements with its directors and employees or any of its compensation and benefit programs.
Effect of the Reincorporation on Stock Certificates
If this Reincorporation Proposal and both of the Delaware Charter Provision Proposals are approved, and the Company proceeds with the Reincorporation, it will not be necessary for shareholders to exchange their existing stock certificates for Newco stock certificates. However, if at any time on or after the Effective Time a shareholder wishes to acquire a stock certificate referring to Delaware as Newco’s state of incorporation, the shareholder may do so by surrendering its, his or her certificate to the transfer agent for Newco with a request for a replacement certificate. Following the Reincorporation, the transfer agent for Newco will continue to be Computershare Trust Company, N.A.
The Reincorporation will have no effect on the transferability of outstanding stock certificates representing the Company’s common stock.
Dissenters’ Rights of Appraisal
Pursuant to New York law, if the Reincorporation is approved by the Company’s shareholders, shareholders who dissent from the Reincorporation will not be entitled to appraisal rights.
Certain U.S. Federal Income Tax Consequences of the Reincorporation
The following is a brief summary of certain U.S. federal income tax consequences to holders of the Company’s Common Stock who receive Newco Common Stock as a result of the Reincorporation. The summary sets forth such consequences to the Company’s shareholders who hold their shares as a capital asset (generally, an asset held for investment).
This summary is for general information only and does not purport to be a complete discussion or analysis of all potential tax consequences that may apply to a shareholder. Shareholders are urged to consult their tax advisors to determine the particular tax consequences of the Reincorporation, including the applicability and effect of federal, state, local or foreign tax laws. This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), the Treasury Regulations promulgated thereunder, and rulings and decisions in effect as of the date of this proxy statement, all of which are subject to change, possibly with retroactive effect, and to differing interpretations.
The Company has neither requested nor received a tax opinion from legal counsel with respect to the U.S. federal income tax consequences of the Reincorporation. No rulings have been or will be requested from the Internal Revenue Service as to the federal income tax consequences of the Reincorporation.
The Reincorporation provided for in the Merger Agreement is intended to be treated as a “tax-free” reorganization as described in Section 368(a)(1)(F) of the Code. Assuming that the Reincorporation qualifies as a “tax-free” reorganization, no gain or loss will be recognized to the holders of the Company’s Common Stock as a result of the consummation of the Reincorporation, and no gain or loss will be recognized by the Company or Newco. The basis of the acquired assets in the hands of Newco will be the same as CONMED's basis in such assets. Each former holder of the Company’s Common Stock will have the same basis in Newco Common Stock received by that holder pursuant to the Reincorporation as was the basis in the Company Common Stock held at the time the reincorporation was consummated. Each shareholder’s holding period with respect to the Newco Common Stock will include the period during which that shareholder held the corresponding the Company’s Common Stock, provided the latter was held by such holder as a capital asset at the time the Reincorporation was consummated.
Accounting Treatment
The Reincorporation would be accounted for as a reverse merger under which, for accounting purposes, Newco would be considered the acquirer and would be treated as the successor to the Company’s historical operations. Accordingly, the Company’s historical financial statements would be treated as the financial statements of Newco.
Comparison of Shareholder Rights Before and After the Reincorporation
Subject to shareholder approval prior to the Effective Time, the Company will change its state of incorporation to Delaware and will thereafter be governed by the DGCL, the Delaware Charter and the Delaware By-laws. There are certain differences between the rights of our shareholders under:
the DGCL, the proposed Delaware Charter and the proposed Delaware By-laws (collectively, such rights, the “Delaware Rights”); and
the New York Business Corporation Law (the “NYBCL”), the New York Charter and the New York By-laws (collectively, such rights, the “New York Rights”), copies of which have been filed with the Securities and Exchange Commission.
Set forth below is a table that summarizes some of the significant differences in the Delaware Rights and the New York Rights. Unless otherwise specified in the table, the New York Governing Documents do not differ from the default provisions of the NYBCL and the Delaware Governing Documents do not differ from the default provisions of the DGCL. The following summary does not purport to be a complete statement of the Delaware Rights and the New York Rights, and is qualified in its entirety by reference to the full text of the New York Governing Documents, the Delaware Governing Documents, the NYBCL and the DGCL.
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Provision | New York | Delaware |
Removal of Directors | Under the NYBCL, shareholders can remove directors for cause and, if provided in the certificate of incorporation or by-laws, without cause. The board can remove directors with or without cause if provided in the charter or a bylaw adopted by shareholders.
Under the New York Charter, directors may be removed by the vote of the Board or a majority of shareholders entitled to vote, in each case only for cause.
| With limited exceptions applicable to classified boards and cumulative voting provisions, under the DGCL directors may be removed, with or without cause, by the holders of a majority of shares then entitled to vote in an election of directors. Under the DGCL, directors may not be removed by the board of directors. |
Filling Board Vacancies and Newly Created Vacancies | Under the New York By-laws, if a director resigns or is removed for cause, then the board may fill the vacancy, but if a director is removed without cause, shareholders must fill the vacancy. Newly created directorships resulting from an increase in the number of directors may be filled by the board. | The Delaware By-laws provide that a vacancy on the Board, whether created as a result of death, resignation or otherwise, or a newly created directorships created by an increase in the total number of directors may be filled by the affirmative vote of a majority of the remaining directors then in office, although less than a quorum. Under the DGCL, vacancies and newly created directorships may also be filled by the shareholders entitled to vote thereon unless the bylaws otherwise provide. The Delaware By-laws do not provide otherwise. |
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Shareholder Right to Call Special Meetings
| Under the New York By-laws, special meetings of shareholders may only be called by the Board, the Chair or the President.
| Under the Delaware By-laws, special meetings of shareholders may be called by the Board, the Chair, the Lead Independent Director or the President. In addition, the Delaware By-laws provide that, upon the written request of one or more shareholders holding at least 25% of the Company’s outstanding stock entitled to vote, the Company will call a special meeting of shareholders, subject to the procedural and informational requirements for calling special meetings of shareholders set forth in the Delaware By-laws.
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Shareholder Action by Written Consent | Under the NYBCL, unless otherwise specified in the certificate of incorporation, shareholder action in lieu of a meeting is permitted to be taken by unanimous written consent of those shareholders who would have been entitled to vote on a given action at a meeting.
The New York By-Laws requires unanimous written consent in order for shareholders to take action without a meeting.
| Under the DGCL, unless the certificate of incorporation provides otherwise, any action required or permitted to be taken at a meeting of theits stockholders may be taken without a meeting if the holders of outstanding stock having at least the minimum number of votes that would be necessary to authorize or take such action at a meeting consent to the action in writing.
Under the Delaware Charter, shareholders can take action by written consent if stockholders holding not less than the minimum number of votes required to authorize or take such action consent. Subject to the approval of Proposal 5 and as further described in Proposal 5 below, the Delaware Charter will provide for certain procedural safeguards in connection with actions taken by written consent, include a minimum ownership threshold, a requirement that written consents must be solicited from all shareholders, and a waiting period before consents can be delivered to ensure that all shareholders have sufficient time to consider the merits of any proposals.
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Notice of Shareholder Meetings | Under the New York By-laws, notice of shareholder meetings must be given personally or by first class mail to each shareholder entitled to vote at the meeting not less than 10 nor more than 50 days before the meeting. | Under the DGCL and the Delaware By-laws, notice of shareholder meetings may be given by mail, courier service, email (unless the shareholder has notified the Company of an objection to receiving notice by email) or another form of electronic transmission consented to by the shareholder. Notice to each shareholder, regardless of method of delivery, will be delivered not less than 10 nor more than 60 days before the meeting. |
Advance Notice Requirements
| Under the New York By-laws, in order to submit a proposal or a director nomination at an annual meeting of shareholders, shareholders must provide the Company with advance notice of such proposal or nomination not less than 60 nor more than 90 days prior to the meeting; provided, however, that if the Company provides less than 70 days’ notice or prior public disclosure of the date of the annual meeting, then shareholders must deliver their notice no later than 10 days following the date the Company provided the notice or public disclosure of the meeting date.
| Under the Delaware By-laws, in order to submit a proposal or director nomination at an annual meeting of shareholders, shareholders must provide the Company with advance notice of such proposal or nomination not less than 60 nor more than 90 days prior to the first anniversary of the previous year’s annual meeting; provided, however, that if the date of the upcoming meeting is delayed or advanced more than 30 days from such anniversary, then the notice must be received on the later of the 90th day prior to the upcoming annual meeting date or the 10th day following the day on which public announcement of the upcoming annual meeting date is first made.
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Shareholder Vote Required for Certain Transactions | Under the NYBCL, a merger, consolidation or sale of all or substantially all of a corporation’s assets must be approved by the corporation’s board of directors and, for companies in existence prior to February 22, 1998 (including the Company), unless the certificate of incorporation of the corporation provides otherwise, two-thirds of outstanding shares entitled to vote in order to adopt the plan of merger.
In a merger between a parent and a subsidiary corporation (in which the parent owns at least 90% of the outstanding shares), there is no requirement of shareholder approval from either corporation, provided the subsidiary is merged into a parent corporation.
Notwithstanding shareholder authorization and at any time prior to the filing of the certificate of merger or consolidation, the plan of merger or consolidation may be abandoned pursuant to a provision for such abandonment, if any, contained in the plan of merger or consolidation.
Pursuant to the terms of the Merger Agreement, the Merger may be abandoned by the Board. at any time prior to the Effective Date.
| Under the DGCL, a merger, consolidation or sale of all or substantially all of a corporation’s assets must generally be approved by the corporation’s board of directors and a majority of the outstanding shares entitled to vote.
In a merger between a parent and a subsidiary corporation (in which the parent owns at least 90% of the subsidiary's outstanding stock), there is no requirement of shareholder approval from either corporation, provided the subsidiary is merged into a parent corporation.
Delaware law does not require a shareholder vote of the surviving corporation in a merger (unless the corporation provides otherwise in its certificate of incorporation) if:
(a) the plan of merger does not amend the existing certificate of incorporation;
(b) each share of stock of the surviving corporation outstanding immediately before the effective date of the merger is an identical outstanding share after the merger; and
(c) either (i) no shares of common stock of the surviving corporation and no shares, securities or obligations convertible into such stock are to be issued or delivered under the plan of merger, or (ii) the authorized unissued shares or shares of common stock of the surviving corporation to be issued or delivered under the plan of merger plus those initially issuable upon conversion of any other shares, securities or obligations to be issued or delivered under such plan do not exceed 20% of the shares of common stock of such constituent corporation outstanding immediately prior to the effective date of the merger.
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Limitations on Director Liability; Exculpation | Under the NYBCL, if a corporation’s certificate of incorporation so provides, the personal liability of a director for breach of fiduciary duty as a director may be eliminated or limited. A corporation’s certificate of incorporation, however, may not limit or eliminate a director’s personal liability (a) if a judgment or other final adjudication adverse to the director establishes that the director acted in bad faith or engaged in intentional misconduct or a knowing violation of law, personally gained a financial profit to which the director was not legally entitled, or violated certain provisions of the NYBCL, or (b) for any act or omission prior to the adoption of such provision in the certificate of incorporation.
The New York Charter does not currently contain a provision limiting the personal liability of directors.
| Under the DGCL, if a corporation’s certificate of incorporation so provides, the personal liability of a director for monetary damages for breach of fiduciary duty as a director, may be eliminated or limited. A corporation’s certificate of incorporation, however, may not limit or eliminate a director’s personal liability (a) for any breach of the director’s duty of loyaltyexcept to the corporationextent such exemption from liability or its shareholders, (b) for acts or omissionslimitation thereof is not in good faith or involving intentional misconduct or a knowing violation of law, (c) for the payment of unlawful dividends, stock repurchases or redemptions, or (d) for any transaction in which the director received an improper personal benefit.
Subject to approval of Proposal 6 and as further described in Proposal 6 below,permitted under the Delaware Charter will contain a provision eliminatingGeneral Corporation Law as currently in effect or as the personal liabilitysame may hereafter be amended. No amendment, modification or repeal of directors for monetary damages to the fullest extent permitted by law.
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Indemnification | Under the NYBCL, a corporation may indemnifythis clause (a) of this Article EIGHTH shall adversely affect any person made,right or threatened to be made, a party to an action or proceeding (other than one by or in the rightprotection of the corporation to procure a judgment in its favor), whether civil or criminal, including an action by or in the right of any other corporation of any type or kind, by reason of the fact that he was a director or officer of the corporation, or served such other corporation in any capacity, against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys’ fees actually and necessarily incurred as a result of such action or proceeding, or any appeal therein, if such director or officer acted, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the corporation and, in criminal actions or proceedings, in addition, had no reasonable cause to believe that his conduct was unlawful. Unless judicially authorized, corporations may not indemnify a person in connection with a proceeding by or in the right of the corporation in which the person was adjudged liable to the corporation. However, no indemnification may be made to or on behalf of any director or officer if a judgment or other final adjudication adverse to the director or officer establishes that his acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled.
The New York By-laws require the Company to indemnify directors and officers to the fullest extent of the law, but provides that no indemnification is required with respect to any settlement or disposition of a proceeding unless the Company has given its prior consent to such settlement/disposition. The New York By-laws also permit the Company to indemnify employees and to advance expenses to any person entitled to indemnification upon request.
| Under the DGCL, a corporation may indemnify any person who was or is a party or is threatened to be made a party to a proceeding (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation against amounts reasonably incurred by the person in connection with such proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. Unless judicially authorized, corporations may not indemnify a person in connection with a proceeding by or in the right of the corporation in which the person was adjudged liable to the corporation. However, a corporation must indemnify an officer or director “to the extent” the person is successful on the merits or otherwise in defending himself or herself.
Similar to the New York By-laws, the Delaware Charter contains a provision requiring the indemnification of directors and officers to the fullest extent permitted by law, but provides that no indemnification is required with respect to any settlement or disposition of a proceeding unless the Company has given its prior consent to such settlement/disposition. The Delaware By-laws also permits the Company to indemnify employees and to advance expenses to any person entitled to indemnification upon request.
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Appraisal Rights | Under the NYBCL, shareholders who follow certain procedures are entitled to exercise appraisal rights in the event of certain mergers or consolidations, share exchanges, sales, leases, exchanges or other dispositions of all or substantially all of the property of the Company.
However, in the case of a merger or consolidation appraisal rights are not available:
(a) to a shareholder of the parent corporation in a merger between a parent and a subsidiary corporation;
(b) to a shareholder of the surviving corporation in a merger authorized under the NYBCL, other than a merger specified above, unless such merger effects one or more of certain specified changes in the rights of the shares held by such shareholder; or
In addition, in the case of a merger, consolidation or share exchange, appraisal rights are not available to a shareholder for the shares of any class or series of stock, which shares or depository receipts, at the record date fixed to determine the shareholders entitled to receive notice of the meeting of shareholders to vote upon the plan of merger or consolidation, were listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc.
Because the Company is listed on the New York Stock Exchange, no appraisal rights are available to the Company’s shareholders under New York law in the event of a merger, consolidation or share exchange.
| Under the DGCL, shareholders of record who follow certain procedures are generally entitled to appraisal rights only in the case of certain mergers or consolidations.
However, appraisal rights are generally not available under the DGCL with respect to shares of any class or series of stock that is listed on a national securities exchange or held of record by more than 2,000 shareholders unless the shares are entitled to receive in the merger or consolidation anything other than:
(a) shares of stock of the corporation surviving or resulting from such merger or consolidation,
(b) shares of stock of any other corporation which at the effective date of the merger of consolidation will be either listed on a national securities exchange or held of record by more than 2,000 shareholders,
(c) cash in lieu of fractional shares of the corporation described in the foregoing clauses (a) and (b), or
(d) any combination of clauses (a), (b), or (c).
In cases where appraisal rights are available, the DGCL permits a shareholder who has received notice of appraisal rights, and who has not voted in favorof the merger (i.e., the shareholder can either vote against or abstain from voting) and who has submitted a timely written demand for appraisal, to file a petition with the Court of Chancery of the State of Delaware to demand a determination of the fair value of such shareholders’ shares. Such petition must be filed within 120 days after the effective date of a merger or consolidation.
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Shareholder Right to Inspect Shareholder List | Under the NYBCL, a shareholder of record may inspect the list of record shareholders upon giving at least five days’ written demand to do so. The inspection may be denied if the shareholder refuses to give an affidavit that such inspection is not desired for a purpose which is in the interest of a business other than the business of the corporation and that the shareholder has not been involved in selling or offering to sell any list of shareholders of any corporation within the preceding five years. | Under the DGCL, any shareholder may upon making a demand under oath stating the purpose thereof, inspect the shareholders’ list for any purpose reasonably related to the person’s interest as a shareholder. In addition, for at least 10 days prior to each shareholder meeting, a Delaware corporation must make available for examination a list of shareholders entitled to vote at the meeting. |
Business Combinations with Interested Shareholders | Under the NYBCL, a publicly traded New York corporation is prohibited from engaging in any “business combination” with an “interested shareholder” for a period of five years following the date the shareholder became an interested shareholder, unless:
(a) the board of directors approves either the business combination or the acquisition of stock by the interested shareholder before the interested shareholder acquires his or her shares;
(b) five years after such interested shareholder acquires his or her shares, the holders of a majority of the outstanding voting stock not beneficially owned by such interested shareholder approves the business combination; or
(c) the business combination meets certain fair price procedural requirements.
An “interested shareholder” under the NYBCL is generally a beneficial owner of at least 20% of the corporation’s outstanding voting stock.
“Business combinations” under the NYBCL include mergers and consolidations between corporations or with an interested shareholder; sales, leases, mortgages or other dispositions to an interested shareholder of assets with an aggregate market value which either equals 10% or more of the corporation’s consolidated assets or outstanding stock, or represents 10% or more of the consolidated earning power or net income of the corporation; issuances and transfers to an interested shareholder of stock with an aggregate market value of at least 5% of the aggregate market value of the outstanding stock of the corporation; liquidation or dissolution of the corporation proposed by or in connection with an interested shareholder; reclassification or recapitalization of stock that would increase the proportionate stock ownership of an interested shareholder; and the receipt by an interested shareholder of any benefit from loans, guarantees, pledges or other financial assistance or tax benefits provided by the corporation.
A New York corporation may elect to waive the above restrictions in its original certificate of incorporation or in a by-law, which is approved by the affirmative vote of a majority of the outstanding voting stock of the corporation, excluding the stock owned by the interested shareholders and its affiliates and associates.
Neither the New York Charter nor the New York By-laws have waived these restrictions.
| Under the DGCL, subject to certain exceptions specified therein, a corporation is prohibited from engaging in any “business combination” with any “interested shareholder” for a three-year period following the date that such shareholder becomes an interested shareholder unless:
(a) prior to such date, the board of directors of the corporation approved either the business combination or the transaction which resulted in the shareholder becoming an interested shareholder;
(b) upon consummation of the transaction which resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of the voting stock of the corporation outstandingexists at the time the transaction commenced (excluding shares held by directors who are also officers and employee stock purchase plans in which employee participants do not have the right to determine confidentially whether plan shares will be tendered in a tender or exchange offer); or
(c) on or subsequent to such date, the business combination is approved by the board of directors of the corporation and by the affirmative vote at an annual or special meeting, and not by written consent, of at least 66 2/3% of the outstanding voting stock which is not owned by the interested shareholder.
An “interested stockholder” under the DGCL is any person other than the corporation and its majority-owned subsidiaries who owns at least 15% of the outstanding voting stock, or who is an affiliate or associate of the corporation and owned at least 15% within the preceding three years.
“Business combinations” under the DGCL include, subject to certain exceptions specified therein, mergers and consolidations between corporations or with an interested shareholder; sales, leases, mortgages or other dispositions to an interested shareholder of assets of the corporation or one of its majority-owned subsidiaries with an aggregate market value which either equals 10% or more of the corporation’s consolidated assets or outstanding stock; issuances and transfers to an interested shareholder of stock; any transaction with an interested shareholder that would increase the proportionate stock ownership of an interested shareholder; and the receipt by an interested shareholder of any benefit from loans, guarantees, pledges or other financial benefits provided by the corporation.
A Delaware corporation may elect to waive the above restriction in its certificate of incorporation.
The Delaware Charter does not exclude Newco from the restrictions imposed under Section 203 of the DGCL.
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Anti-Greenmail Provision
| Under the NYBCL, the Company is prohibited from purchasing or agreeing to purchase more than 10% of its stock from a shareholder at a price greater than the market value of the stock unless the purchase is approved by the Board and a majority of shareholders entitled to vote. However, this restriction does not apply when the Company offers to purchase shares from all of its shareholders or with respect to stock that a shareholder has owned beneficially for more than two years.
| The DGCL does not contain a similar restriction on the Company’s ability to purchase its own stock.
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Other Constituency Statute
| Under the NYBCL when making corporate decisions, directors are entitled to consider the long-term and/or short-term effects of any action on shareholders, employees, customers, creditors and the communities in which the corporation does business.
| The DGCL does not expressly permit directors to consider constituencies other than stockholders when making corporate decisions.
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Transactions with Officers and Directors | Under the NYBCL, a contract or other transaction between a corporation and one or more of its directors, or an entity in which they have an interest, is not void or voidable solely because of such interestamendment, modification or repeal.
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| (b) | An officer the participation of the director or in a meeting of the board of directors or a committee which authorizes the contract or transaction if:(a) the material facts as to such director’s interest in such contract or transaction and as to any such common directorship, officership or financial interest are disclosed in good faith or known to the board or committee, and the board or committee approves such contract or transaction by a vote sufficient for such purpose without counting the vote of such interested director or, if the votes of the disinterested directors are insufficient to constitute an act of the board, by unanimous vote of the disinterested directors; or
(b) the material facts as to such director’s interest in such contract or transaction and as to any such common directorship, officership or financial interest are disclosed in good faith or known to the shareholders entitled to vote thereon, and such contract or transaction is approved by vote of such shareholders; or
(c) the contract or transaction was fair and reasonable as to the corporation at the time it was approved by the board, a committee or the shareholders.
| Under the DGCL, a contract or transaction between a corporation and one or more of its officers or directors or an entity in which they have an interest is not void or voidable solely because of such interest or the participation of the director or officer in a meeting of the board of directors or a committee which authorizes the contract or transaction if:
(a) the material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board of directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of disinterested directors, even though the disinterested directors are less than a quorum;
(b) the material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareholders; or
(c) the contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified by the board of directors, a committee thereof or the shareholders.
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Loans to, and Guarantees of, Directors | Under the NYBCL, a corporation may not lend money to, or guarantee the obligation of, a director unless (1) the shareholders (other than the interested director) approve the transaction; or (2) for corporations in existence on February 22, 1998 (including the Company), if the certificate of incorporation provides that the board may approve the transaction if it determines that the loan or guarantee benefits the corporation and either approves the specific loan or guarantee or a general plan authorizing loans and guarantees. The NYBCL provides that a guarantee mayCorporation shall not be given by a New York corporation, if not in furtherance of its corporate purposes, unless it is authorized by two-thirds of the votes of all outstanding shares entitled to vote.
Under the New York By-laws, no loan, except advances in connection with indemnification, may be made by the Company to any of its directors unless authorized by the Company’s shareholders.
| Under the DGCL, a board of directors may generally authorize loans by the corporation to, and guarantees by the corporation of any obligations of, any director of the corporation who is also an officer or other employee of the corporation whenever, in the judgment of the board of directors, such loan or guarantee may reasonably be expected to benefit the corporation and such guarantee is necessary or convenient to the conduct, promotion or attainment of the business of the corporation. The DGCL does not include a restriction on guarantees by a corporation similar to those imposed under the NYBCL. |
Exclusive Forum | There is no statutory provision in the NYBCL explicitly authorizing a company to designate an exclusive forum for certain types of litigation. The New York Charter and By-laws do not specify an exclusive forum. | As permitted under the DGCL, the Delaware By-laws provide that unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporationliable to the Corporation or the Corporation’s shareholders, (c) any action asserting a claim arising pursuant to any provisionits stockholders for monetary damages for breach of the DGCL, the Delaware Charter or the Delaware By-laws, (d) any action to interpret, apply, enforce or determine the validity of the Delaware Charter or the Delaware By-laws, or (e) any action asserting a claim governed by the internal affairs doctrine (or, if the Court of Chancery does not have jurisdiction, then the Superior Court of the State of Delaware, or if no state court in Delaware has jurisdiction, the federal district court for the District of Delaware). |
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Amendments to Charter | Under the NYBCL,fiduciary duty as an officer, except for certain ministerial changes, and except as otherwise required under a certificate of incorporation, a corporation’s certificate of incorporation may be amended only if authorized by the board of directors and approved by the holders of a majority of the outstanding stock entitled to vote on such amendment.
However, wherever the certification of incorporation requires action by the board or the holders of securities having voting power greater than is required by law, then such provision may not be altered, amended or repealed except by such greater vote.
Additionally, wherever the NYBCL requires a vote greater than a majority of the outstanding stock, then any amendment to the certificate of incorporation for the purpose of reducing this voting threshold mayextent such exemption from liability or limitation thereof is not be adopted except by the vote of shareholders having voting power that is at least equal to that which would be required to take the action.
| Under the DGCL, except for certain ministerial changes, and except where a greater shareholder vote is required by a certificate of incorporation, a corporation’s certificate of incorporation may be amended only if the board adopts a resolution setting forth the proposed amendment and deeming it advisable and such proposed amendment is approved by the holders of a majority of the outstanding stock entitled to vote on such amendment.
However, wherever the certificate of incorporation requires action by the board or the holders of securities having voting power that is greater than is required by law, such provision may not be altered, amended or repealed except by such greater vote.
Additionally, the DGCL provides that the holders of the outstanding shares of a class shall be entitled to vote as a class on any amendment, whether or not entitled to vote thereon by the certificate of incorporation, to increase or decrease the aggregate number of authorized shares of such class (unless the certificate of incorporation provides otherwise), increase or decrease the par value of the shares of such class, or alter or change the powers, preferences, or special rights of the shares of such class so as to affect them adversely (provided that in the case of any such amendment that adversely affects the powers, preferences or special rights of one or more series of any class but does not so affect the entire class, then only the shares of the series so affected shall be considered a separate class for this purpose).
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Amendment of By-laws | Under the NYBCL, a corporation’s by-laws may be amended by the vote of the holders of a majority of the votes cast with respect to such amendment (rather than a majority of the shares outstanding) or, if permitted under the corporation’s certificate of incorporationDelaware General Corporation Law as currently in effect or a bylaw adopted byas the shareholders, by the board of directors.
The New York Charter provides that the Boardsame may amend the New York By-laws without shareholder approval, but any bylaw adopted by the Board mayhereafter be amended or repealed by the shareholders.
| Under the DGCL, the vote of a majority of the shares cast at a meeting of the shareholders is required to adopt, amendamended. No amendment, modification or repeal of this clause (b) of this Article EIGHTH shall adversely affect any right or protection of an officer that exists at the by-laws, unless the certificatetime of incorporationsuch amendment, modification or by-laws provide otherwise. If permitted under the corporation’s certificate of incorporation, the board of directors may also take such action.
Under the Delaware By-laws, shareholders may amend the bylaws by the vote of a majority of the outstanding shares of the Company entitled to vote thereon. The Delaware Charter also provides that the Board may amend the Delaware By-laws without shareholder approval,however, any bylaw adopted by the Board may be amended or repealed by shareholders.
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Expiration of Proxies | Under the NYBCL, a proxy executed by a shareholder will remain valid for eleven months unless the proxy provides for a longer period. | Under the DGCL, a proxy executed by a stockholder will remain valid for a period of three years unless the proxy provides for a longer period.repeal. |
Required Vote
The Reincorporation has been approved by the Board of Directors. Under New York law, the affirmative vote of the holders of two-thirds of the Company’s outstanding shares entitled to vote on this Reincorporation Proposal is required for approval of the Reincorporation.
Consequences of Shareholder Vote
This Proposal 4 is separate from, but contingent upon the approval of, both Proposals 5 and 6. As a result, if either or both of Proposals 5 and 6 are not approved by shareholders, we will not proceed with the Reincorporation regardless of whether this Proposal 4 is approved. Further, if this Proposal 4 is not approved, neither Proposal 5 nor Proposal 6 will become effective and we will continue to be incorporated in New York and governed by our New York Governing Documents.
The Board of Directors unanimously recommends a vote “FOR” this proposal.
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2023 Proxy Statement | | | | 11 |
PROPOSAL FIVE: WRITTEN CONSENT PROCEDURAL PROVISION
As described in Proposal 4 above, consistent with the default threshold under New York law, the Company’s current New York By-laws require unanimity in order for shareholders to act by written consent without a meeting. As a practical matter, this
makes acting by written consent extremely difficult. If the Reincorporation-related proposals are approved and implemented, then the Board plans to instead adopt the Delaware law default for shareholder action by written consent by lowering the threshold for action by written consent to the minimum number of votes necessary to take the action at which the holders of all shares entitled to vote thereon were present and voted (generally, a majority of the outstanding shares). The Board believes that shareholder participation and corporate democracy are enhanced if shareholders have the right to take action without a meeting by written consent, provided that this right is subject to reasonable safeguards to enhance transparency and prevent the disenfranchisement of minority shareholders and the waste of corporate resources. As a result, the Board has unanimously approved, and recommends to shareholders for approval, this proposal to include the provision set forth in the Fifth Article of the Delaware Charter with the following procedural and other safeguards in connection with taking action by written consent:
To reduce the risk that a small group of short-term, special interest or self-interested shareholders initiate actions that are not in the best interests of the Company or its shareholders and reduce unnecessary financial and administrative burdens on the Company as a result of a consent solicitation that has received limited support, the proposed provision requires holders of at least 25% of the Company’s outstanding common stock (provided that such shares are determined to be Net Long Shares (as defined in the Delaware By-Laws) that have been held continuously for at least one year prior to the request) to request that the Board set a record date to determine the shareholders entitled to act by written consent. The Board believes that this 25% threshold strikes the right balance between enhancing the ability of our shareholders to initiate shareholder action and discouraging certain shareholders from engaging in consent solicitations that are only relevant or meaningful to very narrow constituencies.
To protect against minority shareholder disenfranchisement, written consents will have to be solicited from all shareholders, giving each shareholder the right to consider and act on the proposed action. This safeguard will eliminate the possibility that a small group of shareholders can take an action that could have significant implications for the Company and all shareholders without a public and transparent discussion of the merits of any proposed action and without notice to, or input from, all of our shareholders.
To ensure a prompt and orderly process for shareholder action and establish a reasonable deadline for the Board to properly evaluate and respond to a shareholder request for setting a record date, the proposed provision requires that the Board act, with respect to a valid request, to set a record date by the later of (i) 20 days after delivery of a valid request to set a record date; and (ii) 10 days after delivery by the shareholder(s) of any information requested by the Company to determine the validity of the request for a record date or to determine whether the requested action may be effected by written consent. In addition, the record date for determining the shareholders entitled to act by written consent cannot be more than 10 days after the date on which the Board takes action to set a record date. Should the Board fail to set a record date by the required date, the record date will be deemed to be the date on which the first signed consent is delivered to the Company.
To ensure transparency in the written consent process, any shareholder(s) seeking to act by written consent will be required to provide the same information as would be required with respect to a proposal to nominate a director or to be acted upon at a shareholders’ meeting.
To ensure that shareholders have sufficient time to consider the merits of any matter proposed to be acted upon by written consent, any statements in opposition to the proposed action by the other shareholders and the Board’s presentation of its views regarding such matter, the proposed amendments prohibit dating and delivering consents until 60 days after the delivery of a valid request to set a record date.
To avoid an unduly protracted campaign that will disrupt the Company and as required under Delaware law, in order for an action to be effective, consents signed by a sufficient number of shareholders must be delivered to the Company no later than 60 days after the first date on which a consent is delivered to the Company.
To ensure that written consent is in compliance with applicable laws and is not duplicative, the written consent process would not be available for a limited number of matters, specifically: (i) those matters that are not a proper subject for shareholder action under applicable law, or if the request involves a violation of the federal proxy rules or other applicable law, (ii) if the request to set a record date is received by the Company during the period commencing 90 days prior to the first anniversary of the date of the immediately preceding annual meeting and ending on the date of the next annual meeting, (iii) if an identical or substantially similar item (other than the election or removal of directors) was presented at a meeting of shareholders held not more than 12 months before the request for a record date is received by the Company, (iv) if an identical or substantially similar item consisting of the election or removal of directors was presented at a meeting of shareholders held not more than
90 days before the request for a record date was received by the Company, or (v) if an identical or substantially similar item is included in the Company’s notice of meeting for a meeting that has been called but not yet held or that is called to be held within 90 days after the request for a record date is received by the Company.
The foregoing summary of the proposed written consent provision does not purport to be complete and is qualified in its entirety by reference to the text of the Fifth Article of the proposed Delaware Charter, which is attached to this proxy statement as Exhibit B.
Required Vote
Approval of this Proposal 5 requires the affirmative vote of a majority of the outstanding shares of the Company’s stock entitled to vote on this proposal.
Consequences of Shareholder Vote
This Proposal 5 is separate from, but contingent upon on the approval of, both Proposals 4 and 6. As a result, if either of Proposals 4 or 6 is not approved by shareholders, this Proposal 5 will not become effective and we will continue to be governed by the unanimous written consent provision included in our New York By-laws. Further, if this Proposal 5 is not approved by shareholders, we will not proceed with the Reincorporation regardless of whether shareholders approve Proposals 4 and/or 6.
The Board of Directors unanimously recommends a vote “FOR” this proposal.
PROPOSAL SIX: DIRECTOR EXCULPATION PROVISION
As discussed in Proposal 4, Section 102(b)(7) of the DGCL permits a Delaware corporation to include an exculpation provision in its charter eliminating or limiting the personal liability of directors for monetary damages arising out of breaches of their duty of care. Such a provision, however, may not be used to limit or eliminate a director’s personal liability for (i) breaches of their duty of loyalty, (ii) acts or omissions not in good faith or involving intentional misconduct or knowing violation of law (iii) the payment of unlawful dividends, stock repurchases or redemptions, or (iv) transactions in which the director received an improper personal benefit.
Although New York law permits New York corporations to include a similar provision in their charters, this law was not adopted until after the Company’s charter came into effect and, as a result, the Company’s New York Charter does not include such a provision. As part of the Reincorporation, the Board has unanimously approved, and recommends to shareholders for approval, this proposal to include the provision set forth in the Eighth Article of the Delaware Charter providing for the elimination of personal liability of a director to the Company and its shareholders for monetary damages to the fullest extent permitted by Delaware law.
The Board believes this exculpation provision, which is common for public companies incorporated in Delaware, is necessary to ensure that concerns about exposure to personal liability will not adversely affect the ability of our directors to make the difficult, potentially value-maximizing business decisions that are necessary in today’s highly competitive business environment. We are in a competitive industry and compete to secure transactions and to take advantage of strategic opportunities. More than ever before, strong indemnification and exculpation provisions are vital to the company's directors to make value enhancing decisions with more certainty, given the growing frequency of claims and litigation pursued against directors and the substantial costs associated with defending against them, regardless of their merit or their lack thereof.
The foregoing summary of the proposed exculpation provision does not purport to be complete and is qualified in its entirety by reference to the text of the Eighth Article of the proposed Delaware Charter, which is attached to this proxy statement as Exhibit B.
Required Vote
Approval of this Proposal 6 requires the affirmative vote of a majority of the outstanding shares of the Company’s stock entitled to vote on this proposal.
Consequences of Shareholder Vote
This Proposal 6 is separate from, but contingent upon, the approval of both Proposals 4 and 5. As a result, if either of Proposals 4 or 5 is not approved by shareholders, this Proposal 6 will not become effective and we will continue to be governed by our New York Charter, which does not include a director exculpation provision. Further, if this Proposal 6 is not approved by shareholders, we will not proceed with the Reincorporation even if shareholders approve Proposals 4 and/or 5.
The Board of Directors unanimously recommends a vote “FOR” this proposal.
PROPOSAL SEVEN: AMENDED AND RESTATED 2020 NON-EMPLOYEE DIRECTOR EQUITY COMPENSATION PLAN
On December 12, 2019, upon the recommendation of the Compensation Committee, our Board of Directors unanimously approved the Amended and Restated 2020 Non-Employee Director Equity Compensation Plan (the “NED Plan”), subject to approval by our shareholders. The NED Plan was adopted in order to ensure that there will be sufficient shares available for delivery pursuant to the grant of equity-based awards, and to reflect anticipated changes to the Company’s non-employee director compensation program. The NED Plan will be applicable only to awards granted on or after the date the NED Plan is approved by our shareholders (the “Effective Date”). The NED Plan revises the Company’s 2016 Non-Employee Director Equity Compensation Plan, which was originally approved by our shareholders on May 25, 2016 (the “2016 Plan”). Certain significant ways in which the NED Plan terms differ from the terms of the 2016 Plan are summarized below, as are certain material terms of the NED Plan itself. These summaries are qualified in their entireties by reference to the complete text of the NED Plan, which is attached hereto as Exhibit D.
The NED Plan provides for the issuance of equity-based awards covering up to an additional 150,000 shares of Common Stock, plus the [•] shares of Common Stock that remain available for issuance under the 2016 Plan as of [April 3, 2020]. The NED Plan includes a number of provisions designed to protect shareholder interests and to reflect appropriately our non-employee director compensation philosophy, the placement of annual limits on non-employee director compensation, and express prohibitions against repricing stock options or stock appreciation rights (“SARs”), repurchasing out-of-the-money stock options or SARs or subjecting stock options or SARs to automatic reload provisions, in each case, without the approval of the Company’s shareholders.
The Compensation Committee, with approval of the full Board, and pursuant to recommendations of its independent compensation consultant, has been issuing value-based awards of equity compensation to directors generally intended to align with the 50th percentile of peer companies (described on pages 47 - 48 of the CD&A). Since 2019, the Compensation Committee, with the approval of the full Board, has granted our non-employee directors with equity awards with a grant date value of approximately $150,000 annually ($200,000 for the Chair of the Board), with such equity grants comprised of a ratio of 3:1 of restricted stock units (“RSUs”) to stock options. With the increase in the size of the Board in 2019, the number of shares available to provide equity awards for the Board of Directors will need to increase. Further, the Compensation Committee reviews director compensation every three years, and it is possible that director compensation may increase over time, as other companies within the peer group increase their director compensation, and as the Company grows. The Compensation Committee and the Board believe that additional shares are needed to continue to provide an appropriate level of equity compensation to directors beyond 2020.
Our Board believes that the additional 150,000 shares available for grant under the NED Plan would provide sufficient shares for the non-employee director equity-based compensation needs of the Company for approximately four to five years following the effective date of the NED Plan. This estimate is based on our anticipated share usage for 2020 and following years and our history of grants to non-employee directors, taking into account potential changes in our stock price, increased equity usage compared to cash fees and providing for the possibility of new directors who would be eligible to receive initial “staking” grants, we estimate that on average we will grant approximately 25,000 to 35,000 shares in the aggregate per year to our non-employee directors (although our actual grants may be higher or lower than this estimate based on numerous factors, primarily driven by stock price and number of directors).
Currently, the 2016 Plan authorized the issuance of 150,000 shares of Common Stock that may be delivered pursuant to equity granted under the 2016 Plan, of which [•] shares remain available for delivery as of [April 3, 2020], not taking into account grants of awards that will be made in connection with our 2020 annual meeting of shareholders. We estimate that based on our estimated share usages, our remaining shares available for grant will be insufficient to sustain our expected grant practices after 2020. Therefore, if shareholders do not approve the NED Plan, our future ability to issue equity-based awards other than cash-settled awards will be limited, and could, among other things:
•Inhibit alignment with shareholders: As described in the Director Compensation sections of this proxy statement, the Company awards equity compensation to our non-employee directors in order to align their interests with those of shareholders, which would not be possible if our non-employee director share reserve were exhausted; and
•Increase volatility in reported earnings and compensation expense: If we were required in the future to grant cash-settled awards instead of equity-settled awards, our reported director compensation expenses could increase and could thus contribute to volatility in our reported earnings. Under current accounting rules, the charges for cash-settled awards would be based on quarterly fluctuations in our stock price. This would increase the cost of compensation if our stock price appreciates and lead to unpredictable quarterly results.
The incremental dilution resulting from the NED Plan is estimated to be negligible, at approximately [•] calculated, in each case as of the record date, as (x) 150,000 shares newly available under the NED Plan divided by (y) [•] shares outstanding as of [April 3, 2020]. The Company takes into account the relevant accounting and tax impact of all potential forms of equity awards in designing our grants. We believe that the benefits to our shareholders resulting from equity award grants to our non-employee directors, including alignment with shareholder interests, outweigh the potential dilutive effect of grants under the NED Plan.
In addition to the increase in share authorization, the NED Plan adds a one-year minimum vesting requirement generally applicable to awards granted under the NED Plan, and maintains an annual limit on the aggregate value of compensation granted to any one non-employee director in respect of any calendar year with respect to his or her service as a non-employee director at $400,000, which we believe should allow the Company to attract and maintain highly qualified directors. The NED Plan also clarifies that all directors who are not current employees of the Company are eligible to participate (as opposed to directors who are not current or former employees, as under the 2016 Plan), which allows the Company flexibility to issue awards in the event a future director is a former employee of the Company. In connection with the Reincorporation (as described under Proposal 4 (Reincorporation) of this proxy statement), the governing law for the NED Plan has been changed from New York to Delaware. Certain other non-material changes are reflected in the complete text of the NED Plan, which is attached hereto as Exhibit D.
Overview of the NED Plan
The purpose of the NED Plan is to attract, retain and motivate directors who serve on the Board of Directors for the Company, to compensate them for their contributions to the long-term growth and profits of the Company and to encourage them to acquire a proprietary interest in the success of the Company. The NED Plan will be administered by the Compensation Committee, which may delegate any of its powers under the NED Plan to a subcommittee thereof. Awards may be made to any non-employee director who may perform services for the Company and its subsidiaries and affiliates selected by the Compensation Committee. The NED Plan provides for grants of SARs, RSUs, and stock options (collectively, “Awards”).
Eligibility
All members of the Board of Directors who are not current employees of the Company or any of its subsidiaries are eligible to participate in this Plan, which as of the date of this proxy statement comprises nine individuals.
Administration
The NED Plan will be administered by the Compensation Committee, which will consist of at least two members of the Board of Directors who will be appointed by, and will serve at the pleasure of, the Board of Directors. In addition, the Compensation Committee may delegate any of its powers under the NED Plan to a subcommittee of the Compensation Committee (which hereinafter will also be referred to as the Compensation Committee). The Compensation Committee may allocate among its members and delegate to any person who is not a member of the Compensation Committee any of its administrative responsibilities. The Board of Directors may, in its sole discretion, at any time and from time to time, grant Awards under the NED Plan or administer the NED Plan. The Board of Directors will have all of the authority and responsibility granted to the Compensation Committee.
Amendment
The Board of Directors may, at any time, suspend, discontinue, revise or amend the NED Plan in any respect whatsoever, and may also suspend the ability of a recipient of an Award to exercise or otherwise realize the value of his or her Award. Any amendment that materially adversely affects a recipient, however, requires such recipient’s prior written consent. In general, shareholder approval of any suspension, discontinuance, revision or amendment will be obtained only to the extent necessary to comply with any applicable law, rule or regulation.
Shares Subject to the NED Plan; Other Limitations of Awards
The total number of shares of Common Stock that may be delivered pursuant to Awards granted under the NED Plan may not exceed 150,000 shares, plus the [•] shares of Common Stock that remain available for issuance under the 2016 Plan as of [April 3, 2020]. These shares may be authorized but unissued shares of Common Stock or authorized and issued shares of Common Stock held in our treasury or otherwise acquired for the purposes of the NED Plan. If any Award under the NED Plan (or any award granted under the 2016 Plan) is forfeited or otherwise terminates or is canceled without the delivery of shares of Common Stock or shares of Common Stock are surrendered or withheld from any Award (or any award granted under the 2016 Plan) to satisfy a grantee’s income tax or other withholding obligations, or if shares of Common Stock owned by the grantee are tendered to pay for the exercise of a stock option under the NED Plan, then the shares covered by such expired, forfeited, terminated or canceled Award (or award under the 2016 Plan) which are equal to the number of shares surrendered or withheld in respect thereof will again become available to be delivered pursuant to Awards granted or to be granted under the NED Plan.
Types of Awards
Awards under the NED Planmay consist of: (i) SARs granted pursuant to Section 5.1 of the NED Plan, (ii) RSUs granted pursuant to Section 5.2 of the NED Plan, and (iii) nonstatutory stock options granted pursuant to Section 5.3 of the NED Plan. Each Award will be evidenced by an award agreement (an “Award Agreement”) which will govern that Award’s terms and conditions.
No grantee of an Award (or other person having rights pursuant to an Award) will have any rights of a stockholder of the Company with respect to shares of Common Stock subject to an Award until the delivery of such shares. Other than with respect to Award adjustments described in Section 4.2 of the NED Plan, regarding recapitalization adjustments, no adjustments will be made for dividends or distributions of any kind, on, or other events relating to, shares of Common Stock subject to an Award for which the record date is prior to the date such shares are delivered. Notwithstanding any other provision of the NED Plan to the contrary, all Awards under the NED Plan will be subject to the Company’s Recoupment Policy, as it may be amended from time to time.
New Plan Benefits
The amount of each recipient’s Award for the 2020 calendar year (and subsequent years) is not currently known and will be determined based on numerous factors but is generally intended to align with the 50th percentile of peer companies (described on pages 47 - 48 of the CD&A). Our current practice is to grant our non-employee directors equity awards with a grant date value of approximately $150,000 annually ($200,000 for the Chair of the Board), with such equity grants comprised of a ratio of 3:1 in value of restricted stock units (“RSUs”) to stock options. If the NED Plan had been in effect in 2019 when awards for that year were granted, the benefits or amounts received by, or allocated to, our non-employee directors would have been consistent with the benefits or amounts actually received by or allocated to such persons under the 2016 Plan (as described on pages 67 - 69) in that the proposed terms of the NED Plan would not have an impact on the amount or nature of the awards the Compensation Committee issued in 2019 or may issue thereafter.
U.S. Federal Tax Considerations
The following is a brief description of the U.S. federal income tax consequences generally arising with respect to Awards. This summary is not intended to constitute tax advice and is not intended to be exhaustive and, among other things, does not describe state, local or foreign tax consequences. Recipients of Awards are advised to consult with their own independent tax advisors with respect to the specific tax consequences that, in light of their particular circumstances, might arise in connection with their Awards.
Stock Options and SARs
The grant of an option or SAR will create no tax consequences for the recipient or the Company. Upon exercising a stock option or a SAR, a non-employee director will realize ordinary income (not as capital gain) in an amount equal to the excess of the fair market value on the exercise date of the shares subject to the stock option or SAR over the exercise price or reference price of the stock option or SAR. The Company will be entitled to a corresponding deduction in an amount equal to the excess of the fair market value on the exercise date of the shares subject to the stock option or SAR over the exercise price or reference price of the stock option or SAR. The non-employee director will have a basis in the shares received as a result of the exercise, for purposes of computing capital gain or loss, equal to the fair market value of the shares on the exercise date and the non-employee director’s holding period in the shares received will commence on the day after the date of exercise. Income recognized
by a non-employee director in connection with the exercise of a stock option or SAR may be subject to certain self-employment taxes to be paid by the director.
Restricted Stock Units
Generally, a recipient of an RSU will not recognize ordinary income at grant unless the RSU is vested at grant. Instead, the recipient generally will recognize ordinary income and the Company will be entitled to a corresponding deduction when the RSU becomes vested (or if later is settled), equal to the fair market value of the stock covered by the RSU on the date it becomes vested (or if later, is settled). The recipient’s basis for determining gain or loss upon the subsequent disposition of shares acquired pursuant to the RSU will be the amount of any ordinary income recognized either when the RSU becomes vested (or if later, is settled). Upon the disposition of any shares received pursuant to the award, the difference between the sales price and the recipient’s basis in the shares will be treated as a capital gain or loss and generally will be characterized as long- or short-term depending on the period the recipient held such shares after the vesting (or if later, settlement) date. Income recognized by a non-employee director in connection with the vesting or settlement of an RSU may be subject to certain self-employment taxes to be paid by the director.
Net Investment Income Tax
A recipient of an award will also be subject to a 3.8% tax on the lesser of (i) the recipient’s “net investment income” for the relevant taxable year and (ii) the excess of the recipient’s modified adjusted gross income for the taxable year over a certain threshold (ranging from $125,000 to $250,000, depending on the recipient’s circumstances). A recipient’s net investment income generally includes net gains from the disposition of shares. Recipients are urged to consult their tax advisors regarding the applicability of this Medicare tax to their income and gains in respect of their investment in the shares.
Section 409A
If an award is subject to Section 409A of the Code, but does not comply with the requirements of Section 409A of the Code, the taxable events as described above could apply earlier than described, and could result in the imposition of additional taxes and penalties.
Required Vote
Approval of the NED Plan requires the affirmative vote of a majority of the votes cast at the Annual Meeting. The Board of Directors believes that the approval of the NED Plan is in the best interests of the Company because it will ensure that there will be sufficient shares available for delivery to non-employee directors pursuant to the grant of equity-based awards and reflects anticipated changes to the Company’s non-employee director compensation program.
The Board of Directors has unanimously approved the NED Plan and unanimously recommends a vote “FOR” approval of the NED Plan.
PROPOSAL EIGHT: AMENDED AND RESTATED 2020 EMPLOYEE STOCK PURCHASE PLAN
On December 12, 2019, upon the recommendation of the Compensation Committee, our Board of Directors unanimously approved the CONMED Corporation Amended and Restated 2020 Employee Stock Purchase Plan (the “Employee Plan”). The Employee Plan was adopted to reflect anticipated changes to the Company’s employee stock purchase program. The Employee Plan revises the Company’s 2002 Employee Stock Purchase Plan, which was originally approved by our shareholders on May 14, 2002 (the “2002 Plan”) and further amended on January 1, 2006. Certain significant ways in which the Employee Plan terms differ from the terms of the 2002 Plan are summarized below, as are certain material terms of the Employee Plan itself. These summaries are qualified in their entireties by reference to the complete text of the Employee Plan, which is attached hereto as Exhibit E.
If approved by shareholders, the Employee Plan will provide to employees of the Company and its designated subsidiaries and affiliates the opportunity to invest from one percent (1%) to ten percent (10%) of their annual compensation to purchase shares of the Common Stock at a purchase price equal to ninety percent (90%) of the fair market value of the Common Stock at the end of such quarterly period (provided that an alternative discount rate in the range between eighty-five percent (85%) and one hundred percent (100%) may be set prior to the commencement of a future offering period). All employees of the Company or any of its subsidiaries or affiliates designated by the Employee Plan Committee (as defined below) will be eligible for participation in the Employee Plan, subject to certain excluded categories as detailed below. If the proposed amendments are approved, approximately
2,000 U.S. CONMED employees, and additional 1,400 CONMED international employees may be eligible for participation under the Employee Plan.
The number of shares of Common Stock which remain available to be purchased under the 2002 Plan as of [April 3, 2020], is [•], subject to adjustment in the event of a recapitalization, stock dividend, stock split, repurchase of shares or other changes in the outstanding Common Stock. The shares usable under the Employee Plan are authorized but previously unissued shares of Common Stock or authorized and issued Common Stock held in the Company's treasury or acquired by the Company for purposes of the Employee Plan. Shares subject to any lapsed or expired option shall again become available for transfer pursuant to options granted or to be granted under the Employee Plan.
Summary of Other Significant Changes to the 2002 Plan
The Employee Plan improves our employee stock purchase program with the following features:
Changes to Purchase Discount: The Employee plan allows eligible employees to purchase Common Stock at ninety percent (90%) of its fair market value, which was previously ninety-five percent (95%) under the 2002 Plan, as amended. The Employee plan also now provides the Employee Plan Committee (as defined below) discretion to set, prior to the commencement of a future offering period, an alternative discount rate in the range between eighty-five percent (85%) and one hundred percent (100%);
Clarifying Eligibility Requirements and International Offerings: The Employee Plan clarifies certain eligibility requirements under the 2002 Plan in accordance with Section 423 of the Code, so as to permit CONMED’s international employees, who account for approximately 46% of the corporate-wide revenues, to participate in the employee stock purchase plan, to the extent permitted by local laws, and to allow CONMED to make separate offerings under the Employee Plan that do not qualify under Section 423 of the Code, thus enhancing CONMED’s ability to recruit and retain employees internationally; and
Other Changes: In connection with the Reincorporation (as described in the Proposal 4 section of this proxy statement), the governing law for the Employee Plan has been changed from New York to Delaware.
Overview of the Employee Plan
The Employee Plan is designed to encourage employees to increase their ownership interest in the Company and to motivate them to exert their maximum efforts toward the success of the Company. The Employee Plan provides employees of the Company and its designated subsidiaries and affiliates the opportunity to invest a percentage of their annual compensation to purchase shares of the Common Stock from the Company at a discounted price.
Eligibility
Employees eligible to participate in the Employee Plan consist of all employees of the Company or any of its designated subsidiaries or affiliates other than any employee who (1) has not completed at least 90 days of continuous full-time employment with the Company or any of its participating subsidiaries, (2) customarily works five months per year or less, or (3) owns (or would own upon participation in an offering) five percent (5%) or more of the voting securities of the Company; provided that if exclusion of an employee pursuant to (1) or (2) above is in violation of applicable law, such employee will be eligible to participate in the Employee Plan but may be required to participate in a non-Section 423 offering if participation in a Section 423 offering is not in compliance with Section 423 of the Code (all such eligible employees, “Participants”). Participants shall be permitted to purchase shares of the Common Stock under the Employee Plan. Participants shall designate a percentage of their pay ranging from one percent (1%) to a maximum of ten percent (10%) (or such other percentage as the Employee Plan Committee may establish) to be withheld on a regular basis in order to purchase shares of the Common Stock on a quarterly basis through the exercise of rights granted under the Employee Plan (“Payroll Payments”). In order to be eligible to make Payroll Payments, enrollment and payroll deduction forms must be filed or authorization instructions must be given through other means as the Employee Plan Committee may permit by specified dates. Once enrolled for Payroll Payments, a Participant will continue to be enrolled in subsequent months at the percentage of pay selected until the Participant either elects a different rate by filing appropriate forms or giving appropriate instructions or terminates these Payroll Payments.
Administration
The Employee Plan is to be administered by a designated committee from management (the “Employee Plan Committee”) if the Employee Plan is approved at the Annual Meeting of Shareholders.
Stock Purchase Discount
On a quarterly basis, the administrator of the Employee Plan will credit to the account of a Participant the number of whole shares, and fractional shares at the Company's option, of Common Stock derived by dividing the total amount of the Participant’s Payroll Payments during a quarterly period by ninety percent (90%) of the fair market value of the Common Stock on the last business day of the quarterly period. The Employee plan provides the Employee Plan Committee discretion to set, prior to the commencement of a future offering period, an alternative discount rate in the range between eighty-five percent (85%) and one hundred percent (100%). However, no Participant will be granted the right to purchase shares of Common Stock under the Employee Plan and all other employee stock purchase plans of the Company, if any, at a rate which exceeds $25,000 of the fair market value at the date of grant for each calendar year in which such right is outstanding. For purposes of the Employee Plan, the “fair market value” of the Common Stock on a particular day shall be the last reported sale price (on that date) on the New York Stock Exchange, or such other national market on which the Company’s stock may be listed. The Committee may designate separate offerings under the Employee Plan (the terms of which need not be identical) in which Participants will participate (even if the dates of the applicable offering periods of each such offering are identical) and the provisions of the Employee Plan will separately apply to each offering.
Termination of Employment
Upon termination, including voluntary termination, retirement or death, of a Participant during an offering period, the payroll deductions remaining credited to the Participant’s account will be returned to the Participant or his or her estate and the Participant’s option will automatically terminate.
Withdrawal; Assignment or Transfer
A Participant may withdraw Payroll Payments credited to the Participant’s account under the Employee Plan if the amounts have not already been used to purchase Common Stock by giving at least thirty days prior written notice, or such other notice period as the Employee Plan Committee may establish. The cash balance will then be paid to the Participant and no further payroll deductions will be made from the Participant’s pay until the Participant reenrolls in the Employee Plan and elects such payroll deductions.
Participants do not have the ability to assign or transfer their rights to purchase Common Stock under the Employee Plan.
Adjustments
In the event that the outstanding shares of Common Stock have been increased, reduced, changed into or been exchanged for a different number of or kind of shares of Company securities by reason of a reclassification, recapitalization, merger, consolidation, reorganization, stock dividend, stock split or reverse stock split, combination or exchange of shares, repurchase of shares, change in corporate structure, distribution of an extraordinary dividend or otherwise the Employee Plan Committee may make appropriate adjustments to the number and/or kind of shares which may be offered under the Employee Plan.
Amendment
The Board of Directors has the authority to terminate or amend the Employee Plan; provided that the Board of Directors may not make any change in any option granted thereunder which adversely affects the rights of any Participant or, without the approval of the shareholders of the Company, increase the maximum number of shares which may be issued under the Employee Plan.
New Plan Benefits
Because participation in the Employee Plan will vary from employee to employee and levels of participation among Participants will also vary, it is not possible to determine the value of benefits which may be obtained by executive officers and other employees under the Employee Plan.
U.S. Federal Tax Considerations
The Employee Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code. In addition, the Plan authorizes the grant of purchase rights which do not qualify under Section 423 of the Code, pursuant to any rules, procedures, or sub-plans adopted by the Committee for such purpose.
In general, a Participant will not recognize ordinary compensation income upon the exercise of the rights granted under the Employee Plan, provided that the Participant holds the Common Stock acquired upon purchase for at least one year from the date of election and two years from the date of grant (the “Holding Period”). Upon the subsequent disposition of the acquired Common Stock, the Participant will recognize ordinary compensation income in an amount equal to the lesser of (i) the excess of the fair market value of the Common Stock upon disposition over the exercise price thereof or (ii) the excess of the fair market value of the Common Stock at the time of grant over the exercise price thereof. Any additional gain upon the sale of the acquired Common Stock will be long-term capital gain. The Company will not be entitled to a deduction for any long-term capital gain income recognized by the Participant pursuant to either the exercise of options granted under the Employee Plan or the sale of the acquired Common Stock.
If a Participant disposes of the Common Stock acquired prior to the end of the Holding Period, the Participant will recognize ordinary compensation income in the year of the disqualifying disposition in an amount equal to the difference between the fair market value of the Common Stock on the date of exercise over the exercise price thereof. The Company will be entitled to an income tax deduction equal to the amount of the ordinary compensation income recognized by the Participant. Any additional gain (or loss) on the sale of the Common Stock by the Participant will be taxed as short-term capital gain (or loss), as the case may be.
If the requirements of Section 423 of the Code are not satisfied upon the date of purchase, the Participant will recognize ordinary compensation income equal to the difference between the fair market value of the Common Stock at purchase and the exercise price on the date of exercise. The Company will be entitled to an income tax deduction equal to the amount of the ordinary compensation income recognized by the Participant.
Required Vote
Approval of the Employee Plan requires the affirmative vote of a majority of the votes cast at the Annual Meeting. The Board of Directors believes that the approval of the Employee Plan is in the best interests of the Company because it will provide an incentive for the Company’s employees to increase their ownership in the Company and will motivate them to improve their performance and hence enhance shareholder value.
The Board of Directors has unanimously approved the Employee Plan and recommends a vote “FOR” approval of the Employee Plan.
OTHER BUSINESS
BusinessManagement knows of no other business that will be presented for consideration at the Annual Meeting, but should any other matters be brought before the meeting, it is intended that the personsperson named in the accompanying proxy will vote such proxy at theirhis discretion.
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| 12 | | | | 2023 Proxy Statement |
SHAREHOLDER PROPOSALS FOR 2021 ANNUAL MEETING
Stockholder Proposals for 2024 Annual Meeting
Any shareholderstockholders desiring to present a proposal to the shareholdersstockholders at the 20212024 Annual Meeting, which currently is expected to be scheduled on or about May 19, 2021,20, 2024, and who desires that such proposal be included in the Company’s proxy statement and proxy card relating to that meeting, must transmitmail that proposal to the Company so that it is received by the Company at its principal executive offices on or before December 10, 2020.
13, 2023. All such proposals
shouldmust be in compliance with applicable SEC regulations.
Stockholders wishing to propose matters for consideration at the 2024 Annual Meeting but who do not wish to have such proposals included in the Company‘s proxy statement or to propose nominees for election as directors at the 2024 Annual Meeting must follow specified advance notice procedures contained in the Company’s By-laws, a copy of which is available on request to the Special Counsel and Corporate Secretary of the Company, c/o CONMED Corporation, 11311 Concept Boulevard, Largo, FL 33773 (Telephone (727) 392-6464). Stockholder proposals, including director nominee proposals, must comply with the conditions set forth in Sections 1.13 and 1.14 of the Company’s By-laws, as applicable, and to be considered timely, notice of a proposal must be received by the Company no earlier than February 24, 2024 and no later than March 25, 2024. The Company’s Corporate Governance and Nominating Committee will consider nominees for election as directors who are proposed by shareholders ifstockholders in a manner that complies with these procedures. In addition to satisfying the following procedures are followed. Shareholders wishingrequirements under our bylaws, to propose matters for consideration at the 2021 Annual Meeting or to propose nominees for election as directors at the 2021 Annual Meeting must follow specified advance notice procedures contained in the Company’s by-laws, a copy of which is available on request to the General Counsel of the Company, c/o CONMED Corporation, 525 French Road, Utica, New York 13502 (Telephone (315) 797-8375). As of the date of this proxy statement, shareholder proposals, including director nominee proposals, must comply with the conditions setuniversal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Board’s nominees must provide notice that sets forth in Sections 1.13the information required by Rule 14a-19 under the Exchange Act, no later than March 25, 2024.
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2023 Proxy Statement | | | | 13 |
Corporate Governance Matters
Directors, Executive & Other Officers and 2.10Nominees for the Board of the Company’s by-laws, as applicable, and to be considered timely, notice of a proposal must be received by the Company between February 18, 2021 and March 20, 2021.
CORPORATE GOVERNANCE MATTERS
DIRECTORS, EXECUTIVE & OTHER OFFICERS AND NOMINEES FOR THE BOARD OF DIRECTORS
DirectorsThe Company’s directors are elected at each annual meeting of shareholdersstockholders and serve until the next annual meeting and until their successors are duly elected and qualified. Mr. Hartman’s employment is at-will. The Company’s officers are appointed by the Board of Directors and, except as set forth below, hold office at the will of the Board of Directors.
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David Bronson Age 70 Director since 2015 Committees: • Corporate Governance and Nominating (Chair) • Audit | | DAVID BRONSON (age 67) has served as a Director of the Company since July 2015.
| | Biographical Information:Mr. Bronson served as Executive Vice President and Chief Financial Officer of PSS World Medical, Inc. from 2002 until it was acquired by McKesson Corp in 2013. Prior to that, he was Chief Financial Officer of Digineer, Inc. from 2001 to 2002 and of VWR Scientific Products from 1995 to 1999, when it was acquired by Merck KGaA. Mr. Bronson previously spent 15 years at Baxter Healthcare, Inc., where he held various senior financial executive positions. He was a Directordirector and a member of the Audit Committee of Labsco, Inc. until 2016 and was a Directordirector and Audit Committee Chair of AxelaCare, Inc. through November 2015. Mr. Bronson received his Master of Science Degree in Management Studies from Northwestern University’s Kellogg School of Business and his Bachelor of Science Degree in Accounting from California State University, Fullerton. The Board of Directors has determined that Mr. Bronson is independent within the meaning of the rules of the New York Stock Exchange, and that he is an audit committee financial expert within the meaning of the rules of the Securities and Exchange Commission.
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| | | Qualifications: Mr. Bronson’s qualifications for election to CONMED’s Board include his extensive experience as a Chief Financial Officer generally, and in the health-care industry in particular, as well as his financial and accounting expertise acquired through his prior positions. His exposure to, and familiarity with, health care services matters provides an important perspective to the Board. He has the ability and willingness to serve on athe Board, and the correct fit to work in a collegial manner with the other directors. | | |
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Committees:
- Corporate Governance and Nominating (chair)
- Audit
- Pricing
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Corporate Governance Matters |
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Brian P. Concannon Age 65 Director since 2013 Committees: • Compensation (Chair) • Strategy | | BRIAN P. CONCANNON (age 62) has served as a Director of the Company since July 2013.
| | Biographical Information:Mr. Concannon served as President and CEO of Haemonetics Corporation, a publicly traded company (NYSE: HAE) from April 2009 to October 2015. He joined Haemonetics in 2003 and served in various roles to include the President, Global Markets in 2006 and the Chief Operating Officer in 2007-2009. In April 2009, Mr. Concannon was promoted to President and Chief Executive Officer, and elected to the Haemonetics board of directors. Prior to joining Haemonetics, Mr. Concannon was the President, Northeast Region, for Cardinal Health Medical Products and Services where he was employed since 1998. From 1985 to 1998, he was employed by American Hospital Supply Corporation, Baxter Healthcare Corp and Allegiance Healthcare in a series of sales and operations management positions of increasing responsibility. He has served in leadership roles within the healthcare industry for more than 30 years. Mr. Concannon has been a member of the board of directors of Hivers and Strivers, an investment fund, since September 2020, a member of the board of Aegle Health Partners since October 2021, and a member of the board of directors of VetAccel since November 2019. Mr. Concannon was also a member of the board of directors of South Shore Health and was elected Vice-Chair infrom January 2017 through December 2019. Mr. Concannon is2019, and he was also a member of the board of directors of VetAccel since November 2019.My Brother’s Keeper from January 2010 and served as the Chair of the Board from September 2011 through December 2021. Mr. Concannon was also appointed as the Civilian Aide to the Secretary of the Army for Massachusetts in October 2017. Mr. Concannon is a 1979 graduate of West Point. The Board of Directors has determined that Mr. Concannon is independent within the meaning of the rules of the New York Stock Exchange.
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| | | Qualifications:Mr. Concannon’s qualifications for election to CONMED’s Board include his experience as a former CEO and director of a publicly-traded medical device company, and the former president of a distribution company. Mr. Concannon offers industry experience from a sales and marketing perspective. He has the ability and willingness to serve on athe Board, and the correct fit to work in a collegial manner with the other directors. |
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Committees:
- Compensation
- Strategy
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LaVerne Council Age 61 Director since 2019 Committees: • Audit • Corporate Governance and Nominating | | LAVERNE COUNCIL (age 58) has served as a Director of the Company since she was appointed to the Board in December 2019.
| | Biographical Information:Ms. Council is the Chief Executive Officer of Emerald One, LLC, a consulting company focused on helping business and technology organizations transform through digital change. She iswas the former National Managing Principal, Enterprise Technology Strategy & Innovation for Grant Thornton LLP from December 2017 until November 2019. She served as the Senior Vice President and General Manager for MITRE Corporation from 2017 through 2018 and as the Assistant Secretary for Information & Technology and Chief Information Officer for the United States Department of Veteran Affairs from 2015 through 2017. Ms. Council was the Chief Executive Officer of Council Advisory Services, LLC from 2012 through 2015 and served as the Corporate Vice President and Global Chief Information Officer for Johnson & Johnson from 2006 through 2011. Before that, she served in several roles of increasing responsibility at DELL, Inc., most recently as the Global Vice President, Information Technology, Global Business Solutions, and Development Services. Ms. Council also serves on the board of directors of Concentrix (Nasdaq: CNXC), where she serves on the Audit and Compensation Committees, as well as the Board of Thomson Reuters (NYSE: TRI), where she serves on the Audit and Risk Committees. Ms. Council received her Master of Business Administration from Illinois State University and her Bachelor of Business Administration in Computer Science from Western Illinois University. She holds an honorary Doctorate of Business Administration from Drexel University. Ms. Council also serves on the boards of Mathmatica, an acclaimed data research organization, Girl Up a UN Foundation Organization, Delta Sigma Theta, and the March of Dimes. The Board of Directors has determined that Ms. Council is independent, and is an audit committee financial expert, within the meaning of the rules of the New York Stock Exchange.
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| | | Qualifications: Ms. Council’s qualifications for appointment to CONMED’s Board include her extensive experience as a global operations and information technology executive with budgets ranging up to $4.5 billion per year. The Board strongly believes that the Board and Company benefit from the perspectives that Ms. Council brings from her business experience and her gender, and racial diversity. She has the ability and willingness to serve on athe Board, and the correct fit to work in a collegial manner with the other directors. | | |
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Committees:
- Compensation
- Corporate Governance and Nominating
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Charles M. Farkas Age 71 Director since 2014 Committees: • Compensation • Strategy | | CHARLES M. FARKAS (age 68) has served as a Director of the Company since July 2014.
| | Biographical Information: Mr. Farkas has spent the pastmore than 40 years at Bain & Company. Mr. Farkas became an Advisory Partner effectiveof Bain & Company on July 1, 2015. Prior to this, Mr. Farkas was aSenior Partner at Bain & Company, served as the Global Co-Head of Bain'sBain’s Healthcare Practice and advised leading medical technology and pharmaceutical companies in the United States, Europe, and Asia. He also advised academic medical centers and provider organizations in the United States. Mr. Farkas advised chief executives and senior managers in a wide variety of industries on issues critical to long-term success, including strategy, mergers and acquisitions, and operational effectiveness. He has served as the managing director of Bain Canada and as the global leader of Bain & Company'sCompany’s Financial Services practice. Prior to working at Bain, Mr. Farkas received a Bachelor of Arts degree from Princeton University and a Masters in Business Administration from Harvard Business School. Mr. Farkas is also on the Boardboard of John A. Hartford Foundation, a Corporator of Partners Healthcare and from 2005 to 2017 was on the Boardboard of the Harvard Medical School. Mr. Farkas is alsoon the board of Intuitive Healthcare, a special advisor toportfolio company of Altamont Capital Partners. Mr. Farkas also serves on the board of United Bridge Partners, where he advises onan infrastructure fund dedicated solely to financing, building, owning and supports their investmentsoperating toll bridges for cities, towns, counties, and states, and serves as Chair of the Board of Medicinal Genomics, a venture backed life science company in small-cap healthcare businesses.plant genomics. The Board of Directors has determined that Mr. Farkas is independent within the meaning of the rules of the New York Stock Exchange.
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| | | Qualifications: Mr. Farkas’ qualifications for election to CONMED’s Board include his almost 40 years working in healthcare in the US and around the world. Mr. Farkas is a highly-respectedhighly respected leader and he offersprovides the other directorsBoard with valuable strategic and governance perspectives, drawing on his vast experience inside and outside the healthcare industry. He has the ability and willingness to serve on athe Board, and the correct fit to work in a collegial manner with the other directors. | | |
Committees:
- Strategy (chair)
- Compensation
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Martha Goldberg Aronson Lead Independent Director Age 55 Director since 2016 Committees: • Corporate Governance and Nominating | | MARTHA GOLDBERG ARONSON (age 52) was appointed to
| | Biographical Information: Ms. Goldberg Aronson has served as Lead Independent Director of the Board on February 23, 2016.Company since May 2020. Ms. Goldberg Aronson has had responsibility for managing global health care businesses ranging in size from $500 million to $1.0 billion. She was the Executive Vice President and President of Global Healthcare for Ecolab, Inc. (NYSE: ECL) from 2012 through 2015, having previously served as the Senior Vice President and President – North America for Hill-Rom Holdings, Inc. (NYSE: HRC) from 2010-2012. Prior to that, Ms. Goldberg Aronson was the Senior Vice President and Chief Talent Officer for Medtronic, Inc. (NYSE: MDT), having held various prior general management positions within Medtronic, both in the United States and Internationally.internationally. Ms. Goldberg Aronson holds a Bachelor of Arts Degree in Economics from Wellesley College, and a Masters in Business Administration from Harvard Business School. Ms. Goldberg Aronson also served on the board of directors of Methode Electronics, Inc. (NYSE: MEI) through September 2019, and Clinical Innovations, LLC through December 2019, and continues to serve on the board and is Chair of the Compensation Committee of Cardiovascular Systems, Inc. (NASDAQ: CSII). Ms. Goldberg Aronson also served as well asa director of Beta Bionics sincefrom February 2020.2020 through October 2022, having served as interim Chief Executive Officer from February 2022 through August 2022. The Board of Directors has determined that Ms. Goldberg Aronson is independent within the meaning of the rules of the New York Stock Exchange.
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| | | Qualifications: Ms. Goldberg Aronson’s qualifications for election to CONMED’s Board include her extensive experience in the global healthcare markets, including leadership roles within medical device companies, includingand her experience in marketing and talent development. The Board strongly believes that the Board and Company benefits from the perspectives that Ms. Goldberg Aronson brings to the Board and the Company from her business experience as a result ofwell as her gender diversity. She has the ability and willingness to serve on athe Board, and the correct fit to work in a collegial manner with the other directors. | | |
Committees:
- Compensation (chair)
- Corporate Governance and Nominating
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| 16 | | | | 2023 Proxy Statement |
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Corporate Governance Matters |
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Curt R. Hartman Chair of the Board
Age 59 Director since 2014 | | CURT R. HARTMAN (age 56)
| | Biographical Information:Mr. Hartman has served as Chair of the Board since May 2020, and President & Chief Executive Officer of the Company since November 9, 2014, after servinghaving served as Interim Chief Executive Officer of the Company from July 2014 to November 2014, and as a Director of the Company since March 2014. He had a twenty-two year career at Stryker Corporation (“Stryker”) (NYSE: SYK) from 1990 through February 2013. Most recently, he served as the Interim Chief Executive Officer of Stryker from February 2012 to October 2012. Prior to this role, Mr. Hartman was the Vice President of Finance and Vice President, CFO of Stryker from November 2008 to October 2012. Prior to this Mr. Hartman was Global President, of the Stryker Instruments Division from September 1999 to October 2008. Mr. Hartman has a Bachelor of Science degree in Aerospace Engineering from the University of Michigan and a Harvard Advanced Management Program Certificate from the Harvard Business School. Prior to Mr. Hartman’s appointment as Interim CEO, the Board of Directors had determined that he was independent.
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| | | Qualifications: Mr. Hartman’s qualifications for election to CONMED’s Board include his vital role as boththe Chair, Chief Executive Officer and Interim Chief Executive OfficerPresident of the Company, as well as his experience as a former CFO of a publicly-traded medical device company in the orthopedic space. He offers industry experience from a commercial, operational and financial perspective. He has the ability and willingness to serve on the Board, and the correct fit to work in a collegial manner with the other directors. | | |
Committees:
- Pricing
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Jerome J. Lande Age 47 Director since 2014 Committees: • Compensation • Strategy (Chair) | | JEROME J. LANDE (age 44) has served as a Director of the Company since March 2014. As of April 4, 2016,
| | Biographical Information: Mr. Lande became Headthe Deputy CIO of Special Situations for Scopia Capital Management L.P. (“Scopia”) in September 2021, having previously held the position of Head of Special Situations and asa partner of Scopia since January 1, 2018 also became a Partner of Scopia.2018. Prior to Scopia, Mr. Lande was the Managing Partner of Coppersmith Capital, which he co-founded in April 2012. Previously, Mr. Lande was a partner at MCM Capital Management, LLC (“MCM”), from January 2006 until February 2012, and served as an Executive Vice President at MCM from January 2005 until he left the company. MCM was the general partner of MMI Investments, L.P., a small-cap deep value fund where Mr. Lande was responsible for all areas of portfolio management.fund. He served as a Vice President of MCM from February 2002 to January 2005 and as an Associateassociate from January 1999 to February 2002. Mr. Lande served as Corporate Development Officer of Key Components, Inc., a global diversified industrial manufacturer that was formerly an SEC reporting company, from January 1999 until its acquisition by Actuant Corporation in February 2004. Mr. Lande also serves on the Board of Directors,board and Audit and Finance Committee forof Itron, Inc. (NASDAQ: ITRI), and the Nominating and Governance Committee of Indivior (LSE: INDV). Mr. Lande holds a B.A. from Cornell University. The Board of Directors has determined that Mr. Lande is independent within the meaning of the rules of the New York Stock Exchange.
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| | | Qualifications: Mr. Lande’s qualifications for election to CONMED’s Board include his experience as an investor in CONMED and in other stocks. He offers the perspective of a professional investor, with over 20 years of experience investing in healthcare companies in general and medical device companies in particular. He brings a distinct focus on governance, capital markets and shareholderstockholder matters to the Board. He has the ability and willingness to serve on athe Board, and the correct fit to work in a collegial manner with the other directors. | | |
Committees:
- Compensation
- Strategy
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Corporate Governance Matters |
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Barbara J. Schwarzentraub Age 57 Director since 2019 Committees: • Audit (Chair) | | BARBARA J. SCHWARZENTRAUB (age 53) has served as a Director of the Company since she was appointed to the Board in September 2019.
| | Biographical Information: Ms. Schwarzentraub was withheld various roles at Caterpillar, Inc sinceInc. from 1990 and servedthrough 2020, including serving as a Director and Divisional Chief Financial Officer for their Global Information Services Division from 2017 until February 2020. From 2016 through 2017, Ms. Schwarzentraub was the Director of Caterpillar’s Global Component Manufacturing and Supply Chain, having previously served as the Director of Caterpillar’s Parts Distribution and Vice President of Caterpillar Logistics Services IncInc. from 2010 through 2016. She also served as the Director of Global Finance Transformation from 2006 through 2010. Prior to these roles, Ms. Schwarzentraub held a number of positions of increasing responsibility within Caterpillar. Ms. Schwarzentraub received her Master of Business Administration and Bachelor of Science in Accounting from Bradley University. The Board of Directors has determined that Ms. Schwarzentraub is independent within the meaning of the rules of the New York Stock Exchange, and that she is an audit committee financial expert, within the meaning of the rules of the Securities and Exchange Commission.
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| | | Qualifications: Ms. Schwarzentraub’s qualifications for appointment to CONMED’s Board include her extensive experience in information technology and supply chain management on a global basis, experience in leading large organizations, financial and accounting experience, and having recently heldrecent experience in an active leadership position. The Board strongly believes that the Board and Company benefits from the perspectives that Ms. Schwarzentraub brings to the Board and the Company as a result of her business experience and gender diversity. She has the ability and willingness to serve on athe Board, and the correct fit to work in a collegial manner with the other directors. |
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John L. Workman Age 71 Director since 2015 Committees: • Audit • Strategy | | MARK E. TRYNISKI (age 59) has served as a Director of the Company since May 2007 and was the Lead Independent Director from May 2009 until he became Chair of the Board in February 2014. He is the President and Chief Executive Officer of Community Bank System, Inc. (NYSE: CBU), where he served as Executive Vice President and Chief Operating Officer from February 2004 through August 2006. From June 2003 through February 2004, Mr. Tryniski was the Chief Financial Officer. Prior to joining Community Bank in June 2003, Mr. Tryniski was a partner with PricewaterhouseCoopers LLP. Mr. Tryniski also serves on the Board of Directors of the New York Bankers Association as well as the New York Business Development Corporation. Mr. Tryniski holds a B.S. degree from the State University of New York at Oswego. The Board of Directors has determined that Mr. Tryniski is independent within the rules of the New York Stock Exchange, and that he is an audit committee financial expert, within the meaning of the rules of the Securities and Exchange Commission.
Mr. Tryniski’s qualifications for election to CONMED’s Board include his extensive experience as an active Chief Executive Officer of a public financial institution as well as his financial and accounting expertise acquired through his experience as an audit partner with PricewaterhouseCoopers LLP. His exposure to, and familiarity with, banking and financial matters offers a number of contacts and level of familiarity with financial matters that is unique on the Board. Further, his experience engaging with shareholders makes him well-suited to serve in the role of Chair of the Board.
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Committees:
- Board Chair
- Audit
- Strategy
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| | DR. JOHN L. WORKMAN (age 68) was appointed to the Board in July 2015. Mr.Biographical Information: Dr. Workman served as Chief Executive Officer of Omnicare, Inc. from 2012 to 2014, as President and Chief Financial Officer from 2011 to 2012, and as Executive Vice President and Chief Financial Officer from 2009 to 2010. From 2004 to 2009, he was Chief Financial Officer of HealthSouth Corporation (now Encompass Health Corporation), where he oversaw a comprehensive financial statement reconstruction and reduced the company’s debt level by 50% through both a recapitalization and asset divestitures. Prior to HealthSouth, Mr.Dr. Workman served as Chief Executive Officer of U.S. Can Corporation from 2002 - 2002—2004. Mr.Dr. Workman started his career at KPMG, where he was a partner from 1981 to 1984. He is currently ChairmanChair of the Boardboard and the Audit Committee Chair of Agiliti, Inc. (formerly Universal Hospital Services), a company owned by a private equity fund, and a Director,director, Audit Committee Chair and member of the Compensation Committee and Nominating and Governance Committee of Federal Signal Corp (NYSE: FSS). Mr.Dr. Workman also served on the Boardboard of Care Capital Properties from August 2016 until its merger with Sabra Health Care REIT in August 2017. Mr.Dr. Workman received his EdD from Olivet Nazarene University, his Master of Business Administration in Finance and Accounting from the University of Chicago and his Bachelor of Science Degree in Accounting from Indiana University. Dr. Workman is a certified public accountant (inactive). The Board of Directors has determined that Mr.Dr. Workman is independent within the rules of the New York Stock Exchange, and that he is an audit committee financial expert, within the meaning of the rules of the Securities and Exchange Commission.
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| | | Qualifications: Dr. Workman’s qualifications for election to CONMED’s Board include his extensive experience as a Chief Financial Officer generally, and in the healthcare industry in particular, as well as his financial and accounting expertise acquired through his experience as a partner with KPMG. His exposure to, and familiarity with, health care services matters and capital structure issues provides valuable insights and perspectives to the Board. He has the ability and willingness to serve on a Board, and the correct fit to work in a collegial manner with the other directors. | | |
Committees:
- Audit (chair)
- Pricing
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The Board of Directors has determined that Messrs. Bronson, Concannon, Farkas, Lande Tryniski, and Workman and Mses. Council, Goldberg Aronson and Schwarzentraub have no material relationship with the Company and are independent under the standards of the New York Stock Exchange. The independent directors meet in executive session during each in-person Board meeting.
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Executive &and Other Officers
TERENCE M. BERGE (age 50) | | | | | | |
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Terence M. Berge Vice President, Corporate Controller Age 53 | | | | Mr. Berge joined the Company in June 1998 as Assistant Corporate Controller and served as the Company’s Treasurer from March 2008 through March 2015. In March 2013, Mr. Berge’s title was changed to Corporate Vice President, Treasurer and Assistant Controller. On April 1, 2015, Mr. Berge was promoted to Vice President, Corporate Controller. Prior to joining the Company, Mr. Berge was employed by Price Waterhouse LLP from 1991 through 1998 where he served most recently as an audit manager. Mr. Berge is a certified public accountant and holds a B.S. degree in Accounting from the State University of New York at Oswego. | | |
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Patrick J. Beyer President, International and Global Orthopedics Age 57 | | | | Mr. Beyer joined the Company as President of CONMED International in December 2014. On October 1, 2020 Mr. Beyer assumed additional responsibility for the US Orthopedics business and assumed the title of President International and Global Orthopedics. Prior to joining the Company, Mr. Beyer served as Chief Executive Officer of ICNet, a privately held infectious control software company from 2010 to 2014 when the company was sold. Prior to this, Mr. Beyer spent 21 years at Stryker Corporation where he led Stryker Europe from 2005-2009; Stryker UK, South Africa and Ireland from 2002 to 2005 and Stryker Medical from 1999 to 2002. Mr. Beyer is on the board of Axenic and Bioventus (previously Misonix). Mr. Beyer graduated from Kalamazoo College with a BA in Economics, Western Michigan University with an MBA in Finance and Harvard Business School’s Advanced Management Program. | | |
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Heather L. Cohen Executive Vice President and Chief Human Resources and Legal Officer Age 50 | | | | Ms. Cohen joined the Company in October 2001 as Associate Counsel and served as Deputy General Counsel from March 2002 to February 2015 and as the Company’s Secretary from March 2008 until May 2018. In June 2008, Ms. Cohen was also named the Vice President of Corporate Human Resources. In March 2013, Ms. Cohen’s title was changed to Executive Vice President, Human Resources, Deputy General Counsel and Secretary and in April 2015 her title changed to Executive Vice President, Human Resources & Secretary. In 2018, Ms. Cohen relinquished the title of Secretary. In December 2022, Ms. Cohen assumed the title of Executive Vice President, Chief Human Resources and Legal Officer. Prior to joining the Company, Ms. Cohen was an Associate Attorney with the law firm Getnick Livingston Atkinson Gigliotti & Priore, LLP from 1998 to 2001. Ms. Cohen holds a B.A. in Political Science and Education from Colgate University and a J.D. from Emory University. | | |
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Shanna Cotti-Osmanski Executive Vice President, Information Technology & Chief Information Officer Age 46 | | | | Ms. Cotti-Osmanski joined the Company in March 2020 in the role of Executive Vice President, Information Technology & CIO. Prior to joining the Company, Ms. Cotti-Osmanski was employed by Charles River Laboratories, Inc., from 2006 through 2020 where she served the last five years as Sr. VP, Information Technology & CIO. Prior to Charles River Laboratories, Ms. Cotti-Osmanski was a Senior Consultant for Microsoft Corporation from 2001 through 2006 and was also a Senior Consultant for Idea Integration (Actium@Modis Solutions) from 1998 through 2001. Ms. Cotti-Osmanski has a B.S. degree in Management Information Systems from Pennsylvania State University, The Behrend College. | | |
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John Ferrell Executive Vice President, Human Resources Age 55 | | | | Mr. Ferrell joined the Company in June 2015 in the role of Vice President Human Resources, International. In January 2021, he assumed the role of Vice President Human Resources, International and Global Orthopedics. And, in December 2022, Mr. Ferrell became the Executive Vice President of Human Resources. Prior to joining the Company, Mr. Ferrell was employed by Stryker Corporation as the Vice President, Human Resources for the Orthopedic Group from January 2012 through May 2015, previously having served as the Vice President – Human Resources and Organizational Development, Europe from August 2009 through January 2012. Mr. Ferrell serves on the Board of LECMPA, a non-profit insurer for transportation workers. Mr. Ferrell has a B.A. in Psychology from Oakland University, and M.A. in Labor and Industrial Relations from Michigan State University. | | |
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Todd W. Garner Executive Vice President, Finance and Chief Financial Officer Age 54 | | | | Mr. Garner joined the Company as Executive Vice President & Chief Financial Officer on January 2, 2018. Prior to joining CONMED, he served as Vice President – Investor Relations for C.R. Bard, Inc. from 2011 until December 2017. Mr. Garner’s prior roles with C.R. Bard, Inc. include Vice President, Controller (Division Chief Financial Officer) for its Medical division from 2007 through 2011, Director of Financial Reporting from 2005 through 2007 and the Controller of the Reynosa Operations from 2003 through 2005. Prior to working at C.R. Bard, Inc., Mr. Garner was the acting CFO and Controller at Echopass Corporation (currently Genesys Corporation) from 2000 to 2003, the Controller and Value Planning Manager at Futura Industries, Corp. from 1997 to 2000, Accounting Manager at Excel Communications in 1997 and Accounting Coordinator at Verizon from 1995 to 1996. Mr. Garner began his career with Arthur Andersen LLP, where he was a senior auditor from 1992 to 1995. Mr. Garner holds an MBA from the University of Texas – Rio Grande Valley, and a B.S. in accounting from Brigham Young University. Mr. Garner is also a Certified Public Accountant. | | |
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Daniel S. Jonas Special Counsel and Corporate Secretary Age 59 | | | | Mr. Jonas joined the Company as General Counsel in August 1998 and in addition became the Vice President-Legal Affairs in March 1999. In March 2013, Mr. Jonas’ title was changed to Executive Vice President, Legal Affairs & General Counsel. In May 2018, Mr. Jonas assumed the role of Secretary. In December 2022, Mr. Jonas assumed the role of Special Counsel and Corporate Secretary. Prior to his employment with the Company, Mr. Jonas was a partner with the law firm of Harter, Secrest & Emery, LLP in Syracuse from January 1998 to August 1998, having joined the firm as an Associate Attorney in 1995. Mr. Jonas serves on the Board of Rittenhouse Plaza, Inc., as well as ECOM Medical. Mr. Jonas holds an A.B. from Brown University and a J.D. from the University of Pennsylvania Law School. | | |
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Brent Lalomia Vice President, Quality Assurance and Regulatory Affairs Age 48 | | | | Mr. Lalomia is the executive VP of Quality Assurance and Regulatory Affairs reporting to the CEO as of April 1, 2022, having joined the Company in June 2017. Prior to joining the Company, he worked at Stryker Corporation, including as the VP, Quality Assurance and Facilities Management of Stryker Instruments Division from 2014 to 2019. Prior to this he held various positions in Strategy deployment, Research & Development and Manufacturing. Mr. Lalomia holds a B.S. in Mechanical Engineering from Western Michigan University and an MBA from the University of Notre Dame. | | |
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Johonna Pelletier Treasurer and Vice President, Tax Age 50 | | | | Ms. Pelletier joined the Company in 2005 as Tax Director. Effective April 1, 2015, Ms. Pelletier was promoted to Treasurer and Vice President, Tax. Prior to joining the Company, she was employed by PricewaterhouseCoopers LLP where she most recently served as a tax senior manager. She is a certified public accountant and graduated with a B.S. degree in Accounting from Le Moyne College. | | |
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Stanley W. (Bill) Peters President, Advanced Surgical and Advanced Endoscopic Technologies Age 48 | | | | Mr. Peters joined the Company as Vice President and General Manager, U.S. Advanced Surgical in January 2015 and, as previously disclosed, as of March 5, 2022 assumed the position of President Advanced Surgical and Advanced Endoscopic Technologies. Prior to joining the Company, Mr. Peters served as Director of Sales for Mako Surgical Corporation from 2012 to 2014. Mako was purchased by Stryker Corporation in December 2013. Prior to this, Mr. Peters served as an executive with EndoGastric Solutions from 2011 to 2012 and in sales leadership roles at Intuitive Surgical from 2009 to 2011. Prior to Intuitive Surgical, Mr. Peters was employed at Stryker Corporation in sales leadership from 2004 to 2009. Mr. Peters graduated from Ohio University with a B.B.A. degree in Finance. | | |
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Peter K. Shagory Executive Vice President, Strategy and Corporate Development Age 54 | | | | Mr. Shagory joined the Company as Executive Vice President, Strategy and Corporate Development in May 2015. Mr. Shagory has more than 20 years of experience in healthcare venture investing and mergers and acquisitions through his previous venture capital, investment banking and corporate roles. Prior to joining the Company, Mr. Shagory led the strategy and business development efforts for Cardinal Health’s Medical Products Group within the Medical Segment from June 2013 to May 2015 where he played a key role in Cardinal Health’s entry into interventional cardiovascular and the advanced wound care categories. Prior to that, Mr. Shagory led the healthcare and life sciences investment effort at Baird Venture Partners from January 2004 to mid-2013, focusing on medical technology and research tools and diagnostics. Mr. Shagory earned an MBA from Dartmouth’s Tuck School of Business and a B.S. in Finance from Miami University in Oxford, Ohio. | | |
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Skills Matrix and served as the Company’s Treasurer from March 2008 through March 2015. In March 2013, Mr. Berge’s title was changed to Corporate Vice President, Treasurer and Assistant Controller. On April 1, 2015, Mr. Berge was promoted to Vice President, Corporate Controller. Prior to joining the Company, Mr. Berge was employed by Price Waterhouse LLP from 1991 through 1998 where he served most recently as an audit manager. Mr. Berge is a certified public accountant and holds a B.S. degree in Accounting from the State University of New York at Oswego.
PATRICK J. BEYER (age 54) joined the Company as President of CONMED International in December 2014. Prior to joining the Company, Mr. Beyer served as Chief Executive Officer of ICNet, a privately held infectious control software company from 2010 to 2014 when the company was sold. Prior to this, Mr. Beyer spent 21 years at Stryker Corporation where he led Stryker Europe from 2005-2009; Stryker UK, South Africa and Ireland from 2002 to 2005 and Stryker Medical from 1999 to 2002. Mr. Beyer graduated from Kalamazoo College with a BA in Economics, Western Michigan University with an MBA in Finance and Harvard Business School’s Advanced Management Program.
HEATHER L. COHEN (age 47) joined the Company in October 2001 as Associate Counsel and served as Deputy General Counsel from March 2002 to February 2015 and as the Company’s Secretary since March 2008. In June 2008, Ms. Cohen was also named the Vice President of Corporate Human Resources. In March 2013, Ms. Cohen’s title was changed to Executive Vice President, Human Resources, Deputy General Counsel and Secretary and in April 2015 her title changed to Executive Vice President, Human Resources & Secretary. In May 2018, Ms. Cohen relinquished the Secretary title. Prior to joining the Company, Ms. Cohen was an Associate Attorney with the law firm Getnick Livingston Atkinson Gigliotti & Priore, LLP from 1998 to 2001. Ms. Cohen holds a B.A. in Political Science and Education from Colgate University and a J.D. from Emory University.
NATHAN FOLKERT (age 45) joined the Company as the Vice President, General Manager, U.S. Orthopedics in September 2015. Prior to joining CONMED, Mr. Folkert served in leadership positions with Zimmer, most recently as the President, Trauma Division from January 2013 to June 2015, prior to this as the General Manager, Canada from January 2010 to January 2013 and other managerial positions from 2007 to 2010. Prior to Zimmer, Mr. Folkert was employed by Wheelchair Professionals from 2005 to 2007 and by Stryker Corporation from 2000 to 2005. Mr. Folkert graduated with a B.S. degree in Political Science
from the United States Military Academy at West Point and also earned his M.B.A. from the University of Notre Dame Mendoza College of Business.
TODD W. GARNER (age 51) joined the Company as Executive Vice President & Chief Financial Officer on January 2, 2018. Prior to joining CONMED, he served as Vice President - Investor Relations for C.R. Bard, Inc. from 2011 until December 2017. Mr. Garner’s prior roles with C.R. Bard, Inc. include Vice President, Controller (Division Chief Financial Officer) for its Medical division from 2007 through 2011, Director of Financial Reporting from 2005 through 2007 and the Controller of the Reynosa Operations from 2003 through 2005. Prior to working at C.R. Bard, Inc., Mr. Garner was the acting CFO and Controller at Echopass Corporation (currently Genesys Corporation) from 2000 to 2003, the Controller and Value Planning Manager at Futura Industries, Corp. from 1997 to 2000, Accounting Manager at Excel Communications in 1997 and Accounting Coordinator at Verizon from 1995 to 1996. Mr. Garner began his career with Arthur Andersen LLP, where he was a senior auditor from 1992 to 1995. Mr. Garner holds an MBA from the University of Texas - Pan American, and a B.S. in accounting from Brigham Young University. Mr. Garner is also a Certified Public Accountant.
DANIEL S. JONAS (age 56) joined the Company as General Counsel in August 1998 and in addition became the Vice President-Legal Affairs in March 1999. In March 2013, Mr. Jonas’ title was changed to Executive Vice President, Legal Affairs & General Counsel. In May 2018, Mr. Jonas assumed the role of Secretary. Prior to his employment with the Company, Mr. Jonas was a partner with the law firm of Harter, Secrest & Emery, LLP in Syracuse from January 1998 to August 1998, having joined the firm as an Associate Attorney in 1995. Mr. Jonas holds an A.B. in Classics (Latin) from Brown University and a J.D. from the University of Pennsylvania Law School.
JOHN E. (JED) KENNEDY (age 62) joined the Company in September 2012 as Vice President and General Manager, Visualization and Endomechanical. In January 2015, Mr. Kennedy became Vice President and General Manager, U.S. Endoscopic Technologies. In February 2020, Mr. Kennedy became Group Executive Vice President, Patient Care and Endoscopic Technologies. Prior to joining the Company, Mr. Kennedy served as President and Chief Executive Officer of Viking Systems, Inc. from January 2010 to September 2012. Mr. Kennedy had formerly served as President and Chief Operating Officer of Viking Systems, Inc. from October 2007 to December 2009. Prior to October 2007, Mr. Kennedy was the President of the Vision Systems Group at Viking Systems, Inc. From January 1997 to September 2007, Mr. Kennedy held various executive positions with Vista Medical Technologies, Inc. Prior to joining Vista Medical Technologies, Inc., Mr. Kennedy held various positions in Manufacturing, Quality Engineering and Product Development at Smith & Nephew Endoscopy from 1984 through January 1997. Prior to 1984, he held various engineering positions at Honeywell’s Electro-Optics and Avionics divisions. Mr. Kennedy received a B.S. in Manufacturing Engineering from Boston University.
SARAH M. OLIKER (age 43) joined the Company in April 2014 as Assistant General Counsel. She became Assistant General Counsel and Assistant Secretary in May 2018. Prior to joining the Company, she was Senior Counsel for ProCure Treatment Centers, Inc. in New York City, having previously spent five years with Epstein Becker & Green in its Health Care & Life Sciences group based in Washington, D.C. Ms. Oliker is the current Chair of the Board of Directors of MedTech, a New York Life Sciences non-profit. Ms. Oliker holds a B.A. in Political Science from Colgate University and a J.D. from Syracuse University College of Law.
JOHONNA PELLETIER (age 47) joined the Company in 2005 as Tax Director. Effective April 1, 2015, Ms. Pelletier was promoted to Treasurer and Vice President, Tax. Prior to joining the Company, she was employed by PricewaterhouseCoopers LLP where she most recently served as a tax senior manager. She is a certified public accountant and graduated with a B.S. degree in Accounting from Le Moyne College.
STANLEY W. (BILL) PETERS (age 45) joined the Company as Vice President and General Manager, U.S. Advanced Surgical in January 2015. Prior to joining the Company, Mr. Peters served as Director of Sales for Mako Surgical Corporation from 2012 to 2014. Mako was purchased by Stryker Corporation in December 2013. Prior to this, Mr. Peters served as an executive with EndoGastric Solutions from 2011 to 2012 and in sales leadership roles at Intuitive Surgical from 2009 to 2011. Prior to Intuitive Surgical, Mr. Peters was employed at Stryker Corporation in sales leadership from 2004 to 2009. Mr. Peters graduated from Ohio University with a B.B.A. degree in Finance.
WILFREDO RUIZ-CABAN (age 55) joined the Company as the Executive Vice President, Quality Assurance & Regulatory Affairs in September 2015 and in February of 2016 was named Executive Vice President, Quality Assurance, Regulatory Affairs and Operations. Prior to joining the Company, Mr. Ruiz served as the Director, Americas Global Manufacturing from June 2015 to September 2015 and prior to this as the Worldwide Quality Operations Director from August 2012 to June 2015 with Johnson & Johnson, DePuy Synthes. Prior to Johnson & Johnson, Mr. Ruiz served as the Senior Manufacturing Director for Medtronic from June 2009 to August 2012. Mr. Ruiz also held a number of managerial positions in manufacturing and quality
operations. Mr. Ruiz graduated from Cornell University with a B.S. degree in both Electrical and Material Science Engineering and a G.M.B.A. from the Thunderbird School of Global Management.
PETER K. SHAGORY (age 51) joined the Company as Executive Vice President, Strategy and Corporate Development in May 2015. Mr. Shagory has more than 20 years of experience in healthcare venture investing and mergers and acquisitions through his previous venture capital, investment banking and corporate roles. Prior to joining the Company, Mr. Shagory led the strategy and business development efforts for Cardinal Health's Medical Products Group within the Medical Segment from June 2013 to May 2015 where he played a key role in Cardinal Health’s entry into the interventional cardiovascular and the advanced wound care categories. Prior to that, Mr. Shagory led the healthcare and life sciences investment effort at Baird Venture Partners from January 2004 to mid-2013, focusing on medical technology and research tools and diagnostics. Mr. Shagory earned an MBA from Dartmouth’s Tuck School of Business and a B.S. in Finance from Miami University in Oxford, Ohio.
SKILLS MATRIX, BOARD REFRESHMENT AND DIVERSITY
DiversityThe Board has a comprehensive, ongoingon-going director succession and board refreshment planning process designed to provide the Board with an appropriate mix of viewpoints, perspectives, skills and experiences necessary to promote and support and oversee the Company’s strategy. The Board regularly evaluates the Company’s evolving needs and adds new skills, qualifications and experience to the Board as necessary to ensure that the Board remains capable of addressing the risks, trends and opportunities that the Company will face in the future.
The Board is committed to achieving a diverse and broadly inclusive membership. The Corporate Governance and Nominating Committee considers a diverse range of skills, experiences and attributes in determining whether an individual is qualified to serve as a director of the Company, including diversity in gender, race ethnicity, differences in viewpoint, geographic location, skills, education, and professional and industry experience. The Board is proud of its ongoing efforts to improve its board diversity, with its three most recently-appointedrecently appointed directors consisting of diverse candidates.
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Average Age 61.8 years | | 
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The Corporate Governance and Nominating Committee maintains a skills matrix, which it reviews and updates as needed annually, to serve two primary purposes. First, it includes all of the skills and backgrounds the Committee believes are particularly valuable for the Board to oversee the Company and its management. Second, it allows the Board to compare the skills required against the inventory of skills and backgrounds represented individually and collectively by all directors, so that the Corporate Governance and Nominating Committee can recommend changes to the Board, as needed, as the skills or backgrounds needed, or represented, change over time. During 2019, the Board identified the need for increased representation of the following skills and backgrounds: actively engaged executive level perspective; information technologies; gender diversity; and racial diversity. This review resulted in the additions of Barbara J. Schwarzentraub and LaVerne Council to the Board of Directors, who bring these skills and backgrounds to the Board.
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The key qualifications, skills, experience and perspectives that each director brings to the Board are included in their individual biographies and also summarized below. While all of these qualifications were considered by the Corporate Governance and Nominating Committee and the Board in making this year’s nomination decisions and as part of the Board refreshment process, the following summary does not encompass all of the skills, experience, qualifications and attributes of the director nominees and the fact that a particular skill, experience, qualification or attribute for a nominee is not listed below does not mean that he or she does not possess that skill, experience, qualification or attribute. The Board firmly believes that its highly-qualifiedhighly qualified director nominees provide the Board with a diverse complement of specific business skills, experience and perspectives necessary to ensure effective oversight. The skills the Board considers include, among others, the following:
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• | Independent | • | Strategy/M&A | | | | | | |
•Skills and Perspective | |  | |  | |  | |  | |  | |  | |  | |  | |  |
Independent | | ● | | ● | | ● | | ● | | ● | | | | ● | | ● | | ● |
Senior Leadership Experience | • | Risk Management● | | ● | | ● | | ● | | ● | | ● | | | | ● | | ● |
• | Active Executive | • | Operations | | | | | | ● | | | | ● | | ● | | | | |
• | Medical Device | • | Technology● | | | | ● | | ● | | ● | | ● | | | | | | ● |
•Finance | Finance | • | Shareholder/Capital Markets | ● | | | | | | | | ● | | | | ● | | ● |
•Sales/Marketing | Sales/Marketing | •● | | | | ● | | | | ● | | ● | | | | | | ● |
Strategy/M&A | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● |
Risk Management | | | | ● | | ● | | ● | | | | ● | | ● | | ● | | ● |
Operations | | ● | | ● | | ● | | ● | | ● | | ● | | | | ● | | ● |
Technology | | | | | | | | ● | | | | ● | | | | ● | | ● |
Stockholder/ Capital Markets | | ● | | ● | | ● | | | | | | ● | | ● | | | | ● |
Diversity | | ● | | | | | | ● | | | | | | | | ● | | |
ANNUAL BOARD SELF-EVALUATION
Board Refreshment and Term Limits
The Board recognizes the importance of maintaining an appropriate balance of age, tenure, experience, and perspectives on the Board. As a result, our Board has adopted a director term limit policy. Under this policy, independent directors are expected to offer not to stand for reelection upon having completed 12 years of service as a director and such offer will be accepted unless the Corporate Governance and Nominating Committee determines that there is good cause for allowing such director to stand for reelection and that doing so would be in the best interests of the Company. The Board deeply values the thoughtful and robust deliberations that result from its current mix of new and long-standing directors, which allows it to benefit from both the historical and institutional knowledge of its longer-tenured directors as well as the additional perspectives contributed by its newer directors.
In addition to regularly refreshing the composition of the Board of Directors, whose current average tenure is 7.4 years, the Corporate Governance and Nominating Committee has also made recommendations to refresh the membership and leadership of the various Board Committees and has made it a practice to change committee leadership after five years. In this regard, Mr. Concannon assumed the role as Chair of the Compensation Committee in May 2022.
Annual Board Self-Evaluation
The Board recognizes that a robust and constructive evaluation process is an essential component of Board effectiveness. As such, the Board, and each committee, conduct annual self-assessments with the assistance of the General Counsel.Counsel, except in some cases when there is a change in a committee chair mid-year, in which case the self-assessment may be postponed so that it covers a meaningful period of time under the new committee leadership. Each director submits responses anonymously to the General Counsel, who then summarizes the results to the Corporate Governance and Nominating Committee, identifying any themes or issues that have emerged. These self-assessments are designed to elicit suggestions about a range of topics designed to assess Board and committee performance, including Board and committee composition, structure, responsibilities, information received, accountability and effectiveness, among other topics. The Corporate Governance and Nominating
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Committee considers the ways in which the Board processes and effectiveness may be enhanced based on the results of the evaluation process. The Corporate Governance and Nominating Committee then reports on the results of the evaluation process and recommends its suggested changes to the full Board of Directors. As a result of the evaluation, in an effort to bring fresh perspectives, the Board has made a number of changes, including, for example, changes in the Committee chairs during 2019,2020, 2021 and 2022, with the result that twothree of the four Board committees have twoadded new chairs within the last three years, as well as adding new topics or devoting more time to particular topics of interest to meeting agendas. As an example, in 2022, the Board had a panel discussion with two surgeons and a hospital administrator about many topics including the future of healthcare which allows the Board to hear more directly various perspectives of on changes coming to the health care market and how they might have an impact on the Company.
CONMED’s Approach to Environmental, Social and Governance
A coordinated, thoughtful approach to Environmental, Social, and Governance (ESG) lends itself to a healthier, more sustainable future for our key stakeholders, including our employees, customers, vendors, shareholders and community members. Our ESG strategy aligns with the scale of our business, the company vision and our core operating principles. We believe this approach benefits the communities and respects the environment in which we live, work and serve.
On October 7, 2022, CONMED posted our first ESG Report with data from 2019 - 2021 in the ESG section of our website (https://www.conmed.com/en-us/why-conmed/esg). An updated report with 2022 data is forthcoming in 2023.
ESG Organizational Structure: CONMED’s furtherance of our progress in ESG standards starts with the leadership of our Board of Directors. The Board of Directors receives updates and participates in shaping our ESG initiatives. In addition to oversight by the full Board, the Executive ESG Committee provides strategic direction and prioritization of ESG initiatives. This committee includes the Chair of the Board, President and Chief Executive Officer; Executive Vice President of Finance and Chief Financial Officer; Executive Vice President and Chief Human Resources and Legal Officer; and Special Counsel and Corporate Secretary. Our leader of ESG provides management and oversight of our ESG program. CONMED employees across our enterprise are engaged in initiatives impactful to our ESG progress, some of which are listed below. More information related to our ESG program is available in the ESG section of our website (https://www.conmed.com/en-us/why-conmed/esg).
ESG Initiatives:
Environmental: CONMED is committed to environmental regulatory compliance and sustainable development as we conduct business nationally and globally. Our leaders are expected to contribute to building and sustaining an organizational culture where environmental regulatory compliance is as important as business results.
Energy: CONMED is working to manage energy consumption through efficiencies and improvements, as well as by supplementing our energy needs from renewable sources. For example, our manufacturing sites utilize LED lighting with Utica, New York and Chihuahua, Mexico at 100% LED lighting and Largo, Florida at 50% LED lighting.
Certifications: CONMED Chihuahua, Mexico facility has received the Clean Industry Certification since 2015. CONMED Utica, New York manufacturing facility was re-certified with the ISO 14001 Certification in 2021.
Social: As an organization, we sit at the intersection of healthcare providers and patients. Our medical devices are used daily by medical professionals to deliver care and restore hope for patients in need. We understand the impact CONMED as a whole, and each of us as individuals, makes on our customers and the communities in which we live and work. CONMED is a leader in surgical smoke evacuation, which improves air quality in operating rooms.
Employee Training and Development: One of CONMED’s core values is “We Believe in the Power of Engaged Talent.” This value is exemplified throughout CONMED’s talent development philosophy and programming. In the U.S. specifically, CONMED’s Tuition Reimbursement program is in place to support colleagues who are continuing their undergraduate or graduate level college education. Additionally, people leaders across CONMED complete a robust manager training program, equipping them with tools and resources to become even better managers of our global workforce.
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Diversity, Equity and Inclusion: We value the diversity our colleagues bring to our teams and strive to create an environment where we can combine our passions to deliver exceptional results. One example of our work in this area is our engagement with the Society of Women Engineers (SWE). CONMED has been a Corporate Sponsor of SWE since 2019. In 2021, CONMED team members attended the annual SWE conference and ongoing roundtable discussions with the VP Operations and Advanced Engineering.
Internship Program: CONMED Talent Launch is a hands-on, immersive U.S. based internship program designed to provide students with the exposure, experience, and development needed to launch a successful career at CONMED. In 2022, CONMED expanded the U.S. based program internationally, and hosted the first cohort of interns in Quality/Regulatory and Marketing positions with our EMEA team.
Employee Compensation and Benefits: We offer a competitive benefits package that strives to meet the needs of all employees and their families. Our U.S. benefits offerings include robust healthcare coverage alongside company-paid life and disability insurance plans, a 401(k) plan, and an Employee Stock Purchase Plan, among a number of other programs.
Employee Health and Safety: Health & Safety is an integral part of all CONMED business functions, structures, and geographies, including consideration of contractors. Our focus is not merely on compliance, but continued improvement of the overall health and safety management system.
Employee Engagement: CONMED utilizes the Gallup Q12 Employee Engagement Survey both to measure engagement across the organization, and to provide a basis for individual team action planning sessions. Additionally, results from the annual survey capture sentiments around concepts of inclusion and belonging globally. The commitment of our global team members has led to CONMED’s global engagement overall score increasing year-over-year. Also, CONMED was certified as a Great Place to Work in Australia for the first time in 2022, in Canada for the second time in 2022, and in Mexico for the tenth consecutive year in 2022.
Community: CONMED partners with the United Way in the U.S., an organization uniquely positioned to serve the greatest needs in individual communities. CONMED hosts an annual workplace campaign, where team members have the opportunity to give financially or through donations of their time or resources. Additionally, CONMED team members volunteer throughout the year. One such volunteer project was hosted through the United Way of Greater New Haven’s Week of Caring at Columbus House, an organization that provides emergency shelter and a continuum of housing and services designed to help people who are homeless move toward independence. CONMED team members helped the organization prepare for the winter season by cleaning storage units, and moving and organizing supplies to be distributed to people in need. In 2021, CONMED also entered a partnership with TEAMFund through a monetary donation. TEAMFund is a 501(C)3, not-for-profit organization with the aim to expand access to affordable, appropriate, and sustainable medical technologies that address unmet health needs in the world’s most resource constrained populations.
Product Safety and Quality: Our quality department is made up of greater than 230 global employees, overseen by the Vice President of Quality Assurance and Regulatory Affairs. We are ISO 13485 compliant and are Medical Device Single Audit Program certified.
Governance: As discussed in our Corporate Governance Principles https://www.conmed.com/en-us/why-conmed/esg/corporate-governance, our full Board of Directors is charged with the responsibility for risk oversight related to CONMED’s ESG strategy. The Board also ensures that the full Board or its committees review and evaluate management’s strategies, policies, activities and approach to environmental, social and governance.
Board refreshment: CONMED has an average director tenure of 7.4 years and committee chair rotation every 5 years. Also, the term limit for independent director service is 12 years.
Stockholder rights: We empower stockholders through rights to proxy access, stockholder action by written consent, and the ability to call special meeting.
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MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES, |
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Business Ethics Program: Our Code of Business Conduct and Ethicshttps://www.conmed.com/en-us/corporate-footer/policies serves as the foundation for how we conduct business—ethically and in compliance with applicable laws and regulations. Our Compliance Program is overseen by our Corporate Compliance Committee, which is comprised of key executive leaders including CONMED’s Chief Executive Officer and is administered by a dedicated Compliance Director and the Company’s EVP and Chief Human Resources and Legal Officer.
Whistleblower Policy: We support any employee who wishes to raise a compliance question or report a concern in confidence, so we provide our CONMED Hotline, which is hosted by a third-party hotline provider and available 24 hours a day, 7 days a week, in local language for our global employee base. CONMED employees and other parties, such as suppliers, distributors, vendors or customers, have the option of using the CONMED Hotline anonymously.
LEADERSHIP STRUCTURE AND RISK OVERSIGHT
Meetings of the Board of Directors and Committees, Leadership Structure and Risk Oversight
During 2019,2022, the full Board of Directors met seven11 times in person or by telephone conference and acted by unanimous written consent three times.conference. Each director attended or participated in all of the board meetings, with the exception of one director who was unable to attend one meeting due to scheduling conflicts. Directors are expected to attend our annual shareholder meetings.
All directors serving on our Board at the time of the 2022 annual meeting were present for the meeting.Leadership Structure
The Board’s Leadership Structure is designed to promote Board effectiveness, and to allocate authority and responsibility appropriately between the Board and management. All members of our board committees other than the Pricing Committee -namely,committees—namely, the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee and the Strategy Committee - Committee—are independent. The independent members of the Board of Directors also meet regularly without management.
The Board of Directors is committed to independent oversight of management, but believes it is important to retain flexibility to determine the leadership structure based on the particular composition of the Board, of management and the needs and opportunities of the Company, as they all change and evolve over time. The Board currently has a leadership structure with an independent Chair, whose role includes the following:
Setting the agenda for meetings of the Board of Directors, in consultation with the chairs of the various Board Committees and management;
Providing leadership for the Board of Directors during the meetings by presiding over the meetings, and for communications among directors between meetings;
Establishing the schedule for Board and Committee meetings in light of the quarterly reporting obligations, investor conferences and meetings, and conflicting scheduling demands;
Presiding over the meetings of the independent directors in executive session;
Presiding over the Annual Shareholder Meeting;
Being available, as needed, to meet with shareholders;
Establishing the priorities for Board of Directors;
Working with the Nominating and Corporate Governance Committee and the General Counsel in connection with the annual self-assessment of the Board of Directors; and
Serving as the liaison between the Chief Executive Officer and the independent directors.
In December 2019, Mr. Tryniski informed the Board that he did not wish to stand for reappointment as Chair of the Board following the 2020 Annual Meeting of Shareholders, although he was prepared to continue to serve as a director. Acting through the Corporate Governance and Nominating Committee, the Board undertook a thoughtful and thorough reassessment of its leadership structure, and consulted with independent advisors on current trends and governance practices, following which Mr. Tryniski consulted directors individually. The Board then held discussions, including executive sessions at its February 2020 meeting and continued these discussions into March 2020.
As a result, the Board unanimously concluded that combining the roles of Chair and CEO effective upon the expiration of Mr. Tryniski’s term as Chair following the 2020 Annual Meeting of Shareholders was in the best interest of the Company, together with the simultaneous appointment of Ms. Goldberg Aronson as Lead Independent Director in order to maintain strong independent oversight ofwithout management.
The Board believes that having a combined CEO and Chair is effective in allowing Mr. Hartman to draw on his intimatedeep knowledge of the operations of the business and industry developments to provide leadership on the broad strategic issues considered by the Board. At the same time, the appointment of a strong Lead Independent Director with clearly defined responsibilities and authority, along with the Board’s fully independent committees and substantial majority of independent directors, establishes an effective balance between management leadership and appropriate oversight by independent directors.
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The Board has defined the roles of Chair and Lead Independent Director as outlined below, so that the respective duties and responsibilities of management authority in the Chair and Board oversight through the Lead Independent Director are clear, effective and balanced:
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Chair | |
Chair | | Lead Independent Director |
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Prepares the agenda for meetings of the Board of Directors and committees, in consultation with the Lead Independent Director, and the chairs of the various Board Committees | | Provides advice and consultation to Chair, and consults as to the agenda for meetings of the Board of Directors and committees, and has the authority to add items to the agenda |
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Establishes the schedule for Board and Committee meetings in light of the quarterly reporting obligations, investor conferences and meetings, and conflicting scheduling demands | | Consults with Chair concerning schedule for meetings to ensure there is sufficient time to discuss all agenda items |
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Provides leadership for the Board of Directors during the meetings by presiding over the meetings, and for communications among directors between meetings | | Presides over the meetings of the independent directors in executive session, and in the absence of the Chair |
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Guides the Board’s annual self-assessment | | Serves as the liaison between the Chief Executive Officer and the independent directors between meetings, including providing feedback of discussions during executive sessions |
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Presides over the Annual Shareholder Meeting of Stockholders | | Has the authority to call a meeting of the Board, including a meeting of the independent directors |
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| | Acts as a sounding board for the Chair and CEO |
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| | Speaks to or meets individually with the Chair and CEO prior to and following each Board meeting or calls as appropriate |
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| | Establishes the priorities for the Board of Directors |
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| | Advises the CEO of the Board’s information needs |
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| | Guides the Board’s annual assessment of the CEO |
| | Be |
| | Is available, as needed, to meet with shareholdersstockholders |
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| 26 | | | | 2023 Proxy Statement |
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Corporate Governance Matters |
Risk Oversight
While the Company’s management is responsible for day-to-day risk management, the Board has the ultimate responsibility for overseeing the Company’s risk management process. The Company has instituted a thorough, comprehensive enterprise risk management program, which is a Company-wide effort to identify, assess, manage, report and monitor enterprise-wide risks that may affect our ability to achieve our business objectives.objectives and including risks related to cyber-security. This program involves regular Board oversight along with quarterly updates on key risks by management, with the CEO and the General Counsel as well as other subject matter experts within management as appropriate reporting at each regularly scheduled Board meeting of any material changes during the course of the year as they arise. To create the enterprise risk management assessment, executive management works with the General Counsel to:
aggregate all significant risks that may have a material impact on the Company;
assess industry-wide risks as experienced by competitors and others in the same industry as well as emerging risks, including, for example, cyber-security and data privacy;
identify a plan to mitigate, reduce or manage each identified risk, to the extent possible;
review each identified risk quarterly, with more frequent monitoring of significant risks; and
| • | | provide the Board with reports on the overall enterprise risk management process, including a dashboard showing the likelihood and potential of each risk identified, as well as an identification of the trends for each risk, with management providing more in-depth reviews of key risks identified by management, or as requested by the Board. |
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2023 Proxy Statement | | | | 27 |
provide the |
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Corporate Governance Matters |
Board with reports on the overall enterprise risk management process, including a dashboard showing the likelihood and potential of each risk identified, as well as an identification of the trends for each risk, with management providing more in depth reviews of key risks identified by management, or as requested by the Board of Directors.
The Board’s oversight of risk includes monitoring management’s efforts to identify risks and manage risk parameters, including those relating to FDA compliance, anti-corruption compliance and cyber-security.
BOARD COMMITTEES
Committees:The Company’s Board of Directors currently has four standing committees: the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee and the Strategy Committee. In addition, during 2019, the Board formed a Pricing Committee in connection with the issuance of convertible notes. Current members of the individual committees are named below:
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Audit Committee | | Compensation Committee | | | | Corporate
Governance and
Nominating Committee | | | | | | | | |
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Audit Committee | | | | | | | | 
Compensation Committee | | | | | | | | 
Corporate Governance and Nominating Committee | | | | | | | | 
Strategy Committee | | |
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Dr. John L. Workman,
Chair | | Martha Goldberg Aronson,
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| | Barbara J. Schwarzentraub Chair | | | | | | | | Brian Concannon, Chair | | | | | | | | David Bronson, Chair | | | | | | | | Jerome Lande, Chair | | |
| | David Bronson
Chair | | | | | | | | Charles M. Farkas
Chair |
David Bronson | | | | | | | LaVerne Council | | | | | | | | Brian P. Concannon | | |
| | LaVerne Council | | Brian P. Concannon |
Barbara J. Schwarzentraub | | LaVerne Council | | | | Jerome J. Lande | | | | | | | | Martha Goldberg Aronson | | Jerome J. Lande |
Mark E. Tryniski | | | | | Charles M. Farkas | | |
| | John L. Workman | | | | | | | | | | Mark E. Tryniski |
| | Jerome J. Lande | | | | | | |
| | | | | John L. Workman | | |
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Pricing Committee |
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David Bronson |
Curt R. Hartman |
Dr. John L. Workman | | | | | | | | | | | | | | | | | | | | | | | | |
The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Exchange Act and currently consists of four independent directors. As more fully detailed in its charter, the Audit Committee is charged with (a) oversight of the Company’s accounting and financial reporting principles, policies and internal accounting controls and procedures; (b) oversight of the Company’s financial statements and the independent audit thereof; (c) nominating the outside independent registered public accounting firm to be proposed for shareholderstockholder approval; (d) evaluating and, where deemed appropriate, replacing the independent registered public accounting firm; (e) pre-approving all services permitted by law to be performed by the independent registered public accounting firm; (f) approving all related-party transactions above $5,000; (g) establishing procedures for (i) the receipt, retention and treatment of complaints by the Company regarding accounting, internal accounting controls or auditing matters, and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; and (h) the oversight of the Company’s response to claims involving potential financial fraud or ethics matters.matters; and (i) overseeing the Company’s financial statement and financial reporting risks. The Audit Committee has delegated its authority to pre-approve work by the independent registered public accounting firm and related-party transactions to the Chair of the Audit Committee, who is required to disclose any such pre-approvals at the Audit Committee’s next meeting. The Audit Committee met tennine times during 2019.2022. All then-current members of the Audit Committee attended every meeting. The current Audit Committee Charter is available on the Company’s website in the corporate governance tab of the investor relations section (at http:https://www.conmed.com/en/about-us/investors/investor-relations)en-us/why-conmed/esg/corporate-governance). The charter is also available in print to any shareholderstockholder who requests it.
The Compensation Committee currently consists of fivethree independent directors. Brian Concannon became the Chair of the Compensation Committee in May 2022, as part of the Board’s policy to rotate committee chairs on a regular basis. As set forth in its charter, the Compensation Committee is charged with reviewing and establishing levels of salary, bonuses, benefits and other compensation for the Company’s CEO and the CEO'sCEO’s direct reports.reports and overseeing compensation-related risks. The Compensation Committee met sixfive times during 2019.2022. All then-current members of the Compensation Committee attendedparticipated in every meeting. The Compensation Committee, and the full Board of Directors, has determined that the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company because the value of senior management’s short-term incentives are balanced by the value of longer-term incentives. Employees below the senior management level are provided annual incentives that are lower in relation to salary and therefore do not have an incentive that results in risk to the Company as a result of compensation practices or structure. The current Compensation Committee Charter is available on the Company’s website in the corporate governance tab of the investor relations section (at http:https://www.conmed.com/en/about-us/investors/investor-relations)en-us/why-conmed/esg/corporate-governance). The charter is also available in print to any shareholderstockholder who requests it.
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| 28 | | | | 2023 Proxy Statement |
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Corporate Governance Matters |
The Corporate Governance and Nominating Committee currently consists of three independent directors. As stated in its charter, the Corporate Governance and Nominating Committee is responsible for (a) recommending individuals to the full Board of Directors for nominations as members of the Board of Directors, for(b) making recommendations to the full Board of Directors on all matters concerning corporate governance practices, including the development of a set of corporate governance principles and evaluation of the boardBoard and its committees, and for(c) assisting the full Board in overseeing the Company’s approach to environmental, social and governance matters. In this regard, while the Corporate Governance and Nominating Committee ensures that the full Board of Directors oversees the Company’s approach to environmental and governance matters, including the Company’s approach to human rights, and to diversity and inclusion.
As to nominees for the Board, the Corporate Governance and Nominating Committee will consider, but is not obligated to accept, shareholderstockholder recommendations for individuals to be nominated provided that such recommendations are submitted in writing to the Company’s General Counsel withinin accordance with the time frame for shareholder proposals forprocedures set forth in the Annual Meeting,Company’s By-laws (more information concerning director nominations is set forth below under the heading Corporate Governance and Nominating Committee Report). The Corporate Governance and Nominating Committee and the full Board seek directors with expertise and experience in managing companies both public and private, in financial matters, experience with United States and international business, and in the medical field in a variety of functions and areas, as well as diversity in background and gender.gender and race. In this regard, the Corporate Governance and Nominating Committee and the full Board are committed to creating a Board with diversity of expertise, experience, background, race and gender and expect to seek to identify, recruit and advance candidates offering such diversity in future searches. The Corporate Governance and Nominating Committee met sevenfour times during 2019.2022. All then-current members of the Corporate Governance and Nominating Committee attended every meeting. The current Corporate Governance and Nominating Committee Charter and Corporate Governance Principles are available on the Company’s website in the corporate governance tab of the investor relations section (at http:https://www.conmed.com/en/about-us/investors/investor-relations). Theen-us/why-conmed/esg/corporate-governance).The charter is also available in print to any shareholderstockholder who requests it.
The Strategy Committee currently consists of four independent directors. As stated in its charter, the Strategy Committee is responsible for overseeing management'smanagement’s long-term strategic plan for the Company, the risks and opportunities related to such strategy, and strategic decisions regarding investments, acquisitions and divestitures, and capital structure considerations that support the long-term strategic plan of the Company. The Strategy Committee met six times in 2019.2022. All members of the Strategy Committee attended every meeting. The current Strategy Committee Charter, which was amended as of August 2020, is available on the Company’s website in the corporate governance tab of the investor relations section (at http:https://www.conmed.com/en/about-us/investors/investor-relations). Theen-us/why-conmed/esg/corporate-governance).The charter is also available in print to any shareholderstockholder who requests it.
The PricingAudit Committee was formed in connection with the issuance of convertible notes during 2019, and consisted of three directors, two of whom were independent. The Pricing Committee met once during 2019.
AUDIT COMMITTEE REPORT
ReportThe role of the Audit Committee is to assist the Board of Directors in its oversight of the financial management, independent auditor and financial reporting controls and accounting policies and procedures of the Company. The Board of Directors, in its business judgment, has determined that all members of the Audit Committee are “independent”, as required by the applicable listing standards of the New York Stock Exchange and the rules under the Exchange Act in that no member of the Audit Committee has received any payments, other than compensation for Board services, from the Company, and has not participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past four years. Ms. Schwarzentraub and Messrs. Bronson, Tryniski and Workman are not currently engaged professionally in the practice of auditing or accounting, while Ms. Schwarzentraub was engaged during 2019 in the practice of accounting in connection with her employment with another company, her service on the Audit Committee is not in the capacity as an accountant.accounting. Having considered this, the Audit Committee and Board of Directors have determined that Messrs. Bronson, Tryniski and Workman and Ms. Schwarzentraub
qualify as “audit committee financial experts” within the meaning of Section 407 of the Sarbanes-Oxley Act of 2002 and the implementing regulations and that such qualifications were acquired through relevant education and work experience. The Audit Committee operates pursuant to a Chartercharter that was last amended by the Board of Directors in January 2020. A copy of the amended charter, which more fully describes the duties and responsibilities of the Audit Committee, is available on the Company’s website in the corporate governance tab of the investor relations section (at http:https://www.conmed.com/en/about-us/investors/investor-relations)en-us/why-conmed/esg/corporate-governance). Management is responsible for the Company’s internal controls, financial reporting process and compliance with laws and regulations. The independent registered public accounting firm is responsible for performing an integrated audit of the Company’s consolidated financial statements and of its internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee’s responsibility is to monitor and oversee these processes, as well as to attend to the matters set forth in the amended charter. In this regard, during 2019,2022, the Audit Committee continued to work with the HeadVice President of Internal Audit, who reports directly to the Audit Committee, in connection with the Audit Committee’s oversight of the financial management, independent auditor and financial reporting controls and accounting policies and procedures of the Company.
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2023 Proxy Statement | | | | 29 |
In this context, the |
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Corporate Governance Matters |
The Audit Committee met tennine times during 20192022 and held numerous discussions with management and with the Company’s independent registered public accounting firm, including in executive meetings without management present. Management represented to the Audit Committee that the Company’s audited consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Committee has reviewed and discussed the audited consolidated financial statements with management and the independent registered public accounting firm. The Audit Committee discussed with the independent registered public accounting firm matters required to be discussed under PCAOB Auditing Standard No. 16 (Communication with Audit Committees).
The Company’s independent registered public accounting firm also provided to the Audit Committee the written disclosures and the letter regarding the independent registered public accounting firm’s independence required by the PCAOB (Rule 3526, Communications with Audit Committees Concerning Independence) and the Audit Committee discussed with the independent registered public accounting firm its independence. In this regard, the Audit Committee evaluates the fees proposed and billed for non-audit services and also considers the nature and scope of non-audit services when evaluating the independence of the independent registered public accounting firm, all of which the Audit Committee pre-approves. Taking all of these matters into consideration, the Audit Committee has determined that the provision of non-audit services by the independent registered public accounting firm, and the fees and costs incurred in connection with those services, are compatible with the auditor’s independence in light of the nature and extent of permissible non-audit services provided to the Company.
In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the company’s independent registered public accounting firm. In connection with considering whether to retain PricewaterhouseCoopers LLP, the Audit Committee considers, among other things, its familiarity with the Company’s business and operations, its knowledge of and exposure to the industry as a whole, its quality of communication with the Audit Committee, its ability to provide knowledgeable staff, and the expertise and responsiveness of the national office and other experts in various fields within the audit firm. The members of the Audit Committee and the Board have considered the length of the independent registered public accounting firm’s engagement with the Company, the amount of the fees charged and the tenor of the negotiations concerning such fees, as well as the shareholderstockholder ratification of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm. Considering all of these factors, the members of the Audit Committee and the Board believe that the continued retention of PricewaterhouseCoopers LLP to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders.
stockholders.Members of the Audit Committee rely without independent verification on the information provided to them and on the representations made by management and the independent registered public accounting firm. Accordingly, the Audit Committee’s
oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles, or appropriate internal control and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions referred to above do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that the Company’s auditors are in fact “independent”.
Based upon the Audit Committee’s review and discussions referred to above, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Charter,charter, the Audit Committee recommended that the Board of Directors include the Company’s audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 20192022 filed with the Securities and Exchange Commission.
Submitted by the Audit Committee,
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Dr. Barbara J. Schwarzentraub (Chair) | | David Bronson |
LaVerne Council | | John L. Workman (Chair) | David Bronson |
Barbara J. Schwarzentraub | Mark E. Tryniski |
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE REPORT
Corporate Governance and Nominating Committee Report
The role of the Corporate Governance and Nominating Committee is to recommend individuals to the Board for nomination as members of the Board and its committees, to develop and recommend to the Board a set of corporate governance principles applicable to the Company, and to overseeensure that the Board oversees the Company’s approach to environmental, social and
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| 30 | | | | 2023 Proxy Statement |
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Corporate Governance Matters |
governance matters. The Board of Directors, in its business judgment, has determined that all members of the Corporate Governance and Nominating Committee are “independent”, as required by applicable listing standards of the New York Stock Exchange, in that no member of the Corporate Governance and Nominating Committee has received any payments, other than compensation for Board services, from the Company. The Corporate Governance and Nominating Committee operates pursuant to a Charter that was last amended and restated by the Board of Directors in December 2019.2021. A copy of the amended and restated charter is available on the Company’s website in the corporate governance tab of the investor relations section.
section (at https://www.conmed.com/en-us/why-conmed/esg/corporate-governance).The Corporate Governance and Nominating Committee has no fixed process for identifying and evaluating potential candidates to be nominees. The Corporate Governance and Nominating Committee has no fixed set of qualifications that must be satisfied before a candidate will be considered, although the Corporate Governance and Nominating Committee and the Full Board areis committed to creatingrecommending candidates who create and maintain a Board of Directors with diversity, including diversity of expertise, experience, background,professional backgrounds, race, and gender and is committed to identifying, recruiting, and advancing candidates offering such diversity in future searches.gender. The Corporate Governance and Nominating Committee has opted to retain the flexibility to consider such factors as it deems appropriate. These factors maydeveloped and maintains a set of desirable skills and expertise, reviewed and updated annually, for potential candidates for Board service. Factors considered for potential candidates include business judgment, skill, diversity, reputation, experience within leadership roles in businesses and other organizations of comparable size as executives, directors or in other leadership positions, anand complexity, understanding of finance and financial reporting processes, a corporate governance background,and oversight experience, the ability to dedicate significant time for service on the Company’sa Board of Directors, the interplay of thea candidate’s experience with the experience of other Board members, and the extent to which the candidate would be a desirable addition to the Board and any committees of the Board. In this regard, theThe Corporate Governance and Nominating Committee also looks forconsiders the skills and expertise required to satisfy the listing requirements of the New York Stock Exchange, on which the Company’s stock is traded.
During 2019,2022, Mark Tryniski reached his term limit, the Corporate GovernanceBoard reevaluated the need for increased Board refreshment and Nominating Committee consideredindependence and reduced the Board’s committee structure, leadership andterm limit for directors to 12 years, from the succession planning forprior 15 year rule. The Board further opted to set the Committees, and concluded that it was appropriate for rotationsize of the Board at (9) nine directors. Therefore, the Committee made no recommendations or nominations for new directors. With Mr. Tryniski stepping off the Board, the Committee rotated the chair of the Compensation Committee, consistent with its policy of rotating committee chairs every five years, with the next scheduled change to be the chair of the Corporate Governance and Nominating Committee as well asin May 2024. The Committee continues to review the Board’s skill index, with respect to the Compensation Committee. In addition, the Corporate Governancean eye towards additional rotations of Committee chairs and Nominating Committee determined during 2019 that it was advisable and in the best interests of shareholders to increase the size of the Board, and to enhance the diversity of the Board,directors reaching a newly adopted 12-year term limit, with the appointments of Ms. Schwarzentraub and Ms. Council.
a preference toward identifying an active C-suite executive.The Committee may consider candidates proposed by management but is not required to do so. As previously disclosed, the Corporate Governance and Nominating Committee will consider any nominees submitted to the Company by shareholdersstockholders wishing to propose nominees for election as directors at the 20212024 Annual Meeting, provided that the shareholdersstockholders proposing any such nominees have adhered to specified advance notice procedures contained in the Company’s by-laws, a copy of which is available on request to the General CounselCorporate Secretary of the Company, CONMED Corporation, 525 French Road, Utica, New York 1350211311 Concept Blvd, Largo, FL 33773 (Telephone (315) 797-8375)(727) 392-6464).
Submitted by the Corporate Governance and Nominating Committee,
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David Bronson (Chair) | | LaVerne Council |
Martha Goldberg Aronson | | |
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
ShareholdersCommunications with the Board of Directors
Stockholders and other interested parties who wish to communicate with the Board of Directors as a group or an individual director may do so by sending correspondence to the attention of the GeneralSpecial Counsel of the Company at 525 French Road, Utica, New York 1350211311 Concept Blvd, Largo, FL 33773 with a cover letter specifying the intended recipient. At this time, no communications received by the Company in this manner will be screened, although this could change without prior notice. As set forth in the Company’s Corporate Governance Principles, the Company’s policy is that directors will attendparticipate in the Annual Meeting of Shareholders,Stockholders, absent exceptional circumstances. All directors attendedparticipated in the 20192022 Annual Meeting of ShareholdersStockholders (the “2019“2022 Annual Meeting”) in person.through the online platform.
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2023 Proxy Statement | | | | 31 |
ETHICS DISCLOSURE
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Corporate Governance Matters |
Ethics Disclosure
The Company has adopted as of March 31, 2003, and updated on February 28, 2017, an ethics program which applies to all employees, including senior financial officers and the principal executive officer. The ethics program is available on the Company’s website in the corporate governance tab of the investor relationsPolicies section (http:(https://www.conmed.com/en/about-us/investors/investor-relations),en-us/corporate-footer/policies) and is administered by the Company’s General Counsel.EVP and Chief Human Resources and Legal Officer and the Company’s Compliance Director. The Program codifies standards reasonably necessary to deter wrongdoing and to promote honest and ethical conduct, avoidance of conflicts of interest, full, fair, accurate, timely and understandable disclosure, compliance with laws, prompt internal reporting of code violations and accountability for adherence to the code and permits anonymous reporting by employees to an independent third party, which forwards reports if and when it receives any anonymous reports. No waivers under the Ethics Program have been granted.
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| 32 | | | | 2023 Proxy Statement |
PRINCIPAL ACCOUNTING FEES AND SERVICES
Principal Accounting Fees and Services
The Audit Committee is responsible for the audit fee negotiations associated with the retention of PricewaterhouseCoopers LLP. The aggregatefollowing table presents fees and expenses billedfor professional audit services rendered by PricewaterhouseCoopers LLP for professional services rendered for the audit of the Company’s annual financial statements for the years ended December 31, 20192022 and December 31, 2018,2021, and fees billed for other services rendered by PricewaterhouseCoopers during those periods. Audit fees were incurred in connection with audit work performed on the reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-Q for those years, for theintegrated audit of the Consolidated Financial Statements, as well as work generally only the independent registered public accounting firm can reasonably be expected to provide, such as subsidiary audits, accounting consultations, and services in connection with securities offerings. 2022 audit fees also included incremental services related to the Company’s internal control over financial reporting asacquisitions of December 31, 2019In2Bones and December 31, 2018,BioRez, debt transactions and all other audit related,software implementation. Tax fees include tax consultingcompliance, tax planning, and other fees and expenses, are set forth in the table below.
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| Fee Summary | | 2019 | | 2018 |
| Audit Fees: | | |
| | |
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| Audit of Annual Financial Statements and Interim Reviews | | $ | 2,275,000 |
| | $ | 2,073,800 |
|
| Audit of Internal Control over Financial Reporting | | Included above |
| | Included above |
|
| SEC Registration Statements | | $ | — |
| | $ | — |
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| Total Audit Fees | | $ | 2,275,000 |
| | $ | 2,073,800 |
|
| Audit Related Fees: | | |
| | |
|
Assurance and Related Services1 | | $ | 232,500 |
| | $ | — |
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| Tax Fees: | | |
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| Tax Compliance and Consulting Services | | $ | 185,983 |
| | $ | 217,228 |
|
| All Other Fees: | | |
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| Research Service License | | $ | 2,700 |
| | $ | 2,700 |
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| Total Fees and Expenses | | $ | 2,696,183 |
| | $ | 2,293,728 |
|
1 In conjunction with the Company's acquisition of Buffalo Filter, PricewaterhouseCoopers LLP was engaged to perform an audit of the 2018 Buffalo Filter financial statements. Assurance and related service fees shown above represent the fees associated with the audit.
tax advice. | | | | | | | | |
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Fee Summary | | 2022 | | | 2021 | |
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Total Audit Fees | | | $2,735,800 | | | | $1,868,000 | |
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Audit Related Fees: | | | $ — | | | | $ 35,000 | |
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Tax Fees: | | | $ 288,400 | | | | $ 160,000 | |
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All Other Fees: | | | $ 5,900 | | | | $ 7,500 | |
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Total Fees and Expenses | | | $3,030,100 | | | | $2,070,500 | |
The Audit Committee has adopted procedures requiring prior approval of particular engagements for services rendered by the Company’s independent registered public accounting firm. Consistent with applicable laws, the Audit Committee has delegated its authority to pre-approve work by the independent registered public accounting firm and related-party transactions to the Chair of the Audit Committee, who is required to disclose any such pre-approvals at the Audit Committee’s next meeting. All fee amounts set forth in the table above were pre-approved.
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2023 Proxy Statement | | | | 33 |
A Letter From Our Compensation Committee
Dear Fellow Stockholders,
As members of CONMED Corporation’s Compensation Committee, we aim to design an executive compensation program that attracts, retains, and motivates top executive talent, and aligns rewards with performance goals that directly correlate to enhancing long term stockholder value. The result of our 2022 say-on-pay vote indicated a need for us to reassess certain aspects of our approach to disclosures and/or our executive compensation program. We, along with the entire CONMED Board of Directors, were determined to understand your perspectives and committed to making constructive changes in response to your feedback. In response, we conducted a survey of our stockholders to better understand your perspectives and incorporate this feedback into our 2023 compensation plan.
We gathered your views during an extensive outreach effort that included members of the Board and management.
This effort involved an outreach representing 75% of our stockholders of which 56% of the stockholders indicated that a meeting was not necessary and that they would contact us should any questions or concerns arise. As a result of this outreach, we met with stockholders representing over 33% of the Company’s outstanding common stock. During these conversations, we also heard your enthusiasm for our CEO and the CEO’s direct reports (“the Executive Team” or “Executives”) and the work they have done, an enthusiasm we share. We heard support for targeted changes to our executive compensation program. The range of views and the thoughtful dialogue were reflective of the debates that we have within our boardroom, where a diversity of voices helps to identify the path forward.
Based on those discussions, we took the following actions.
1) We enhanced our disclosures to explain in more detail the philosophy underlying our executive compensation program and, more specifically, the CEO equity awards. Feedback received from several stockholders demonstrated that we had not provided enough context for the compensation philosophy and the details around its application, which we believe is critical to the Company’s ability to attract, retain, and motivate industry leading talented executives who can deliver stockholder value. In particular, several stockholders voiced concerns that we had not provided enough detail as to why to the 2021 grant to our CEO, as outlined in the 2022 proxy, increased in value over the previous year. After reflecting on this feedback, we have taken steps to ensure that future disclosures clearly communicate the data on which our decisions were based and also provide further context into the process and rationale for decisions relating to our executive compensation program.
2) We added a new equity vehicle to our annual executive compensation program in 2023. While most stockholders indicated that they found stock options to be an important equity vehicle to align executives with stockholders’ interest in long-term value creation, some stockholders expressed a desire for performance stock units (PSUs) to be included in our equity mix. After thorough consideration by the Compensation Committee, we have added PSUs to the mix of equity vehicles utilized in the March 2023 awards. These PSUs, as of 2023, now comprise 50% of the annual equity value awarded to the CEO and 25% of the annual equity value awarded to the Executive Team. We will continue to evaluate our equity mix over time to ensure it meets our stockholders’ objectives.
We believe these changes address the feedback we received from stockholders while remaining consistent with the Company’s strategic goals. We worked diligently to integrate feedback from varying points of view and implement changes that are in the best interests of our stockholders as a group, align our management team’s incentives to drive long-term value with those of our stockholders, and serve to retain a talented and experienced Executive Team in a highly competitive talent market.
Our Committee is and will remain committed to the evaluation and improvement of our executive compensation program, informed by ongoing candid discussions with you, our stockholders. We look forward to continuing the dialogue and encourage you to reach out with any questions or concerns related to our program before making your voting decision. Thank you for your investment in CONMED. For further description of our engagement with stockholders following the 2022 Annual Stockholders Meeting, please refer to the section entitled “Say on Pay and Stockholder Feedback” in the “Compensation Discussion and Analysis,” below.
The Compensation Committee,
Brian Concannon, Compensation Committee Chair
Jerome Lande
Chuck Farkas
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| 34 | | | | 2023 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Discussion and Analysis
The following Compensation Discussion & Analysis (“CD&A”) describes the philosophy, objectives and structureprovides a description of our fiscal year 2019CONMED’s executive compensation program. This CD&A is intendedphilosophy and programs and, more specifically, discusses the process to be read in conjunction withdetermine the tables beginning on page 58, which provide further historical compensation information forof our named executive officers (“NEOs”) for 2022, as identified below.
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| Name | | Title |
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Curt R. Hartman | | Chair of the Board, President, and Chief Executive Officer |
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Todd W. Garner | | Executive Vice President and Chief Financial Officer |
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Patrick J. Beyer | | President, CONMED International and Global Orthopedics |
Nathan Folkert | |
Stanley (Bill) W. Peters | | Vice President, & General Manager, U.S. OrthopedicsAdvanced Surgical and Advanced Endoscopic Technologies |
Stanley W. (Bill) Peters | |
Heather L. Cohen | | Executive Vice President & General Manager, U.S. Advanced Surgicaland Chief Human Resources and Legal Officer |
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Quick CD&A Reference Guide | | |
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Executive SummaryKey Compensation Decisions | | Section I (Page 35) |
Business Strategy Link to Compensation | |
Executive Summary | | Section II (Page 36) |
Objectives | |
Company Strategy and PhilosophyPerformance | | Section III (Page 37) |
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Compensation Philosophy | | Section IV (Page 40) |
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Pay Aligns with Performance | | Section V (Page 43) |
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Compensation Decision-Making Process | | Section IVVI (Page 46) |
Competitive Market Analysis | |
2022 Pay Elements Overview | | Section VVII (Page 49) |
Elements of Executive Compensation | | Section VI |
Share Ownership: Prohibition on Hedging and Pledging | | Section VII |
Additional Compensation Policies and Practices | | Section VIII (Page 56) |
Our compensation program is designed to reward executives for focus and achievement ofI. Key Compensation Decisions
To highlight the Company’s short- and long-term performance goals. This is important, as our Company’s performance is very much dependent on the talents, skills and engagementrigor of our people. We measure CompanyExecutive Compensation program and the alignment with performance, by growth in sales and earnings, and these goals are directly reflected in our annual bonus plan. Strengthening our stock price performance over the long-terma summary of this year’s key changes is also a focus; as such, our equity incentives are delivered as stock options and, to a lesser degree, restricted stock units (“RSUs”). Finally, our executives are measured by their individual contributions to the Company’s success, and this is reflected in a small portion of the annual bonus as well as in base salary adjustments.
provided below. | |
II. | Business Strategy Link to Compensation
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The Company’s business strategy is to increase revenues and earnings through a dual focus on organic revenues and acquisitions. Over the past several years we have experienced the following growth:
The Company’s International revenues have increased through the introduction of the new orthopedic products, through the Advanced Surgical acquisitions, and, in some cases, through channel changes in certain geographies.
The Company’s Advanced Surgical revenues have increased through organic sales growth, but has also had the benefit of acquisitions: SurgiQuest in 2016 and Buffalo Filter in 2019.
The Company’s Orthopedic revenues have increased primarily through organic sales increases from new product introductions.
As revenues grow, CONMED has been able to leverage its structure to increase earnings.
On a corporate-wide basis, the Company’s 2019 results reflect these accomplishments:
The Company’s net sales increased 11.1% in 2019. Acquisitions contributed approximately 580 basis points of growth.
The Company’s Adjusted Operating Margin increased to 13.4% in 2019. A reconciliation of GAAP to Adjusted EPS is shown on page 51.
The Company’s Adjusted Earnings Per Share ("EPS") increased to $2.64 in 2019. A reconciliation of GAAP to Adjusted EPS is shown on page 51.
The Company’s compensation structure advances the business strategy in the following ways:
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Pay Element | Description | Link to Strategy and Performance |
Base SalaryWhat has changed? | Base salaries are | Details |
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Inclusion of Performance Stock Units (“PSUs”) as part of our 2023 annual equity awards | | In 2022, we retained Infinite Equity, an objective, third-party equity compensation consultant, to evaluate our equity program and assess a range of equity vehicles. In 2023, we incorporated PSUs as part of our annual grants to executives as per Infinite Equity’s recommendation and based on a reviewStockholder feedback gathered by management and the board. For the CEO, 50% of competitive positions with peer companies,the equity grant was awarded in the form of PSUs and adjusted annuallyfor the other executives 25% was in the form of PSUs. More details on the PSU vehicles are provided below in Section VII. |
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2023 Executive Equity Awards issued based on individual performancetargeted values | To attract | The Equity Awards issued to Executives in 2023 were based upon a target value which then was split between options and retain high-performingPSUs with the split being 50/50 for the CEO and experienced leaders at a competitive compensation.75/25 for the other executives. |
Annual Bonus Plan | Bonus targets |
Equity awarded to CEO decreased in grant value in 2022 as a percentage of salary ranging from 55%compared to 100% of salary to drive focus on annual goals, with a significant portiongrant in 2021 | | The grant date value of the goals based on pre-determined financial metrics, withequity awarded to the remainder based on individual strategic goals. | A significant portion of executive pay is tied to annual corporate wide sales and adjusted EPS. As noted at pages 49 and 50, to drive increased focus on EPS, the weighting of the bonus tied to EPSCEO in 2022 was increased in 2019approximately $6.3 million as compared to the 2018 weighting.
The approach to the annual bonus plan is to reward executives primarily for Company-wide performance, because the various businesses and functions must work together with limited resources to ensure corporate-wide success. To encourage the cooperation required to achieve company-wide goals, 73% - 100% of the executives’ bonus plans are based on company-wide results.
As executives other than the CEO must focus on his or her unique functional or business goals, up to approximately 27% of each executive’s performance goals are individual in nature, although the goals are intended to advance Company-wide performance.
The Compensation Committee also has the discretion to award discretionary bonuses in recognition of exceptional individual performance.
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Equity Compensation | A significant portion of overall compensation, ranging from 70% for the CEO to an average of 61% for the other NEOs consists of equity compensation vesting over 4-5 years. | Directly aligns the interests of our executives with those of our shareholders. Stock options only have value for executives if operating performance results in appreciation of stock price.
The relativegrant date value of the stock options over time ensure that executives are focused on long-term success, and will not sacrifice long-term value creation at the altarequity award of short-term performance, the majorityapproximately $7.4 million in 2021. This is a decrease of executive compensation is in the form of equity compensation which vests over longer periods - five years for stock options. Further, this compensation does not provide value to executives unless the stock increasesapproximately 15% in value over time, which we believe results from steady increases in revenues and adjusted earnings.
We also utilize RSUs, when appropriate, to emphasize retention and stock ownership given the grants have value immediately upon vesting.
awarded. |
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2023 Proxy Statement | | | | 35 |
Overview of Pay Program
Our pay program is reflective of our business strategy, our desire to fairly and appropriately pay our executive team, and our desire to align management with shareholder interests.
While there is no fixed formula, the Compensation Committee seeks an appropriate balance between cash and non-cash compensation, short and long term incentives, at-risk compensation and the appropriate mix of different forms of equity compensation. In addition, the Compensation Committee believes that senior executives who have a greater and more direct impact and influence over the Company’s overall performance should receive a significant proportion of equity relative to their total compensation, thus seeking to align the executive’s incentives and impact with the value he or she brings to the Company-wide performance.
Our executive pay program consists of three major elements:
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Compensation Discussion and Analysis |
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Base Salary | |
What has changed? | | • Individual salariesDetails |
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Robust goals established for the 2022 Executive Bonus plan with targets set above prior year’s actuals | | Our cash bonus program is designed to reward performance relative to the prior year and relative to the expectations of the markets that we serve. |
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Paid below-target bonus in 2022 based on Company performance against rigorous goals | | Based on the rigorous goals established for our bonus plan, the actual 2022 Company performance resulted in below target payouts for all of our Executives. |
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Reduced the number of options granted as well as the target value of equity awards to Executives in 2023 | | Upon the recommendation of the CEO, the equity grants awarded to executives in 2022, other than the CEO, were increased due to the performance track record of the team and unprecedented competition for executive talent in the market. In 2023, the target value for these executives was decreased to a level that is below the 2022 level. |
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Enhanced disclosures | | We have included enhanced disclosures around our historical compensation practices in order to provide more clarity as to why certain compensation is awarded and how our philosophy and practices are established at time of hiredesigned to attract, motivate, and adjusted thereafter by committee discretionreward executives that deliver long-term value for our stockholders. |
II. Executive Summary
The success of every business depends on the talent and engagement of the people within the organization, and of course, this starts with executive leadership. Our Company is no different than any other in this regard. The questions that every Board of Directors and Compensation Committee needs to consider are: 1) which executive talent attributes are best able to deliver results for the Company and 2) how to attract, retain, motivate, and reward that talent with the ultimate goal of delivering long-term stockholder value.
The Board is actively engaged and involved in talent management as a key strategic imperative. The Board reviews the Company’s people strategy in support of its business strategy at least annually and discusses talent matters regularly at its meetings. This includes a detailed discussion of the Company’s global leadership bench and succession plans with a focus on key positions at the executive level. High-potential leaders are given exposure and visibility to Board members through formal presentations and informal events. More broadly, the Board is regularly updated on key talent indicators for the overall workforce, including diversity, recruiting, and development programs.
Say on Pay and Stockholder Feedback
The annual advisory say-on-pay vote provides us an opportunity to assess the alignment of our executive compensation program with the expectations of our stockholders. In 2022, 68.4% of stockholders affirmatively supported our executive compensation program. In the three prior years, the advisory say-on-pay vote had ranged from 93.5% to 97.9%. While there was no change to our program in 2021, this decline in support evident in the 2022 vote prompted us to seek feedback from stockholders to better understand what motivated their votes and what actions we could take to address their concerns. The Board of Directors engaged in a vigorous discussion about the feedback, how to address the concerns, and meet the goals of the program to attract, retain and motivate great executive talent to deliver stockholder value.
Scope of Outreach
We reached out to stockholders representing over 75% of our outstanding common stock since our last Annual Meeting of Stockholders. We met with stockholders representing more than 33% of our outstanding common stock, and we specifically requested feedback on the concerns relating to our executive compensation program given the decline in the say-on-pay vote in 2022.
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| 36 | | | | 2023 Proxy Statement |
• Designed to be competitive within the market |
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Compensation Discussion and industry, and to reflect individual performance and contributionAnalysis |
Engagement Efforts
Compensation Committee Chair, Brian Concannon, participated in engagements at the request of stockholders representing 28% of our outstanding common stock. Additionally, management also met with stockholders to gather feedback. Management representatives included:
Curt Hartman, Chair of the Board, President, and CEO
Todd Garner, EVP and Chief Financial Officer
Heather L. Cohen, EVP and Chief Human Resources and Legal Officer
Daniel S. Jonas, Special Counsel and Corporate Secretary
In total, stockholders representing more than 33% of the outstanding shares of common stock were engaged to discuss the Company’s executive compensation philosophy and program. In the ordinary course of the year, management also continued to meet with stockholders at annual conferences and other industry forums.
Key Discussion Topics
In our meetings with stockholders, we heard strong support for our CEO and Executive Team. Stockholders also appreciated the significance of executive retention in light of the strong performance track record demonstrated by the team and the competitive talent market. In addition to executive compensation, we discussed the Company’s governance practices and the desire for the Company to provide more robust disclosures moving forward.
We summarize below what we heard and our response.
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Short-Term Incentive
(“STI”)
What We Heard | | • Cash incentives intended to reward the achievement of annual Company financial goals as well as individual accomplishmentsHow We Responded | | Intended Outcome and contributions• For 2019, cash performance measures were Total Net Sales (FX Adjusted) and Adjusted EPS, as well as individual performance goals
When Effective |
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Long-Term Incentives
(“LTI”)
Some stockholders thought that we did not provide sufficient explanation for the CEO 2021 equity award, while other stockholders requested a more robust disclosure surrounding the application of our compensation philosophy to executive pay. | | • Equity awards with meaningful vesting periods for retentive purposesWe have added enhanced disclosures in relation to the link between the Company’s financial performance and executive compensation, as well as added disclosures in relation to focus executives on long-term share price appreciation, which are intendedmarket percentile rank for equity awards. | | More clear and robust disclosures explaining the why behind executive compensation changes. |
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Some stockholders were satisfied with our compensation philosophy and disclosures. | | We will continue to align shareholder and management interests • For 2019 and 2018, equity was delivered asmonitor stockholder feedback to ensure continued support.
| | Ongoing discussions with stockholders will continue. |
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Some stockholders do not consider stock options to be a sufficiently performance-based form of compensation but saw a strong relationship between pay and RSUs • Outstandingperformance and therefore support our program. A smaller number of stockholders stated that they specifically prefer to see PSUs as part of the program.
| | We added PSUs as a component of our equity compensation for the CEO and for Executives in 2023. | | The first awards with the new PSU components were included in the 2023 equity awards include performance share units (“PSUs”) awarded tofor our CEO and executives as of March 1, 2023. The equity awards to executives also declined in 20152023. The PSU terms are more fully described below in Section VII. |
III. Company Strategy and Performance
The Company has focused on People, Products and Profits since Mr. Hartman was named CEO in 2014. CONMED’s objectives for our stockholders include:
Aggregate growth and profitability over the long term to significantly increase the valuation of the Company;
Increase our market share in large and attractive markets;
Deliver above-market revenue growth over the long term.
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2023 Proxy Statement | | | | 37 |
Target Pay
To promote the performance-based culture as described above, and to align the interests of management and shareholders, our executive compensation program focuses on variable compensation. Our CEO’s and other NEO’s average pay mix at target in 2019 illustrate this:
Compensation Program Governance |
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Compensation Discussion and Analysis |
As announced on February 2, 2023, the Company expects full-year 2023 reported revenue between $1.170 billion and $1.220 billion, which includes an expected headwind from foreign exchange between 150 and 200 basis points. Adjusted diluted net earnings per share(1) is expected to be in the range of $3.20 to $3.45, which includes an expected headwind from foreign exchange between $0.20 and $0.25.
| (1) | Information reconciling forward-looking adjusted diluted net earnings per share to the comparable GAAP financial measures is unavailable to the company without unreasonable effort. |
Below, we have included comparisons of our total shareholder return (TSR) relative to our Proxy Peer Group, as this relative performance is used to evaluate executive compensation. However, our Proxy Peer Group does not provide a comprehensive comparison of our relative performance, as there are other relevant companies against which we compete in the market and which investors may choose to invest. For these reasons, we have also included a comparison of our TSR relative to a selection of large-cap healthcare companies, although these are not used to benchmark compensation.
| (1) | 8-Year Total Returns excludes VREX and PEN as they did not become publicly traded until 2017 and 2015, respectively. |
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Best Practices We Employ | Practices We Avoid | |
Majority of NEO compensation tied to long-term performance38 | Hedging is not permitted | | | 2023 Proxy Statement |
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Equity awards granted in 2015 and beyond require a double trigger for Change in Control vesting acceleration | Our equity plan does not allow repricing of underwater options without shareholder approval |
Stock ownership guidelines of 4x salary for CEO, 3x for the CFO,Compensation Discussion and 1x for other NEOsAnalysis |
Under Mr. Hartman’s leadership the revenue of the Company has increased by 4.4% annually over his tenure. More broadly, under the leadership of Mr. Hartman and his team, the Company has accomplished the following:
| We do not provide executive perquisites other than international employees where such perquisites are common | | | | | | | |
Appropriate caps on incentive plan payouts | Excise tax gross-ups are not permitted |
Compensation Committee is comprised entirely of independent directors | We do not pay dividends on unvested equity awards |
Compensation Committee engages an independent consultant | |
Compensation Committee regularly meets in executive session without management present2014 | | | | 2015 - 2022 |
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Annual risk assessment of• Declining organic revenue despite participation in markets growing globally | | | | • Revenue increasing at or above market growth rates for all product categories. Total Company revenues crossed the compensation programbillion-dollar threshold for the first time in 2021. | | | | • Four transformational acquisitions since 2016 offering unique platform technologies in AirSeal®, Buffalo Filter®, In2Bones, and BioBrace®. |
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Robust holding requirements until minimum share ownership requirements are achieved• No meaningful new organic product pipelines | | | | • Meaningful organic product pipeline represented in numerous product launches | | | | • Product Quality in good standing with regulatory bodies around the world |
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Minimum vesting schedule of at least 12 months for equity awards• Inability to attract industry top talent into leadership roles | | | | • Executive management and broader company leadership includes many talented, medical device experienced individuals | | | | • Established compliance and internal audit functions |
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Incentive• Warning Letter issued by Food and Drug Administration (FDA) | | | | • Stock price has increased by 97% since 2014 | | | | • Established an ESG program designs do not encourage excessive risk takingand published the Company’s first ESG disclosure in 2022 |
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The Company CEO is not present during any deliberations or voting | | | | • Increased diversity on the Board of Directors and throughout the Compensation Committee or Board regarding CEO compensationentire company | | | | • Weathered the unprecedented COVID-19 pandemic |
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| | | | • During 2022, executed on a convertible notes financing transaction to lock in a fixed 2.25% interest rate just prior to the steady rise of interest rates. | | | | |
2019 Say-on-Pay Vote Results
The Compensation Committee reviewed the voting results on the advisory resolution, commonly referred to as a “say-on-pay” resolution, when evaluating our executive compensation programs and noted 97.9% of the shares that were voted by shareholders at the 2019 Annual Shareholders meeting voted in favor of the compensation program. The Compensation Committee believes that these voting results reflect strong shareholder support for our current compensation practices. Accordingly, we did not make significant changes to our executive compensation practices or programs based on the results of the vote. The Compensation Committee will continue to review our executive compensation program as well as consider the outcome of our “say on pay” votes when making future compensation decisions for the NEOs.
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III. | Objectives and Philosophy | |
2023 Proxy Statement | | | | 39 |
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Compensation Discussion and Analysis |
IV. Compensation Philosophy
The Company’s change in leadership beginning in 2014 was dependent upon attracting, retaining, and motivating great executive talent from the medical device industry to develop a strategy that would deliver better than market level growth and long-term stockholder value. To attract and motivate great talent, a deep dive into the compensation philosophy of the Company was required.
The Compensation Committee undertook the compensation philosophy and governance reevaluation effort with great vigor and considerable thought. Given the nature of the market for talent and the size of the competitors with whom we compete for talent, it was critical for the Company to provide a differentiator that would attract the talent needed to improve Company performance and deliver above market growth. The essential talent needed was driven by an entrepreneurial mindset; a mindset that thinks like an owner of the business, motivated to deliver results over the long term.
As the Company’s performance has dramatically improved since 2014, Mr. Hartman as well as others on our Executive Team are regularly recruited by larger organizations who have resources to offer larger compensation packages. The Compensation Committee does not attempt to compete directly with all of those opportunities, but the awareness of this reality does inform the need to provide a differentiated experience for our Executives. The Committee, as well as the full Board, appreciates that the challenge today is not as much about recruiting executive talent as it was in 2014 but the challenges today are more centered around continuing to motivate and reward our Executives for great performance such that we maintain stability of our Executive Team in order to continue building a record of success.
The Company’s Executive compensation program reflects the following principles:
Attract, retain and motivate top talent.
Provide incentives that reward the achievement of performance goals that directly correlate to the enhancement of shareholderstockholder value, as well as facilitate executive retention.
Align the executives’Executives’ interests with those of shareholdersstockholders through long-term incentives linked to specific performance of objective goals.
Equity
To attract executives prepared to undertake the work required to change the trajectory of the Company, the Compensation Committee resolved that the Company’s Compensation Philosophy would be rooted in a strong equity program because it would attract, retain and motivate executives with an entrepreneurial mindset. In other words, compensation philosophy related specifically to equity is core to our strategy and helps to differentiate our compensation offering to executives who might otherwise consider other opportunities. We decided that we would seek to award executives equity with values approaching the 75th percentile of the market when the Company achieved above market growth and profitability. For clarity, we have not established the 75th percentile as the target compensation. We contemplate that to attract, motivate, and reward executive talent, that above median performance would be rewarded with above median compensation. We believe this practice aligns executive rewards with performance and incentivizes long-term value creation for our stockholders. To be sure, there are variations based on individual factors: performance, seniority in a role, the potential for future contributions, and other factors.
Not only has equity been an important factor in terms of the value awarded, but also the nature of the vehicles that we have used. We believe, and our results have proven, that an equity program that features a heavy weighting of stock options appropriately attracts, retains, and rewards our Executives. We believe that stock options align the Executives interests with those of our stockholders because they have no value unless the stock price increases over time. Further, the annual cycle of awards regularly aligns the Executives’ interests with those stockholders at various cost bases. Additionally, our stock options are an affordable compensation vehicle for the Company as compared to other forms of equity compensation, given that our stock options vest over five years. Other forms of equity typically vest over shorter periods of time, which result in higher period costs. Additionally, from the Executives perspective, stock options can be more tax efficient.
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| 40 | | | | 2023 Proxy Statement |
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Compensation Discussion and Analysis |
Commencing in 2023, we have begun including a component of PSUs in the mix of the annual executive equity compensation in response to some themes identified during the shareholder engagement process, as discussed above. By including PSUs in our equity mix, we believe we have introduced another element that strongly aligns pay with performance by assessing the Company performance as compared to an identified market peer group. For further description of this added feature of our program, please refer to section VII below.
We have used PSUs previously when Mr. Hartman was awarded an equity grant on February 24, 2015 (“CEO Performance Award”) under the Amended and Restated 2015 Long-Term Incentive Plan. The CEO Performance Award provided for a target number of 100,000 PSUs, with the actual number of PSUs earned ranging from 0% to a maximum of 200% of target depending on the Company’s total stockholder return relative to the S&P 1500 Health Care Equipment Select Index (the “Peer Index”) over the performance period of January 1, 2015 to December 31, 2019. As described more fully in the April 2020 Proxy Statement, as of December 31, 2019, the Company’s actual performance based on total stockholder return during the performance period was 22.61% relative to the Peer Index (16.54%), or 607 basis points above the threshold level required for Mr. Hartman to earn an award of the PSUs. Based on the outperformance, Mr. Hartman earned 104,000 shares based on the terms of the Performance Award, as certified by the Compensation Committee as of January 31, 2020.
We have also periodically utilized RSUs, most often in the first few years of an executive’s employment to align his/her interests as a stockholder early in his/her tenure.
Cash
Our total cash program is anchored by data at the 50th market percentile relative to blended data described further below in the Competitive Market Analysis, and as with our equity program, is influenced by factors such as Company and individual performance, seniority in a role, future impact as well as others. When Mr. Hartman was named CEO, his cash compensation was at or below the 50th percentile relative to blended data and remained in that range for several years. The improvement in the Company’s performance along with more seniority in roles and the unprecedented competitiveness of the talent market has shifted the Executives’ cash compensation to be between the 50th and 75th percentile relative to blended data. Strong performance over time is a key driver to all compensation decisions.
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2023 Proxy Statement | | | | 41 |
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Compensation Discussion and Analysis |
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| 42 | | | | 2023 Proxy Statement |
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Compensation Discussion and Analysis |
V. Pay Aligns with Performance
While the Company’s turnaround has not been linear,particularly
given macro environmental and economic events such as the global pandemic, the Company’s executive compensation has been highly correlated with the Company’s performance. Each year the Compensation Committee assesses performance of the Companyover
time, the prior year performance as well as the anticipated performance in the coming year to determine the appropriate level of compensation. Description of Relationship Between CEO and Non-CEO NEO Compensation Actually Paid, Company TSR and Peer Group TSR
The following chart sets forth the relationship between Compensation Actually Paid to our CEO, the Average Compensation Actually Paid to our Non-CEO NEOs, the Company’s cumulative TSR, and the Peer Group TSR over the three most recently completed fiscal years.
The Pay versus Performance table below shows the strong link between Compensation Actually Paid (“CAP”) and the performance of the Company. The strong correlation between TSR and CAP results from two factors: (i) the role of revenue growth and adjusted diluted net earnings per share in driving the bonus plan payouts; and (ii) the fact that executives do not realize value from stock options unless stockholders also see an increase in the stock price, which is the sole driver of value for the stock options (as we do not allow for dividend equivalents for unvested stock options). The Company has added PSUs to its annual equity compensation in March 2023. These PSUs will vest based on the relative performance of Company’s TSR compared to an index of similar companies.
Relationship of Compensation Actually Paid and Our Net Income
The compensation actually paid to our CEO and other NEOs had limited alignment to our reported net income during the three-year period of 2020 to 2022. Reported net income is not used as a performance measure in the pay programs for our CEO and other NEOs, in part due to adjustments made, for example, to account for the impact on Net Income from financing transactions such as when we refinanced the Convertible Notes in 2022.
Relationship of Compensation Actually Paid and our Adjusted Diluted Net Earnings Per Share
The compensation actually paid to our CEO and other NEOs aligns with our adjusted diluted net earnings per sh
are as this represents 40% of the Executive Bonus Plan for our CEO, and 28%-40% of the Executive Bonus Plan for our other NEOs for 2021 and 2022. For 2020, adjusted diluted net earnings per share represents 30% of the Executive Bonus Plan for our CEO, and 23%-30% of the Executive Bonus Plan for our other NEOs.
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Compensation Decision-Making ProcessDiscussion and Analysis |
In accordance with the rules adopted by the Securities and Exchange Commission pursuant to the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our CEO and non-CEO NEOs and Company performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
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| | | | | | | | | | | Value of Initial Fixed $100
Investment Based On: | | | | |
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| | Summary
Compensation
Table (SCT) Total
for CEO (1) | | Compensation
Actually Paid to
CEO (2) | | Average Summary Compensation Table Total for Non-CEO NEOs (1) | | Average Compensation Actually Paid to Non-CEO NEOs (3) | | Total
Shareholder
Return (4) | | Peer Group
Total
Shareholder
Return (4) | | | | Adjusted
Diluted Net
Earnings
Per
Share (6) |
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| 2022 | | $7,835,495 | | ($8,291,607) | | $3,060,984 | | ($792,325 ) | | $81.19 | | $113.92 | | ($80.6) | | $2.65 |
| 2021 | | $9,374,480 | | $23,174,447 | | $2,345,015 | | $5,176,896 | | $128.81 | | $140.40 | | $62.5 | | $3.21 |
| 2020 | | $6,461,620 | | $8,417,084 | | $1,706,722 | | $2,092,471 | | $101.14 | | $117.63 | | $9.5 | | $2.18 |
| (1) | The CEO and NEOs included in the above compensation reflect the following: |
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| 2022 | | Curt R. Hartman | | Todd W. Garner, Patrick J. Beyer, Heather L. Cohen, Stanley (Bill) W. Peters |
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| 2021 | | Curt R. Hartman | | Todd W. Garner, Patrick J. Beyer, Daniel S. Jonas, Stanley (Bill) W. Peters |
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| 2020 | | Curt R. Hartman | | Todd W. Garner, Patrick J. Beyer, John E. (Jed) Kennedy, Stanley (Bill) W. Peters |
| (2) | The following table sets forth the adjustments made to the SCT Total for the CEO during each year presented to determine compensation actually paid (CAP) to the CEO in accordance with Item 402(v) of Reg S-K, with “fair value” calculated in accordance with Compensation – Stock Compensation Topic 718 of FASB ASC as of the end of the specified period. |
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| | | | | | | | | |
| | | | |
| | | | | | | | | | | | |
| | | | |
| Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | | | ($4,674,000 | ) | | | ($7,376,003 | ) | | | ($6,340,000 | ) |
| | | | |
Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | | | $8,622,686 | | | | $9,816,627 | | | | $2,905,326 | |
| | | | |
| Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | | | $980,642 | | | | $9,695,332 | | | | ($13,258,089 | ) |
| | | | |
| Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | | | $0 | | | | $0 | | | | $0 | |
| | | | |
| Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | | | ($2,973,864 | ) | | | $1,664,011 | | | | $565,661 | |
| | | | |
Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | | | $0 | | | | $0 | | | | $0 | |
| | | | |
| Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | | | $0 | | | | $0 | | | | $0 | |
| | | | |
Compensation Actually Paid | | | | | | | | | | | | |
|
|
Compensation Discussion and Analysis |
| (3) | The following table sets forth the adjustments made to the SCT Total forNon-CEO NEOs during each year presented to determine compensation actually paid (CAP) toNon-CEO NEOs , with “fair value” calculated in accordance with Compensation – Stock Compensation Topic 718 of FASB ASC as of the end of the specified period. |
| | | | | | | | | | | | |
| | | | |
| | | | | | | | | |
| | | | |
| | | | | | | | | | | | |
| | | | |
| Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | | | ($968,563 | ) | | | ($1,475,201 | ) | | | ($2,257,040 | ) |
| | | | |
Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | | | $1,701,547 | | | | $1,963,325 | | | | $1,034,296 | |
| | | | |
| Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | | | $184,123 | | | | $2,034,891 | | | | ($2,739,250 | ) |
| | | | |
| Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | | | $0 | | | | $0 | | | | $0 | |
| | | | |
| Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | | | ($531,358 | ) | | | $308,866 | | | | $108,685 | |
| | | | |
Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | | | $0 | | | | $0 | | | | $0 | |
| | | | |
| Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | | | $0 | | | | $0 | | | | $0 | |
| | | | |
Compensation Actually Paid | | | | | | | | | | | | |
| (4) | In accordance with Item 402(v) of Reg S-K, each year reflects what the cumulative value of $100 would be, including the reinvestment of dividends, if such amount were invested on December 31, 2019. The Peer Group referenced for purposes of TSR comparisons reflects the group of companies in the S&P 500 Health Care Equipment Index, which is the industry peer group as reflected in our Annual Report on Form10-K pursuant to Item 201(e) of RegulationS-K for the fiscal year ended December 31, 2022. |
| (5) | The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
| (6) | Adjusted diluted net earnings per share (“EPS”) is a financial measure that the Company believes is an important performance measure to link compensation actually paid to our CEO and other NEOs to the Company’s performance. Adjusted diluted net EPS is anon-GAAP measure. Refer to the “GAAP toNon-GAAP Reconciliations” section for the most directly comparable GAAP measure, GAAP diluted earnings (loss) per share. |
Most Important Performance Measures
The table below lists ourmost
important performance measures used to link compensation actually paid to our NEO’s for 2022 to Company performance as further described in the sections titled “2022 Executive Bonus Plan” and “Equity Compensation” of the CD&A.
| | |
2022 Most Important Performance Measures (Unranked) |
| | • Three Year Relative Total Shareholder Return |
• Adjusted Diluted Net Earnings per Share | | |
|
|
Compensation Discussion and Analysis |
VI. Compensation Decision-Making Process
Role of Board of Directors and Compensation Consultant
The Compensation Committee oversees all aspects of compensation for the CEO and the CEO's direct reports ("the Executive Team"). The Compensation Committee structures the executive compensation program to balance the goals of linking pay-to-performance and creating alignment with shareowner interestsTeam with the challenge of retainingfull Board reviewing and motivating a qualified Executive Teamapproving compensation matters related to provide business continuity and strategic leadership.
the CEO based on recommendations from the Compensation Committee.In the fall of 2015, the Compensation Committee, after a thorough review process, retained Radford, part of the Rewards Solutions practice of Aon plc, as its independent compensation consultant in connection with the compensation paid to the Executive Team, and to review director compensation.
The Compensation Committee has assessed the independence of Radford pursuant to SEC and NYSE rules. Radford does not provide any material services to management and the Compensation Committee has determined that it does not have any business or personal relationship with any member of the Committee or management.
Based on its consideration of the foregoing and other relevant factors, the Compensation Committee concluded that there were no conflicts of interest, and that Radford is independent. Radford’s independence is evaluated annually. The Company paid Radford $92,283 for its compensation consulting services. The Company also paid Radford $864,476 for insurance brokerage services unrelated to its compensation consulting services. These services were provided by different personnel, and were approved by management in the ordinary course of business, and not by the Compensation Committee.In determining executive compensation, the Compensation Committee obtains input and advice from Radford, and reviews recommendations from our CEO and the Executive Vice President, ofChief Human Resources and Legal Officer with respect to the performance and compensation of our other Executive Team members. The Board of Directors, upon recommendation from the Compensation Committee, reviews and approves CEOthe CEO’s compensation.
In 2022, the Company also retained Infinite Equity, an objective, third-party equity compensation consultant, to evaluate our equity program and NEO compensation.
assess a range of equity vehicles and their alignment to our compensation philosophy, the impact from an expense perspective, and market competitiveness. We did this in response to some of the feedback we received from stockholders that we should consider adding additional performance vehicles to our equity mix. This has resulted in changes that are incorporated into our 2023 program that are described in Section VII.Risk Assessment
The Compensation Committee annually evaluates the Company’s compensation programs to assess whether such programs as designed or administered wouldmight facilitate or encourage excessive risk-taking by employees. In 2019,2022, the Committee concluded that the programs are not reasonably likely to have a material adverse effect on the Company in part due to the following program elements: (i) limits provided on annual incentive and long-term performance awards, (ii) the potential opportunity derived from long-term incentive programs outweigh the benefit available under the annual incentive programs thereby creating a focus on sustained Company operational and financial performance, and (iii) the stock ownership guidelines impacting all of the Executive Team. Among the design features that mitigate the likelihood of excessive risk-taking are:
Multiple metrics that balance revenue and profitability
Linear payout schemes with performance thresholds and caps
| |
V.• | Competitive Market Analysis | Reasonable pre-set goals which are well-defined and communicated |
A strong recoupment policy
Training on our Code of Conduct and other policies that educate employees on appropriate behaviors and the consequences of inappropriate actions; and
Balance of short and long-term compensation that align with creating value in our stock.
Competitive Market Analysis
Our compensation committeeCompensation Committee utilizes a comparative framework to help define specific peer companies and several other survey data sources to help with the assessment.
Additionally, the Board and the Compensation Committee believe we employ some of the most talented executive officers in our industry. Our Executives are routinely recruited as candidates to lead other larger, sophisticated life science companies. Given the strength of our Executive Team, the Compensation Committee believes it is critical they receive total compensation opportunities reflecting their individual skills and experiences to retain and properly motivate them, while ensuring that the executive compensation is aligned with the long-term creation of value for stockholders. | | | | |
| | |
| 46 | | | | 2023 Proxy Statement |
|
|
Compensation Discussion and Analysis |
The Compensation Committee recognizes that the market for talent is highly competitive and believes that the Executive Team is highly talented and accomplished. It is with this macro-view that we evaluate the available benchmark data alongside the experience, skills, delivered results, and leadership of individuals.
| | | | | | | | |
Primary Market
(Peer Companies)
| Secondary Market
(Survey Data)
| Data Sources | | |
| | | | Survey Data | | | | Blended Data Sources |
| | | | |
• Specific peers in the medical device and healthcare equipment industry with a similar business and financial profile | | | | • Broader, size-appropriate comparisons in the medical device industry | | | | • Public SEC filings for specific peers • Radford Global Life Sciences Survey |
We regularly review this competitive data which includes data with respect to salary, bonus, total cash, equity and equitytotal direct compensation across a range of percentiles. Therepercentiles as described below.
| | | | | | | | |
| | | | |
Base Salary | | | | Total Target Cash | | | | Equity |
| | | | |
50th percentile | | | | 50th percentile | | | | 50th percentile |
| | | | |
• Exceptional talent, performance and future trajectory may warrant above 50th percentile | | | | • Aligns with performance culture to put more cash “at risk” | | | | • Attracts top talent to organization • Preference for stock options as vehicle, closely aligns interests with stockholders |
Total Company performance is no fixed formula orthe leading factor in informing the appropriate percentile of market-established compensation levels which the Company strivesthat is targeted in a given period. In addition, when assessing where to meet and the benchmark data reviewed includes a range from the 25
th percentile to the 75th percentile. This data is but one factor considered in our evaluation. Otherposition each individual executive’s pay, we also consider other factors considered include the scope of the executive’s role within our Company, thesuch as:Individual performance of the individual, and the expectedover time;
Anticipated future contributions of the individual.impact;
Experience, unique skills/talents, knowledge;
2019Individual motivators.
2022 Peer Group
Each year the Compensation Committee works with our independent compensation consultant to review compensation for similar positions at other corporations within a designated peer group of companies to help ensure that the Company’s overall compensation levels, and the components thereof, are appropriate.
As our Company evolves, we continue to revisit and refine, as needed, this peer group. To select peers for 2020,2022, we worked with Radford to consider companies which generally fit within the following criteria:
Market Capitalization – 1/3 to 3x the Company’s current market capitalization, now ranging from $900 million to $8.2 billion;| • | | Market Capitalization – 1/3 to 3x the Company’s 30-day average market value, now ranging from $1.3 billion to $11.4 billion; |
| • | | Revenue – 1/3 to 3x the Company’s trailing twelve-month revenue, now ranging from $490 million to $2.45 billion; |
| • | | Headcount – 1/3 – 3x the Company’s headcount, now ranging from 1,150 to 10,200. |
| | | | |
| | |
2023 Proxy Statement | | | | 47 |
Revenue – 1/3 to 3x the Company’s trailing twelve-month revenue, now ranging from $320 million to $2.9 billion;
Headcount – 1/3 - 3x the Company’s current headcount, now ranging from 1,150 to 10,500.
As a result of our review, we removed the following:
|
| |
Removed Company | Reasoning |
NXStage Medical
Invacare
| NxStage was acquired during 2019,Compensation Discussion and Invacare was removed from the peer group as its financials were no longer comparable.Analysis |
Our 2019During 2022, our Peer Group was as follows:
|
| | | | | | | | |
| Company | LFY # of EEs | LFY Revenues | 30-Day Avg. Market Cap ($M) |
| Align Technology | 14,530 | $ | 2,407 |
| $ | 21,616 |
|
| Cantel Medical | 2,775 | $ | 918 |
| $ | 3,109 |
|
| Globus Medical | 2,000 | $ | 785 |
| $ | 5,767 |
|
| Haemonetics | 3,216 | $ | 968 |
| $ | 5,963 |
|
| ICU Medical | 8,000 | $ | 1,266 |
| $ | 3,812 |
|
| Integer | 8,250 | $ | 1,258 |
| $ | 2,590 |
|
| Integra LifeSciences | 4,000 | $ | 1,518 |
| $ | 5,166 |
|
| Masimo | 1,600 | $ | 938 |
| $ | 8,370 |
|
| Merit Medical Systems | 6,355 | $ | 995 |
| $ | 1,668 |
|
| Natus Medical | 1,484 | $ | 495 |
| $ | 1,082 |
|
| NuVasive | 2,800 | $ | 1,168 |
| $ | 3,932 |
|
| Orthofix Medical | 1,055 | $ | 460 |
| $ | 873 |
|
| West Pharmaceutical Services | 8,200 | $ | 1,840 |
| $ | 10,988 |
|
| Wright Medical Group | 3,030 | $ | 921 |
| $ | 3,823 |
|
| | | | |
| | | | |
| 75th Percentile | 7,589 | $ | 1,264 |
| $ | 5,914 |
|
| 50th Percentile | 3,123 | $ | 981 |
| $ | 3,877 |
|
| 25th Percentile | 2,194 | $ | 919 |
| $ | 2,719 |
|
| | |
| |
| |
|
| | | | |
| CONMED | 3,300 |
| $ | 955 |
| $ | 3,170 |
|
| Percentile Rank | 55% | 43% | 31% |
We have excluded NXStage Medical from the table above as it was acquired during 2019. Invacare was excluded as the financial data was no longer comparable as of December 31, 2019.
| | | | | | | | | | | | | | | |
| | | | |
Company (08/27/2021 Data) | | LFY # of
EEs | | Revenues | | 30-Day Avg.
Market Cap ($M) |
| | | | |
Globus Medical | | | | 2,200 | | | | $ | 928 | | | | $ | 8,000 | |
| | | | |
Haemonetics | | | | 2,708 | | | | $ | 903 | | | | $ | 3,045 | |
| | | | |
ICU Medical | | | | 7,900 | | | | $ | 1,279 | | | | $ | 4,121 | |
| | | | |
Integra Life Sciences | | | | 3,700 | | | | $ | 1,509 | | | | $ | 6,029 | |
| | | | |
LivaNova | | | | 4,000 | | | | $ | 1,022 | | | | $ | 4,312 | |
| | | | |
Masimo | | | | 2,000 | | | | $ | 1,177 | | | | $ | 15,097 | |
| | | | |
Merit Medical Systems | | | | 5,989 | | | | $ | 1,031 | | | | $ | 3,799 | |
| | | | |
Natus Medical | | | | 1,420 | | | | $ | 452 | | | | $ | 873 | |
| | | | |
Nevro | | | | 843 | | | | $ | 409 | | | | $ | 4,258 | |
| | | | |
NuVasive | | | | 2,700 | | | | $ | 1,153 | | | | $ | 3,099 | |
| | | | |
Orthofix Medical | | | | 1,036 | | | | $ | 456 | | | | $ | 785 | |
| | | | |
Penumbra | | | | 3,300 | | | | $ | 671 | | | | $ | 9,603 | |
| | | | |
Varex Imaging | | | | 2,000 | | | | $ | 762 | | | | $ | 1,093 | |
| | | | |
75th Percentile | | | | 3,700 | | | | $ | 1,153 | | | | $ | 6,029 | |
| | | | |
50th Percentile | | | | 2,700 | | | | $ | 928 | | | | $ | 4,121 | |
| | | | |
25th Percentile | | | | 2,000 | | | | $ | 671 | | | | $ | 3,045 | |
| | | | |
CONMED | | | | 3,400 | | | | $ | 979 | | | | $ | 3,786 | |
| | | | |
Percentile Rank | | | | 69 | % | | | | 54 | % | | | | 42 | % |
| | | | |
VI. | Elements of Executive Compensation | |
| 48 | | | | 2023 Proxy Statement |
|
|
Compensation Discussion and Analysis |
VII. 2022 Pay Elements Overview
Our compensation philosophy is important to our ability to attract, retain, and motivate Executives with an entrepreneurial mindset to deliver stockholder value over time. NEO compensation primarily consists of base salary, annual incentive awards, and annual grants of equity awards. These elements are in line with the level of responsibility and impact on our results for each executive.Executive. The cash components of our pay structure are the foundation to attracting top executive talent in our industry. The equity program is designed to align the Executives’ compensation with stockholder value creation. While there is no fixed formula, the Committee seeks an appropriate balance between these elements that is market competitive and puts a significant portion of compensation “at risk” depending on the Company’s performance. In addition, the Compensation Committee believes that Executives who have a greater and more direct impact and influence over the Company’s overall performance should receive a significant proportion of compensation in the form of equity relative to their total compensation, thus seeking to align the Executive’s incentives and impact with the value he or she brings to the Company-wide performance.
| | | | | | | | | | | | | | | | |
| Pay Element | | | | | | | | Description | | | | | | | | Pay Strategy Aligns with Shareholder Value Creation |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Base Salary | | | | | | | | Base salaries are based on a review of compensation paid by peer companies and other survey data. Base Salary is adjusted annually based on individual performance, or in connection with an executive taking on substantially increased responsibilities. | | | | | | | | To attract and retain high-performing and experienced leaders at a competitive compensation. |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Annual Bonus Plan | | | | | | | | Bonus targets as a percentage of salary range from 65% to 110% of salary to drive focus on annual pre-determined financial goals. | | | | | | | | A significant portion of executive pay is tied to annual corporate wide sales and adjusted diluted net EPS. The approach to the annual bonus plan is to reward executives based on Company performance. Executives with specific business unit responsibilities have a small portion of their bonuses tied to specific individual financial goals related to his/her business unit. The Compensation Committee has the discretion to award discretionary bonuses in recognition of exceptional individual performance. |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Equity
Compensation | | | | | | | | A significant portion of overall compensation, at target, ranging from 76% for the CEO to an average of 73% for the other NEOs, consists of equity compensation vesting over 4-5 years. | | | | | | | | Directly aligns the interests of our executives with those of our stockholders. We have used a mix of vehicles including PSUs, RSUs, and stock options. The 2023 equity grants to the CEO were awarded with 50% in value in PSUs and 50% in value in stock options. For our Executives, the value was split 75% in stock options and 25% in PSUs. |
| | | | |
| | |
2023 Proxy Statement | | | | 49 |
|
|
Compensation Discussion and Analysis |
To promote the performance-based culture as described above, and to align the interests of management and stockholders, our executive compensation program focuses on variable compensation. Our CEO’s and other NEO’s average pay mix at target in 2022 illustrate this:
| | |
| 2022 CEO Target Pay Mix | | 2022 Other NEO Target Pay Mix |
2022 Base Salary
An NEO’s salary is initially established based upon an evaluation of the competitive salaries for similar positions in the market. Absent a promotion or some other unusual circumstance, such as a change in responsibilities, salaries are reviewed once per year. In this process, the Compensation Committee considers the recommendation of the CEO along with the Executive Vice President, ofChief Human Resources and Legal Officer in reviewing and approving the base salaries of the Executive Team (other than the CEO).
In making his recommendationrecommendations for the Executive Team, the CEO considers the individual’s contribution to the Company’s performance and exercises judgment and discretion when considering any additional factors that should appropriately affect the executive’s salary such as market competitiveness, current compensation data derived from the proxies of the peer companies described above and, as appropriate, compensation data gathered from third-party surveys generally available to the Company. No specific formula is used to weigh or evaluate these factors; rather, the CEO considers such factors on the whole when making a base salary recommendation.
| | | | |
| | |
| 50 | | | | 2023 Proxy Statement |
|
|
Compensation Discussion and Analysis |
As to the process for reviewing the base salary for the CEO, the Committee considers the Company’s performance, the CEO’s contribution and his responsibilities as well as the competitive talent market. No fixed formula or target percentile is established for setting the base salary. The salary adjustments in 2019February 2022, effective as of March 2022, were as follows.
|
| | | | | | | | | | |
| NEO | 2019 Base Salary | | 2018 Base Salary | | % Change |
| Curt R. Hartman |
| $850,000 |
| |
| $800,000 |
| | 6.3 | % |
| Todd W. Garner |
| $442,000 |
| |
| $425,000 |
| | 4.0 | % |
| Patrick J. Beyer |
| $419,075 |
| 1 |
| $387,192 |
| 1 | 8.2 | % |
| Nathan Folkert |
| $373,000 |
| |
| $364,000 |
| | 2.5 | % |
| Stanley W. (Bill) Peters |
| $374,000 |
| |
| $361,000 |
| | 3.6 | % |
_________________
noted in the chart below. After the pay 2022 adjustments our NEO pay relative to blended survey data was generally between the 50th and 75th percentiles. | | | | | | | | | | | | | | | |
| | | | |
Name | | 2022 Base Salary | | 2021 Base Salary | | % Change 2022 Compared
to 2021 |
| | | | |
Curt R. Hartman | | | $ | 950,000 | | | | $ | 921,850 | | | | | 3 | % |
| | | | |
Todd W. Garner | | | $ | 525,825 | | | | $ | 500,786 | | | | | 5 | % |
| | | | |
Patrick J. Beyer(1) | | | $ | 505,471 | | | | $ | 540,466 | | | | | 5 | % |
| | | | |
Stanley W. (Bill) Peters(2) | | | $ | 440,692 | | | | $ | 400,629 | | | | | 10 | % |
| | | | |
Heather L. Cohen(2) | | | $ | 420,000 | | | | $ | 348,181 | | | | | 21 | % |
| |
| (1) | Mr. Beyer is located in the U.K., and, while the amounts shown in this table are expressed in U.S. dollars, his salary is paid in British pounds. These components were converted to U.S. dollars using exchange rates of £0.761£0.834 and £0.785£0.743 to U.S. $1.00 aton December 31, 20192022 and December 31, 2018,2021, respectively. Mr. Beyer’s compensation in local currency increased 5% between 2021 to 2022. Due to currency fluctuations between December 31, 2021 and December 31, 2022 this increase is negated when shown in USD. |
| (2) | The increases of Mr. Peters and Ms. Cohen’s pay in 2022 are the result of promotions. Mr. Peters’ took on the additional responsibilities of the Advanced Endoscopic Technologies business. Ms. Cohen’s responsibilities expanded to include leadership of the Legal function. |
2022 Executive Bonus Plan
The Company maintains the shareholder-approvedstockholder-approved Executive Bonus Plan, which may be used to pay incentive compensation to the Company executives,Executives, including our NEOs. The Executive Bonus Plan, which was adopted in connection with the Company’s 2017 Annual Meeting of Shareholders, replaced in its entirety the Company’s 2012 Executive Bonus Plan. The Executive Bonus Plan is effective for performance periods commencing on or after January 1, 2018. For the NEOs, annual bonus targets and performance metrics are established in the first quarter of the year by the Compensation Committee and the Board of Directors at the meeting typically held in late February or early March.
Executive Bonus Plan Performance Goals for 2019
2022The Executive Bonus Plan performance goals for 20192022 were initially established by the Compensation Committee and approved by the full Board in February 2019. 2022, as detailed below. The bonus plans were adjusted in September 2022 to incorporate the impact of the two acquisitions. These adjustments aligned the goals to financial expectations of the Company inclusive of the acquisitions.
| | | | |
| | |
2023 Proxy Statement | | | | 51 |
|
|
Compensation Discussion and Analysis |
The bonus payment iswas conditioned upon the achievement of certain threshold goals and iswas to be measured on a sliding scale between threshold and maximum performance. For 2019, each NEO’sConsistent with prior years, the bonus other thanplans for Mr. Hartman, Mr. Garner and Ms. Cohen were based on (i) Total Company Net Sales (Fx Adjusted) and (ii) Adjusted Diluted Net EPS. And also consistent with prior years’ the CEO's bonus wasplans established for Mr. Beyer and Mr. Peters were based on three metrics: (i) Total Company Net Sales (Fx Adjusted); (ii) Adjusted EPS;Diluted Net EPS and (iii) individual performance goals. The CEO's goals did not include any individualtheir respective business unit’s financial performance goals. The weighting of each performance metric (in each case, expressed as a percentage of the NEO’s annual base salary) variesvaried by position,position. As amended for the reasons described below, the thresholds, targets and maximums were as follows:
|
| | | | | | | | |
| | Threshold | | Target | | Maximum |
| Curt R. Hartman | |
| | |
| | |
|
| Net Sales (FX Adjusted) | 24.0 | % | | 40.0 | % | | 80.0 | % |
| Adjusted EPS | 45.0 | % | | 60.0 | % | | 120.0 | % |
| Total | 69.0 | % | | 100.0 | % | | 200.0 | % |
| | | | | | |
| Todd W. Garner | |
| | |
| | |
|
| Net Sales (FX Adjusted) | 13.5 | % | | 22.5 | % | | 45.0 | % |
| Adjusted EPS | 24.4 | % | | 32.5 | % | | 65.0 | % |
| CFO Goals | 0.0 | % | | 15.0 | % | | 30.0 | % |
| Total | 37.9 | % | | 70.0 | % | | 140.0 | % |
| | | | | | |
| Patrick J. Beyer | |
| | |
| | |
|
| Net Sales (FX Adjusted) | 12.0 | % | | 20.0 | % | | 40.0 | % |
| Adjusted EPS | 22.5 | % | | 30.0 | % | | 60.0 | % |
| International Goals | 10.4 | % | | 15.0 | % | | 30.0 | % |
| Total | 44.9 | % | | 65.0 | % | | 130.0 | % |
| | | | | | |
| Nathan Folkert | |
| | |
| | |
|
| Net Sales (FX Adjusted) | 9.0 | % | | 15.0 | % | | 30.0 | % |
| Adjusted EPS | 18.8 | % | | 25.0 | % | | 50.0 | % |
| Orthopedics Goals | 10.3 | % | | 15.0 | % | | 30.0 | % |
| Total | 38.1 | % | | 55.0 | % | | 110.0 | % |
| | | | | | |
| Stanley W. (Bill) Peters | |
| | �� |
| | |
|
| Net Sales (FX Adjusted) | 9.0 | % | | 15.0 | % | | 30.0 | % |
| Adjusted EPS | 18.8 | % | | 25.0 | % | | 50.0 | % |
| Advanced Surgical Goals | 10.3 | % | | 15.0 | % | | 30.0 | % |
| Total | 38.1 | % | | 55.0 | % | | 110.0 | % |
| | | | | | | | | | | | | | | |
| | | |
| | | Threshold | | Target | | Maximum |
| | | |
Curt R. Hartman | | | | | | | | | | | | | | | |
| | | |
Net Sales (FX Adjusted) | | | | 13.2 | % | | | | 66.0 | % | | | | 79.2 | % |
| | | |
Adjusted Diluted Net EPS | | | | 8.8 | % | | | | 44.0 | % | | | | 52.8 | % |
Total | | | | 22.0 | % | | | | 110.0 | % | | | | 132.0 | % |
| | | |
Todd W. Garner | | | | | | | | | | | | | | | |
| | | |
Net Sales (FX Adjusted) | | | | 9.6 | % | | | | 48.0 | % | | | | 57.6 | % |
| | | |
Adjusted Diluted Net EPS | | | | 6.4 | % | | | | 32.0 | % | | | | 38.4 | % |
Total | | | | 16.0 | % | | | | 80.0 | % | | | | 96.0 | % |
| | | |
Patrick J. Beyer | | | | | | | | | | | | | | | |
| | | |
Net Sales (FX Adjusted) | | | | 6.8 | % | | | | 33.8 | % | | | | 40.5 | % |
| | | |
Adjusted Diluted Net EPS | | | | 4.4 | % | | | | 22.5 | % | | | | 27.0 | % |
| | | |
Commercial Goals | | | | 3.8 | % | | | | 18.7 | % | | | | 22.5 | % |
Total | | | | 15.0 | % | | | | 75.0 | % | | | | 90.0 | % |
| | | |
Stanley W. (Bill) Peters | | | | | | | | | | | | | | | |
| | | |
Net Sales (FX Adjusted) | | | | 5.4 | % | | | | 27.0 | % | | | | 32.4 | % |
| | | |
Adjusted Diluted Net EPS | | | | 3.6 | % | | | | 18.0 | % | | | | 21.6 | % |
| | | |
Commercial Goals | | | | 4.0 | % | | | | 20.0 | % | | | | 24.0 | % |
Total | | | | 13.0 | % | | | | 65.0 | % | | | | 78.0 | % |
| | | |
Heather L. Cohen | | | | | | | | | | | | | | | |
| | | |
Net Sales (FX Adjusted) | | | | 7.8 | % | | | | 39.0 | % | | | | 46.8 | % |
| | | |
Adjusted Diluted Net EPS | | | | 5.2 | % | | | | 26.0 | % | | | | 31.2 | % |
Total | | | | 13.0 | % | | | | 65.0 | % | | | | 78.0 | % |
The corporate goals, after adjusting for the two acquisitions, were set and measured as follows:
Net sales (FX adjusted) goals were in the $922.9$1,010.6 million to $994.8$1,199.3 million range with payouts from 60%20% to 200%120%. The target was $942.4$1,145.3 million for 100% payout. Net Sales (FX Adjusted) is calculated by taking GAAP net sales and adjusting for the impact of actual foreign exchange rates versus budgeted foreign exchange rates.
Adjusted Diluted Net EPS goals were in the $2.48$3.21 to $2.95$3.66 range with payouts from 75%20% to 200%. The120% of the target payout, which was $2.54$3.53 for a 100% payout. Adjusted Diluted Net EPS for these purposes iswas adjusted for amortization of intangible assets, amortization of deferred financing fees and debt discount, unusual items, including restructuring charges, impairment charges, changes in tax or accounting rules, acquisitions or other special or nonrecurring events. TheA reconciliation of GAAP to Adjusted Diluted Net EPS is shown on page 63. Compensation Committee structured this scale to incent executives with challenging targets based upon the Company’s internal goals and guidance to investors.
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| 52 | | | | 2023 Proxy Statement |
In addition, |
|
Compensation Discussion and Analysis |
Given the importance of revenue generation, the weighting of the revenue performance metric (in each case, expressed as a percentage of the NEO’s annual bonus, other than the CEO,base salary) was subject to performance goals specific to the individual’s areas of responsibility:
Mr. Garner’s goals included the developmentemphasized and implementation of strategic and operational initiatives;
Mr. Beyer’s goals included specific targets relative to the International business;
Mr. Folkert’s goals included specific targets relative to the U.S. Orthopedics business;
Mr. Peters’ goals included specific targets relative to the U.S. Advanced Surgical business.
2019varied by position, as follows:2022 Bonus Plan Targets:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | Curt R. Hartman | | Todd W. Garner | | Patrick J. Beyer | | Stanley W. (Bill) Peters | | Heather L. Cohen |
| | | | | |
Target | | | | 110 | % | | | | 80 | % | | | | 75 | % | | | | 65 | % | | | | 65 | % |
| | | | | |
Net Sales (FX Adjusted) | | | | 66 | % | | | | 48 | % | | | | 34 | % | | | | 27 | % | | | | 39 | % |
| | | | | |
Adjusted Diluted Net EPS | | | | 44 | % | | | | 32 | % | | | | 22 | % | | | | 18 | % | | | | 26 | % |
| | | | | |
Business Unit Goals | | | | 0 | % | | | | 0 | % | | | | 19 | % | | | | 20 | % | | | | 0 | % |
2022 Actual Payouts
For 2019,2022, the Company achieved:
Net Sales (FX Adjusted)* of $955.9$1,058.7 million, which is 126%was 92% of target.target, yielding a payout of 67.8%.
Adjusted EPSDiluted Net EPS* of $2.64,$2.65, or 125%75% of target.
Below istarget, yielding a reconciliationpayout of GAAP to Adjusted EPS (in $ thousands):0%
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Twelve Months Ended December 31, 2019 |
| | | Gross Profit | | Selling & Administrative Expense | | Research & Development Expense | | Operating Income | | Interest Expense | | Other Expense | | Tax Expense | | Effective Tax Rate | | Net Income | | Diluted EPS |
| As reported | | $ | 524,715 |
| | $ | 400,141 |
| | $ | 45,460 |
| | $ | 79,114 |
| | $ | 42,701 |
| | $ | 5,188 |
| | $ | 2,605 |
| | 8.3 | % | | $ | 28,620 |
| | $ | 0.97 |
|
| % of sales | | 54.9 | % | | 41.9 | % | | 4.8 | % | | 8.3 | % | | | | | | |
| | |
| | |
| | |
|
| Business acquisition costs | | 1,335 |
| | (13,066 | ) | | — |
| | 14,401 |
| | — |
| | — |
| | 3,609 |
| | |
| | 10,792 |
| | 0.37 |
|
| Manufacturing consolidation costs | | 2,858 |
| | — |
| | — |
| | 2,858 |
| | — |
| | — |
| | 354 |
| | |
| | 2,504 |
| | 0.08 |
|
| Debt refinancing costs | | — |
| | — |
| | — |
| | — |
| | — |
| | (3,904 | ) | | 1,149 |
| | | | 2,755 |
| | 0.09 |
|
| | | $ | 528,908 |
| | $ | 387,075 |
| | $ | 45,460 |
| | $ | 96,373 |
| | $ | 42,701 |
| | $ | 1,284 |
| | $ | 7,717 |
| | | | $ | 44,671 |
| | $ | 1.51 |
|
| Adjusted gross profit % | | 55.4 | % | | | | | | | | | | | | |
| | |
| | |
| | |
|
| Amortization | | $ | 6,000 |
| | (26,075 | ) | | — |
| | 32,075 |
| | (11,756 | ) | | — |
| | 10,590 |
| | |
| | 33,241 |
| | 1.13 |
|
| Adjusted net income | | |
| | $ | 361,000 |
| | $ | 45,460 |
| | $ | 128,448 |
| | $ | 30,945 |
| | $ | 1,284 |
| | $ | 18,307 |
| | 19.0 | % | | $ | 77,912 |
| | $ | 2.64 |
|
| % of sales | | | | 37.8 | % | | 4.8 | % | | 13.4 | % | | | | | | | | | | | | |
| * | Refer to the “GAAP to Non-GAAP Reconciliations” section for the most directly comparable GAAP measure, GAAP net sales and GAAP diluted earnings per share. |
Applying these results, as well as the achievement of the individual performance goals for each NEO, bonuses were earned as follows:
|
| | | | | | | | | | |
| NEO | Bonus Target (as % of Base Salary) | Net Sales (FX Adjusted) Achieved | Adjusted EPS Performance Achieved | Individual Performance Achieved | FY 2019
Actual
Performance
Achieved (as
% of target
bonus) | FY 2019
Earned Bonus
(as % of base
salary) | FY 2019
Earned
Bonus
($) | |
| Curt R. Hartman | 100% | 126% | 125% | N/A | 125% | 125% | $ | 1,065,900 |
| |
| Todd W. Garner | 70% | 126% | 125% | 117% | 124% | 87% | $ | 382,529 |
| |
| Patrick J. Beyer | 65% | 126% | 125% | 110% | 122% | 79% | $ | 331,908 |
| 1 |
| Nathan Folkert | 55% | 126% | 125% | 27% | 99% | 54% | $ | 202,278 |
| |
| Stanley W. (Bill) Peters | 55% | 126% | 125% | 100% | 118% | 65% | $ | 243,437 |
| |
_________________
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Name | | Bonus
Target (as
% of Base
Salary | | Net Sales
(FX
Adjusted)
Achieved | | Adjusted
Diluted Net
EPS
Performance
Achieved | | Business
Unit
Goals | | FY 2022 Actual
Performance
Achieved (as % of
target bonus) | | FY 2022
Earned
Bonus
(as % of
YE base
salary) | | FY 2022
Earned
Bonus ($) |
Curt R. Hartman | | | | 110 | % | | | | 68 | % | | | | 0 | % | | | | — | | | | | 41 | % | | | | 45 | % | | | | $425,106 | |
Todd W. Garner | | | | 80 | % | | | | 68 | % | | | | 0 | % | | | | — | | | | | 41 | % | | | | 33 | % | | | | $171,124 | |
Patrick J. Beyer | | | | 75 | % | | | | 68 | % | | | | 0 | % | | | | 52 | % | | | | 44 | % | | | | 33 | % | | | | $165,318 | |
Stanley W. (Bill) Peters | | | | 65 | % | | | | 68 | % | | | | 0 | % | | | | 49 | % | | | | 43 | % | | | | 28 | % | | | | $124,179 | |
Heather L. Cohen | | | | 65 | % | | | | 68 | % | | | | 0 | % | | | | — | | | | | 41 | % | | | | 26 | % | | | | $111,056 | |
| |
| (1) | Mr. Beyer is located in the U.K., and, while the amounts shown in this table are expressed in U.S. dollars, his bonus compensation is paid in British pounds. These components were converted to U.S. dollars using an exchange rate of £0.761£0.834 to U.S. $1.00, which was the spot rate as of December 31, 201930, 2022 (the last business day of the year). |
The Compensation Committee has the discretion to award discretionary bonuses in recognition of exceptional individual and Executive Vice President and Chief Human Resources and Legal Officer performance including awards upon the recommendation of the CEO. For 2019, discretionary bonuses were awarded based on strong performance with respect to a varietyMr. Garner, in recognition of corporate-wide initiatives, ranging from the execution of acquisitions, financing transactions,his contribution to the work associated withacquisitions of Biorez and In2Bones as well as the listing on the New York Stock Exchange, financial and product introduction efforts. Mr. Garner,convertible notes offering, received a $30,000 discretionary award. Mr. Beyer, Mr. Folkertin recognition of his contributions to the acquisitions, received a $34,789 discretionary award, and in recognition of the extraordinary work related to the commercial support for our Warehouse Management System, received a $23,992 discretionary award (based on spot rate as of December 30, 2022, the last business day of the year). Mr. Peters, were awarded discretionary bonuses in recognition of the amount of $60,000, $50,000, $25,000 and $35,000 (14%, 12%, 7% and 9% of annual salary) respectively.
Annual Equity Compensation
We believe our long-term incentive awards align the interests of NEOs with those of shareholders, encourage long-term retention, and provide an appropriate balanceextraordinary work related to the
short-term incentives offered by the Company's annual incentive bonus programcommercial support for
NEOs. Given our growth strategy, we believe that an appropriate long-term emphasis on stock price appreciationWarehouse Management System, received a $25,000 discretionary award.Equity Compensation
As described above, equity compensation is appropriate, which creates an immediate, strong alignment of shareholder and management interests. Accordingly, a significant portioncritical element of our long-term equity awards are grantedcompensation philosophy in the form of stock options or stock appreciation rights (“SARs”). We also utilize RSUs, when appropriate,order to emphasize retentionattract, motivate and stock ownership given the grants have value immediately upon vesting. We have evaluated the use of Performance Share Units (“PSUs”) and have elected not to use this vehicle in our current annual equity program at this time and instead have elected to use stock options which we believe more closely align the interests of our executives (including our NEOs) to the long term interests of shareholders. We have used PSUs in the instance of the 2015 grant of PSUs to Mr. Hartman as described below. The Compensation Committee believes this approach is consistentretain exceptional executive talent who lead with its philosophy that those employees, the NEOs in particular, who are in a position to most directly impact corporate performance should have the highest risk/reward potential tied to corporate performance.an entrepreneurial mindset. Equity compensation awards to our NEOs were granted under our 2018 Long-Term Incentive Plan (the "LTIP"“LTIP”). The Compensation Committee generally determines the amount of equity compensation for each NEO other than the CEO, based in part, on recommendations from the CEO and Executive Vice President ofand Chief Human Resources.Resources and Legal Officer. Additionally, the Committee reviews the expense and the annual and aggregate dilutive impact of our equity grants.
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2023 Proxy Statement | | | | 53 |
|
|
Compensation Discussion and Analysis |
For 2019,2022, our executiveExecutive equity grants consisted of RSUsstock options. The Committee, in recognition of the unprecedented level of competition for talent, awarded increased grants to the Executive Team, other than Mr. Hartman, to provide additional incentives for the team to forego other offers while also being motivated to continue to deliver results for stockholders. The Committee believes that these awards help to deliver meaningful stability in Executive leadership which is advantageous to the Company’s continued growth.
The level of the award granted to Mr. Hartman was established based on the Company’s relative performance over 2021, the competitive talent market, and stock options,the importance of Mr. Hartman’s continued leadership in stewarding the Company’s future. Similarly, the grants awarded to the other NEOs were supported by the individual and collective performance of the team over 2021. The grant date value of the equity awarded to the CEO in 2022 was approximately $6.3 million as compared to the grant date value of the equity award of approximately $7.4 million in 2021. This is a decrease of approximately 15% in value awarded.
The equity grants awarded in 2022 are set forth below:
|
| | | | |
| NEO | # RSUs | # Options |
| Curt R. Hartman | — |
| 200,000 |
|
| Todd W. Garner | 6,400 |
| 48,000 |
|
| Patrick J. Beyer | — |
| 56,000 |
|
| Nathan Folkert | — |
| 32,000 |
|
| Stanley W. (Bill) Peters | — |
| 32,000 |
|
| | | | |
| |
NEO | | Grant (# Options) | |
| |
Curt R. Hartman | | | 125,000 | |
| |
Todd W. Garner | | | 55,000 | |
| |
Patrick J. Beyer | | | 55,000 | |
| |
Stanley (Bill) W. Peters | | | 35,000 | |
| |
Heather L. Cohen | | | 33,000 | |
Our NEOs were granted annual awards of stock options effective March 1, 2019,2022, following the review of 20182022 performance at the February 20192022 Board meeting. The stock option awards vest ratably over five years with 20% of each award vesting annually. The RSU awards vest ratably over four years with 25% of each award vesting annually. Although annual grants are generally intended to incentivize future performance, in determining the size of grants, the Committee may consider, among other factors, market competitiveness individual contributions, and performance during the preceding fiscal year. The exercise price on all outstanding stock options and SARs is equal to the quoted closing price of the stock on the date of grant. Stock options, SARs, RSUs and PSUs are generally nontransferable other than on death and stock options and SARs expire ten years from date of grant. The Company has a policy against cash buyouts of underwater stock options or SARs, and such repurchases are expressly prohibited by the LTIP, unless approved by shareholders.
stockholders.These equity grants, as well as the annual equity grants made to NEOs since 2015 under the LTIP, are subject to “double-trigger” vesting on a termination of the NEO’s employment by the Company other than for “cause” or by the NEO for “good reason” (each as defined in the applicable award agreement) within two years following the change in control (as defined in the applicable award agreement). Our equity compensation awards also include standard non-compete, non-solicit restrictions, as well as trade secret and confidentiality obligations.
| | | | |
VII. | Share Ownership: Prohibition on Hedging and Pledging | |
| 54 | | | | 2023 Proxy Statement |
|
|
Compensation Discussion and Analysis |
Inclusion of Performance Stock Units (PSUs) in 2023 Equity Awards
After thorough consideration by the Compensation Committee of feedback received from stockholders following our last Annual Meeting of Stockholders and the implications to the application of the compensation philosophy, the Committee, with full support of the Board, added performance stock units (PSUs) to the mix of equity vehicles utilized in the March 2023 awards. In response to feedback received from stockholders who prefer that PSUs be included in the equity mix granted to Executives to ensure a performance-based component to equity compensation, the Committee, with full support of the Board, included PSUs in the equity awards to Mr. Hartman and the Executive Team in 2023. For Mr. Hartman the value mix awarded was 50% in options and 50% in PSUs. For the Executive Team, the value mix awarded was 75% options and 25% PSUs. The process to assess the appropriate value of the award granted remains the same as did the philosophy relative to market targets and other factors previously discussed. Once the equity award values are established, the number of options and PSUs is determined based on the value on the grant date.
| | | | | | | | | | | | |
| | | | |
NEO | | Grant Value | | | Options | | | PSUs | |
| | | | |
Curt R. Hartman | | $ | 5,315,000 | | | | 67,141 | | | | 18,256 | |
| | | | |
Todd W. Garner | | $ | 1,700,000 | | | | 32,212 | | | | 2,920 | |
| | | | |
Patrick J. Beyer | | $ | 1,700,000 | | | | 32,212 | | | | 2,920 | |
| | | | |
Stanley (Bill) W. Peters | | $ | 1,100,000 | | | | 20,843 | | | | 1,889 | |
| | | | |
Heather L. Cohen | | $ | 1,000,000 | | | | 18,948 | | | | 1,717 | |
| | | | | | | | | | |
| | |
Performance Level | | Percentile | | Payout
Percentage |
| | |
Maximum | | 75th or above | | | | 200 | % |
| | |
Target | | 50th | | | | 100 | % |
| | |
Threshold | | 25th | | | | 50 | % |
| | |
Below Threshold | | Below 25th | | | | 0 | % |
The PSUs are earned based on relative TSR comparison of Standard & Poor’s Healthcare Equipment Select Index. The awards cliff vest after 3 years. The performance period is 3 years from the time of grant. If the Company’s relative performance to the peer group is at or below the 25th percentile, there will be no payout. The maximum payout is 200% of target. We believe that the combination of PSUs and options as an equity award will further strengthen the alignment of Company performance and our Executive compensation.
In response to Stockholders’ Request for more Clarity around the 2021 Equity Grant to Mr. Hartman
When conducting our initial modeling for Mr. Hartman’s 2021 equity award we used a Black Scholes Value (BSV) that was similar to the model that we used historically. At the time the awards were granted in early March, the BSV had increased, providing a jump in the accounting value over what was initially planned for the grant size. While a portion of this increase in BSV was related to the price of the CONMED stock, it was also meaningfully impacted by the significantly higher market volatility than we have historically seen. This volatility, which was not Company specific, was primarily a reaction to the COVID pandemic during 2020 and 2021. Notwithstanding this increase in BSV, the final value of the award was not incompatible with our compensation philosophy, particularly as it related to the Company’s improved performance under Mr. Hartman’s leadership and the fact that Mr. Hartman’s pay was lower relative to market in the earlier years of his tenure. Finally, as to the actual number of options awarded to Mr. Hartman, the number has declined from 205,000 options in 2020, to 174,500 options in 2021 and 125,000 in 2022.
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| | |
2023 Proxy Statement | | | | 55 |
|
|
Compensation Discussion and Analysis |
VIII. Additional Compensation Policies and Practices
Stock Ownership Guidelines
The Company’s stock ownership guidelines are designed to encourage sharestock ownership so that our executives have a direct stake in the Company’s future and to directly align their interests with those long-term interests of the shareholder.stockholders. The ownership guidelines cover the Executive Team of the Company, including all NEOs. The guidelines are as follows:
|
| |
Position | |
Position | | Required Salary Multiple |
| |
President and CEO | | 4x base salary |
| |
CFO | | 3x base salary |
| |
All other executive officers | | 1x base salary |
The following share types are included under these guidelines: shares directly owned, shares jointly owned and estimated net after tax shares of unvested RSUs and vested in-the-money stock options, also on an after-tax basis. Executives are required to be in compliance with these guidelines within five years of becoming subject to this policy. These ownership guidelines also contain a retention requirement for equity-based awards until such time as the minimum share ownership is achieved. A complete copy of these guidelines is available on the Company’s website in the investor relations section.
All NEOs were in compliance with the guidelines as assessed as of December 31, 2019.
2022.Policy Prohibiting Hedging and Pledging of Company Stock
The Company also prohibits its Executive Team and directors from hedging or otherwise pledging stock or holding any derivatives of Common Stock other than those issued by the Company. The intent of this policy is to align the interests of senior management with those of the holders of the Common Stock.
| |
VIII. | Additional Compensation Policies and Practices |
All employees in the United States, including the U.S. based NEOs, are eligible to participate in the Retirement Savings Plan. The Company maintains the Benefits Restoration Plan for eligible employees including the NEOs, except in the case of Mr. Beyer who participates in a program designed to compensate him in a similar fashion in accordance with practices in the UK. The following summary of the terms of these plans is qualified in its entirety by reference to the complete plan documents.
The Retirement Savings Plan (the “Savings Plan”) is a tax-qualified (401(k)) retirement savings plan pursuant to which all U.S. employees are eligible after completing three months of service, including the NEOs who meet the Savings Plan’s requirements. The Savings Plan provides a 100% matching contribution up to a maximum of seven percent of the participant’s (including each NEO’s) compensation provided the employee’s contributions are equally distributed across eachper pay period during the year.
year, as detailed in the plan documents, and subject to certain legal restrictions. Effective February 13, 2023 the Savings Plan was amended whereby the maximum matching contribution is $7,000. The Company may also, in its sole discretion, provide a discretionary match.Benefits Restoration Plan
The Company has established a Benefits Restoration Plan effective January 1, 2010. The Benefits Restoration Plan is a funded nonqualified deferred compensation plan that provides eligible employees, which include the NEOs, the opportunity to defer receipt of up to 50% of base salary and up to 100% of incentive compensationbonus and to receive seven percent (7%) matching contributions or other contributions from the Company that would otherwise be unavailable under our Savings Plan because of limits imposed by the Internal Revenue Code of 1986, as amended (the “Code”).Company. In addition, similar to the Savings Plan, the Company has discretion to contribute to the Benefits Restoration Plan in addition to the match. The funds are invested based upon the investments selected by the participant from the investments available under the Savings Plan.
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| 56 | | | | 2023 Proxy Statement |
|
|
Compensation Discussion and Analysis |
A participant is 100% vested in the participant’s contributions and any earnings. Upon a “change in control”, the unvested portion of a participant’s account will automatically become vested. For purposes of the Benefits Restoration Plan, a “change in control” has the meaning provided in any written agreement between any participant and the employer, if applicable, and if there is no such written agreement with the employer defining a change in control, then a change in control generally means an acquisition of 25% or more of the outstanding voting shares or a change in a majority of the Board of Directors. The vesting requirements align with those of the Savings Plan, which provides for vesting of 20% of any Company contributions for each year of service, such that an employee is 100% vested in any Company contribution after five years of service.
Corporate Aviation Policy
In September 2019, the Board (excluding Mr. Hartman, who recused himself from voting) approved the purchase of a fractional share of a plane alonginterests. Consistent with the Company efforts to reduce our impact on the environment, the Company also purchased corresponding carbon-offsets, and adopted a policy regarding the use of Companycorporate aircraft. The Board believes the use of the plane pursuant to the policy enhances productivity, minimizes distractions and maximizes the efficient use of travel time by Mr. Hartman, Mr. Garner, and other members of the executive management team.Executive Team, as well as other employees whose travel on the plane is approved by the CEO. Pursuant to the Company policy, Mr. Hartman and Mr. Garner and other executivesExecutives are permitted to use the plane for business purposes. Mr. Hartman and Mr. Garner are also permitted toExecutives do not use the plane for purposes of commuting to work, provided that they pay forpersonal travel. If the income imputed
for tax purposes at Standard Industry Fare Level (“SIFL”) rates and are responsible for paying the associated taxes. Likewise, if the spouse, family member or guest of Mr. Hartman, Mr. Garner or another executiveExecutive is permitted to accompany an executiveExecutive on a flight or otherwise be on the plane, the corresponding executiveExecutive is responsible for the income imputed for tax purposes, as well as any associated taxes. There was no personal use or imputed incomePursuant to the policy, Mr. Hartman, Mr. Garner and other members of the Executive Team are each responsible for the usepayment of any tax on the corporate plane during 2019.
income imputed to them. CONMED does not pay any gross-up payment with respect to such taxes.Recoupment Policy
In the interest of further aligning the interests of the NEOs with those of our shareholders,stockholders, the Company’s Recoupment Policy allows the Committee to require any participant or former participant in the Executive Bonus Plan or recipient of performance-based equity awards in any of the prior three years to repay to the Company all or a portion of the amount received in connection with a fiscal year in which either (i) there was a recalculation of a financial or other performance metric related to the determination of a bonus award or performance-based equity award due to an error in the original calculation or (ii) there was a restatement of earnings for the Company due to material noncompliance with any financial reporting requirement under either GAAP or federal securities laws, other than as a result of changes to accounting policy, rules or regulation; and (iii) the restated earnings or corrected performance measurement would have (or likely would have) resulted in a smaller award than the amount actually received by the participant. A similar recoupment provision is extended to non-executives who participate in other Company incentive programs.
The Company intends to adopt a revised clawback policy regarding accounting restatements in accordance with the SEC’s adoption of new rules to implement Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 once such final rule is implemented by NYSE.Deductibility of Executive Compensation
Section 162(m) of the Code generally limits the tax deductibility of compensation (including performance-based compensation) in excess of $1,000,000 per year paid by a public company to its “covered employees.” TheWhile the Committee considers the tax and accounting consequences, including those stemming from changes to Section 162(m) of the Code, as one factor when making a decision regarding executive compensation.
Undercompensation, the recent tax legislation, for taxable years beginning after December 31, 2017, there is no longer an exception to the deductibility limit for qualifying “performance-based compensation” unless the compensation qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017 and not materially modified afterwards (the scope of which is currently uncertain). Also under the recent legislation, the definition of “covered employees” has been expanded to include a company’s chief financial officer, in addition to the chief executive officer and three other most highly paid executive officers. Any individual who has been a “covered employee” in any taxable year beginning after December 31, 2016 remains a covered employee in all future years.
The Committee continues to evaluate the changes to Section 162(m) and retains the ability to provide compensation that exceeds deductibility limits as it determines appropriate, including to recognize performance, meet market demands and retain key executives.
As a general matter, all Company employees are employed on an “at-will”“at-will” basis, and the Company does not enter into employment agreements except with respect to confidentiality, non-compete and non-solicitation provisions, and as may be customary in regions outside of the United States (as is the case with Mr. Beyer’s compensation arrangements, discussed below).
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2023 Proxy Statement | | | | 57 |
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Compensation Discussion and Analysis |
Mr. Hartman’s Compensation Arrangements
Effective November 9, 2014, the Company entered into a letter agreement with Mr. Hartman, outlining the terms of his employment as President and CEO of the Company (the “CEO Employment Letter”). The CEO Employment Letter was amended as of December 28, 2020. The CEO Employment Letter provided Mr. Hartman with a minimum base salary of $710,000 and a target bonus equal to 100% of his annual base salary. The CEO Employment Letter also provides that Mr. Hartman is subject to certain restrictive covenants, including confidentiality and non-disparagement covenants, and two-year post-termination restrictions on competition and solicitation of the Company’s customers and employees. Additionally, as outlined in the CEO Employment Letter, Mr. Hartman participates in the Executive Severance Plan as described below.
Mr. Hartman was awarded an equity grant on February 24, 2015 (“CEO Performance Award”) in the form of PSUs under the Amended and Restated 2015 Long-Term Incentive Plan. The CEO Performance Award provided for a target number of 100,000 PSUs, with the actual number of PSUs earned ranging from 0% to a maximum of 200% of target depending on the Company’s total shareholder return relative to the S&P 1500 Health Care Equipment Select Index over the performance period of January 1, 2015 to December 31, 2019:
|
| |
Relative Performance | Percentage of Target Units
Earned
|
+15.8% above index | 200% |
+11.0% above index | 150% |
+8.2% above index | 125% |
+5.7% above index | 100% |
+3.6% above index | 75% |
+2.0% above index | 50% |
Below +2.0% above index | 0% |
The PSUs were to be earned, in three separate tranches, subject to adjustment from 0% to 200% based on the Company’s performance as of each of the three vesting dates: (1) 20,000 PSUs (at target) on December 31, 2017, (2) 20,000 PSUs (at target) on December 31, 2018 and (3) 100,000 PSUs (at target) on December 31, 2019, less the number of PSUs paid out based on actual performance in respect of earlier vesting dates. Mr. Hartman did not earn any portion of the 20,000 PSUs as of December 31, 2018, or the 20,000 as of December 31, 2017.
In general, Mr. Hartman was required to remain employed through the applicable vesting date in order to receive payment in respect of earned PSUs.
Upon a “change in control” of the Company (as defined in the CEO Performance Award agreement), outstanding unvested PSUs were to be deemed to be earned based on the level of performance actually achieved through the change in control date.
The goal of the CEO Performance Award was to present Mr. Hartman with the opportunity to earn a superior payment for superior Company performance based on the Company’s total shareholder return relative to a peer index. The Company’s stock price performance was to be measured against total shareholder return over a five-year performance period, in order to motivate longer-term performance and provide incentives for Mr. Hartman to remain with the Company. The five-year period is balanced by opportunities to earn awards after the third and fourth years of the performance period to drive shorter-term business objectives.
Total shareholder return, compared to an index of our industry peers, was selected by the Compensation Committee as the CEO Performance Award’s sole performance measure in order to provide strong alignment with shareholder interests and permit multi-year performance measurement without the need to establish multi-year goals. A rigorous payout schedule was established, so that substantial outperformance was required in order to earn awards above target levels. No PSUs were to be earned unless the Company’s total shareholder return exceeds the S&P 1500 Health Care Equipment Select Index by at least 2.0%, and in order for Mr. Hartman to earn the maximum number of PSUs, our total shareholder return for the performance period was to exceed the index by 15.8%.
As of December 31, 2019, the Company’s actual performance based on total shareholder return during the performance period was 22.61% relative to the S&P 1500 Health Care Equipment Select Index (16.54%), or 6.07% above the threshold level required for Mr. Hartman to earn an award of the PSUs. Based on the outperformance, Mr. Hartman earned 104,000 shares based on28, 2020 amendment updated the terms of Mr. Hartman’s employment in connection with the Performance Award,designation of Largo, Florida as certified by the Compensation CommitteeCompany’s headquarters. As with several other Executive Officers, including Mr. Garner, the terms of employment were updated to note that the Company would provide an office for him near his residence for when he was not at the Largo headquarters, and to provide for Delaware as the source of January 31, 2020.
controlling law and the exclusive forum for any disputes concerning the employment terms.Mr. Beyer'sBeyer’s Service Agreement
Mr. Beyer and CONMED U.K. Limited entered into a Service Agreement, dated April 25, 2019, outlining the terms of his continued employment as President, International (the “Service Agreement”). The Service Agreement provides Mr. Beyer with a base salary of £319,000, as well as a monthly car allowance of £1,000. Mr. Beyer may also participate in CONMED U.K. Limited’s occupational pension scheme, to which CONMED U.K. Limited will make contributions of £10,000 per annum for each year Mr. Beyer participates. CONMED U.K. Limited will also pay Mr. Beyer a pension allowance of £69,382.34, which it reserves the right to vary or withdraw at any time. Mr. Beyer may be awarded discretionary bonuses from time to time and may also be eligible to participate in the Executive Severance Plan (as described below) and the CONMED Corporation Executive Bonus Plan (as described above), and may also receive certain medical, life and disability insurance benefits.
Either party may terminate Mr. Beyer’s employment under the Service Agreement on six months written notice. CONMED U.K. Limited may terminate the agreement with immediate effect by paying to Mr. Beyer, within 28 days of giving notice of such termination, all or the remaining part of Mr. Beyer’s base salary for the then unexpired period of notice. In such event, the Company may reduce the payments or benefits otherwise due to Mr. Beyer under the Executive Severance Plan to avoid duplication of payments or benefits. Upon such termination, the Company may require Mr. Beyer not to perform any services (or perform only
specified services) in accordance with garden leave policies applicable to employees in the U.K. Under the Service Agreement, Mr. Beyer is subject to certain restrictive covenants, including confidentiality covenants and restrictions on competition and solicitation of the Company’s customers and employees that range from six-months to one-year post-termination.
As a supplement to Mr. Beyer’s Service Agreement, in connection with Mr. Beyer assuming additional responsibilities for the U.S. Orthopedic business, the Company committed to provide Mr. Beyer with housing, a car and certain airfare to permit him to work in Largo, Florida for the Company’s benefit, rather than his home in the United Kingdom, as well as a tax gross-up to ensure that Mr. Beyer did not bear the costs for the taxable value that Mr. Beyer incurred as a result of assuming these responsibilities at the Company’s requests. Although the Company pays for these directly, the costs for these items are included in the “Other Compensation” column of the summary compensation table pursuant to SEC guidance with respect to perquisites. In addition, the Company provided Mr. Beyer with a supplemental salary in the United States of $10,000, to cover the estimated cost for health insurance premiums in the United States for Mr. Beyer, and his wife.
Executive Severance Plan
The Company maintains an executive severance plan (the “Executive Severance Plan”) in which all of the NEOs as of December 31, 20192022 participated. The CEO’s benefit under the Executive Severance Plan is two (2.0) times salary and the two-year average of the non-equity incentive plan compensation and discretionary bonus earned for a non-change in control involuntary termination and three (3.0) times salary and the three-year average of the non-equity incentive plan compensation and discretionary bonus earned for a change in control involuntary termination. The CFO'sCFO’s benefit under the plan is one and one-half (1.5) times salary and the two-year average of the non-equity incentive plan compensation and discretionary bonus earned for a non-change in control involuntary termination and two and one-half (2.5) times salary and the three-year average of the non-equity incentive plan compensation and discretionary bonus earned for a change in control involuntary termination.
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| 58 | | | | 2023 Proxy Statement |
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Compensation Discussion and Analysis |
Each other NEO’s severance benefit is one (1.0) times salary and the two-year average of the non-equity incentive plan compensation and discretionary bonus earned for a non-change in control involuntary termination without cause or for good reason and two (2.0) times salary and the three-year average of the non-equity incentive plan compensation and discretionary bonus earned level for a change in control involuntary termination without cause or for good reason. Benefits due to a participant under the Executive Severance Plan may be reduced or eliminated in the event that the participant receives duplicative termination payments or benefits under any other plan, program, policy, individually negotiated agreement or other arrangement.
For purposes of the Executive Severance Plan, “Cause” generally means the NEO’s willful and continued failure to substantially perform his or her duties or willfully engaging in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company or its affiliates. “Good Reason” generally includes any material and adverse change in the NEO’s duties, responsibilities, titles or offices with the Company, a material reduction in the rate of annual base salary or annual target bonus opportunity, or any requirement that the NEO be based more than 50 miles from the office where he or she is located. “Change
“Change in Control” generally means a change in the majority combined voting power of the Company (other than transactions involving related parties), the shareholdersstockholders approve a plan of complete liquidation or dissolution of the Company, or a sale of all or substantially all of the Company’s assets. Change in Control benefits apply for involuntary terminations without Cause or for Good Reason within the two (2) year period following a Change in Control. The Executive Severance Plan also contains certain restrictive covenants, including a non-disparagement covenant and one-year post-termination restrictions on competition and solicitation of the Company’s customers and employees.
The Compensation Committee periodically reviews the Executive Severance Plan as part of its overall review of the executive compensation program. No changes were made for 2019.2022.
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2023 Proxy Statement | | | | 59 |
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Compensation Discussion and Analysis |
Executive Compensation Best Practices
|
|
| Best Practices We Employ |
|
✔ Majority of NEO compensation tied to long-term performance |
|
✔ Equity awards require a double trigger for Change in Control vesting acceleration |
|
✔ Stock ownership guidelines of 4x salary for CEO, 3x for the CFO, and 1x for other NEOs |
|
✔ Caps on incentive plan payouts |
|
✔ Compensation Committee is comprised entirely of independent directors |
|
✔ Compensation Committee engages an independent consultant |
|
✔ Compensation Committee regularly meets in executive session without management present |
|
✔ Annual risk assessment of the compensation program |
|
✔ Robust holding requirements until minimum share ownership requirements are achieved |
|
✔ Minimum vesting schedule of at least 12 months for equity awards |
|
✔ Incentive program designs do not encourage excessive risk taking |
|
✔ The CEO is not present during any deliberations or voting of the Compensation Committee or Board regarding CEO compensation |
|
| Practices We Avoid |
|
✘ Hedging and pledging stock are prohibited |
|
✘ Our equity plan does not allow repricing of underwater options without stockholder approval |
|
✘ We do not provide executive perquisites other than international employees where such perquisites are common |
|
✘ Excise tax gross-ups are generally not permitted in our employment arrangements |
|
✘ We do not pay dividends on unvested equity awards |
|
✘ We do not guarantee bonus payments; each bonus requires a threshold of performance |
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| 60 | | | | 2023 Proxy Statement |
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
This Compensation Committee Report shall not be deemed to be incorporated by reference into any filing made by the Company under the Securities Act of 1933 or the Exchange Act, notwithstanding any general statement contained in any such filing incorporating this proxy statement by reference, except to the extent the Company incorporates such Report by specific reference.
The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
Submitted by the Compensation Committee,
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Brian Concannon (Chair) | | |
Jerome J. Lande Charles Farkas | | |
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Martha Goldberg Aronson (Chair) 2023 Proxy Statement | Brian Concannon |
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LaVerne Council | Charles M. Farkas |
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Jerome J. Lande | 61 |
SUMMARY COMPENSATION TABLE
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
Name and Principal Position | Year | | Salary1($) | | Bonus2 ($) | | Stock Awards3 ($) | | Option Awards4($) | | Non-Equity Incentive Plan Compensation5 ($) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | | All Other Compensation6 ($) | | Total |
| Curt R. Hartman – | 2019 | | $ | 842,489 |
| | $ | — |
| | $ | — |
| | $ | 4,136,000 |
| | $ | 1,065,900 |
| | $ | — |
| | $ | 135,871 |
| | $ | 6,180,260 |
|
| President & Chief | 2018 | | $ | 790,917 |
| | $ | — |
| | $ | — |
| | $ | 2,618,000 |
| | $ | 1,081,060 |
| | $ | — |
| | $ | 102,399 |
| | $ | 4,592,376 |
|
| Executive Officer | 2017 | | $ | 753,237 |
| | $ | — |
| | $ | — |
| | $ | 1,602,641 |
| | $ | 554,950 |
| | $ | — |
| | $ | 91,536 |
| | $ | 3,002,364 |
|
| | | | | | | | | | | | | | | | | |
|
|
| Todd W. Garner – | 2019 | | $ | 439,187 |
| | $ | 60,000 |
| | $ | 504,064 |
| | $ | 992,640 |
| | $ | 382,529 |
| | $ | — |
| | $ | 59,325 |
| | $ | 2,437,745 |
|
| Executive Vice President and Chief Financial Officer | 2018 | | $ | 423,390 |
| | $ | — |
| | $ | 404,880 |
| | $ | 571,680 |
| | $ | 377,363 |
| | $ | — |
| | $ | 74,430 |
| | $ | 1,851,743 |
|
| | | | | | | | | | | | | | | | | |
|
|
| Patrick J. Beyer – | 2019 | | $ | 415,796 |
| | $ | 50,000 |
| | $ | — |
| | $ | 1,158,080 |
| | $ | 331,908 |
| | $ | — |
| | $ | 129,637 |
| | $ | 2,085,421 |
|
| President, CONMED | 2018 | | $ | 384,710 |
| | $ | — |
| | $ | — |
| | $ | 852,720 |
| | $ | 273,551 |
| | $ | — |
| | $ | 115,232 |
| | $ | 1,626,213 |
|
International7 | 2017 | | $ | 392,966 |
| | $ | 23,713 |
| | $ | — |
| | $ | 573,990 |
| | $ | 156,523 |
| | $ | — |
| | $ | 79,183 |
| | $ | 1,226,375 |
|
| | | | | | | | | | | | | | | | | |
|
|
Nathan Folkert – Vice President & | 2019 | | $ | 371,500 |
| | $ | 25,000 |
| | $ | — |
| | $ | 661,760 |
| | $ | 202,278 |
| | $ | — |
| | $ | 28,204 |
| | $ | 1,288,742 |
|
| General Manager, | 2018 | | $ | 362,839 |
| | $ | — |
| | $ | — |
| | $ | 523,600 |
| | $ | 241,514 |
| | $ | — |
| | $ | 24,128 |
| | $ | 1,152,081 |
|
| U.S. Orthopedics | 2017 | | $ | 356,446 |
| | $ | — |
| | $ | 67,088 |
| | $ | 362,520 |
| | $ | 111,181 |
| | $ | — |
| | $ | 22,368 |
| | $ | 919,603 |
|
| | | | | | | | | | | | | | | | | |
|
|
| Stanley W. (Bill) Peters – | 2019 | | $ | 371,833 |
| | $ | 35,000 |
| | $ | — |
| | $ | 661,760 |
| | $ | 243,437 |
| | $ | — |
| | $ | 208,394 |
| | $ | 1,520,424 |
|
Vice President & General Manager, | 2018 | | $ | 359,207 |
| | $ | — |
| | $ | — |
| | $ | 478,720 |
| | $ | 266,599 |
| | $ | — |
| | $ | 112,100 |
| | $ | 1,216,626 |
|
| U.S. Advanced Surgical | 2017 | | $ | 355,701 |
| | $ | — |
| | $ | — |
| | $ | 332,310 |
| | $ | 110,817 |
| | $ | — |
| | $ | 39,653 |
| | $ | 838,481 |
|
GAAP to Non-GAAP Reconciliations
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | Reconciliation of Reported Net Income (Loss) to Adjusted Net Earnings (in thousands, except per share amounts, unaudited) Year Ended December 31, 2022 | |
| | | | | | | | | | | |
| | | Gross
Profit | | | Selling &
Administrative
Expense | | | Operating
Income | | | Interest
Expense | | | Other
Expense | | | Tax
Expense/
(Benefit) | | | Effective
Tax Rate | | | Net
Income
(Loss) | | | Basic EPS | | | Adjustments | | | Diluted
EPS | |
| | | | | | | | | | | |
As reported | | $ | 571,245 | | | $ | 454,039 | | | $ | 70,054 | | | $ | 28,905 | | | $ | 112,011 | | | $ | 9,720 | | | | -13.7 | % | | $ | (80,582 | ) | | | | | | $ | — | | | $ | (80,582 | ) |
| | | | | | | | | | | |
% of sales | | | 54.6 | % | | | 43.4 | % | | | 6.7 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
EPS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (2.68 | ) | | | | | | $ | (2.68 | ) |
| | | | | | | | | | | |
Shares | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 30,040 | | | | — | | | | 30,040 | |
| | | | | | | | | | | |
Acquisition and integration costs | | | 4,540 | | | | (10,063 | ) | | | 14,603 | | | | — | | | | — | | | | 46,965 | | | | | | | | (32,362 | ) | | | | | | | | | | | | |
| | | | | | | | | | | |
Legal matters | | | — | | | | (775 | ) | | | 775 | | | | — | | | | — | | | | (462 | ) | | | | | | | 1,237 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Restructuring and related costs | | | 1,955 | | | | (786 | ) | | | 2,741 | | | | — | | | | — | | | | 6,029 | | | | | | | | (3,288 | ) | | | | | | | | | | | | |
| | | | | | | | | | | |
Software implementation costs | | | — | | | | (6,769 | ) | | | 6,769 | | | | — | | | | — | | | | 14,889 | | | | | | | | (8,120 | ) | | | | | | | | | | | | |
| | | | | | | | | | | |
Contingent consideration fair value adjustment | | | — | | | | (2,518 | ) | | | 2,518 | | | | — | | | | — | | | | 5,538 | | | | | | | | (3,020 | ) | | | | | | | | | | | | |
| | | | | | | | | | | |
Convertible notes premium on extinguishment | | | — | | | | — | | | | — | | | | — | | | | (103,125 | ) | | | (61,521 | ) | | | | | | | 164,646 | | | | | | | | | | | | | |
Change in fair value of convertible notes hedges upon settlement | | | — | | | | — | | | | — | | | | — | | | | (5,460 | ) | | | (3,257 | ) | | | | | | | 8,717 | | | | | | | | | | | | | |
Loss on early extinguishment of debt | | | — | | | | — | | | | — | | | | — | | | | (3,426 | ) | | | (2,044 | ) | | | | | | | 5,470 | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | $ | 577,740 | | | $ | 433,128 | | | $ | 97,460 | | | $ | 28,905 | | | $ | — | | | $ | 15,857 | | | | | | | $ | 52,698 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Adjusted gross profit % | | | 55.3 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Amortization | | $ | 6,000 | | | | (27,791 | ) | | | 33,791 | | | | (4,910 | ) | | | — | | | | 9,381 | | | | | | | | 29,320 | | | | | | | | | | | | | |
As adjusted | | | | | | $ | 405,337 | | | $ | 131,251 | | | $ | 23,995 | | | $ | — | | | $ | 25,238 | | | | 23.5 | % | | $ | 82,018 | | | | | | | $ | 2,978 | | | $ | 84,996 | |
% of sales | | | | | | | 38.8 | % | | | 12.6 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted Diluted EPS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2.65 | |
Shares | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 30,040 | | | | 2,656 | | | | 32,696 | |
Convertible note hedges | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (578 | ) |
Adjusted Diluted Shares | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 32,118 | |
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| 62 | | | | 2023 Proxy Statement |
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|
GAAP to Non-GAAP Reconciliations |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | Reconciliation of Reported Net Income to Adjusted Net Earnings (in thousands, except per share amounts, unaudited) Year Ended December 31, 2021 | |
| | | | | | | | | | | |
| | | Gross
Profit | | | Selling &
Administrative
Expense | | | Operating
Income | | | Interest
Expense | | | Other
Expense | | | Tax
Expense | | | Effective
Tax Rate | | | Net
Income | | | Basic EPS | | | Adjustments | | | Diluted
EPS | |
| | | | | | | | | | | |
As reported | | $ | 568,036 | | | $ | 414,754 | | | $ | 109,717 | | | $ | 35,485 | | | $ | 1,127 | | | $ | 10,563 | | | | 14.4 | % | | $ | 62,542 | | | | | | | $ | — | | | $ | 62,542 | |
| | | | | | | | | | | |
% of sales | | | 56.2 | % | | | 41.0 | % | | | 10.9 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
EPS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2.14 | | | | | | | $ | 1.94 | |
| | | | | | | | | | | |
Shares | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 29,162 | | | | 3,054 | | | | 32,216 | |
| | | | | | | | | | | |
Restructuring and related costs | | | — | | | | (414 | ) | | | 414 | | | | — | | | | — | | | | 109 | | | | | | | | 305 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Loss on early extinguishment of debt | | | — | | | | — | | | | — | | | | — | | | | (1,127 | ) | | | 281 | | | | | | | | 846 | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | $ | 568,036 | | | $ | 414,340 | | | $ | 110,131 | | | $ | 35,485 | | | $ | — | | | $ | 10,953 | | | | | | | $ | 63,693 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Adjusted gross profit % | | | 56.2 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Amortization | | $ | 6,000 | | | | (27,133 | ) | | | 33,133 | | | | (13,943 | ) | | | — | | | | 11,394 | | | | | | | | 35,682 | | | | | | | | | | | | | |
| | | | | | | | | | | |
As adjusted | | | | | | $ | 387,207 | | | $ | 143,264 | | | $ | 21,542 | | | $ | — | | | $ | 22,347 | | | | 18.4 | % | | $ | 99,375 | | | | | | | $ | — | | | $ | 99,375 | |
| | | | | | | | | | | |
% of sales | | | | | | | 38.3 | % | | | 14.2 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Adjusted Diluted EPS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 3.21 | |
Shares | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 29,162 | | | | 3,054 | | | | 32,216 | |
Convertible note hedges | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,273 | ) |
Adjusted Diluted Shares | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 30,943 | |
| | | | |
| | |
2023 Proxy Statement | | | | 63 |
|
|
GAAP to Non-GAAP Reconciliations |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | Reconciliation of Reported Net Income to Adjusted Net Earnings (in thousands, except per share amounts, unaudited) Year Ended December 31, 2020 | |
| | | | | | | | | | | |
| | | Gross
Profit | | | Selling &
Administrative
Expense | | | Operating
Income | | | Interest
Expense | | | Other
Expense | | | Tax
Expense/
(Benefit) | | | Effective
Tax Rate | | | Net
Income | | | Basic
EPS | | | Adjustments | | | Diluted
EPS | |
| | | | | | | | | | | |
As reported | | $ | 460,300 | | | $ | 373,817 | | | $ | 46,010 | | | $ | 44,052 | | | $ | 355 | | | $ | (7,914 | ) | | | -493.9 | % | | $ | 9,517 | | | | | | | $ | — | | | $ | 9,517 | |
| | | | | | | | | | | |
% of sales | | | 53.4 | % | | | 43.3 | % | | | 5.3 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
EPS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 0.33 | | | | | | | $ | 0.32 | |
| | | | | | | | | | | |
Shares | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 28,581 | | | | 883 | | | | 29,464 | |
| | | | | | | | | | | |
Plant underutilization costs | | | 6,586 | | | | — | | | | 6,586 | | | | — | | | | — | | | | 739 | | | | | | | | 5,847 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Product rationalization costs | | | 2,169 | | | | (2,095 | ) | | | 4,264 | | | | — | | | | — | | | | 460 | | | | | | | | 3,804 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Restructuring and related costs | | | 1,087 | | | | (4,782 | ) | | | 5,869 | | | | — | | | | — | | | | 1,807 | | | | | | | | 4,062 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Acquisition and integration costs | | | 2,820 | | | | (1,192 | ) | | | 4,012 | | | | — | | | | — | | | | 888 | | | | | | | | 3,124 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Manufacturing consolidation costs | | | 3,993 | | | | — | | | | 3,993 | | | | — | | | | — | | | | 485 | | | | | | | | 3,508 | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | $ | 476,955 | | | $ | 365,748 | | | $ | 70,734 | | | $ | 44,052 | | | $ | 355 | | | $ | (3,535 | ) | | | | | | $ | 29,862 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Adjusted gross profit % | | | 55.3 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Amortization | | $ | 6,000 | | | | (27,945 | ) | | | 33,945 | | | | (13,414 | ) | | | — | | | | 13,037 | | | | | | | | 34,322 | | | | | | | | | | | | | |
| | | | | | | | | | | |
As adjusted | | | | | | $ | 337,803 | | | $ | 104,679 | | | $ | 30,638 | | | $ | 355 | | | $ | 9,502 | | | | 12.9 | % | | $ | 64,184 | | | | | | | $ | — | | | $ | 64,184 | |
| | | | | | | | | | | |
% of sales | | | | | | | 39.2 | % | | | 12.1 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Adjusted Diluted EPS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2.18 | |
| | | | | | | | | | | | |
| |
| | | 2022 Sales Summary (in millions, unaudited) | |
| | | |
| | | Net Sales,
As
Reported | | | Impact of
Foreign
Currency | | | Net Sales,
Fx
Adjusted | |
Net Sales | | $ | 1,045.5 | | | $ | 13.2 | | | $ | 1,058.7 | |
Refer to our 2022 Annual Report on Form 10-K filing with the SEC, as well as our Form 8-K filings with the SEC on February 2, 2023, January 26, 2022 and January 27, 2021 for additional information regarding our non-GAAP measures.
| | | | |
| | |
| 64 | | | | 2023 Proxy Statement |
Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | |
Name and
Principal Position | | Year | | | Salary1
($) | | | Bonus2
($) | | | Stock
Awards3
($) | | | Option
Awards4
($) | | | Non-Equity
Incentive Plan
Compensation5
($) | | | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($) | | | All Other
Compensation6
($) | | | Total | |
| | | | | | | | | |
Curt R. Hartman – Chair of the Board, President & Chief Executive Officer | | | 2022 | | | $ | 946,055 | | | $ | 0 | | | $ | 0 | | | $ | 6,340,000 | | | $ | 425,106 | | | $ | 0 | | | $ | 124,334 | | | $ | 7,835,495 | |
| | | 2021 | | | $ | 918,120 | | | $ | 0 | | | $ | 0 | | | $ | 7,376,003 | | | $ | 957,857 | | | $ | 0 | | | $ | 122,500 | | | $ | 9,374,480 | |
| | | 2020 | | | $ | 888,324 | | | $ | 0 | | | $ | 0 | | | $ | 4,674,000 | | | $ | 766,630 | | | $ | 0 | | | $ | 132,666 | | | $ | 6,461,620 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Todd W. Garner – Executive Vice President and Chief Financial Officer | | | 2022 | | | $ | 521,653 | | | $ | 30,000 | | | $ | 0 | | | $ | 2,789,600 | | | $ | 171,124 | | | $ | 0 | | | $ | 60,702 | | | $ | 3,573,079 | |
| | | 2021 | | | $ | 498,355 | | | $ | 0 | | | $ | 0 | | | $ | 1,906,967 | | | $ | 354,782 | | | $ | 0 | | | $ | 55,308 | | | $ | 2,815,412 | |
| | | 2020 | | | $ | 478,833 | | | $ | 0 | | | $ | 0 | | | $ | 1,208,400 | | | $ | 283,953 | | | $ | 0 | | | $ | 63,718 | | | $ | 2,034,904 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Patrick J. Beyer – President, CONMED International & Global Orthopedics7 | | | 2022 | | | $ | 501,460 | | | $ | 58,781 | | | $ | 0 | | | $ | 2,789,600 | | | $ | 165,318 | | | $ | 0 | | | $ | 497,612 | | | $ | 4,012,771 | |
| | | 2021 | | | $ | 537,002 | | | $ | 0 | | | $ | 0 | | | $ | 1,978,928 | | | $ | 344,447 | | | $ | 0 | | | $ | 361,841 | | | $ | 3,222,218 | |
| | | 2020 | | | $ | 477,334 | | | $ | 0 | | | $ | 0 | | | $ | 1,254,000 | | | $ | 283,393 | | | $ | 0 | | | $ | 171,728 | | | $ | 2,186,455 | |
| | | | | | | | | |
Stanley W. (Bill) Peters – Vice President & General Manager, U.S. Advanced Surgical | | | 2022 | | | $ | 434,015 | | | $ | 25,000 | | | $ | 0 | | | $ | 1,775,200 | | | $ | 124,179 | | | $ | 0 | | | $ | 64,923 | | | $ | 2,423,317 | |
| | | 2021 | | | $ | 398,684 | | | $ | 0 | | | $ | 0 | | | $ | 1,115,396 | | | $ | 226,243 | | | $ | 0 | | | $ | 56,117 | | | $ | 1,796,440 | |
| | | 2020 | | | $ | 386,468 | | | $ | 0 | | | $ | 0 | | | $ | 706,800 | | | $ | 185,648 | | | $ | 0 | | | $ | 48,635 | | | $ | 1,327,551 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Heather L. Cohen – Executive Vice President & Chief Human Resources and Legal Officer | | | 2022 | | | $ | 408,775 | | | $ | 0 | | | $ | 0 | | | $ | 1,673,760 | | | $ | 111,056 | | | $ | 0 | | | $ | 41,176 | | | $ | 2,234,767 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Salary reflects actual salary earned. Salary levels are adjusted annually, typically in March. Accordingly, any salary levels listed in the CD&A may not match amounts actually paid during the course of the year. In addition, the Company paid employees on a weekly basis (in arrears) until 2017 transitioning to a semi-monthly (current) payroll cycle in January 2017. As a result of the change in the payroll cycle, employees, including our NEOs, were paid for the last week of December 2016 and also received a semi-monthly salary in January 2017, resulting in 53 weeks of base salary pay in 2017. |
| |
| (2) | Bonus reflects the 2019 2022 one-time discretionary payments as further described in CD&A under the heading "Discretionary Bonuses"“Discretionary Bonuses”. There were no discretionary bonus payments made in 2021 or 2020. |
| |
| (3) | Amounts in this column reflect the grant date fair value of RSUs in accordance with Compensation – Stock Compensation Topic 718 of FASB ASC. The assumptions made in the valuation of these awards are set forth in Note 9,10, (“Shareholders’ Equity”), to the Consolidated Financial Statements in Item 15 to the Company’s 20192022 Annual Report on Form 10-K (available at http:https://www.conmed.com)www.conmed.com/en/about-us/investor-relations/investor-information/investor-relations). |
| |
| (4) | Amounts in this column reflect the grant date fair value of stock options in accordance with Compensation – Stock Compensation Topic 718 of FASB ASC. The assumptions made in the valuation of these awards are set forth in Note 9,10, (“Shareholders’ Equity”), to the Consolidated Financial Statements in Item 15 to the Company’s 20192022 Annual Report on Form 10-K. |
| |
| (5) | Non-Equity Incentive Plan Compensation represents earningsamounts earned under the Company’s Executive Bonus Plan for 2022 and is calculated as a percentage of each NEO’s Salary (as defined in the CD&A).salary. See “Executive Bonus Plan Performance Goals for 2019”2022” on page 4951 in the CD&A for an additional discussion of 20192022 annual incentive payments under the Company’s Executive Bonus Plan. |
| | | | |
| | |
2023 Proxy Statement | | | | 65 |
|
|
Summary Compensation Table |
| (6) | All 20192022 Other Compensation consists of the following: |
| | | | | | | | | | | | | | | | |
| | | 401(k) Employer
Contributions(a) | | | Benefit
Restoration
Plan Employer
Contributions(b) | | | Certain Other
Payments(c) | | | Total All Other
Compensation | |
| | | | |
Curt R. Hartman | | $ | 20,500 | | | $ | 103,398 | | | $ | 436 | | | $ | 124,334 | |
| | | | |
Todd W. Garner | | $ | 20,500 | | | $ | 40,097 | | | $ | 105 | | | $ | 60,702 | |
| | | | |
Patrick J. Beyer | | $ | 0 | | | $ | 0 | | | $ | 497,612 | | | $ | 497,612 | |
| | | | |
Stanley W. (Bill) Peters | | $ | 20,500 | | | $ | 27,468 | | | $ | 16,955 | | | $ | 64,923 | |
| | | | |
Heather L. Cohen | | $ | 15,062 | | | $ | 26,019 | | | $ | 95 | | | $ | 41,176 | |
|
| | | | | | | | | | | | | | | |
| | 401(k) Employer Contributions(a) | | Benefit Restoration Plan Employer Contributions(b) | | Certain Other Payments(c) | | Total All Other Compensation |
| Curt R. Hartman | $ | 19,000 |
| | $ | 116,871 |
| | $ | — |
| | $ | 135,871 |
|
| Todd W. Garner | $ | 19,000 |
| | $ | 40,325 |
| | $ | — |
| | $ | 59,325 |
|
| Patrick J. Beyer | $ | — |
| | $ | — |
| | $ | 129,637 |
| | $ | 129,637 |
|
| Nathan Folkert | $ | 19,000 |
| | $ | — |
| | $ | 9,204 |
| | $ | 28,204 |
|
| Stanley W. (Bill) Peters | $ | 11,200 |
| | $ | 33,720 |
| | $ | 163,474 |
| | $ | 208,394 |
|
| |
| (a) | Amounts represent 20192022 Company contributions to employee 401(k) plan accounts on the same terms offered to all other employees. |
| |
| (b) | Amounts represent 20192022 Company contributions to the Benefits Restoration Plan (“BRP”). |
| |
| (c) | For Mr. Beyer, other payments include retirement plan payments of $113,873$140,746 for participation in a program designed to compensate him in a similar fashion as the BRP in accordance with practices in the UK, and payments of $15,765$14,395 in respect of his U.K. car allowance. For Mr. Folkert, such payments include $9,204allowance as provided for in his Service Agreement and $5,191 in costs associated with attending a sales force award trip in 2019.2022. Also included in the ‘Certain Other Payments’ column for Mr. Beyer to manage the U.S. Orthopedic business are $90,013 representing costs associated with personal air travel, $71,250 representing the rental cost of a Company-provided apartment, a supplemental payment of $10,000 to cover the projected cost for health insurance under standard employees plans made available to employees in the United States, $8,600 for the cost of a leased car that the Company provides for Mr. Beyer’s use in Largo, Florida and $157,327 related to a federal tax gross-up on the portion of certain other payments deemed taxable in the U.S.. For Mr. Peters, such payments include relocation expenses of $154,871 in connection with his relocation to Denver, Colorado and $7,424included $16,423 in costs associated with attending a sales force award trip in 2019.2022. All other compensation does not include the costs for health insurance, long-term disability insurance, life insurance and other benefits generally available to other employees on the same terms as those offered to the officers listed above. As disclosed in the CD&A, Mr. Hartman, Mr. Garner and Ms. Cohen had imputed income as a result of their spouse, family member or guests accompanying them on business flights. As there was no incremental cost to the Company for such flights, there is no incremental value for perquisite purposes included in the ‘Other Compensation’ column. |
| |
| (7) | As noted above at page 37, Mr. Beyer assumed additional responsibilities for the US Orthopedic Business, including Research & Development, in October of 2020. His salary was increased as of October 2020 by 12%, and again in 2021 by 4%. Consequently, the base salary figures on page 37 do not correspond to the actual amounts paid In the Summary Compensation Table. Mr. Beyer is located in the U.K., and, while the amounts shown in this table are expressed in U.S. dollars, all of his cash compensation is paid in British pounds. This was converted to U.S. dollars using the spot exchange rates as of December 31, 2019,30, 2022, December 31, 20182021 and December 29, 2017,31, 2020, respectively, (the last business day of the year) of £0.761, £0.785£0.834, £0.743 and £0.738£0.735 to U.S. $1.00. If we had converted Mr. Beyer’s 20192022 total compensation at the December 31, 20182021 spot exchange rate, his total compensation would have been $2,058,605.$4,120,827. |
| | | | |
| | |
| 66 | | | | 2023 Proxy Statement |
GRANTS OF PLAN-BASED AWARDS
Grants of Plan-Based Awards
The table below summarizes the estimated cash awards under the Executive Bonus Plan as well as equity compensation granted during 2019.2022. Information regarding the terms of these awards can be found under the headings “Executive Bonus Plan” and “Annual Equity“Equity Compensation” in the CD&A.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | (k) | | (l) |
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards1 | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | | | | | | |
| Name | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | All Other Stock Awards: Number of Shares of Stock or Units (#)2 | | All Other Option Awards: Number of Securities Underlying Options (#)2 | | Exercise or Base Price of Option Awards ($/sh) | | Grant Date Fair Value of Stock and Option Awards ($)3 |
Curt R. Hartman | | 3/1/2019 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 200,000 |
| | $ | 78.76 |
| | $ | 4,136,000 |
|
| | N/A | | $ | 586,500 |
| | $ | 850,000 |
| | $ | 1,700,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| Todd W. Garner | | 3/1/2019 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 6,400 |
| | — |
| | — |
| | $ | 504,064 |
|
| | 3/1/2019 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 48,000 |
| | 78.76 |
| | 992,640 |
|
| | N/A | | $ | 167,408 |
| | $ | 309,400 |
| | $ | 618,800 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Patrick J. Beyer5 | | 3/1/2019 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 56,000 |
| | $ | 78.76 |
| | $ | 1,158,080 |
|
| | N/A | | $ | 187,955 |
| | $ | 272,399 |
| | $ | 544,798 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| Nathan Folkert | | 3/1/2019 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 32,000 |
| | $ | 78.76 |
| | $ | 661,760 |
|
| | N/A | | $ | 142,113 |
| | $ | 205,150 |
| | $ | 410,300 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| Stanley W. (Bill) Peters | | 3/1/2019 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 32,000 |
| | $ | 78.76 |
| | $ | 661,760 |
|
| | N/A | | $ | 142,494 |
| | $ | 205,700 |
| | $ | 411,400 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
(a) | | (b) | | | (c) | | | (d) | | | (e) | | | | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | | | (k) | | | (l) | |
| | | | | | | | | |
| | | | | | Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards1 | | | | | | Estimated Future Payouts
Under Equity Incentive
Plan Awards | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Name | | Grant Date | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)2 | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)2 | | | Exercise
or Base
Price of
Option
Awards
($/sh)3 | | | Grant Date
Fair Value
of Stock
and Option
Awards
($)4 | |
| | | | | | | | | | | | |
Curt R. Hartman | | | 3/1/2022 | | | | — | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | 125,000 | | | $ | 144.55 | | | $ | 6,340,000 | |
| | | N/A | | | $ | 209,000 | | | $ | 1,045,000 | | | $ | 1,254,000 | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | |
Todd W. Garner | | | 3/1/2022 | | | | — | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | 55,000 | | | $ | 144.55 | | | $ | 2,789,600 | |
| | | N/A | | | $ | 84,132 | | | $ | 420,660 | | | $ | 504,792 | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | |
Patrick J. Beyer5 | | | 3/1/2022 | | | | — | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | 55,000 | | | $ | 144.55 | | | $ | 2,789,600 | |
| | | N/A | | | $ | 75,821 | | | $ | 379,104 | | | $ | 454,924 | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | |
Stanley (Bill) W. Peters | | | 3/1/2022 | | | | — | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | 35,000 | | | $ | 144.55 | | | $ | 1,775,200 | |
| | | N/A | | | $ | 57,290 | | | $ | 286,450 | | | $ | 343,846 | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | |
Heather L. Cohen | | | 3/1/2022 | | | | — | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | 33,000 | | | $ | 144.55 | | | $ | 1,673,760 | |
| | | N/A | | | $ | 54,600 | | | $ | 273,000 | | | $ | 327,000 | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| |
| (1) | Non-Equity Incentive Compensation represents earnings under the Company’s Executive Bonus Plan. The threshold, target and maximum compensation for all NEOs is a percentage of Salary (as defined in the CD&A) atNEO’s salary on December 31, 2019.2022. The compensation is based on financial factors as well as individual goals as further described in the Executive“Executive Bonus Plan section of the CD&A.Performance Goals for 2022” on page 51. During 2019,2022, Mr. Hartman, Mr. Garner, Mr. Beyer, Mr. FolkertPeters and Mr. PetersMs. Cohen earned non-equity incentive compensation equal to 125%45%, 87%33%, 79%33%, 54%28% and 65%26%, respectively, of their base salaries. |
| |
| (2) | RSU awards granted as of March 1, 2019 vest annually over a period of four years. The amounts shown in column (j) represent the total stock options awarded to the NEOs. Stock option awards granted as of March 1, 20192022 for all NEOs vest annually over a period of five years. |
| |
| (3) | Represents the closing market price of a share of common stock on the date of the grant of the option award. |
| (4) | Amounts in this column reflect the grant date fair value of RSUs and stock options in accordance with Compensation – Stock Compensation Topic 718 of FASB ASC. The assumptions made in the valuation of these awards are set forth in Note 9,10, (“Shareholders’ Equity”), to the Consolidated Financial Statements in Item 15 to the Company’s 20192022 Annual Report on Form 10-K. |
| |
(4) | During 2019, all NEOs earned RSUs and/or stock options as reported in the “Stock Awards” and “Option Awards” columns of the Summary Compensation Table. |
| |
| (5) | Mr. Beyer is located in the U.K., and, while the amounts shown in this table are expressed in U.S. dollars, his non-equity incentive plan compensation is paid in British pounds. This was converted to U.S. dollars using the spot exchange rate as of December 31, 201930, 2022 (the last business day of the year) of £0.761£0.834 to U.S. $1.00. |
Material terms related to the NEOs’ compensation are described in the CD&A, footnotes to the Summary Compensation Table, Grants of Plan-Based Awards table and under the section “Potential Payments on Termination or Change-in-Control”.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | (b) | | (c) | | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | | (j) | |
| | | Option Awards4 | | Stock Awards | |
| Name | | Grant Date | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#)2 | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#)3 | | Market Value of Shares or Units of Stock That Have Not Vested ($)5 | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Yet Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |
| Curt R. Hartman | | 2/24/2015 | | — |
| | | — |
| | — |
| | — |
| | — |
| | — |
| | 104,000 |
| 1 | | $ | 11,630,320 |
| |
| | 2/27/2015 | | 118,640 |
| | | 29,660 |
| |
| $51.30 |
| | 2/27/2025 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2016 | | — |
| | | — |
| | — |
| | — |
| | 2,250 |
| |
| $251,618 |
| | — |
| | | — |
| |
| | 3/1/2016 | | 102,000 |
| | | 68,000 |
| |
| $39.87 |
| | 3/1/2026 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2017 | | 63,660 |
| | | 95,490 |
| |
| $41.93 |
| | 3/1/2027 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2018 | | 35,000 |
| | | 140,000 |
| |
| $59.96 |
| | 3/1/2028 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2019 | | — |
| | | 200,000 |
| |
| $78.76 |
| | 3/1/2029 |
| | — |
| | — |
| | — |
| | | — |
| |
| | | | | |
| | | |
| | |
| | |
| | |
| | |
| | |
| | | |
| |
| Todd W. Garner | | 1/2/2018 | | — |
| | | — |
| | — |
| | — |
| | 6,000 |
| |
| $670,980 |
| | — |
| | | — |
| |
| | 1/2/2018 | | 9,600 |
| | | 38,400 |
| |
| $50.61 |
| | 1/2/2028 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2019 | | — |
| | | — |
| | — |
| | — |
| | 6,400 |
| |
| $715,712 |
| | — |
| | | — |
| |
| | 3/1/2019 | | — |
| | | 48,000 |
| |
| $78.76 |
| | 3/1/2029 |
| | — |
| | — |
| | — |
| | | — |
| |
| | | | | |
| | | |
| | |
| | |
| | |
| | |
| | |
| | | |
| |
| Patrick J. Beyer | | 2/27/2015 | | 40,560 |
| | | 10,140 |
| |
| $51.30 |
| | 2/27/2025 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2016 | | — |
| | | — |
| | — |
| | — |
| | 725 |
| |
| $81,077 |
| | — |
| | | — |
| |
| | 3/1/2016 | | 33,180 |
| | | 22,120 |
| |
| $39.87 |
| | 3/1/2026 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2017 | | 22,800 |
| | | 34,200 |
| |
| $41.93 |
| | 3/1/2027 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2018 | | 11,400 |
| | | 45,600 |
| |
| $59.96 |
| | 3/1/2028 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2019 | | — |
| | | 56,000 |
| |
| $78.76 |
| | 3/1/2029 |
| | — |
| | — |
| | — |
| | | — |
| |
| | | | | |
| | | |
| | |
| | |
| | |
| | |
| | |
| | | |
| |
| Nathan Folkert | | 3/1/2016 | | — |
| | | — |
| | — |
| | — |
| | 500 |
| |
| $55,915 |
| | — |
| | | — |
| |
| | 3/1/2016 | | 11,207 |
| | | 15,200 |
| |
| $39.87 |
| | 3/1/2026 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2017 | | — |
| | | — |
| | — |
| | — |
| | 800 |
| |
| $89,464 |
| | — |
| | | — |
| |
| | 3/1/2017 | | 14,104 |
| | | 21,600 |
| |
| $41.93 |
| | 3/1/2027 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2018 | | 7,000 |
| | | 28,000 |
| |
| $59.96 |
| | 3/1/2028 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2019 | | — |
| | | 32,000 |
| |
| $78.76 |
| | 3/1/2029 |
| | — |
| | — |
| | — |
| | | — |
| |
| | | | | |
| | | |
| | |
| | |
| | |
| | |
| | |
| | | |
| |
Stanley W. (Bill) Peters | | 2/27/2015 | | 24,000 |
| | | 6,000 |
| |
| $51.30 |
| | 2/27/2025 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2016 | | — |
| | | — |
| | — |
| | — |
| | 425 |
| |
| $47,528 |
| | — |
| | | — |
| |
| | 3/1/2016 | | 19,620 |
| | | 13,080 |
| |
| $39.87 |
| | 3/1/2026 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2017 | | 13,200 |
| | | 19,800 |
| |
| $41.93 |
| | 3/1/2027 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2018 | | 6,400 |
| | | 25,600 |
| |
| $59.96 |
| | 3/1/2028 |
| | — |
| | — |
| | — |
| | | — |
| |
| | 3/1/2019 | | — |
| | | 32,000 |
| |
| $78.76 |
| | 3/1/2029 |
| | — |
| | — |
| | — |
| | | — |
| |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | |
(1) | Mr. Hartman was granted 100,000 PSUs on February 24, 2015. As of December 31, 2019, as disclosed in the CD&A, 104,000 shares were earned but not vested as vesting did not occur until certification by the Compensation Committee which took place on January 31, 2020. | |
2023 Proxy Statement | | | | 67 |
Outstanding Awards at Fiscal Year End
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
(a) | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | | | | (g) | | | (h) | | | (i) | | | (j) | |
| | | | |
| | | Option Awards3 | | | | | | Stock Awards | |
| | | | | | | | | | | |
Name | | Grant Date | | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)1 | | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | | | | Number
of
Shares
or
Units of
Stock
That
Have Not
Vested
(#)2 | | | Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)4 | | | All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)2 | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That Have Not
Vested
($) | |
| | | | | | | | | | |
Curt R. Hartman | | | 2/27/2015 | | | | 148,300 | | | | — | | | $ | 51.30 | | | | 2/27/2025 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2017 | | | | 96,650 | | | | — | | | $ | 41.93 | | | | 3/1/2027 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2018 | | | | 140,000 | | | | 35,000 | | | $ | 59.96 | | | | 3/1/2028 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2019 | | | | 120,000 | | | | 80,000 | | | $ | 78.76 | | | | 3/1/2029 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/2/2020 | | | | 82,000 | | | | 123,000 | | | $ | 97.69 | | | | 3/2/2030 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2021 | | | | 34,850 | | | | 139,400 | | | $ | 122.55 | | | | 3/1/2031 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | |
| | | 3/1/2022 | | | | — | | | | 125,000 | | | $ | 144.55 | | | | 3/1/2032 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | |
Todd W. Garner | | | 1/2/2018 | | | | 25,500 | | | | 9,600 | | | $ | 50.61 | | | | 1/2/2028 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2019 | | | | — | | | | — | | | | — | | | | — | | | | | | | | 1,600 | | | $ | 141,824 | | | | — | | | | — | |
| | | 3/1/2019 | | | | 28,800 | | | | 19,200 | | | $ | 78.76 | | | | 3/1/2029 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/2/2020 | | | | 21,200 | | | | 31,800 | | | $ | 97.69 | | | | 3/2/2030 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2021 | | | | 9,010 | | | | 36,040 | | | $ | 122.55 | | | | 3/1/2031 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2022 | | | | — | | | | 55,000 | | | $ | 144.55 | | | | 3/1/2032 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | |
Patrick J. Beyer | | | 3/1/2017 | | | | 57,000 | | | | — | | | $ | 41.93 | | | | 3/1/2027 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2018 | | | | 45,600 | | | | 11,400 | | | $ | 59.96 | | | | 3/1/2028 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2019 | | | | 33,600 | | | | 22,400 | | | $ | 78.76 | | | | 3/1/2029 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/2/2020 | | | | 22,000 | | | | 33,000 | | | $ | 97.69 | | | | 3/2/2030 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2021 | | | | 9,350 | | | | 37,400 | | | $ | 122.55 | | | | 3/1/2031 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | |
| | | 3/1/2022 | | | | — | | | | 55,000 | | | $ | 144.55 | | | | 3/1/2032 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | |
Stanley W. (Bill) Peters | | | 2/27/2015 | | | | 30,000 | | | | — | | | $ | 51.30 | | | | 2/27/2025 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2017 | | | | 17,500 | | | | — | | | $ | 41.93 | | | | 3/1/2027 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2018 | | | | 25,600 | | | | 6,400 | | | $ | 59.96 | | | | 3/1/2028 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2019 | | | | 19,200 | | | | 12,800 | | | $ | 78.76 | | | | 3/1/2029 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/2/2020 | | | | 12,400 | | | | 18,600 | | | $ | 97.69 | | | | 3/2/2030 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2021 | | | | 5,270 | | | | 21,080 | | | $ | 122.55 | | | | 3/1/2031 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2022 | | | | — | | | | 35,000 | | | $ | 144.55 | | | | 3/1/2032 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | | |
(2) | | |
| 68 | | | | 2023 Proxy Statement |
|
|
Outstanding Awards at Fiscal Year End |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
(a) | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | | | | (g) | | | (h) | | | (i) | | | (j) | |
| | | | |
| | | Option Awards3 | | | | | | Stock Awards | |
| | | | | | | | | | | |
Name | | Grant Date | | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)1 | | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | | | | Number
of
Shares
or
Units of
Stock
That
Have Not
Vested
(#)2 | | | Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)4 | | | All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)2 | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That Have Not
Vested
($) | |
| | | | | | | | | | |
Heather L. Cohen | | | 6/1/2013 | | | | 5,000 | | | | — | | | $ | 32.93 | | | | 6/1/2023 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 6/1/2014 | | | | 6,500 | | | | — | | | $ | 44.90 | | | | 6/1/2024 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 2/27/2015 | | | | 21,000 | | | | — | | | $ | 51.30 | | | | 2/27/2025 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2016 | | | | 23,500 | | | | — | | | $ | 39.87 | | | | 3/1/2026 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2017 | | | | 25,000 | | | | — | | | $ | 41.93 | | | | 3/1/2027 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | |
| | | 3/1/2018 | | | | 22,000 | | | | 5,500 | | | $ | 59.96 | | | | 3/1/2028 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | |
| | | 3/1/2019 | | | | 15,000 | | | | 10,000 | | | $ | 78.76 | | | | 3/1/2029 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | |
| | | 3/2/2020 | | | | 10,000 | | | | 15,000 | | | $ | 97.69 | | | | 3/2/2030 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | |
| | | 3/1/2021 | | | | 4,250 | | | | 17,000 | | | $ | 122.55 | | | | 3/1/2031 | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | |
| | | | 3/1/2022 | | | | — | | | | 33,000 | | | $ | 144.55 | | | | 3/1/2032 | | | | | | | | — | | | | — | | | | — | | | | — | |
| (1) | Stock options for all NEOs vest annually over a period of five years beginning on the date of grant. |
| (2) | |
(3) | RSUs for all NEOs vest annually over a period of four years beginning on the date of grant. |
| (3) | |
(4) | All outstanding option awards are SARs or stock options. |
| (4) | |
(5) | Value shown for unvested RSUs and PSUs is based on the December 31, 201930, 2022 (the last trading day of the year) closing stock price on the NASDAQNYSE of $111.83.$88.64. |
OPTION EXERCISES AND STOCK VESTED
|
| | | | | | | | | | | | | | |
| (a) | | (b) | | (c) | | (d) | | (e) |
| | | Option Awards1 | | Stock Awards3 |
| Name | | Number of Shares Acquired On Exercise (#) | | Value Realized on Exercise2 ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting4 ($) |
| Curt R. Hartman | | — |
| | $ | — |
| | 4,200 |
| | $ | 330,792 |
|
| | | | | | | | | |
| Todd W. Garner | | — |
| | $ | — |
| | 2,000 |
| | $ | 126,820 |
|
| | | | | | | | | |
| Patrick J. Beyer | | — |
| | $ | — |
| | 1,400 |
| | $ | 110,264 |
|
| | | | | | | | | |
| Nathan Folkert | | 7,480 |
| | $ | 323,088 |
| | 900 |
| | $ | 70,884 |
|
| | | | | | | | | |
| Stanley W. (Bill) Peters | | — |
| | $ | — |
| | 825 |
| | $ | 64,977 |
|
| | | | | | | | | |
| | | | |
| | |
2023 Proxy Statement | | | | 69 |
Option Exercises and Stock Vested
| | | | | | | | | | | | | | | | | | | | |
| | | | | | |
(a) | | (b) | | | (c) | | | | | | (d) | | | (e) | |
| | | | |
| | | Option Awards1 | | | | | | Stock Awards3 | |
| | | | | | |
Name | | Number of Shares
Acquired On Exercise
(#) | | | Value Realized
on Exercise2
($) | | | | | | Number of Shares
Acquired on Vesting
(#) | | | Value Realized on
Vesting4
($) | |
| | | | | |
Curt R. Hartman | | | 15,000 | | | $ | 1,453,800 | | | | | | | | — | | | | — | |
| | | | | |
Todd W. Garner | | | 4,500 | | | $ | 174,150 | | | | | | | | 3,600 | | | $ | 523,000 | |
| | | | | |
Patrick J. Beyer | | | — | | | | — | | | | | | | | — | | | | — | |
| | | | | |
Stanley W. (Bill) Peters | | | 18,200 | | | $ | 1,587,224 | | | | | | | | — | | | | — | |
| | | | | |
Heather L. Cohen | | | 5,000 | | | $ | 339,600 | | | | | | | | — | | | | — | |
| (1) | Amount relates to option exercises during 2019.2022. |
| |
| (2) | Calculated by multiplying the number of shares purchased by the difference between the exercise price of the option and the market price of the Common Stock on the date of exercise. |
| |
| (3) | Amount relates to the RSUs that vested during 2019.2022. |
| |
| (4) | Calculated by multiplying the number of shares vested by the market price of the Common Stock on the date of vesting. |
| | | | |
| | |
| 70 | | | | 2023 Proxy Statement |
NON-QUALIFIED DEFERRED COMPENSATION
Non-qualified Deferred Compensation
The table below shows the executive contributions, Company contributions and aggregate earnings related to deferred
compensation for all NEOs during 2019.2022. Effective January 1, 2010, the Company began offering a Benefits Restoration Plan to eligible employees, including all NEOs. This planNEOs, except Mr. Beyer who participates in a program designed to compensate him in a similar fashion in accordance with practices in the UK. The Benefits Restoration Plan provides the opportunity to defer receipt of up to 50% of base salary and up to 100% of annual cash incentivebonus compensation and to receive 7% matching contributions from the Company that would otherwise be unavailable under our 401(k) plan because of limits imposed by the Code. Refer to the section “Retirement Benefits - Benefits—Benefits Restoration Plan” in the CD&A for further details.
|
| | | | | | | | | | | | | | | | | | | | |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
| Name | | Executive Contributions in Last FY1 ($) | | Registrant Contributions in Last FY2 ($) | | Aggregate Earnings in Last FY ($) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at Last FYE ($) |
| | | | | | | | | | | |
| Curt R. Hartman | | $ | 419,665 |
| | $ | 116,871 |
| | $ | 335,475 |
| | $ | — |
| | $ | 2,113,622 |
|
| | | | | | | | | | | |
| Todd Garner | | $ | 61,719 |
| | $ | 40,325 |
| | 3,301 |
| | $ | — |
| | $ | 105,345 |
|
| | | | | | | | | | | |
| Stanley W. (Bill) Peters | | $ | 36,000 |
| | $ | 33,720 |
| | $ | 61,574 |
| | $ | — |
| | $ | 355,587 |
|
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
(a) | | (b) | | (c) | | (d) | | (e) | | (f) |
| | | | | |
Name | | Executive
Contributions in
Last FY1
($) | | Registrant
Contributions
in Last FY2
($) | | Aggregate
Earnings/
(Loss) in
Last FY
($) | | Aggregate
Withdrawals/
Distributions
($) | | Aggregate
Balance at
Last FYE
($) |
| | | | | |
Curt R. Hartman | | | $ | 295,341 | | | | $ | 103,398 | | | | ($ | 643,260 | ) | | | | — | | | | $ | 3,928,996 | |
| | | | | |
Todd W. Garner | | | $ | 50,594 | | | | $ | 40,097 | | | | ($ | 70,731 | ) | | | | — | | | | $ | 388,508 | |
| | | | | |
Patrick J. Beyer | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | |
| | | | | |
Stanley W. (Bill) Peters | | | $ | 75,000 | | | | $ | 27,468 | | | | ($ | 83,766 | ) | | | | — | | | | $ | 697,199 | |
| | | | | |
Heather L. Cohen | | | $ | 51,909 | | | | $ | 26,019 | | | | ($ | 443,625 | ) | | | | — | | | | $ | 1,848,337 | |
| |
| (1) | Executive contributions related to the Benefit Restoration Plan were included in earnings in 2019.2022 and reported in the Summary Compensation Table above. |
| |
| (2) | Registrant contributions related to the Benefit Restoration Plan were included in earnings in 2019.2022 and reported in the Summary Compensation Table above. |
POTENTIAL PAYMENTS ON TERMINATION OR CHANGE IN CONTROL
TERMINATION/NO CHANGE IN CONTROL
Potential Payments on Termination or Change in Control
Termination/No Change in Control
The table below represents the payments the NEOs would receive under the Executive Severance Plan if they were terminated by the Company without cause or resigned for good reason on December 31, 20192022 and no change in control had occurred. The table assumes the termination by the Company without cause (as defined in the Executive Severance Plan) with respect to each NEO. No payments will be made, other than accrued benefits, if an NEO is terminated for cause or resigns without good reason.
|
| | | |
| Name | Salary Continuation or Severance ($)1 |
| | |
|
| Curt R. Hartman | $ | 3,846,960 |
|
| | |
|
| Todd W. Garner | $ | 1,277,919 |
|
| | |
|
Patrick J. Beyer2 | $ | 751,117 |
|
| | |
|
| Nathan Folkert | $ | 607,396 |
|
| | |
|
| Stanley W. (Bill) Peters | $ | 646,518 |
|
| | | | |
| |
Name | | Salary
Continuation or
Severance
($)1 | |
| |
Curt R. Hartman | | $ | 3,282,963 | |
| |
Todd W. Garner | | $ | 1,205,667 | |
| |
Patrick J. Beyer | | $ | 770,923 | |
| |
Stanley (Bill) W. Peters | | $ | 628,403 | |
| |
Heather L. Cohen | | $ | 574,196 | |
| |
| (1) | For each NEO, amount represents the sum of the executive’s base salary and the two-year average of the non-equity incentive plan compensation and discretionary bonus earned as of December 31, 20192022 multiplied by the applicable severance multiple as defined in the Executive Severance Plan payable as a lump sum. The severance multiple is defined as two (2.0) for Mr. Hartman, one and one-half (1.5) for Mr. Garner and one (1.0) for each other NEO. |
| |
| (2) | Mr. Beyer is located in the U.K., and, while the amounts shown in this table are expressed in U.S. dollars, his compensation is paid in British pounds. This was converted to U.S. dollars using the spot exchange rate as of December 31, 201930, 2022 (the last business day of the year) of £0.761 £0.834 to U.S. $1.00. |
Under the terms of the Company’s equity award programs, the vesting date for all outstanding stock options, SARs and RSUs granted to any NEO would accelerate to the date of termination due to death or disability. In those circumstances, the value of equity awards vesting would be the same as described below for a termination in connection with a change in control. Upon disability or death, Mr. Hartman’s PSUs would immediately become vested. As of December 31, 2019, as disclosed
| | | | |
| | |
2023 Proxy Statement | | | | 71 |
|
|
Potential Payments on Termination or Change in Control |
Termination/Change in the CD&A, 104,000 shares were earned but not vested, as vesting did not occur until certification by the Compensation Committee which took place on January 31, 2020. The value of the PSUs vesting would be $11,630,320 on December 31, 2019.
TERMINATION/CHANGE IN CONTROL
ControlThe table below represents the earningspayments the NEOs would receive upon a qualifying termination in connection with a change in control on December 31, 20192022 under the Executive Severance Plan and under the terms of the Benefits Restoration Plan, as applicable, as further described in the CD&A.
|
| | | | | | | | | | | | | | | | | | | | |
| Name | | Salary Continuation or Severance ($)1 | | Intrinsic Value of Unvested Stock Awards ($)2 | | Intrinsic Value of Unvested Options and SARs ($)2 | | Value of Unvested Company BRP Contributions ($) | | Total ($) |
Curt R. Hartman3 | | $ | 5,251,910 |
| | $ | 11,881,938 |
| | $ | 27,239,151 |
| | $ | — |
| | $ | 44,372,999 |
|
| | | | | | | | | | | |
| Todd W. Garner | | $ | 2,129,865 |
| | $ | 1,386,692 |
| | $ | 3,938,208 |
| | $ | 32,260 |
| | $ | 7,487,025 |
|
| | | | | | | | | | | |
Patrick J. Beyer4 | | $ | 1,397,367 |
| | $ | 81,077 |
| | $ | 8,813,301 |
| | $ | — |
| | $ | 10,291,745 |
|
| | | | | | | | | | | |
| Nathan Folkert | | $ | 1,132,649 |
| | $ | 145,379 |
| | $ | 5,114,232 |
| | $ | — |
| | $ | 6,392,260 |
|
| | | | | | | | | | | |
| Stanley W. (Bill) Peters | | $ | 1,185,235 |
| | $ | 47,528 |
| | $ | 5,074,549 |
| | $ | 21,224 |
| | $ | 6,328,536 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Name | | Salary
Continuation
or
Severance
($)1 | | Intrinsic
Value of
Unvested
Stock
Awards ($)2 | | Intrinsic
Value of
Unvested
Options
and SARs
($)2 | | Value of
Unvested
Company BRP
Contributions
($) | | Total ($) |
| | | | | |
Curt R. Hartman | | | $ | 4,999,593 | | | | | — | | | | $ | 1,794,200 | | | | | — | | | | $ | 6,793,793 | |
| | | | | |
Todd W. Garner | | | $ | 2,014,445 | | | | $ | 141,824 | | | | $ | 554,784 | | | | $ | 34,900 | | | | $ | 2,745,953 | |
| | | | | |
Patrick J. Beyer | | | $ | 1,564,936 | | | | | — | | | | $ | 548,264 | | | | | — | | | | $ | 2,113,200 | |
| | | | | |
Stanley (Bill) W. Peters | | | $ | 1,255,431 | | | | | — | | | | $ | 310,016 | | | | | — | | | | $ | 1,565,447 | |
| | | | | |
Heather L. Cohen | | | $ | 1,150,887 | | | | | — | | | | $ | 256,540 | | | | | — | | | | $ | 1,407,427 | |
| |
| (1) | Amount represents the sum of the executive’s base salary and the three-year average of the non-equity incentive plan compensation and discretionary bonus earned as of December 31, 20192022 multiplied by the applicable severance multiple. The severance multiple is defined as three (3.0) for Mr. Hartman, two and one-half (2.5) for Mr. Garner and two (2.0) for each other NEO. |
| |
| (2) | As described above in the CD&A under “Annual Equity Compensation” and "Mr. Hartman's“Equity Compensation, Arrangements",” unvested equity awards held by each NEO are subject to accelerated vesting upon a qualifying termination in connection with a change in control. The intrinsic value of unvested equity awards is calculated by taking the product of (a) $111.83,$88.64, which was the closing market price of our common stock as of December 31, 2019,30, 2022, (the last business day of the year) less the exercise price of any stock option, or SAR, and (b) the number of stock awards subject to acceleration. See “Grants of Plan-Based Awards” and “Outstanding Equity Awards at Fiscal Year-End” for information on the awards and the unvested portion of such awards. |
| |
| (3) | The Intrinsic Value of Unvested Stock Awards disclosed for Mr. Hartman assumes 104,000 shares vested at a value of $11,630,320 as the Company’s total shareholder return was 22.61% relative to the S&P 1500 Healthcare Equipment Select Index or 6.07% above the threshold level required for Mr. Hartman to earn an award of the PSUs as of December 31, 2019 as further described in CD&A under “Mr. Hartman’s Compensation Arrangements.” |
| |
(4) | Mr. Beyer is located in the U.K., and, while the amounts shown in this table are expressed in U.S. dollars, his salary continuation or severance is paid in British pounds. This was converted to U.S. dollars using the spot exchange rate as of December 31, 201930, 2022 (the last business day of the year) of £0.761 £0.834 to U.S. $1.00. |
| (4) | |
(5) | No NEOs would receive any other accelerated or enhanced deferred compensation payments or benefits upon a change in control other than as described in this table. As described in the CD&A under “Retirement Benefits – Benefits Restoration Plan”, upon a change in control, the unvested portion of each NEO’s account will automatically become vested. |
| | | | |
| | |
| 72 | | | | 2023 Proxy Statement |
DIRECTOR COMPENSATION
Director Compensation
The Company uses a mix of cash and equity-based incentive compensation to attract and retain qualified candidates to serve on the Board of Directors, and to ensure directors interests are aligned with those of our shareholders.stockholders. Director compensation consists of a mix of an annual retainer and equity compensation for non-employee directors.
During 2022, the Director compensation consisted of a mix of cash fees, as well as equity compensation as detailed below.The Compensation Committee and the full Board of Directors generally reviewreviews director fees at least every threetwo years. As disclosed in last year’s Proxy Statement, theThe Compensation Committee last reviewed the fees in 20182021 with the assistance of Radford, the Compensation Committee’s compensation consultant. During 2018,2021, Radford recommended that the Board consider increasing the cashequity compensation elementselement of the director compensation. Based on the Radford recommendation, the Compensation Committee and Board of Directors increased the cash retainer fee for non-employee directors from $45,000 per year, toremained at $60,000 per year, and increasedwith the cash retainer for the Chair of the Board from $90,000Lead Independent Director receiving $110,000 per year, to $110,000 per year. There were no changes to the directorwith equity compensation. Directors receive equity withcompensation increased in 2022 from a Black Scholes valuation of $150,000 with a(with $37,500 in RSUs and $112,500 in value ratio of 1:3 ofin stock optionsoptions) to $175,000 (with $37,500 in RSUs with the Chair of the Board to receive equity awards with a total Black Scholes value of $200,000 with the same 1:3 value ratio ofand $137,500 in stock options to RSUs. In the case of the awards to newly appointed directors, the Compensation Committee effectively prorated the equity compensation awards based on when during the course of the year the director first commenced serving on the Board. Thus, Ms. Schwarzentraub was appointed to the Board as of September 22, 2019 and received equity compensation valued at $120,000, while Ms. Council was appointed to the Board as of December 1, 2019, and received equity compensation valued at $90,000.
options).Cash Compensation Paid to Directors
For 2019, each director received cash fee compensation2022, the Director Cash Fee Compensation was as described below:
Director Cash Fee Compensation Plan
|
| |
| Annual Retainer Total
(Paid Quarterly)
|
Chair (None if Executive Officer) | $110,000 |
Directors (Non-Executive only) | $60,000 |
Audit Committee Chair | $30,000 |
Audit Committee Member | $15,000 |
Governance/ Compensation Chair | $15,000 |
Governance/ Compensation Committee Member | $7,500 |
Strategy Committee Chair | $15,000 |
Strategy Committee Member | $7,500 |
There was no compensation paid to directors for service on the Pricing Committee in 2019.
| | | | |
| |
Name | | Annual Retainer Total
(Paid Quarterly) | |
| |
Lead Independent Director | | $ | 110,000 | |
| |
Directors (Non-Executive only) | | $ | 60,000 | |
| |
Audit Committee Chair | | $ | 15,000 | |
| |
Audit Committee Member | | $ | 15,000 | |
| |
Governance, Compensation or Strategy Committee Chair | | $ | 15,000 | |
| |
Governance, Compensation or Strategy Committee Member | | $ | 7,500 | |
Equity Compensation Awarded to Directors
In 2019,2022, each non-employee director other than Ms. Schwarzentraub and Ms. Council, received grants of approximately $150,000$175,000 which equated to 2,1653,453 stock options and 1,407 RSUs, with the Chair of the Board receiving grants of approximately $200,000 equating to 2,886 stock options and 1,876335 RSUs, which, in each case, will vest on June 1, 2020. As Ms. Schwarzentraub and Ms. Council were appointed to the Board as of September 22, 2019 and as of December 1, 2019, respectively, and served less than a full term, their initial equity awards were prorated. Ms. Schwarzentraub was awarded equity valued at $120,000, consisting of 1,515 stock options and 895 RSUs. Ms. Council was awarded equity valued at $90,000, consisting of 987 stock options and 599 RSUs.2023. The 20192022 awards were issued from the Amended and Restated 2016 2020 Non-Employee Director Equity Compensation Plan.
Director Compensation Table
|
| | | | | | | | | | | | | | | | |
| (a) | | (b) | | (c) | | (d) | | (e) |
| Name | | Fees Earned or Paid in Cash ($)1 | | Stock Awards ($)2 | | Option Awards ($)2 | | Total ($) |
| | | | | | | | | |
| Mark E. Tryniski | | $ | 132,500 |
| | $ | 149,967 |
| | $ | 49,986 |
| | $ | 332,453 |
|
| | | | | | | | | |
| David Bronson | | $ | 88,125 |
| | $ | 112,476 |
| | $ | 37,498 |
| | $ | 238,099 |
|
| | | | | | | | | |
| Brian P. Concannon | | $ | 78,750 |
| | $ | 112,476 |
| | $ | 37,498 |
| | $ | 228,724 |
|
| | | | | | | | | |
| LaVerne Council | | $ | 18,750 |
| | $ | 67,417 |
| | $ | 22,484 |
| | $ | 108,651 |
|
| | | | | | | | | |
| Charles M. Farkas | | $ | 82,500 |
| | $ | 112,476 |
| | $ | 37,498 |
| | $ | 232,474 |
|
| | | | | | | | | |
| Martha Goldberg Aronson | | $ | 80,625 |
| | $ | 112,476 |
| | $ | 37,498 |
| | $ | 230,599 |
|
| | | | | | | | | |
Dirk M. Kuyper3 | | $ | 56,250 |
| | $ | — |
| | $ | — |
| | $ | 56,250 |
|
| | | | | | | | | |
| Jerome J. Lande | | $ | 75,000 |
| | $ | 112,476 |
| | $ | 37,498 |
| | $ | 224,974 |
|
| | | | | | | | | |
| Barbara J. Schwarzentraub | | $ | 33,750 |
| | $ | 89,965 |
| | $ | 29,982 |
| | $ | 153,697 |
|
| | | | | | | | | |
| Dr. John L. Workman | | $ | 90,000 |
| | $ | 112,476 |
| | $ | 37,498 |
| | $ | 239,974 |
|
| | | | | | | | | |
| | | | |
| | |
2023 Proxy Statement | | | | 73 |
Director Compensation Table
| | | | | | | | | | | | | | | | | | | | |
| | | | |
(a) | | (b) | | (c) | | (d) | | (e) |
| | | | |
Name | | Fees Earned
or Paid in
Cash ($)1 | | Stock
Awards
($)2 | | Option
Awards
($)2 | | Total
($) |
| | | | |
David Bronson | | | $ | 90,000 | | | | $ | 37,450 | | | | $ | 137,498 | | | | $ | 264,948 | |
| | | | |
Brian P. Concannon | | | $ | 79,492 | | | | $ | 37,450 | | | | $ | 137,498 | | | | $ | 254,440 | |
| | | | |
LaVerne Council | | | $ | 82,500 | | | | $ | 37,450 | | | | $ | 137,498 | | | | $ | 257,448 | |
| | | | |
Charles M. Farkas | | | $ | 75,000 | | | | $ | 37,450 | | | | $ | 137,498 | | | | $ | 249,948 | |
| | | | |
Martha Goldberg Aronson | | | $ | 117,500 | | | | $ | 37,450 | | | | $ | 137,498 | | | | $ | 292,448 | |
| | | | |
Jerome J. Lande | | | $ | 82,500 | | | | $ | 37,450 | | | | $ | 137,498 | | | | $ | 257,448 | |
| | | | |
Barbara J. Schwarzentraub | | | $ | 90,000 | | | | $ | 37,450 | | | | $ | 137,498 | | | | $ | 264,948 | |
| | | | |
Mark E. Tryniski | | | $ | 30,082 | | | | | — | | | | | — | | | | $ | 30,082 | |
| | | | |
Dr. John L. Workman | | | $ | 82,500 | | | | $ | 37,450 | | | | $ | 137,498 | | | | $ | 257,448 | |
| (1) | Cash fees paid to directors may not match the amounts listed in the Director Cash Fee Compensation Plan above due to changes in the committee assignments during the course of 2019,2022, and due to when individual directors commenced or terminated service as a director. The fees earned or paid in cash with respect to Mr. Lande include amounts paid directly to Scopia Capital Management LP (“Scopia”) pursuant to the arrangement as further described below.. |
| |
| (2) | Amounts in these columns reflect the grant date fair value of RSUs and stock options in accordance with Compensation – Stock Compensation Topic 718 of FASB ASC. The assumptions made in the valuation of these awards are set forth in Note 9,10, (“Shareholders’ Equity”), to the Consolidated Financial Statements in Item 15 to the Company’s 20192022 Annual Report on Form 10-K (available at http:https://www.conmed.comwww.conmed.com/en/about-us/investor-relations). |
| |
| (3) | Dirk Kuyper resigned from the Board effective August 1, 2019.During 2022, Mr. Tryniski reached his term limit and did not stand for reelection. |
Below is a summary of the stock options, SARs and RSUs outstanding for non-employee Directors as of December 31, 2019.
|
| | | | |
| Name | | Stock Option & SAR Awards Outstanding (#) | | Stock Awards Outstanding (#) |
| | | | | |
| Mark E. Tryniski | | 24,372 | | 1,876 |
| | | | | |
| David Bronson | | 14,779 | | 1,407 |
| | | | | |
| Brian P. Concannon | | 16,779 | | 1,407 |
| | | | | |
| LaVerne Council | | 987 | | 599 |
| | | | | |
| Charles M. Farkas | | 15,779 | | 1,407 |
| | | | | |
| Martha Goldberg Aronson | | 13,779 | | 1,407 |
| | | | | |
| Jerome J. Lande | | 4,165 | | 1,407 |
| | | | | |
| Barbara J. Schwarzentraub | | 1,515 | | 895 |
| | | | | |
| Dr. John L. Workman | | 14,779 | | 1,407 |
Since the third quarter of 2016, at the request of Mr. Lande, in order to comply with internal compliance and compensation policies of Scopia, Mr. Lande’s employer (and then a shareholder of CONMED), Mr. Lande’s cash director fees have been paid by the Company directly to Scopia. Other than redirecting Mr. Lande’s cash fees to Scopia, Mr. Lande’s cash fees are the same as the fees that any other director serving on the same committees would receive. Although Mr. Lande had not received equity compensation, at his request, while Scopia was a shareholder, Scopia no longer holds CONMED stock, and as such Mr. Lande received equity compensation with the other directors in June 2019.
2022. | | | | | | | | | | |
| | |
Name | | Stock Option & SAR
Awards Outstanding (#) | | Stock Awards Outstanding
(#) |
| | |
David Bronson | | | | 20,940 | | | | | 335 | |
| | |
Brian P. Concannon | | | | 13,383 | | | | | 335 | |
| | |
LaVerne Council | | | | 7,148 | | | | | 335 | |
| | |
Charles M. Farkas | | | | 21,940 | | | | | 335 | |
| | |
Martha Goldberg Aronson | | | | 19,940 | | | | | 335 | |
| | |
Jerome J. Lande | | | | 10,326 | | | | | 335 | |
| | |
Barbara J. Schwarzentraub | | | | 5,833 | | | | | 335 | |
| | |
Mark E. Tryniski | | | | 0 | | | | | 0 | |
| | |
Dr. John L. Workman | | | | 20,940 | | | | | 335 | |
Director Stock Ownership Requirements and Policy Prohibiting Hedging and Pledging Policy of Company Stock
In order to give the directors a direct stake in the Company’s future and to directly align their interests with those long-term interests of the shareholders,stockholders, effective July 31, 2009 (and subsequently amended effective December 31, 2013), the Company adopted guidelines to encourage outright share ownership by directors. The ownership guidelines require directors to own four times their annual board retainer fee. Any new directors will be required to be in compliance with these guidelines within five years of becoming subject to this policy. The following share types are included under these guidelines: shares directly owned, shares jointly owned, estimated net after tax shares of unvested RSUs and shares held in saving plan accounts. These ownership guidelines also contain a retention requirement for equity-based awards until such time as the minimum share ownership is achieved. A complete copy of these guidelines is available on the Company’s website in the investor relationscorporate governance section.
| | | | |
| | |
| 74 | | | | 2023 Proxy Statement |
The Company’s director stock ownership guidelines also state that the Company grants stock-based incentives in order to align the interests of its directors with the interests of its shareholders.stockholders. Accordingly, the Company prohibits directors from hedging or pledging Company stock, or from buying or selling derivative securities related to the Company’s stock, such as puts or calls on Company stock, since such securities may diminish the alignment that the Company is trying to foster. This policy does not prohibit directors from purchasing the Company’s convertible notes or any other security issued directly by the Company that may be a derivative from or into the Company’s common stock.
All directors were in compliance with these guidelines as assessed as of December 31, 2019.2022.
| | | | |
| | |
2023 Proxy Statement | | | | 75 |
PAY RATIO
Pay Ratio
We are required by SEC rules adopted under Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, to disclose the ratio of our median employee’s annual total compensation to the annual total compensation of our principal executive officer.
During fiscal 2019,year 2022, the principal executive officer of the Company was our Chair of the Board, President and Chief Executive Officer, Curt Hartman. For 2019,2022, Mr. Hartman’s total annual compensation was $6,180,260$7,835,495 and for our median employee was approximately $33,311$53,442 resulting in an estimated pay ratio of 186:147:1.
We identified the median employee by using all 3,4923,386 active employees and contractors of the Company and its consolidated subsidiaries (excluding Mr. Hartman) as of November 1, 2017,December 31, 2020, whether employed full-time part-time or on a contractual basis. During 2018, we identified the median employee had terminated employment and therefore utilized a substitute employee with substantially similar compensation. This same individual was also used in 2019.part-time. We believe this is reasonable as there have been no changes to compensation or to the composition of our employees that would materially affect our pay ratio. For individuals hired prior to December 31, 2016, we used each applicable individual's taxable earnings as of December 31, 2016. For individuals hired after December 31, 2016, we used each applicable individual's non-annualized taxable earnings as of November 1, 2017 (the median employee determination date). Taxable earnings consisted of of:
(A) base salary, (B) the target bonus, commission and/or management bonus paid during the period, (C) the estimated accounting value of any equity awards granted during the period, (D) other miscellaneous compensation items. Where applicable, currency of earnings was converted to U.S. dollars using an exchange rate as of our determination date.
After identifying our median employee, who is located in the U.S., in accordance with SEC rules we calculated 20192022 annual total compensation for both the median employee and Mr. Hartman using the same methodology that we use to determine our NEOs’ annual total compensation for the Summary Compensation Table.
The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
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| 76 | | | | 2023 Proxy Statement |
BOARD OF DIRECTORS AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION; CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Board of Directors and Compensation Committee Interlocks and Insider Participation; Certain Relationships and Related Transactions
The Company’s Board of Directors, which is presently composed of David Bronson, Brian P. Concannon, LaVerne Council, Charles M. Farkas, Martha Goldberg Aronson, Curt R. Hartman, Jerome J. Lande, Barbara J. Schwarzentraub Mark E. Tryniski and Dr. John L. Workman, establishes the compensation plans and specific compensation levels for Mr. Hartman and for other executive officers through the Compensation Committee, and administers the Company’s equity incentive plans through the Compensation Committee.
Mr. Hartman does not participate in any deliberations or voting of the Compensation Committee or Board regarding CEO compensation. No member of our Compensation Committee is or has been an officer or employee of the Company. No member of our Compensation Committee or our Board is or has been in 2022 an executive officer of another entity at which one of our executive officers serves or has in 2022 served on either the Board of Directors or Compensation Committee.In March 2003, the Audit Committee adopted a written policy specifying that it would pre-approve all transactions in which the Company is a participant and in which a related person has or will have a direct or indirect material interest, including without limitation any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships, other than related party transactions to any person or entity that are, individually or in the aggregate on an annual basis, lessmore than $5,000. This was recently reaffirmed in the Audit Committee Charter adopted as of January 2020. Pursuant to the related-party policy, which the Audit Committee reviews annually, requests for pre-approvals can be submitted to the Chair of the Audit Committee for pre-approval, with the Chair to report any such pre-approvals at the next scheduled meeting of the Audit Committee. Under the policy, such related-person transactions as further defined in the Company’s related-party policy must be approved or ratified by the Audit Committee. Further, any related-party transaction in which the projected spending is over $50,000 requires management to secure competitive bids to ensure that any proposal is reasonable with respect to costs. The Committee may also determine that the approval or ratification of such transaction should be considered by all of the disinterested members of the Board. Related persons include any of our directors or executive officers and their family members.
In considering whether to approve or ratify any related-person transaction, the chair or Committee, as applicable, may consider all factors that they deem relevant to the transaction, including, but not limited to: the size of the transaction and the
amount payable to or receivable from a related person; the nature of the interest of the related person in the transaction; the Company’s prior dealings, if any, with the related party; whether the transaction may involve a conflict of interest; and whether the transaction involves the provision of goods or services to the Company that are available from unaffiliated third parties and, if so, whether the transaction is on terms and made under circumstances that are at least as favorable to the Company as would be available in comparable transactions with or involving unaffiliated third parties.
To identify related-person transactions, at least once a year all directors and executive officers of the Company are required to complete questionnaires seeking, among other things, disclosure with respect to such transactions of which such director or executive officer may be aware.
The Company employs Devon Hartman, who is the daughter-in-law of Mr. Hartman, as a product manager. As such, she is paid a salary and is enrolled in the Employee Incentive Program at a rate commensurate with others in similar positions within the company with similar performance and experience levels. In addition, she is eligible to participate in other compensation programs, such as the Retirement Savings Plan, on the same terms available to all other employees. During 2022, she earned total compensation of $180,281. A portion of the compensation earned by Ms. Hartman in 2022 relates to her time employed as a Territory Manager until June 2022, when she moved into her current role as a product manager.
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2023 Proxy Statement | | | | 77 |
INSURANCE FOR DIRECTORS AND OFFICERS
Insurance for Directors and Officers
The Company has entered into directors’ and officers’ insurance policies with Travelers Casualty and Surety Company of America, Allied World Assurance Company, Chubb,CNA Financial Corporation, Illinois National Insurance Company, and XL Specialty Insurance Co. covering the period from May 31, 20192022 through May 30, 202031, 2023 at a total cost of $598,224$990,112 which covers directors and officers of the Company and its subsidiaries.
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| 78 | | | | 2023 Proxy Statement |
ANNUAL REPORT
Annual Report
The Company’s Annual Report to Shareholders,Stockholders, including the Annual Report on Form 10-K for the fiscal year ended December 31, 20192022 is being mailed with this proxy statementmade available to shareholdersstockholders of record on [April 3, 2020].March 28, 2023 through the Notice of Internet Availability that was mailed to stockholders on April 11, 2023. Except for the Company’s Form 10-K for the fiscal year ended December 31, 2019,2022, which is hereby incorporated by reference into this proxy statement,Proxy Statement, no other part of the Company’s Annual Report to ShareholdersStockholders is incorporated by reference nor shall it constitute a part of the proxy soliciting material or be deemed “filed” with the SEC.
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2023 Proxy Statement | | | | 79 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information with respect to the beneficial ownership of the Company’s Common Stock as of March 6, 2020,28, 2023, by each shareholderstockholder known by the Company to be the beneficial owner of more than 5% of its outstanding Common Stock, by each director and director nominee, by each of the NEOs, and by all directors and executive officers as a group.
|
| | | | |
Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class |
| Patrick J. Beyer | | 170,947 | | * |
| David Bronson | | 23,649 | | * |
| Brian P. Concannon | | 30,149 | | * |
| LaVerne Council | | — | | * |
| Charles M. Farkas | | 29,117 | | * |
| Nathan Folkert | | 62,791 | | * |
| Todd W. Garner | | 32,105 | | * |
| Martha Goldberg Aronson | | 19,149 | | * |
| Curt R. Hartman | | 593,841 | | 2.05 |
| Jerome J. Lande | | 9,000 | | * |
| Stanley W. (Bill) Peters | | 96,432 | | * |
| Barbara J. Schwarzentraub | | — | | * |
| Mark E. Tryniski | | 61,766 | | * |
| Dr. John L. Workman | | 26,649 | | * |
Directors and executive officers as a group (21 persons)(1) | | 1,577,271 | | 5.29 |
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10055 | | 4,348,855 | | 15.25 |
The Vanguard Group, Inc.(3) 100 Vanguard Blvd. Malvern, PA 19355 | | 3,000,096 | | 10.52 |
Capital Research Global Investors(4) 333 South Hope Street Los Angeles, CA 90071 | | 2,156,651 | | 7.56 |
2 | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Shares
Owned
Directly | | Shares
Owned
Indirectly | | Shares Vesting or
Exercisable
in 60 days | | Total
Ownership | | Percentage |
| | | | | |
Patrick J. Beyer | | | | 7,807 | | | | | | | | | | 358,962 | | | | | 366,769 | | | | | 1.2 | % |
| | | | | |
David Bronson | | | | 14,775 | | | | | | | | | | 20,275 | | | | | 35,050 | | | | | * | |
| | | | | |
Heather Cohen(1) | | | | 26,778 | | | | | 5,671 | | | | | 199,198 | | | | | 232,647 | | | | | | |
| | | | | |
Brian P. Concannon | | | | 11,884 | | | | | | | | | | 13,383 | | | | | 25,602 | | | | | * | |
| | | | | |
LaVerne Council | | | | 2,932 | | | | | | | | | | 7,483 | | | | | 10,415 | | | | | * | |
| | | | | |
Charles M. Farkas | | | | 19,243 | | | | | | | | | | 20,275 | | | | | 39,518 | | | | | * | |
| | | | | |
Todd W. Garner | | | | 1,115 | | | | | | | | | | 238,362 | | | | | 239,477 | | | | | * | |
| | | | | |
Martha Goldberg Aronson | | | | 11,275 | | | | | | | | | | 20,275 | | | | | 31,550 | | | | | * | |
| | | | | |
Curt R. Hartman(2) | | | | 5,299 | | | | | — | | | | | 1,043,041 | | | | | 1,136,840 | | | | | 3.7 | % |
| | | | | |
Jerome J. Lande | | | | 3,219 | | | | | | | | | | 8,661 | | | | | 11,880 | | | | | * | |
| | | | | |
Stanley W. (Bill) Peters(3) | | | | 63 | | | | | 1,313 | | | | | 194,693 | | | | | 196,069 | | | | | * | |
| | | | | |
Barbara J. Schwarzentraub | | | | 3,228 | | | | | | | | | | 6,168 | | | | | 9,396 | | | | | * | |
| | | | | |
John L. Workman | | | | 19,775 | | | | | | | | | | 20,275 | | | | | 40.050 | | | | | * | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | * | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | * | |
| | | | | |
Directors and executive officers as a group (18 persons)(4) | | | | 155,965 | | | | | 6,984 | | | | | 2,333,9842 | | | | | 2,496,933 | | | | | 7.6 | % |
| | | | | |
BlackRock, Inc.(5) 55 East 52nd Street New York, NY 10055 | | | | | | | | | | | | | | | | | | | 4,992,968 | | | | | 16.3 | % |
| | | | | |
The Vanguard Group, Inc.(6) 100 Vanguard Blvd. Malvern, PA 19355 | | | | | | | | | | | | | | | | | | | 3,423,498 | | | | | 11.2 | % |
| | | | | |
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Unless otherwise set forth above, the address of each of the above listed shareholdersstockholders is c/o CONMED Corporation, 525 French Road, Utica, New York 13502
11311 Concept Boulevard, Largo, FL 33773.
| |
| (1) | As of March, 6, 2020 the Company’s directors and executive officersThese figures include 4,971 shares beneficially held through a fund whose only investment is CONMED common stock in a 401(k) fund, as a group (21 persons) are the beneficial owners of 304,114well as 1,700 shares of Common Stock (excluding RSUs, Stock Options and SARs), which is approximately 1.07% of the Common Stock outstanding.owned by Ms. Cohen’s spouse. |
| |
| (2) | These figures do not include 83,500 shares held in a trust in which Mr. Hartman’s spouse is a trustee; Mr. Hartman disclaims any beneficial or other interest in the shares held in the trust. |
| (3) | These figures include 1,313 shares beneficially held through a fund whose only investment is CONMED common stock in a 401(k) fund. |
| (4). | An Amendmentamendment to Schedule 13G filed with the SEC by BlackRock, Inc. on February 7, 2020January 26, 2023, indicates beneficial ownership of 4,348,855 shares of Common Stock by virtue of having sole voting power over 4,300,2294,888,237 shares of Common Stock and sole power to dispose of 4,348,8554,922,968 shares of Common Stock in its role as investment advisor for certain funds. |
| (5). | As of March 28, 2023, the Company’s directors and executive officers as a group (18 persons) are the beneficial owners of shares of common stock (excluding stock options, SARs, RSUs and PSUs), which is approximately % of the common stock outstanding. |
(3)(6). | An Amendmentamendment to Schedule 13G filed with the SEC by The Vanguard Group, Inc. on February 10, 20209, 2023, indicates beneficial ownership of 3,000,0963,423,498 shares of Common Stock by virtue of having sole votingdispositive power over 57,4793,344,867 shares of Common Stock, shared votingdispositive power over 4,361 shares of Common Stock, sole power to dispose of 2,941,72478,631 shares of Common Stock, and shared voting power to dispose of 58,372over 48,701 shares of Common Stock. |
| |
(4) | An Amendment to Schedule 13G filed with the SEC by Capital Research Global Investors on February 13, 2020 indicates beneficial ownership of 2,156,651 shares of Common Stock by virtue of having sole power to vote over 2,156,651 shares and sole power to dispose of 2,156,651 shares. |
On March 6, 202028, 2023, the record date, there were 526 shareholders461 stockholders of record of 30,560,476 shares of the Company’s Common Stock.
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| 80 | | | | 2023 Proxy Statement |
DELINQUENT SECTIONDelinquent Section 16(a) REPORTS
ReportsPursuant to regulations promulgated by the Securities and Exchange Commission, the Company is required to identify, 16a-3(e) thereunder, each person who, at any time during its fiscal year ended December 31, 2019,2022, was a director, officer or beneficial owner of more than 10% of the Company’s Common Stock that failed to file on a timely basis any such reports. Based solely on the review of the Forms 3, 4 and 5 and amendments thereto furnished to the Company and certain representations made to the Company, the Company believes that there were no late filings during 2019.
Exhibit A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this “Merger Agreement”), dated as of [•], 2020, is by and between CONMED Corporation, a New York corporation (“Parent”), and CONMED Corporation, a Delaware corporation (“Subsidiary”), pursuant to Article 9 of the Business Corporation Law of the State of New York (the “NYBCL”) and Subchapter IX of the Delaware General Corporation Law (the “DGCL”).
WHEREAS, Parent is a corporation duly organized and in good standing under the laws of the State of New York;
WHEREAS, Parent was originally formed under the name Concor Enterprises, Inc.;
WHEREAS, Subsidiary is a corporation duly organized and in good standing under the laws of the State of Delaware;
WHEREAS, Subsidiary is newly formed for the purpose of effecting the transactions contemplated hereby and does not currently hold any property or have any tax attributes;
WHEREAS, Parent is authorized to issue (a) 100,000,000 shares of common stock, par value $0.01 per share (“Parent Common Stock”), of which [•] shares are issued and outstanding as of the date hereof (which number of outstanding shares is subject to change prior to the Effective Time (as defined below) in connection with Parent’s repurchase or issuance of shares of Parent Common Stock), and (b) 500,000 shares of preferred stock, par value $0.01 per share, of which none are issued and outstanding as of the date hereof;
WHEREAS, Subsidiary is authorized to issue [•] shares of common stock, par value $0.01 per share, of which [•] shares are issued and outstanding as of the date hereof;
WHEREAS, Parent currently holds all of the issued and outstanding shares of common stock of Subsidiary;
WHEREAS, the respective Boards of Directors of Parent and Subsidiary have determined that it is advisable and in the best interests of such corporations and their shareholders and stockholder, respectively, for Parent to merge with and into Subsidiary, for the purpose of changing the Parent’s state of incorporation from the State of New York to the State of Delaware;
WHEREAS, the parties intend, by executing this Merger Agreement, to adopt a plan of reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the “Code”), and to cause the merger described herein to qualify as a reorganization under the provisions of Section 368(a)(1)(F) of the Code; and
WHEREAS, the Board of Directors of Parent has directed that this Merger Agreement be submitted to a vote of Parent’s shareholders for approval in accordance with the NYBCL and the DGCL.
NOW, THEREFORE, in consideration of the premises, mutual agreements and covenants set forth herein, the parties hereto agree as follows:
ARTICLE 1.The Merger.
(a) Upon the terms and subject to the conditions set forth in this Merger Agreement, at the Effective Time, Parent shall be merged with and into Subsidiary (the “Merger”), and the separate existence of Parent shall cease and Subsidiary shall be the entity surviving the Merger (hereinafter referred to as the “Surviving Entity”), which shall continue to exist under, and be governed by, the laws of the State of Delaware. The Merger shall have the effects specified in the DGCL, including Section 259 of Subchapter IX of Title 8 of the DGCL, the NYBCL, including Section 906 of Article 9 of the NYBCL, and this Merger Agreement.
(b) Subject to Article 9 hereof, the Merger shall become effective upon the later of (x) (i) the acceptance for filing of the Delaware Certificate of Ownership and Merger (the “Delaware Certificate of Merger”), to be prepared and filed with the Secretary of State of the State of Delaware, pursuant to Section 253 of the DGCL and (ii) the acceptance for filing of the New York Certificate of Merger (the “New York Certificate of Merger”), to be prepared and filed with the New York
Department of State, pursuant to Sections 905 and 907(e) of the NYBCL, and (y) such other time as agreed upon by the parties and set forth in the Delaware Certificate of Merger and the New York Certificate of Merger (the “Effective Time”).
(c) The parties intend, by executing this Merger Agreement, to adopt a plan of reorganization within the meaning of Section 368 of the Code; and to cause the Merger to qualify as a reorganization under the provisions of Section 368(a)(1)(F) of the Code.
ARTICLE 2. Directors and Officers. The parties will take all actions necessary so that the directors and officers of Parent immediately prior to the Effective Time shall be the directors and officers of the Surviving Entity from and after the Effective Time, all of whom shall hold their directorships and offices until the election and qualification of their respective successors or until their tenure is otherwise terminated in accordance with the by-laws of the Surviving Entity, as the same may be amended from time to time, or the DGCL.
ARTICLE 3. Governing Documents.
(a) The certificate of incorporation of Subsidiary in effect immediately prior to the Effective Time, in the form attached hereto as Exhibit B, shall be the certificate of incorporation of the Surviving Entity upon the Effective Time until amended in accordance with applicable law.
(b) The by-laws of Subsidiary in effect immediately prior to the Effective Time, in the form attached hereto as Exhibit C, shall be the by-laws of the Surviving Entity upon the Effective Time until amended in accordance with applicable law.
ARTICLE 4. Name. From and after the Effective Time, the name of the Surviving Entity shall be: CONMED Corporation.
ARTICLE 5. Effect of Merger on Capital Stock.
(a) At the Effective Time, (i) each share of Parent Common Stock issued and outstanding immediately prior to the Effective Time shall be automatically converted into one share of common stock of the Surviving Entity, and (ii) each issued and outstanding share of common stock of Subsidiary, all of which are owned by Parent, shall be automatically retired and canceled, without the payment of consideration therefor.
(b) At the Effective Time, each option, restricted stock unit, performance stock unit, stock appreciation right, convertible note or other security of Parent issued and outstanding immediately prior to the Effective Time shall be converted into and shall be an identical security of the Surviving Entity, governed by the same terms and conditions (including with respect to vesting, performance goals and exercisability) as were applicable to such securities immediately prior to the Effective Time, and shares of common stock of the Surviving Entity shall be reserved for issuance in connection with the vesting, exercise or conversion of such securities for each share of Parent Common Stock so reserved prior to the Effective Time. The exercise price or conversion ratio for each share of common stock of the Surviving Entity issuable pursuant to any such option, restricted stock unit, performance stock unit, stock appreciation right, convertible note or other security of Parent shall be equal to the exercise price or conversion ratio applicable to any such security of Parent at the Effective Time.
(c) At and after the Effective Time, all of the outstanding certificates or other documents that immediately prior to the Effective Time evidenced ownership of securities of Parent shall be deemed for all purposes to evidence ownership of and to represent the securities of the Surviving Entity into which such securities of Parent have been converted, as herein provided, and shall be so registered on the books and records of the Surviving Entity or its transfer agent. The registered owner of any such outstanding certificate or other document evidencing ownership of securities of Parent shall, until such certificate or other document shall have been surrendered for transfer or otherwise accounted for to the Surviving Entity or its transfer agent, have and be entitled to exercise any voting and other rights with respect to, and to receive any dividends and other distributions upon, the securities evidenced by such certificate or other document, as above provided. Each certificate representing capital stock of the Surviving Entity issued in the Merger shall bear the same legends, if any, with respect to the restrictions on transferability as the certificates of Parent so converted and given in exchange therefor, unless otherwise determined by the Board of Directors of the Surviving Entity in compliance with applicable laws, and any additional legends required by applicable blue sky laws.
(d) All shares of common stock of the Surviving Entity into which shares of Parent Common Stock are to be converted pursuant to the Merger shall not be subject to any statutory or contractual preemptive rights, shall, when issued, be validly issued, fully paid and non-assessable and shall be issued in full satisfaction of all rights pertaining to such Parent Common Stock.
ARTICLE 6. Transfer, Conveyance and Assumption. Without limiting the generality of the foregoing, at the Effective Time, (i) the Surviving Entity shall, without further transfer, succeed to and possess all of the rights, privileges, franchises, immunities and powers of Parent; (ii) the Surviving Entity shall be subject to all actions previously taken by Parent’s Board of Directors; (iii) all of the assets and property of whatever kind and character of Parent shall vest in the Surviving Entity without further act or deed; and (iv) the Surviving Entity shall, without further act or deed, assume and be subject to all of the duties, liabilities, obligations and restrictions of every kind and description of Parent, including, without limitation, all outstanding indebtedness of Parent.
ARTICLE 7. Employee Benefit and Compensation Plans. At the Effective Time, each employee benefit plan, incentive compensation plan and other similar plans to which Parent is then a party (the “Plans”) shall be assumed by, and continue to be the plan of, the Surviving Entity, and Surviving Entity shall assume, as of the Effective Time, all obligations of Parent under the Plans, including (i) the outstanding options, restricted stock units, performance stock units, stock appreciation rights or other awards or portions thereof granted pursuant to the Plans and the right to grant additional awards thereunder and (ii) all obligations of Parent under the Plans with respect to which employee rights or accrued benefits are outstanding as of the Effective Time (including, for the avoidance of doubt, any change in control or severance plan, agreement or arrangement). To the extent any Plan provides for the issuance or purchase of, or otherwise relates to, securities of Parent, after the Effective Time such plan shall be deemed to provide for the issuance or purchase of, or otherwise relate to, the securities of the Surviving Entity into which such securities of Parent have been converted as herein provided.
ARTICLE 8. Further Assurances. In the event that this Merger Agreement shall have been duly adopted by the shareholders of Parent in accordance with Article 9, Parent and Subsidiary agree that they will cause to be executed and filed and recorded any document or documents prescribed by the laws of the State of New York and by the laws of the State of Delaware, and that they will cause to be performed all necessary acts within the State of New York and the State of Delaware and any other applicable jurisdiction, in each case to effectuate the Merger pursuant to the terms set forth in this Merger Agreement. The directors and officers of the Parent and Subsidiary are fully authorized, empowered and directed to do any and all acts and things, and to make, execute, deliver, file, and record any and all instruments, papers, and documents which shall be or become necessary, proper, or convenient to carry out or put into effect any of the provisions of this Merger Agreement and the transactions contemplated hereby, including the Merger.
ARTICLE 9. Shareholder Approval; Termination. This Merger Agreement shall be submitted to a vote of the shareholders of Parent in accordance with the laws of the State of New York and Parent’s certificate of incorporation and by-laws. In the event that this Merger Agreement shall not be adopted by the requisite vote of the shareholders of Parent entitled to vote thereon, this Merger Agreement shall thereupon be terminated without further action of the parties hereto. Notwithstanding anything to the contrary set forth in this Merger Agreement (including the provisions of Article 8), this Merger Agreement may also be terminated by Parent before or after shareholder approval thereof, and the Merger may be abandoned, at any time prior to the Effective Time, if the Board of Directors of Parent determines for any reason, in its sole judgment and discretion, that the consummation of the Merger would be inadvisable or not in the best interests of Parent and its shareholders. In the event of the termination and abandonment of this Merger Agreement, this Merger Agreement shall become null and void and have no effect, without any liability on the part of either Parent or Subsidiary, or any of their respective shareholders, stockholders, directors or officers.
ARTICLE 10. Amendments; Waivers.
(a) Any provision of this Merger Agreement may, subject to applicable law, be amended or waived prior to the Effective Time if, and only if, such amendment or waiver is in writing and signed by Parent and Subsidiary, provided that, following the adoption of the Merger Agreement by the requisite vote of the shareholders of Parent entitled to vote therein, an amendment shall not (i) alter or change the amount or kind of shares, securities, cash, property and/or rights to be received in exchange for or on conversion of all or any securities of Parent to be effected by the Merger; (ii) alter or change any term of the certificate of incorporation of the Surviving Entity; or (iii) alter or change any of the terms and conditions of this Merger Agreement if such alteration or change would adversely affect the holders of any equity securities of Parent.
(b) No failure or delay by any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
ARTICLE 11. No Third Party Beneficiaries. The provisions of this Merger Agreement are solely for the benefit of the parties hereto and this Merger Agreement is not intended to, and does not, confer upon any person other than the parties, and
their respective successors and permitted assigns, any rights or remedies, express or implied, hereunder, including the right to rely upon or enforce any of the provisions of this Agreement.
ARTICLE 12. Successors and Assigns. The provisions of this Merger Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Merger Agreement without the consent of the other party hereto.
ARTICLE 13. Governing Law. This Merger Agreement and all claims or causes of action arising out of or relating to this Merger Agreement shall be governed by, and interpreted and construed in accordance with, the laws of the State of Delaware, without regard to principles of conflicts of law, except to the extent that the laws of the State of New York are mandatorily applicable to the Merger.
ARTICLE 14. Counterparts; Effectiveness. This Merger Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. A signed copy of this Merger Agreement delivered by facsimile, email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Merger Agreement.
ARTICLE 15. Severability. The provisions of this Merger Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Merger Agreement, or the application thereof to any person or any circumstance, is determined by any court or other authority of competent jurisdiction to be invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Merger Agreement and the application of such provision to other persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned, being authorized officers of the constituent corporations, have executed this Merger Agreement as of the date first written above.
2022. | | | | |
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2023 Proxy Statement | | | | 81 |
|
| | |
| PARENT: |
| |
| CONMED Corporation, |
| a New York corporation |
| |
| |
| By: | |
| Name: | Curt R. Hartman |
| Title: | President and Chief Executive Officer |
| |
| |
| |
| SUBSIDARY / SURVIVING ENTITY: |
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| CONMED Corporation, |
| a Delaware corporation |
| |
| |
| By: | |
| Name: | Daniel S. Jonas |
| Title: | Executive Vice President, Legal Affairs, General Counsel & Secretary |
Exhibit B
ANNEX A:
ANNEX A
AMENDED CERTIFICATE OF INCORPORATION
[Effective if approved at 2023 Annual Meeting]
FIRST. The name of the corporation is CONMED Corporation (the “Corporation”).
SECOND. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.
THIRD. The registered office of the Corporation in the State of Delaware is to be located at Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.
FOURTH. The total number of shares of all classes of stock which the Corporation shall have the authority to issue is 100,500,000, of which 100,000,000 shares of the par value of $.01 per share shall be designated as common stock (“Common Stock”) and 500,000 shares of the par value of $.01 per share shall be designated as preferred stock (“Preferred Stock”).
1.
Shares of Preferred Stock may be issued in one or more series from time to time by the Board of Directors, and the Board of Directors is expressly authorized to fix by resolution the designations and the powers, preferences and rights, and the qualifications, limitations and restrictions, of the shares of each series of Preferred Stock, including without limitation the following:(a)
the distinctive serial designation of such series which shall distinguish it from other series;(b)
the number of shares included in such series;(c)
the dividend rate (or method of determining such rate) payable to the holders of the shares of such series, any conditions upon which such dividends shall be paid and the date or dates upon which such dividends shall be payable;(d)
whether dividends on the shares of such series shall be cumulative and, in the case of shares of any series having cumulative dividend rights, the date or dates or method of determining the date or dates from which dividends on the shares of such series shall be cumulative;(e)
the amount or amounts which shall be payable out of the assets of the Corporation to the holders of the shares of such series upon voluntary or involuntary liquidation, dissolution or winding up the Corporation, and the relative rights of priority, if any, of payment of the shares of such series;(f)
the price or prices at which, the period or periods within which and the terms and conditions upon which the shares of such series may be redeemed, in whole or in part, at the option of the Corporation or at the option of the holder or holders thereof or upon the happening of a specified event or events;(g)
the obligation, if any, of the Corporation to purchase or redeem shares of such series pursuant to a sinking fund or otherwise and the price or prices at which, the period or periods within which and the terms and conditions upon which the shares of such series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;(h)
whether or not the shares of such series shall be convertible or exchangeable, at any time or times at the option of the holder or holders thereof or at the option of the Corporation or upon the happening of a specified event or events, into shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation, and the price or prices or rate or rates of exchange or conversion and any adjustments applicable thereto; | | | | |
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(i)
whether or not the holders of the shares of such series shall have voting rights, in addition to the voting rights provided by law, and if so the terms of such voting rights; and(j)
any other powers, preferences and rights and qualifications, limitations and restrictions not inconsistent with the General Corporation Law of the State of Delaware.2.
All Preferred Stock redeemed, purchased or otherwise acquired by the Corporation (including shares surrendered for conversion or exchange or acquired by exchange or otherwise) shall be cancelled and thereupon restored to the status of authorized but unissued shares of Preferred Stock undesignated as to series.3.
No holder of Common Stock or of Preferred Stock shall be entitled as a matter of right to subscribe for, purchase or receive, or have any preferential or preemptivepre-emptive right with respect to, any part of any new or additional issue of stock of any class or series whatsoever, or any options or warrants for such stock, or any rights to subscribe for or purchase such stock, or of securities convertible into or exchangeable for any stock of any class or series whatsoever, whether now or hereafter authorized and whether issued for cash or other consideration or by way of dividend or otherwise.4.
Unless otherwise provided in the resolution or resolutions of the Board of Directors or a duly authorized committee thereof establishing the terms of a series of Preferred Stock, no holder of any share of Preferred Stock shall be entitled as of right to vote on any amendment or alteration of the Certificate of Incorporation to authorize or create, or increase the authorized number of shares of, any other series of Preferred Stock or any alteration, amendment or repeal of any provision of any other series of Preferred Stock that does not adversely affect in any material respect the rights of the series of Preferred Stock held by such holder.5.
Except as otherwise required by the General Corporation Law of Delaware or provided in the resolution or resolutions of the Board of Directors or a duly authorized committee thereof establishing the terms of a series of Preferred Stock, no holder of Common Stock, as such, shall be entitled to vote on any amendment or alteration of the Certificate of Incorporation that alters, amends or changes the powers, preferences, rights or other terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other series of Preferred Stock, to vote thereon pursuant to the Certificate of Incorporation or pursuant to the General Corporation Law of the State of Delaware.6.
Except as may from time to time be required by law and except as otherwise may be provided by the Board of Directors in accordance with paragraph 1 of this Article FOURTH in respect of any particular series of Preferred Stock, all voting rights of the Corporation shall be vested exclusively in the holders of the Common Stock who shall be entitled to one vote per share on all matters.7. Subject to the rights of the holders of any outstanding series of Preferred Stock, the number of authorized shares of Preferred Stock or any series of Preferred Stock of the Corporation may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of at least a majority of the voting power of all classes of stock entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware.
8.
Unless otherwise provided in the resolution or resolutions of the Board of Directors or a duly authorized committee thereof establishing the terms of a series of Preferred Stock, no holder of any share of Preferred Stock shall, in such capacity, be entitled to bring a derivative action, suit or proceeding on behalf of the Corporation.FIFTH. All actions required or permitted to be taken by the stockholders at an annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of record of the outstanding shares of the Corporation having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation in accordance with this Article Fifth and applicable law, provided that no such action by written consent may be effected except in accordance with this Article FIFTH and applicable law.
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1.Request for Record Date. The record date for determining the stockholders entitled to consent to a corporate action in writing without a meeting shall be as fixed by the Board of Directors or as otherwise established under this Article FIFTH. Any stockholder(s) of record seeking to have the stockholders of the Corporation authorize or take action by written consent without a meeting shall, by written notice addressed to the Secretary, delivered to the Corporation at its principal executive office and signed by holders of record at the time such notice is delivered beneficially owning
shares representing in the aggregate at least twenty-five percent of the outstanding shares of capital stock of the Corporation, provided that such shares are determined to be “Net Long Shares” (as defined in Section 1.2(b)(i) of the by-laws of the Corporation, as may be amended from time to time) that have been held continuously for at least one year prior to the date of the written request (the “Requisite Percentage”), request that a record date be fixed for such purpose. For purposes of this Article FIFTH, the word “beneficially owned” has the meaning ascribed thereto in Rules 13d-3 and 13d-5 under the Exchange Act. Such request must contain the information set forth in paragraph (2) of this Article FIFTH. Following receipt of such request, the Board of Directors shall, by the later of (i) twenty days after the Corporation’s receipt of such request and (ii) ten days after delivery of any information requested by the Corporation to determine the validity of any such request or whether the request relates to an action that may be taken by written consent pursuant to this Article FIFTH and applicable law, determine the validity of such request and, if appropriate, adopt a resolution fixing the record date for such purpose. The record date for such purpose shall be no more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors and shall not precede the date upon which such resolution is adopted. If the request required by this paragraph (1) has been determined to be valid and to relate to an action that may be effected by written consent pursuant to this Article FIFTH and applicable law or if no such determination shall have been made by the date required by this paragraph (1), and in either event no record date has been fixed by the Board of Directors, the record date shall be the first date on which a signed written consent relating to the action taken or proposed to be taken by written consent is delivered to the Corporation in the manner described in paragraph (5) of this Article FIFTH; provided, that if prior action by the Board of Directors is required by applicable law, the record date shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
(a)
Any request required by paragraph (1) of this Article FIFTH must be delivered by the holders of record of at least the Requisite Percentage, who shall not revoke such request and who shall continue to beneficially own not less than the Requisite Percentage through the date of delivery of consents signed by a sufficient number of stockholders to authorize or take such action, and must:(i)
contain an agreement to solicit consents in accordance with subsection (4) of this Article FIFTH;(ii)
describe the action proposed to be taken by written consent of stockholders (including the text of any resolutions to be adopted by written consent of stockholders and the language of any proposed amendment to the by-laws of the Corporation)(iii)
contain (x) in the case of any matter (other than a director nomination) proposed to be taken by written consent of stockholders, the information required by Sections 1.13(b)(ii)(A) and (B) of the by-laws of the Corporation, and (y) in the case of any director nominations proposed to be elected by written consent of stockholders, the information required by Sections 1.13(b)(ii)(A), (C) and (D), and Section 1.14(d) of the by-laws of the Corporation;(iv)
set forth the calculation of the requesting stockholder(s)’ Net Long Shares, including the number of shares held of record and disclosure of any short positions, hedges, voting or other arrangements that impact the calculation of such Net Long Shares;(v)
include an agreement by the requesting stockholder(s) to notify the Corporation immediately in the case of any disposition prior to the record date set for the action by written consent of any Net Long Shares beneficially owned of record and an acknowledgement that any such disposition shall be deemed a revocation of such request to the extent of such disposition, such that the number of shares disposed of shall not be included in determining whether the Requisite Percentage has been reached and maintained; and(vi)
include documentary evidence that the requesting stockholder(s) beneficially own in the aggregate not less than the Requisite Percentage as of the date of such written request to the Secretary; provided, however, that if the stockholder(s) making the request are not the beneficial owners of the shares representing the Requisite Percentage, then to be valid, the | | | | |
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request must also include documentary evidence (or, if not simultaneously provided with the request, such documentary evidence must be delivered to the Secretary within ten business days after the date on which the request is
delivered to the Secretary) that the beneficial owners on whose behalf the request is made beneficially own at least the Requisite Percentage as of the date on which such request is delivered to the Secretary.
(b)
The Corporation may require the stockholder(s) submitting such request to furnish such other information as may be reasonably requested by the Corporation.(c)
Any requesting stockholder may revoke his, her or its request at any time by written revocation delivered to the Secretary at the principal executive offices of the Corporation; provided, however, that if at any time following such revocation (including any revocation resulting from a disposition of shares), the unrevoked valid requests represent in the aggregate less than the Requisite Percent, the Board of Directors, in its discretion, may cancel the action by written consent and revoke the fixing of the record date established in connection therewith.3.
Actions Which May Be Taken by Written Consent. Stockholders are not entitled to act by written consent in lieu of a meeting of stockholders if (i) the request to act by written consent made pursuant to paragraph (1) of this Article FIFTH (x) does not comply with this Article FIFTH, (y) was made in a manner that involved a violation of Regulation 14A under the Exchange Act or other applicable law, or (z) relates to an item of business that is not a proper subject for stockholder action under applicable law, (ii) any such request is received by the Corporation during the period commencing ninety days before the first anniversary of the date of the immediately preceding annual meeting of stockholders and ending on the date of the next annual meeting of stockholders, (iii) an identical or substantially similar item (as determined by the Board of Directors, a “Similar Item”), other than the election or removal of directors, was presented at a meeting of stockholders held not more than twelve months before the request for a record date for such action is delivered to the Corporation, (iv) a Similar Item consisting of the election or removal of directors was presented at a meeting of stockholders held not more than ninety days before the request for a record date was delivered to the Corporation (and, for purposes of this clause, the election or removal of directors shall be deemed a “Similar Item” with respect to all items of business involving the election or removal of directors, changing the size of the Board of Directors and the filling of vacancies and/or newly created directorships resulting from any increase in the authorized number of directors), or (v) a Similar Item is included in the Corporation’s notice of meeting as an item of business to be brought before an annual or special meeting of stockholders that has been called but not yet held or that is called within ninety days after the request is received by the Secretary. The Board of Directors shall determine whether a record date is required to be set under this Article FIFTH.4.
Manner of Consent Solicitation. Stockholders may take action by written consent only if consents are solicited by the stockholder(s) seeking to take action by written consent from all holders of capital stock of the Corporation entitled to vote on the matter in accordance with this Article FIFTH, the by-laws of the Corporation, Regulation 14A of the Exchange Act, without reliance upon the exemption contained in Rule 14a-2(b)(2) of the Exchange Act, and applicable law.5.
Timing of delivery. No written consent purporting to take or authorize the taking of a corporate action (each such written consent is referred to in this paragraph (5) and in paragraph (6) of this Article FIFTH as a “Consent”) shall be effective to take the corporate action referred to therein unless Consents signed by a sufficient number of stockholders to take such action are delivered to the Corporation in the manner required by paragraph (6) of this Article FIFTH within sixty days of the first date on which a Consent is so delivered to the Corporation.6.
Delivery of Consents. No Consents may be dated or delivered to the Corporation or its registered office in the State of Delaware until the date that is sixty days after the date of delivery of a valid request to set a record date. Consents must be delivered to the Corporation by delivery to its registered office in the State of Delaware or its principal place of business. Delivery must be made by hand or by certified or registered mail, return receipt requested. In the event of the delivery to the Corporation of Consents, the Secretary or such other officer of the Corporation or insepctorinspector as the Board of Directors may designate shall provide for the safe-keeping of such Consents and any related revocations and shall promptly conduct such ministerial review of the sufficiency of all Consents and any related revocations and of the validity of the action to be taken by written consent as the Secretary or such other officer of the Corporation, as the case may be, deems necessary or appropriate, including, without limitation, whether the stockholders of a number of shares having the requisite voting power to authorize or take the action specified in the Consents have given their valid and duly executed consent to the taking of such action; provided, however, that if the action to which the Consents relate is the election or removal of one or more members of the Board of Directors, the Secretary or such other officer of the Corporation, as the case may be, shall promptly designate two persons, who | | | | |
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shall not be members of the Board of Directors, to serve as inspectors (the “Inspectors”) with respect to such Consent, and such Inspectors shall discharge the functions of the Secretary or such other officer of the Corporation, as the case may be, under this Article FIFTH. If, after such
investigation, the Secretary, such other officer of the Corporation or the Inspectors, as the case may be, determines that the action purported to have been taken is duly authorized by the Consents, that fact shall be certified on the records of the Corporation kept for the purpose of recording the proceedings of meetings of stockholders and the Consents shall be filed in such records. In conducting the investigation required by this section, the Secretary, such other officer of the Corporation or the Inspectors, as the case may be, may, at the expense of the Corporation, retain special legal counsel and any other necessary or appropriate professional advisors as such person or persons may deem necessary or appropriate and, to the fullest extent permitted by law, shall be fully protected in relying in good faith upon the opinion of such counsel or advisors.
7.
Effectiveness of Consent. Notwithstanding anything in this Certificate of Incorporation to the contrary, no action may be taken by written consent of the stockholders except in accordance with this Article FIFTH and applicable law. If the Board of Directors shall determine that any request to fix a record date or to take stockholder action by written consent was not properly made in accordance with, or relates to an action that may not be effected by written consent pursuant to, this Article FIFTH or applicable law, or the stockholder(s) seeking to take such action do not otherwise comply with this Article FIFTH or applicable law, then the Board of Directors shall not be required to fix a record date in respect of such proposed action, and any such purported action by written consent shall be null and void. No action by written consent without a meeting shall be effective until such date as the Secretary, such other officer of the Corporation as the Board of Directors may designate or the Inspectors, as applicable, certify to the Corporation that the Consents delivered to the Corporation in accordance with paragraph (6) of this Article FIFTH represent at least the minimum number of votes that would be necessary to take the corporate action at a meeting at which all shares entitled to vote thereon were present and voted, in accordance with applicable law and this Certificate of Incorporation.8.
Challenge to Validity of Consent. Nothing contained in this Article FIFTH shall in any way be construed to suggest or imply that the Board of Directors or any stockholder shall not be entitled to contest the validity of any Consent or related revocations, whether before or after such certification by the Secretary, such other officer of the Corporation as the Board of Directors may designate or the Inspectors, as the case may be, or to take any other action with respect thereto (including, without limitation, the commencement, prosecution, or defense of any litigation, and the seeking of injunctive relief in such litigation).9.
Board-Solicited Stockholder Action by Written Consent. Notwithstanding anything to the contrary set forth above, (x) none of the foregoing provisions of this Article FIFTH shall apply to any solicitation of stockholder action by written consent in lieu of a meeting by or at the direction of the Board of Directors and (y) the Board of Directors shall be entitled to solicit stockholder action by written consent in accordance with applicable law.SIXTH. Elections of directors need not be by written ballot except and to the extent provided in the by-laws of the Corporation.
SEVENTH. The number of directors of the Corporation shall be fixed from time to time in the manner provided in the by-laws of the Corporation.
EIGHTH.
| 1. | A director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as currently in effect or as the same may hereafter be amended. No amendment, modification or repeal of this Article EIGHTH shall adversely affect any right or protection of a director that exists at the time of such amendment, modification or repeal. |
| 2. | An officer the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as an officer, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as currently in effect or as the same may hereafter be amended. No amendment, modification or repeal of this clause (b) of this Article EIGHTH shall adversely affect any right or protection of an officer that exists at the time of such amendment, modification or repeal. |
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EIGHTH. A director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as currently in effect or as the same may hereafter be amended. No amendment, modification or repeal of this Article EIGHTH shall adversely affect any right or protection of a director that exists at the time of such amendment, modification or repeal.
NINTH. The Corporation shall, to the fullest extent permitted by Section 145 of the Delaware General Corporation Law as currently in effect or as the same may hereafter be amended, indemnify directors and officers from and against any and all of the expenses, liabilities or other matters referred to in or covered by said section. The indemnification provided for herein shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise. No amendment, modification or repeal of this Article NINTH shall adversely affect any right or protection of a director that exists at the time of such amendment, modification or repeal.
TENTH. The name and mailing address of the incorporator is Daniel S. Jonas, Esq., c/o CONMED Corporation, 525 French Road, Utica, New York 13502.
ELEVENTH. The power to adopt, amend or repeal the by-laws of the Corporation shall be vested in the Board of Directors and the stockholders of the Corporation entitled to vote in the election of directors.
IN WITNESS WHEREOF, I have signed this Amended Certificate of Incorporation this [•]th day of [April][May], 2020.
Exhibit C
BY-LAWS
OF
CONMED CORPORATION
Effective [•], 2020
ARTICLE I
Stockholders
Section 1.1.Annual Meeting. A meeting of stockholders shall be held annually for the election of directors and the transaction of other business on such date, time and place either within or without the State of Delaware, or may not be held at any place, but may instead be held solely by means of remote communication, as may be designated by the Board of Directors (the “Board”) of CONMED Corporation (the “Corporation”) from time to time.
Section 1.2.Special Meetings.
(a)Special meetings of the stockholders of the Corporation may be called at any time by the Board, the Chair of the Board, if any, the Lead Independent Director, if any, the President or by stockholders of the Corporation as provided in this Section 1.2, in each case to be held at such date, time and place either within or without the State of Delaware, or may not be held at any place, but may instead be held by means of remote communication, as may be stated in the notice of the meeting.
(b) A special meeting of the stockholders (a “Stockholder Requested Special Meeting”) shall be called by the Secretary upon the written request (each, a “Special Meeting Request”) of one or more stockholders who have continuously held of record for at least one year as of the date of the Secretary’s receipt of the request to call a special meeting “Net Long Shares” (as defined in clause (i) of this Section 1.2(b)) representing in the aggregate at least twenty-five percent (25%) of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote on the matter or matters to be brought before the proposed special meeting (such Net Long Shares held for the requisite period, the “Requisite Percentage”) subject to the following:
(i) For purposes of calculating the Requisite Percentage, a requesting stockholder’s “Net Long Shares” shall be limited to the number of shares beneficially owned, directly or indirectly, by each requesting stockholder that constitute such stockholder’s “net long position” as defined in Rule 14e-4 under the Exchange Act; provided that (i) for the purposes of such definition, reference in such rule to (A) “the date that a tender offer is first publicly announced or otherwise made known by the bidder to holders of the security to be acquired” shall be the date of the Secretary’s receipt of the relevant Special Meeting Request, (B) the “highest tender offer price or stated amount of the consideration offered for the subject security” shall refer to the closing sales price of the Company’s common stock on the New York Stock Exchange (or such other securities exchange designated by the Board if the Company’s common stock is not then listed for trading on the New York Stock Exchange) on such date (or, if such date is not a trading day, the next succeeding trading day), (C) the “person whose securities are the subject of the offer” shall refer to the Company, and (D) “subject security” shall refer to the issued and outstanding common stock of the Company; and (ii) the net long position of such stockholder shall be reduced by the number of shares as to which the Board determines such stockholder does not, or will not, have the right to vote on its own behalf at the proposed special meeting or as to which the Board determines that such shareholder has entered into any derivative or other agreement, arrangement, or understanding that hedges or transfers, in whole or in part, directly or indirectly, any of the economic consequences of ownership of such shares. In addition, to the extent any affiliates of the stockholder or beneficial owner are acting in concert with the stockholder or beneficial owner with respect to the calling of the special meeting, the determination of Net Long Shares may include the effect of aggregating the Net Long Shares (including any negative number) of such affiliate or affiliates. Whether shares constitute Net Long Shares shall be determined in good faith by the Board. For purposes of this Section 1.2, the word “beneficially owned” has the meaning ascribed thereto in Rules 13d-3 and 13d-5 under the Exchange Act.
(ii) In order for a Stockholder Requested Special Meeting to be called by the Secretary, one or more Special Meeting Requests stating the purpose of the special meeting and the matters proposed to be acted upon at such meeting must be signed and dated by the Requisite Percentage of record holders of the common stock of the Corporation (or their duly authorized agents), must be delivered to the Secretary at the principal executive offices of the Corporation and must:
(A) describe the specific purpose(s) of the meeting and the matters proposed to be acted on at such special meeting (including the text of any resolutions proposed for consideration and the language of any proposed amendment to these by-laws);
(B) contain (x) in the case of any matter (other than a director nomination) proposed to be conducted at such Stockholder Requested Special Meeting, the information required by Sections 1.13(b)(ii)(A) and (B) of these by-laws, and (y) in the case of any director nominations proposed to be presented at such Stockholder Requested Special Meeting, the information required by Sections 1.13(b)(ii)(A), (C) and (D), and Section 1.14(d) of these by-laws;
(C) set forth the calculation of the requesting stockholder’s Net Long Shares, including the number of shares held of record and disclosure of any short positions, hedges, voting or other arrangements that impact the calculation of such Net Long Shares;
(D) include an agreement by the requesting stockholder(s) to notify the Corporation immediately in the case of any reduction prior to the record date for the Stockholder Requested Special Meeting of any Net Long Shares beneficially owned of record and an acknowledgment that any such disposition shall be deemed a revocation of such Special Meeting Request to the extent of such disposition, such that the number of shares disposed of shall not be included in determining whether the Requisite Percentage has been reached and maintained; and
(E) include documentary evidence that the requesting stockholder(s) beneficially own in the aggregate not less than the Requisite Percentage as of the date of such Special Meeting Request to the Secretary; provided, however, that if the stockholder(s) making the request are not the beneficial owners of the shares representing the Requisite Percentage, then to be valid, the Special Meeting Request must also include documentary evidence (or, if not simultaneously provided with the request, such documentary evidence must be delivered to the Secretary within ten business days after the date on which the request is delivered to the Secretary) that the beneficial owners on whose behalf the request is made beneficially own at least the Requisite Percentage as of the date on which such request is delivered to the Secretary
(iii) The Corporation may require the requesting stockholder(s) to furnish such other information as may be reasonably requested by the Corporation.
(iv) The Corporation will provide the requesting stockholder(s) with notice of the record date for the determination of stockholders entitled to vote at the Stockholder Requested Special Meeting. Each requesting stockholder is required to update the notice delivered pursuant to this Section 1.2 not later than ten (10) business days after such record date to provide any material changes in the foregoing information as of such record date.
(v) In determining whether a Stockholder Requested Special Meeting has been requested by the record holders of shares representing in the aggregate at least the Requisite Percent, multiple Special Meeting Requests delivered to the Secretary will be considered together only if each such Special Meeting Request (x) identifies substantially the same purpose or purposes of the special meeting and substantially the same matters proposed to be acted on at the special meeting (in each case as determined in good faith by the Board), and (y) has been dated and delivered to the Secretary within sixty (60) days of the earliest dated of such Special Meeting Requests. If the record holder is not the signatory to the Special Meeting Request, such Special Meeting Request will not be valid unless documentary evidence is supplied to the Secretary at the time of delivery of such Special Meeting Request (or within ten (10) business days thereafter) of such signatory’s authority to execute the Special Meeting Request on behalf of the record holder.
(vi) Any requesting stockholder may revoke his, her or its Special Meeting Request at any time by written revocation delivered to the Secretary at the principal executive offices of the Corporation; provided, however, that if at any time following such revocation (including any revocation resulting from a disposition of shares), the unrevoked valid Special Meeting Requests represent in the aggregate less than the Requisite Percent, there shall be no requirement to hold a special meeting. The first date on which unrevoked valid Special Meeting Requests constituting not less than the Requisite Percentage shall have been delivered to the Corporation is referred to herein as the “Request Receipt Date”.
(vii) A Special Meeting Request shall not be valid if:
(A) the Special Meeting Request relates to an item of business that is not a proper subject for stockholder action under applicable law;
(B) the Request Receipt Date is during the period commencing ninety (90) days prior to the first anniversary of the date of the immediately preceding annual meeting and ending on the date of the next annual meeting;
(C) the purpose specified in the Special Meeting Request is not the election of directors and an identical or substantially similar item (as determined in good faith by the Board, a “Similar Item”) was presented at any meeting of stockholders held within the twelve (12) months prior to the Request Receipt Date;
(D) a Similar Item consisting of the election or removal of directors was presented at a meeting of stockholders held not more than ninety (90) days before the Special Meeting Request was delivered to the Corporation (and, for purposes of this clause, the election or removal of directors shall be deemed a “Similar Item” with respect to all items of business involving the election or removal of directors, changing the size of the Board and the filling of vacancies and/or newly created directorships resulting from any increase in the authorized number of directors; or
(E) a Similar Item is included in the Corporation’s notice as an item of business to be brought before an annual or special meeting of stockholders that has been called but not yet held or that is called for a date within ninety (90) days of the Request Receipt Date.
(viii) A Stockholder Requested Special Meeting shall be held at such date and time as may be fixed by the Board; provided, however, that the Stockholder Requested Special Meeting shall be called for a date not more than ninety (90) days after the Request Receipt Date.
(ix) Business transacted at any Stockholder Requested Special Meeting shall be limited to (i) the purpose(s) stated in the valid Special Meeting Request(s) received from the Requisite Percentage of record holders and (ii) any additional matters that the Board determines to include in the Corporation’s notice of the meeting. If none of the stockholders who submitted the Special Meeting Request appears or sends a qualified representative to present the matters to be presented for consideration that were specified in the Stockholder Meeting Request, the Corporation need not present such matters for a vote at such meeting, notwithstanding that proxies in respect of such matter may have been received by the Corporation.
Section 1.3.Notice of Meetings. Notice of each meeting of stockholders shall be given stating the place, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.
Unless otherwise provided by law, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder's address as it appears on the records of the Corporation. In addition, if given by electronic mail, then such notice by electronic mail shall be deemed to be given when directed to such stockholder's electronic mail address (unless the stockholder has notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail or such notice is prohibited by the Delaware General Corporation Law to be given by electronic transmission). If such notice is transmitted by a posting on an electronic network together with separate notice to the stockholder of such specific posting, such notice shall be deemed to be given upon the later of (i) such posting, and (ii) the giving of such separate notice. If such notice is transmitted by any other form of electronic transmission, such notice shall be deemed to be given when directed to the stockholder. Notice shall be deemed to have been given to all stockholders of record who share an address if notice is given in accordance with the “householding” rules set forth in the rules of the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 233 of the Delaware General Corporation Law. For purposes of these by-laws, “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases (including one or more distributed electronic networks or databases), that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form through an automated process.
Section 1.4.Adjournments. When a meeting of stockholders is adjourned to another time or place, it shall not be necessary to give any notice of any such adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, thereof are announced at the meeting at which the adjournment is taken, and at the adjourned meeting any business may be transacted that might have been transacted on the original date of the meeting. However, if the adjournment is for more than thirty days, or if after the adjournment the Board fixes a new record date for determining the stockholders entitled to vote at the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record as of the new record date for determining the stockholders entitled to notice of the adjourned meeting under Section 1.3.
Section 1.5.Waiver of Notice. Notice of meeting need not be given to any stockholder who submits a signed waiver of notice, in person or by proxy, or a waiver by electronic transmission, whether before or after the meeting. The attendance of any stockholder at a meeting, in person or by proxy, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened, shall constitute a waiver of notice by such stockholder.
Section 1.6.Inspectors. Prior to any meeting of stockholders, the Board or the President shall appoint one or more inspectors to act at such meeting and make a written report thereof and may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at the meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall ascertain the number of shares outstanding and the voting power of each, determine the shares represented at the meeting and the validity of proxies and ballots, count all votes and ballots, determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors and certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. The inspectors may appoint or retain other persons to assist them in the performance of their duties. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting. No ballot, proxy or vote, nor any revocation thereof or change thereto, shall be accepted by the inspectors after the closing of the polls. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted therewith, any information provided by a stockholder who submits a proxy by electronic transmission from which it can be determined that the proxy was authorized by the stockholder, any written ballot or, if authorized by the Board, a ballot submitted by electronic transmission together with any information from which it can be determined that the electronic transmission was authorized by the stockholder, any information provided in a record of a vote if such vote was taken at the meeting by means of remote communication along with any information used to verify that any person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder, ballots and the regular books and records of the corporation, and they may also consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for such purpose, they shall, at the time they make their certification, specify the precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors' belief that such information is accurate and reliable.
Section 1.7.List of Stockholders at Meetings. The Secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting; provided, however, if the record date for determining the stockholders entitled to vote is less than ten days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Nothing in this Section shall require the Corporation to include electronic mail addresses or other electronic content information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least ten days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal executive offices of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then a list of stockholders entitled to vote at the meeting shall be produced and kept at the time and place of the meeting during the whole time thereof and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then such list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.
Section 1.8.Quorum of Stockholders. The holders of a majority of the shares of stock entitled to vote on a matter at a meeting of stockholders, present in person or represented by proxy, shall constitute a quorum at such meeting of stockholders
for the transaction of any business, provided that when a specified item of business is required to be voted on by a class or series, voting as a class or series, the holders of a majority of the shares of such class or series shall constitute a quorum for the transaction of such specified items of business.
When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any stockholders.
In the absence of a quorum, the stockholders present in person or represented by proxy and entitled to vote may, by a majority of the votes cast, adjourn the meeting in the manner provided by Section 1.4 of these by-laws until a quorum is so present or represented or (ii) the Chairperson of the meeting may on his or her own motion adjourn the meeting in the manner provided by Section 1.4 of these by-laws until a quorum is so present and represented without the approval of the stockholders who are present in person or represented by proxy and entitled to vote, without notice other than announcement at the meeting, despite the absence of a quorum.
Section 1.9.Voting; Proxies. Directors shall, except as otherwise required by law or by the certificate of incorporation, be elected by a plurality of the votes cast at a meeting of the stockholders by the holders of shares entitled to vote in the election. Whenever any corporate action, other than the election of directors, is to be taken by vote of the stockholders, it shall, unless a different or minimum vote is required by law or by the certificate of incorporation, these by-laws, the rules or regulations of any stock exchange applicable to the Corporation, or any law or regulation applicable to the Corporation or its securities, in which case such different or minimum vote shall be the applicable vote on the matter, be authorized by a majority of the votes cast at the meeting of stockholders by the holders of shares entitled to vote thereon.
Every stockholder entitled to vote at a meeting of stockholders or to express consent or dissent without a meeting may authorize another person or persons to act for him or her by proxy. Every proxy must be signed by the stockholder or his authorized officer, director, employee or agent or provided by electronic transmission in accordance with applicable law. No proxy shall be valid after the expiration of three years from the date thereof unless otherwise provided in the proxy. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power, regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary.
The authority of the holder of a proxy to act shall not be revoked by the incompetence or death of the stockholder who executed the proxy, unless, before the authority is exercised, written notice of an adjudication of such incompetence or of such death is received by the Secretary or any Assistant Secretary.
Section 1.10.Consent of Stockholders in Lieu of Meeting. Any action required or permitted to be taken by the stockholders of the Corporation may be effected by a consent or consents in writing by the stockholders in accordance with, and subject to the limitations set forth in, the certificate of incorporation.
Section 1.11.Fixing Record Date.
(a) In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the foregoing provisions of this Section 1.11 at the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled to consent to any corporate action in writing without a meeting, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than ten (10) days after the date on which the resolution fixing the record date is adopted by the Board. If no record date has been fixed by the Board, the record date for
determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware or its principal place of business. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board and prior action by the Board is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be the day on which the Board adopts the resolution taking such prior action.
(c) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
Section 1.12.Organization. Meetings of the Board shall be presided over by the Chairperson of the Board, if any, or in the absence of the Chairperson of the Board by the Vice Chairperson of the Board, if any, or in the absence of the Vice Chairperson of the Board by the President, or in their absence by a chairperson chosen at the meeting. The Secretary, or in the absence of the Secretary an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairperson of the meeting may appoint any person to act as secretary of the meeting.
The order of business at each such meeting shall be as determined by the chairperson of the meeting. The chairperson of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts and things as are necessary or desirable for the proper conduct of the meeting, including, without limitation, the establishment of procedures for the maintenance of order and safety, limitations on the time allotted to questions or comments on the affairs of the Corporation, restrictions on entry to such meeting after the time prescribed for the commencement thereof and the opening and closing of the voting polls, for each item on which a vote is to be taken.
Section 1.13.Advance Notice of Stockholder Nominees for Director and Other Stockholder Proposals.
(a) No business shall be transacted at an annual or special meeting of stockholders, except such business as shall be properly brought before such meeting in compliance with the procedures set forth in this Section 1.13.
(b) For any matter to be properly brought before an annual meeting of stockholders, the matter must be (i) specified in the Corporation’s notice of meeting as provided in Section 1.3 of these by-laws, (ii) otherwise brought before the meeting by or at the direction of the Board, or (iii) otherwise brought before the meeting by a stockholder of record of the Corporation entitled to vote at the meeting in compliance with the procedure set forth in this Section 1.13.
(i) In addition to any other requirements under applicable law and the certificate of incorporation and these by-laws of the Corporation, for any matter to be brought properly before an annual meeting by a stockholder pursuant to subsection (iii) above, written notice by the stockholder (the “Stockholder Notice”) of any director nomination or other proposal must be addressed and delivered to the Corporation, or mailed to the Corporation, postage prepaid, and received, at the principal executive office of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the first anniversary date of the annual meeting for the preceding year (which shall include for all purposes hereunder, in the case of the first annual meeting of stockholders following the merger of CONMED Corporation, a New York corporation (the “New York Corporation”), with and into the Corporation, the first anniversary of the annual meeting of the New York Corporation’s shareholders for the preceding year); provided, however, that if (and only if) the annual meeting is not scheduled to be held within a period that commences thirty (30) days before such anniversary date and ends within thirty (30) days after such anniversary date (an annual meeting date outside such period being referred to herein as an “Other Meeting Date”), the Stockholder Notice shall be given in the manner provided herein by the later of the close of business on (i) the date ninety (90) days prior to such Other Meeting Date or (ii) the tenth (10th) day following the date such Other Meeting Date is first publicly announced or disclosed.
(ii) The Stockholder Notice must set forth in writing:
(A) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made:
(1) the name and address of such stockholder as they appear in the Corporation’s books, and of such beneficial owner, if any;
(2) (i) the class or series and number of shares of the Corporation which are, directly or indirectly, owned of record and/or owned beneficially by the stockholder and such beneficial owner, if any, and a representation that the stockholder and beneficial owner, if any, will notify the Corporation in writing of the class or series and number of such shares owned of record and beneficially as of the record date for the meeting, promptly following the later of the record date and the date notice of the record date is first publicly announced;
(ii) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholder and beneficial owner, if any, and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation;
(iii) any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder and beneficial owner, if any, has a right to vote any shares of any security of the Corporation;
(iv) any short interest in any security of the Corporation (for purposes hereof, a person or entity shall be deemed to have a short interest in a security if such person or entity directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security);
(v) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder and beneficial owner, if any, that are separated or separable from the underlying shares of the Corporation;
(vi) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder and beneficial owner, if any, is a general partner or, directly or indirectly, beneficially owns an interest in a general partner; and
(vii) any performance-related fees (other than an asset-based fee) that such stockholder and beneficial owner, if any, is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by such stockholder’s and beneficial owner’s, if any, affiliates, any person or entity with whom such stockholder and beneficial owner, if any, is acting in concert or members of such stockholder’s and beneficial owner’s, if any, immediate family sharing the same household;
(3) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;
(4) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such annual meeting on the matter proposed and intends to appear in person or by proxy at such meeting to propose such nomination or other business; and
(5) if the stockholder intends to solicit proxies in support of such stockholder’s proposal, a representation to that effect.
(B) if the notice relates to any business that the stockholder proposes to bring before the meeting other than a nomination of a director or directors:
(1) a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration), the reasons for conducting such business at the meeting, any material interest of such stockholder and beneficial owner, if any, on whose behalf the business is being proposed and of each of their respective affiliates or associates or others acting in concert therewith, if any, in such business and, in the event that such business includes a proposal to amend the by- laws of the Corporation, the language of the proposed amendment; and
(2) a description of all agreements, arrangements and understandings between such stockholder and/or beneficial owner, if any, and any other person or persons (including the names of such persons) in connection with the proposal of such business by such stockholder.
(C) If the stockholder proposes to nominate a person for election or reelection to the Board:
(1) as to each person whom the stockholder proposes to nominate for election or reelection to the Board:
(i) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected);
(ii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated by the Securities and Exchange Commission under Regulation S-K (or any successor rule or regulation) if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such “registrant”; and
(iii) such other information as may be necessary to enable the Board to make an informed determination as to whether such nominee, if elected, would be an “independent director” as defined in the rules and regulations of the New York Stock Exchange or any other stock exchange on which the Corporation’s Common Stock is listed or quoted, or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.
(2) the details of any relationship that existed within the past three years and that would have been described pursuant to Item 6(e) of Schedule 14N (or any successor item) if it existed on the date of submission of the Schedule 14N;
(3) a representation and warranty that the candidacy or, if elected, Board membership of each person whom the stockholder proposes to nominate for election or reelection to the Board would not violate applicable state or federal law or the rules of any stock exchange on which the Corporation’s securities are traded;
(4) a representation and warranty that each person whom the stockholder proposes to nominate for election or reelection to the Board:
(i) does not have any direct or indirect relationship with the Corporation that would cause such person to be considered not independent pursuant to the Corporation’s Corporate Governance Guidelines as most recently published on its website and otherwise
qualifies as independent under the rules of the primary stock exchange on which the Corporation’s shares of common stock are traded;
(ii) meets the audit committee and compensation committee independence requirements under the rules of the primary stock exchange on which the Corporation’s shares of common stock are traded;
(iii) is a “non-employee director” for the purposes of Rule 16b-3 under the Exchange Act (or any successor rule);
(iv) is an “outside director” for the purposes of Section 162(m) of the Internal Revenue Code (or any successor provision); and
(v) is not and has not been subject to any event specified in Rule 506(d)(1) of Regulation D (or any successor rule) under the Securities Act of 1933 or Item 401(f) of Regulation S-K (or any successor rule) under the Exchange Act, without reference to whether the event is material to an evaluation of the ability or integrity of such person;
(5) details of any position where each person whom the stockholder proposes to nominate for election or reelection to the Board has served as an officer or director of any competitor (that is, any entity that produces products, provides services or engages in business activities that compete with or are alternatives to the products produced, services provided or business activities engaged in by the Corporation or its affiliates) of the Corporation, within the three years preceding the submission of the Stockholder Notice;
(D) The Corporation may also require any proposed nominee to furnish such other information, including completion of the Corporation’s directors questionnaire, as it may reasonably request.
(c) For any matter to be properly brought before a special meeting of stockholders, the matter must be set forth in the Corporation’s notice of such meeting given by or at the direction of the Board or by the Secretary of the Corporation pursuant to Section 1.2(b) of these by-laws. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any stockholder entitled to vote for the election of such director(s) at such meeting may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of such meeting, but only if a Stockholder’s Notice containing the information required by subsection (b) of this Section 1.13 shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting.
(d) For purposes of this Section 1.13, a matter shall be deemed to have been “publicly announced or disclosed” if such matter is disclosed in a press release issued by the Corporation and distributed by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission.
(e) For purposes of this Section 1.13, (i) “affiliate” and “associate” have the meanings ascribed thereto in Rule 405 under the Securities Act of 1933, as amended; provided, however, that the term “partner” as used in the definition of “associate” shall not include any limited partner that is not involved in the management of the relevant partnership, and (ii) “beneficially owned” has the meaning ascribed thereto in Rules 13d-3 and 13d-5 under the Exchange Act.
(f) In no event shall the postponement or adjournment of an annual or special meeting (whether or not already publicly noticed), or any announcement of such postponement or adjournment, commence a new period (or extend any time period) for the giving of notice as provided in this Section 1.13.
(g) This Section 1.13 shall not apply to (i) any stockholder proposal made pursuant to Rule 14a-8 of the Exchange Act, (ii) any director nomination pursuant to Section 1.14 or (iii) any Stockholder Requested Special Meeting (except as specifically provided in Section 1.13(c)).
(h) The Chair of any meeting of stockholders shall, if the facts warrant, determine and declare to the meeting that any business was not properly brought before the meeting in accordance with the provisions prescribed by these by-laws and, if he or she should so determine, he or she shall so declare to the meeting and, to the extent permitted by law, any such business not so properly brought before the meeting shall not be transacted; provided that nothing herein shall prevent the Board or any duly
authorized committee thereof from making such determinations in advance of any meeting of stockholders. Notwithstanding the foregoing provisions of this Section 1.13, if the stockholder or a qualified representative of the stockholder does not appear at the annual meeting of stockholders of the Corporation to present any such nomination, or make any such proposal, such nomination or proposal shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation.
(i) Nothing in this Section 1.13 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, nor the right of the Corporation to omit a proposal from, the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 1.14.Proxy Access for Stockholder Nominations of Directors.
(a) Inclusion of Nominees in Proxy Statement. Subject to the provisions of this Section 1.14, if expressly requested in the relevant Proxy Access Notice (as defined below), the Corporation shall include in its proxy statement for any annual meeting of stockholders:
(i) the names of any person or persons nominated for election (each, a “Nominee”), which shall also be included on the Corporation’s form of proxy and ballot, by any Eligible Holder (as defined below) or group of up to twenty Eligible Holders that has (individually and collectively, in the case of a group) satisfied, as determined by the Board, all applicable conditions and complied with all applicable procedures set forth in this Section 1.14 (such Eligible Holder or group of Eligible Holders being a “Nominating Stockholder”);
(ii) disclosure about each Nominee and the Nominating Stockholder required under the rules of the SEC or other applicable law to be included in the proxy statement;
(iii) any statement included by the Nominating Stockholder in the Proxy Access Notice for inclusion in the proxy statement in support of each Nominee’s election to the Board (subject, without limitation, to Section 1.14(e)(ii)), if such statement does not exceed 500 words and fully complies with Section 14 of the Exchange Act and the rules and regulations thereunder, including Rule 14a-9 (the “Supporting Statement”); and
(iv) any other information that the Corporation or the Board determines, in their discretion, to include in the proxy statement relating to the nomination of each Nominee, including, without limitation, any statement in opposition to the nomination, any of the information provided pursuant to this Section 1.14 and any solicitation materials or related information with respect to a Nominee.
For purposes of this Section 1.14, any determination to be made by the Board may be made by the Board, a committee of the Board or any officer of the Corporation designated by the Board or a committee of the Board, and any such determination shall be final and binding on the Corporation, any Eligible Holder, any Nominating Stockholder, any Nominee and any other person so long as made in good faith (without any further requirements). The Chair of any annual meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall have the power and duty to determine whether a Nominee has been nominated in accordance with the requirements of this Section 1.14 and, if not so nominated, shall direct and declare at the meeting that such Nominee shall not be considered.
(b) Maximum Number of Nominees.
(i) The Corporation shall not be required to include in the proxy statement for an annual meeting of stockholders more Nominees than that number of directors constituting the greater of (i) two or (ii) 20% of the total number of directors of the Corporation on the last day on which a Proxy Access Notice may be submitted pursuant to this Section 1.14 (rounded down to the nearest whole number) (the “Maximum Number”). The Maximum Number for a particular annual meeting shall be reduced by: (1) Nominees who the Board itself decides to nominate for election at such annual meeting; (2) Nominees who cease to satisfy, or Nominees of Nominating Stockholders that cease to satisfy, the eligibility requirements in this Section 1.14, as determined by the Board; (3) Nominees whose nomination is withdrawn by the Nominating Stockholder or who become unwilling to serve on the Board; and (4) the number of incumbent directors who had been Nominees with respect to any of the preceding two annual meetings of stockholders and whose reelection at the upcoming annual meeting is being recommended by the Board. In the event that one or more vacancies for any reason occurs on the Board after the deadline for submitting a Proxy Access Notice as set forth in Section 1.14(d) below but before the date of the annual meeting, and the Board resolves to reduce the size of the board in connection therewith, the Maximum Number shall be calculated based on the number of directors in office as so reduced.
(ii) If the number of Nominees pursuant to this Section 1.14 for any annual meeting of stockholders exceeds the Maximum Number then, promptly upon notice from the Corporation, each Nominating Stockholder will select one Nominee for inclusion in the proxy statement until the Maximum Number is reached, going in order of the amount (largest to smallest) of the ownership position as disclosed in each Nominating Stockholder’s Proxy Access Notice, with the process repeated if the Maximum Number is not reached after each Nominating Stockholder has selected one Nominee. If, after the deadline for submitting a Proxy Access Notice as set forth in Section 1.14(d), a Nominating Stockholder or a Nominee ceases to satisfy the eligibility requirements in this Section 1.14, as determined by the Board, a Nominating Stockholder withdraws its nomination or a Nominee becomes unwilling to serve on the Board, whether before or after the mailing or other distribution of the definitive proxy statement, then the nomination shall be disregarded, and the Corporation: (1) shall not be required to include in its proxy statement or on any ballot or form of proxy the disregarded Nominee or any successor or replacement nominee proposed by the Nominating Stockholder or by any other Nominating Stockholder and (2) may otherwise communicate to its stockholders, including without limitation by amending or supplementing its proxy statement or ballot or form of proxy, that a Nominee will not be included as a nominee in the proxy statement or on any ballot or form of proxy and will not be voted on at the annual meeting.
(c) Eligibility of Nominating Stockholder.
(i) An “Eligible Holder” is a person who has either (1) been a record holder of the shares of common stock used to satisfy the eligibility requirements in this Section 1.14(c) continuously for the three-year period specified in subsection (ii) below or (2) provides to the Secretary, within the time period referred to in Section 1.14(d), evidence of continuous ownership of such shares for such three-year period from one or more securities intermediaries in a form that the Board determines would be deemed acceptable for purposes of a shareholder proposal under Rule 14a-8(b)(2) under the Exchange Act (or any successor rule).
(ii) An Eligible Holder or group of up to twenty Eligible Holders may submit a nomination in accordance with this Section 1.14 only if the person or group (in the aggregate) has continuously owned at least the Minimum Number (as defined below) of shares of the Corporation’s common stock throughout the three-year period preceding and including the date of submission of the Proxy Access Notice, and continues to own at least the Minimum Number through the date of the annual meeting. Two or more funds that are (x) under common management and investment control, (y) under common management and funded primarily by a single employer or (z) a “group of investment companies,” as such term is defined in Section 12(d)(1)(G)(ii) of the Investment Company Act of 1940, as amended, shall be treated as one Eligible Holder if such Eligible Holder shall provide together with the Proxy Access Notice documentation reasonably satisfactory to the Corporation that demonstrates that the funds meet the criteria set forth in (x), (y) or (z) hereof. For the avoidance of doubt, in the event of a nomination by a group of Eligible Holders, any and all requirements and obligations for an individual Eligible Holder that are set forth in this Section 1.14, including the minimum holding period, shall apply to each member of such group; provided, however, that the Minimum Number shall apply to the ownership of the group in the aggregate. Should any stockholder cease to satisfy the eligibility requirements in this Section 1.14, as determined by the Board, or withdraw from a group of Eligible Holders at any time prior to the annual meeting of stockholders, the group of Eligible Stockholders shall only be deemed to own the shares held by the remaining members of the group.
(iii) The “Minimum Number” of shares of the Corporation’s common stock means 3% of the number of outstanding shares of common stock as of the most recent date for which such amount is given in any filing by the Corporation with the SEC prior to the submission of the Proxy Access Notice.
(iv) For purposes of this Section 1.14, an Eligible Holder “owns” only those outstanding shares of the Corporation as to which the Eligible Holder possesses both:
(A) the full voting and investment rights pertaining to the shares; and
(B) the full economic interest in (including the opportunity for profit and risk of loss on) such shares, provided that the number of shares calculated in accordance with clauses (A) and (B) shall not include any shares: (1) purchased or sold by such Eligible Holder or any of its affiliates in any transaction that has not been settled or closed, (2) sold short by such Eligible Holder, (3) borrowed by such Eligible Holder or any of its affiliates for any purpose or purchased by such Eligible Holder or any of its affiliates pursuant to an agreement to resell or subject to any other obligation to resell to another person, or (4) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such Eligible Holder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of outstanding shares of the Corporation, in any such case which instrument
or agreement has, or is intended to have, the purpose or effect of: (x) reducing in any manner, to any extent or at any time in the future, such Eligible Holder’s or any of its affiliates’ full right to vote or direct the voting of any such shares, and/or (y) hedging, offsetting, or altering to any degree, gain or loss arising from the full economic ownership of such shares by such Eligible Holder or any of its affiliates.
An Eligible Holder “owns” shares held in the name of a nominee or other intermediary so long as the Eligible Holder retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares. An Eligible Holder’s ownership of shares shall be deemed to continue during any period in which the Eligible Holder has delegated any voting power by means of a proxy, power of attorney, or other similar instrument or arrangement that is revocable at any time by the Eligible Holder. An Eligible Holder’s ownership of shares shall be deemed to continue during any period in which the Eligible Holder has loaned such shares provided that the Eligible Holder has the power to recall such loaned shares on five business days’ notice, has recalled such loaned shares as of the date of the Proxy Access Notice and continues to hold such shares through the date of the annual meeting. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings. Whether outstanding shares of the Corporation are “owned” for these purposes shall be determined by the Board.
(v) No Eligible Holder shall be permitted to be in more than one group constituting a Nominating Stockholder, and if any Eligible Holder appears as a member of more than one group, it shall be deemed to be a member of the group that has the largest ownership position as reflected in the Proxy Access Notice.
(d) Proxy Access Notice. To nominate a Nominee, the Nominating Stockholder must, no earlier than one hundred fifty (150) calendar days and no later than one hundred twenty (120) calendar days before the anniversary of the date that the Corporation mailed its proxy statement for the prior year’s annual meeting of stockholders, submit to the Secretary at the principal executive office of the Corporation all of the following information and documents (collectively, the “Proxy Access Notice”); provided, however, that if (and only if) the annual meeting is not scheduled to be held within a period that commences thirty (30) days before such anniversary date and ends thirty days after the anniversary of the prior year’s meeting date (an annual meeting date outside such period being referred to herein as an “Other Meeting Date”), the Proxy Access Notice shall be given in the manner provided herein by the later of the close of business on the date that is one hundred eighty days (180) prior to such Other Meeting Date or the tenth (10th) day following the date such Other Meeting Date is first publicly announced or disclosed. For purposes of this Section 1.14, a matter shall be deemed to have been “publicly announced or disclosed” if such matter is disclosed in a press release issued by the Corporation and distributed by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission.
(i) A Schedule 14N (or any successor form) relating to each Nominee, completed and filed with the SEC by the Nominating Stockholder as applicable, in accordance with SEC rules;
(ii) A written notice, in a form deemed satisfactory by the Board, of the nomination of each Nominee that includes the following additional information, agreements, representations and warranties by the Nominating Stockholder (including each group member):
(A) the information required with respect to the nomination of directors pursuant to Section 1.13 of these by-laws;
(B) a representation and warranty that the Nominating Stockholder will not engage in a “solicitation” within the meaning of Rule 14a-1(l) (without reference to the exception in Section 14a-1(l)(2)(iv)) (or any successor rules) with respect to the annual meeting, other than with respect to a Nominee or any nominee of the Board;
(C) a representation and warranty that the Nominating Stockholder will not use any proxy card other than the Corporation’s proxy card in soliciting stockholders in connection with the election of a Nominee at the annual meeting;
(D) if desired, a Supporting Statement; and
(E) in the case of a nomination by a group, the designation by all group members of one group member that is authorized to act on behalf of all group members with respect to matters relating to the nomination, including withdrawal of the nomination;
(iii) a representation and warranty that the Nominating Stockholder satisfies the eligibility requirements set forth in Section 1.14(c) and has provided evidence of ownership to the extent required by Section 1.14(c)(i);
(iv) a representation and warranty that the stockholder acquired the securities of the Corporation in the ordinary course of business and did not acquire, and is not holding, securities of the Corporation for the purpose or with the effect of changing control or influencing of the Corporation
(v) a representation and warranty that the Nominating Stockholder intends to continue to satisfy the eligibility requirements described in Section 1.14(c) through the date of the annual meeting and a statement regarding the Nominating Stockholder’s intent with respect to continued ownership of the Minimum Number of shares for at least one year following the annual meeting; provided, however, that any Eligible Holder that is a registered open-end mutual fund under the Investment Company Act of 1940, and that seeks to replicate an index, will not violate this requirement as a result of changes to its common stock holdings in response to changes in the index or weightings of the securities in the index;
(vi) An executed agreement, in a form deemed satisfactory by the Board, pursuant to which the Nominating Stockholder (including each group member) agrees:
(A) to comply with all applicable laws, rules and regulations in connection with the nomination, solicitation and election;
(B) to file any written solicitation or other written communication with the Corporation’s stockholders relating to one or more of the Corporation’s directors or director nominees or any Nominee with the Securities and Exchange Commission, regardless of whether any such filing is required under rule or regulation or whether any exemption from filing is available for such materials under any rule or regulation;
(C) to assume all liability stemming from an action, suit or proceeding concerning any actual or alleged legal or regulatory violation arising out of any communication by the Nominating Stockholder or any of its Nominees with the Corporation, its stockholders or any other person in connection with the nomination or election of directors, including, without limitation, the Proxy Access Notice;
(D) to indemnify and hold harmless (jointly with all other group members, in the case of a group member) the Corporation and each of its directors, officers and employees individually against any liability, loss, damages, expenses or other costs (including attorneys’ fees) incurred in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the Corporation or any of its directors, officers or employees arising out of or relating to a failure or alleged failure of the Nominating Stockholder or any of its Nominees to comply with, or any breach or alleged breach of, its or their obligations, agreements or representations under this Section 1.14
(E) in the event that any information included in the Proxy Access Notice, or any other communication by the Nominating Stockholder (including with respect to any group member), with the Corporation, its stockholders or any other person in connection with the nomination or election ceases to be true and accurate in all material respects (or omits a material fact necessary to make the statements made not misleading), or that the Nominating Stockholder (including any group member) has failed to continue to satisfy the eligibility requirements described in Section 1.14(c), to promptly (and in any event within 48 hours of discovering such misstatement, omission or failure) notify the Corporation and any other recipient of such communication of (A) the misstatement or omission in such previously provided information and of the information that is required to correct the misstatement or omission or (B) such failure; and
(vii) An executed agreement, in a form deemed satisfactory by the Board, by each Nominee:
(A) to provide to the Corporation such other information and certifications, including completion of the Corporation’s director questionnaire, as it may reasonably request;
(B) at the reasonable request of the Corporate Governance and Nominating Committee, to meet with the Corporate Governance and Nominating Committee to discuss matters relating to the nomination of such Nominee to the Board, including the information provided by such Nominee to the Corporation in connection with his or her nomination and such Nominee’s eligibility to serve as a member of the Board;
(C) that such Nominee consents to being named as a nominee in the Corporation’s proxy statement and in any associated proxy card of the Corporation and agrees to serve if elected as a director of the Corporation.
(D) that such Nominee has read and agrees, if elected, to serve as a member of the Board, to adhere to the Corporation’s Corporate Governance Guidelines, Code of Business Conduct, Related Party Transaction Policy and any other Corporation policies and guidelines applicable to directors; and
(E) that such Nominee is not and will not become a party to (i) any compensatory, payment or other financial agreement, arrangement or understanding with any person or entity in connection with his or her nomination, service or action as a director of the Corporation that has not been disclosed to the Corporation, (ii) any agreement, arrangement or understanding with any person or entity as to how such Nominee would vote or act on any issue or question as a director (a “Voting Commitment”) that has not been disclosed to the Corporation or (iii) any Voting Commitment that could limit or interfere with such Nominee’s ability to comply, if elected as a director of the Corporation, with its fiduciary duties under applicable law.
The information and documents required by this Section 1.14(d) to be provided by the Nominating Stockholder shall be: (i) provided with respect to and executed by each group member, in the case of information applicable to group members; and (ii) provided with respect to the persons specified in Instruction 1 to Items 6(c) and (d) of Schedule 14N (or any successor item) in the case of a Nominating Stockholder or group member that is an entity. The Proxy Access Notice shall be deemed submitted on the date on which all the information and documents referred to in this Section 1.14(d) (other than such information and documents contemplated to be provided after the date the Proxy Access Notice is provided) have been delivered to or, if sent by mail, received by the Secretary.
(e) Exceptions.
(i) Notwithstanding anything to the contrary contained in this Section 1.14, the Corporation may omit from its proxy statement any Nominee and any information concerning such Nominee (including a Nominating Stockholder’s Supporting Statement) and no vote on such Nominee will occur (notwithstanding that proxies in respect of such vote may have been received by the Corporation), and the Nominating Stockholder may not, after the last day on which a Proxy Access Notice would be timely, cure in any way any defect preventing the nomination of such Nominee, if:
(A) the Corporation receives a notice pursuant to Section 1.13 of these by-laws that a stockholder intends to nominate a candidate for director at the annual meeting, whether or not such notice is subsequently withdrawn or made the subject of a settlement with the Corporation;
(B) the Nominating Stockholder or the designated lead group member, as applicable, or any qualified representative thereof, does not appear at the meeting of stockholders to present the nomination submitted pursuant to this Section 1.14, the Nominating Stockholder withdraws its nomination or the Chair of the annual meeting declares that such nomination was not made in accordance with the procedures prescribed by this Section 1.14 and shall therefore be disregarded;
(C) the Board determines that such Nominee’s nomination or election to the Board would result in the Corporation violating or failing to be in compliance with the Corporation’s by-laws or certificate of incorporation or any applicable law, rule or regulation to which the Corporation is subject, including any rules or regulations of the primary stock exchange on which the Corporation’s common stock is traded;
(D) such Nominee was nominated for election to the Board pursuant to this Section 1.14 at one of the Corporation’s two preceding annual meetings of stockholders and either withdrew or became ineligible or received a vote of less than 25% of the shares of common stock entitled to vote for such Nominee;
(E) such Nominee has been, within the past three years, an officer or director of a competitor, as defined for purposes of Section 8 of the Clayton Antitrust Act of 1914, as amended;
(F) the Corporation is notified, or the Board determines, that the Nominating Stockholder or the Nominee has failed to continue to satisfy the eligibility requirements described in Section 1.14(c), any of the representations and warranties made in the Proxy Access Notice ceases to be true and accurate in all material respects (or omits a material fact necessary to make the statements made not misleading), such Nominee becomes
unwilling or unable to serve on the Board or any material violation or breach occurs of the obligations, agreements, representations or warranties of the Nominating Stockholder or such Nominee under this Section 1.14;
(ii) Notwithstanding anything to the contrary contained in this Section 1.14, the Corporation may omit from its proxy statement, or may supplement or correct, any information, including all or any portion of the Supporting Statement or any other statement in support of a Nominee included in the Proxy Access Notice, if the Board determines that:
(A) such information is not true in all material respects or omits a material statement necessary to make the statements made not misleading;
(B) such information directly or indirectly impugns the character, integrity or personal reputation of, or directly or indirectly makes charges concerning improper, illegal or immoral conduct or associations, without factual foundation, with respect to, any person; or
(C) the inclusion of such information in the proxy statement would otherwise violate the SEC proxy rules or any other applicable law, rule or regulation.
The Corporation may solicit against, and include in the proxy statement its own statement relating to, any Nominee.
ARTICLE II
Board
Section 2.1.Power of Board and Qualification of Directors. The business of the Corporation shall be managed under the direction of the Board.
Section 2.2.Number of Directors. The number of directors constituting the entire Board shall be the number, not less than three, fixed from time to time by a majority of the total number of directors which the Corporation would have, prior to any increase or decrease, if there were no vacancies, provided that no decrease shall shorten the term of any incumbent director.
Section 2.3.Election and Term of Directors. Directors elected at each annual or special meeting of stockholders shall hold office until the next annual meeting of stockholders, and until their successors are elected and qualified or until their earlier resignation or removal.
Section 2.4.Quorum of Directors and Action by the Board. Unless a greater proportion is required by law or by the certificate of incorporation, one-half of the entire Board shall constitute a quorum for the transaction of business or of any specified item of business. Except where otherwise provided by law or in the certificate of incorporation or these by-laws, the vote of a majority of the directors present at a meeting at the time of such vote, if a quorum is then present, shall be the act of the Board.
Any action required or permitted to be taken by the Board may be taken without a meeting if all members of the Board consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents by the members of the Board shall be filed with the minutes of the proceedings of the Board.
Except as otherwise provided by law, all corporate action to be taken by the Board shall be taken at a meeting of the Board or by unanimous written consent. Any one or more members of the Board may participate in a meeting of the Board by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time, and participation by such means shall constitute presence in person at such meeting.
Section 2.5.Meetings of the Board. An annual meeting of the Board shall be held in each year as soon as practicable after the annual meeting of stockholders. Regular meetings of the Board shall be held at such times as may be fixed by the Board. Special meetings of the Board may be held at any time whenever called by the Chair of the Board, if any, the Lead Independent Director, if any, the President or any two directors.
Meetings of the Board shall be held at such places within or without the State of Delaware as may be fixed by the Board for annual and regular meetings and in the notice of meeting for special meetings.
No notice need be given of annual or regular meetings of the Board. Notice of each special meeting of the Board shall be given to each director either by mail not later than noon, Eastern time, on the third day prior to the meeting, or by electronic transmission, telephonically or in person to the director not later than noon, Eastern time, on the day prior to the meeting. If notice is sent by mail, it shall be sent by first class mail, charges prepaid.
Notice of a meeting of the Board need not be given to any director who submits a waiver of notice whether before or after the meeting, or who attends the meeting except when the directors attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
A notice or waiver of notice need not specify the purpose of any meeting of the Board.
The Chair, if any, the Lead Independent Director, if any, or a majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. Notice of any adjournment of a meeting to another time or place shall be given in the manner described above to the directors who were not present at the time of the adjournment and, unless such time and place are announced at the meeting, to the other directors.
Section 2.6.Resignation. Any director of the Corporation may resign at any time by giving written notice to the Board, the Chair of the Board, if any, the Lead Independent Director, if any, President or the Secretary. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective.
Section 2.7.Removal of Directors. Any director or the entire Board may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.
Section 2.8.Newly Created Directorships and Vacancies. Newly created directorships resulting from an increase in the number of directors and vacancies occurring in the Board for any reason may be filled by a majority of the directors then in office, although less than a quorum, or by the sole remaining director. A director elected to fill a vacancy shall hold office until the next annual meeting of stockholders, and until his or her successor has been elected and qualified.
Section 2.9.Compensation of Directors. The Board shall have authority to fix the compensation of directors for their service on the Board or any committee thereof.
ARTICLE III
Committees
Section 3.1.Committees of Directors. The Board, by resolution adopted by a majority of the entire Board, may designate from among its members an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and such other committees as it deems appropriate, each consisting of one or more directors, and each of which, to the extent provided in the resolution, shall have all the powers and authority of the Board, except that no such committee shall have the power or authority as to the following matters:
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(a) | approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by Delaware law to be submitted to stockholders for approval; or |
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(b) 2023 Proxy Statement | adopting, amending or repealing these by-laws. | | | 87 |
The Board may designate one or more directors as alternate members of any such committee, who may replace any absent member or members at any meeting of such committee.
Unless the Board otherwise provides, each committee designated by the Board may adopt, amend and repeal rules for the conduct of its business. In the absence of a provision by the Board or a provision in the rules of such committee to the contrary, a majority of the directors then serving on the committee shall constitute a quorum for the transaction of business, the vote of a majority of the members present at a meeting at the time of such vote if a quorum is then present or the unanimous written consent of all members thereof shall be the act of such committee, any one or more members of such committee may participate in a meeting of such committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time and participation by such means shall constitute presence in person at such meeting, and in other respects each committee shall conduct its business in the same manner as the Board conducts its business pursuant to Article II of these by-laws.
ARTICLE IV
Officers
Section 4.1.Officers. As soon as practicable after the annual meeting of stockholders in each year, the Board shall elect or appoint a Chief Executive Officer, President, Chief Financial Officer, Secretary and Treasurer, and it may, if it so determines, elect or appoint from among its members a Chair of the Board and one or more Vice-Chair of the Board. The Board may also elect or appoint one or more Vice-Presidents, Assistant Vice-Presidents, Assistant Secretaries and Assistant Treasurers and may give any of them such further designations or alternate titles as it considers desirable. Any two or more offices may be held by the same person, except the offices of President and Secretary.
Section 4.2.Lead Independent Director. A majority of the independent members of the Board may elect from among the independent members of the Board a Lead Independent Director, but the election of a Lead Independent Director shall not be required. The Lead Independent Director may be removed as a Lead Independent Director by vote of a majority of the independent members of the Board. If a Lead Independent Director shall be elected, then the Lead Independent Director shall have such duties and authority as may be prescribed by the Board from time to time. For purposes of this by-law, “independent” has the meaning set forth in the rules of the primary stock exchange on which the Corporation’s shares of common stock are traded at such time.
Section 4.3.Term of Office; Resignation; Removal; Vacancies. Unless otherwise provided in the resolution of the Board electing any officer, each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any officer may resign at any time upon written notice or electronic transmission to the Board or to the President or the Secretary. Such resignation shall take effect at the time it is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events. Unless otherwise specified therein, no acceptance of such resignation shall be necessary to make it effective. The Board may remove any officer with or without cause at any time. Any such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation, but the election of an officer shall not of itself create contractual rights. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise, may be filled by the Board at any regular or special meeting.
Section 4.4.Powers and Duties. The officers of the Corporation shall have such authority and perform such duties in the management of the Corporation as may be prescribed by the Board and, to the extent not so prescribed, as generally pertain to their respective offices, subject to the control of the Board. Securities of other corporations held by the Corporation may be voted by any officer designated by the Board and, in the absence of any such designation, by the President, any Vice-President, the Secretary or the Treasurer. The Board may require any officer, agent or employee to give security for the faithful performance of his duties.
ARTICLE V
Shares and Transfer of Shares
Section 5.1.Forms of Share Certificates. The shares of the Corporation may be represented by certificates or may be uncertificated shares. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class and series shall be identical.
Shares represented by certificates shall be in such forms as the Board may prescribe, signed by any two authorized officers of the Corporation (it being understood that each of the Chair of the Board, any Vice-Chair of the Board, the President, any Vice-President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer of the Corporation, and the Chief Executive Officer of the Corporation shall be an authorized officer for such purpose), and may be sealed with the seal of the Corporation.
The signatures of the officers upon a certificate may be by electronic signature permitted under the Delaware General Corporation Law. In case any officer who has signed or whose electronic signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer at the date of issue. Each certificate representing shares shall state upon the face thereof (1) that the Corporation is formed under the laws of the State of Delaware; (2) the name of the person or persons to whom issued; and (3) the number and class of shares, and the designation of the series, if any, which such certificate represents.
Section 5.2.Transfers of Shares. Shares represented by certificates of the Corporation shall be transferable on the record of stockholders upon presentation to the Corporation or a transfer agent of a certificate or certificates representing the shares requested to be transferred, with proper endorsement on the certificate or on a separate accompanying document, together with
such evidence of the payment of transfer taxes and compliance with other provisions of law as the Corporation or its transfer agent may require.
Section 5.3.Lost, Stolen or Destroyed Share Certificates. The Corporation may issue a new certificate for shares represented by certificates in place of any certificate theretofore issued by it, alleged to have been lost or destroyed, and the Corporation may require the owner of the lost or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss or destruction of any such certificate or the issuance of any such new certificate.
ARTICLE VI
Other Matters
Section 6.1.Corporate Seal. The Board may adopt a corporate seal; alter such seal at pleasure, and authorize it to be used by causing it or a reproduction of such seal to be affixed or impressed or reproduced in any other manner.
Section 6.2.Fiscal Year. The fiscal year of the Corporation shall be fixed by the Board.
Section 6.3.Books to be Kept. The Corporation shall keep correct and complete books and records of account, stock transfer books, minutes of the proceedings of its stockholders and Board and such other records as may be necessary or advisable.
Section 6.4.Interest of Directors and Officers in Transactions. No contract or other transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, firm, association or other entity or organization in which one or more of its directors or officers are directors or officers, or have a substantial financial interest, shall be either void or voidable, irrespective of whether such interested director(s) or officer(s) are present at or participates in the meeting of the Board, or of a committee thereof, which approves such contract or transaction and irrespective of whether his or their votes are counted for such purpose, if:
(a) The material facts as to the director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum;
(b) The material facts as to the director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board, a committee or the stockholders.
Interested directors or officers may be counted in determining the presence of a quorum at a meeting of the Board or of a committee which authorizes the contract or transaction.
Section 6.5.Indemnification. Except as provided in this by-law, the Corporation shall indemnify to the full extent permitted by Delaware law each person made or threatened to be made a party to any action or proceeding, whether civil or criminal, by reason of the fact that such person or such person’s testator or intestate is or was a director or officer of the Corporation, or serves or served at the request of the Corporation, any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, penalties, amounts paid in settlement and reasonable expenses, including attorneys’ fees, incurred in connection with such action or proceeding, or any appeal therein, if such person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful; provided, however, that no such indemnification shall be required with respect to any settlement or other nonadjudicated disposition of any threatened or pending action or proceeding unless the Corporation has given its prior consent to such settlement or other disposition. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.
The Corporation may advance or promptly reimburse upon request any person entitled to indemnification hereunder for all expenses, including attorneys’ fees, reasonably incurred in defending any action or proceeding in advance of the final disposition thereof upon receipt of an undertaking by or on behalf of such person to repay such amount if such person is ultimately found not to be entitled to indemnification or, where indemnification is granted, to the extent the expenses so advanced or reimbursed exceed the amount to which such person is entitled, provided, however, that such person shall cooperate in good faith with any request by the Corporation that common counsel be utilized by the parties to an action or proceeding who are similarly situated unless to do so would be inappropriate due to actual or potential differing interests between or among such parties.
Anything in these by-laws to the contrary notwithstanding, no elimination of this by-law, and no amendment of this by-law adversely affecting the right of any person to indemnification or advancement of expenses hereunder shall be effective until the 60th day following notice to such person of such action, and no elimination of or amendment to this by-law shall deprive any person of his or her rights hereunder arising out of alleged or actual occurrences, acts or failures to act prior to such 60th day.
The Corporation shall not, except by elimination or amendment of this by-law in a manner consistent with the preceding paragraph, take any corporate action or enter into any agreement which prohibits, or otherwise limits the rights of any person to, indemnification in accordance with the provisions of this by-law. The indemnification of any person provided by this by-law shall continue after such person has ceased to be a director, officer or employee of the Corporation and shall inure to the benefit of such person’s heirs, executors, administrators and legal representatives.
The Corporation is authorized to enter into agreements with any of its directors, officers or employees extending rights to indemnification and advancement of expenses to such person to the fullest extent permitted by applicable law as it currently exists, but the failure to enter into any such agreement shall not affect or limit the rights of such person pursuant to this by-law, it being expressly recognized hereby that all directors, officers and employees of the Corporation, by serving as such after the adoption hereof, are acting in reliance hereon and that the Corporation is estopped to contend otherwise.
In case any provision in this by-law shall be determined at any time to be unenforceable in any respect, the other provisions shall not in any way be affected or impaired thereby, and the affected provision shall be given the fullest possible enforcement in the circumstances, it being the intention of the Corporation to afford indemnification and advancement of expenses to its directors and officers, acting in such capacities or in the other capacities mentioned herein, to the fullest extent permitted by law.
For purposes of this by-law, the Corporation shall be deemed to have requested a person to serve an employee benefit plan where the performance by such person of his or her duties to the Corporation also imposes duties on, or otherwise involves services by, such person to the plan or participants or beneficiaries of the plan, and excise taxes assessed on a person with respect to an employee benefit plan pursuant to applicable law shall be considered indemnifiable expenses. For purposes of this by-law, the term “Corporation” shall include any legal successor to the Corporation, including any corporation which acquires all or substantially all of the assets of the Corporation in one or more transactions.
Section 6.6.Forum Selection. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law (or, if the Court of Chancery of the State of Delaware does not have jurisdiction, then the Superior Court of Delaware shall, or if such state courts in Delaware lack jurisdiction, the federal district court for the District of Delaware shall), be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, the certificate of incorporation or these by-laws (in each case, as they may be amended from time to time) or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 6.6.
Section 6.7.Amendments. These by-laws may be amended or repealed, and new by-laws may be adopted, by the Board, but the stockholders entitled to vote may adopt additional by-laws and may amend or repeal any by-law whether or not adopted by them by the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock of the Corporation entitled to vote thereon.
Exhibit D
AMENDED AND RESTATED 2020 NON-EMPLOYEE DIRECTOR EQUITY COMPENSATION PLAN
OF CONMED CORPORATION
The Amended and Restated 2020 Non-Employee Director Equity Compensation Plan of CONMED Corporation (this “Plan”) is established to attract and retain highly qualified individuals who are not current employees of CONMED Corporation (the “Company”) as members of the Board of Directors of the Company and to enable them to increase their ownership in the common stock, par value $0.01 per share, of the Company (the “Common Stock”). This Plan will be beneficial to the Company and its stockholders because it will allow these directors to have a greater personal financial stake in the Company through the ownership of the Common Stock, in addition to underscoring their common interest with stockholders in increasing the long-term value of the Common Stock. This Plan is an amendment and restatement of the Amended and Restated 2016 Non-Employee Director Equity Compensation Plan (the “Prior Plan”).
1. DEFINITIONS
“Award” means an award made pursuant to the Plan as described in Section 5.
“Award Agreement” means the written document by which each Award is evidenced.
“Board” means the Board of Directors of the Company.
“Business Combination” has the meaning ascribed in Section 15.2.
“Certificate” means a stock certificate (or other appropriate document or evidence of ownership) representing shares of Common Stock.
“Change in Control” has the meaning ascribed in Section 15.2.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the applicable rulings and regulations thereunder.
“Committee” means the Compensation Committee of the Board of Directors, as described in Section 2.
“Company” has the meaning ascribed in the preamble.
“Company Voting Securities” has the meaning ascribed in Section 15.2.
“consent” has the meaning ascribed in Section 11.
“Covered Person” has the meaning ascribed in Section 2.5.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the applicable rules and regulations thereunder.
“Fair Market Value” means, per share of Common Stock, the closing price of the Common Stock on the New York Stock Exchange or, if applicable, principal securities exchange on which the shares of Common Stock are then traded, or, if not traded, the price set by the Committee.
“Non-Control Transaction” has the meaning ascribed in Section 15.2.
“Non-Employee Directors” has the meaning ascribed in Section 3.
“Plan” has the meaning ascribed in the preamble.
“plan action” has the meaning ascribed in Section 11.
“Prior Plan” has the meaning ascribed in the preamble.
“Section 409A” has the meaning ascribed in Section 4.2.
“Stock Options” has the meaning ascribed in Section 5.3.
2. PLAN ADMINISTRATION
2.1 Committee. The Plan shall be administered by the Committee, which shall consist of at least two members of the Board of Directors who shall be appointed by, and shall serve at the pleasure of, the Board of Directors. Except as otherwise determined by the Board of Directors, the members of the Committee shall be “non-employee directors” under Rule 16b-3 of the Exchange Act; provided, however, that the failure of the Committee to be so comprised shall not cause any Award to be invalid. The Committee may delegate any of its powers under the Plan to a subcommittee of the Committee (which hereinafter shall also be referred to as the Committee).
2.2 Authority. The Committee shall have complete control over the administration of the Plan and shall have the authority in its sole discretion to (i) exercise all of the powers granted to it under the Plan, (ii) construe, interpret and implement the Plan and all Award Agreements, (iii) prescribe, amend and rescind rules and regulations relating to the Plan, including rules governing its own operations, (iv) make all determinations necessary or advisable in administering the Plan, (v) correct any defect, supply any omission and reconcile any inconsistency in the Plan, (vi) amend the Plan to reflect changes in applicable law, (vii) grant Awards and determine who shall receive Awards, when such Awards will be granted and the terms of such Awards, including setting forth provisions with regard to the effect of a termination of directorship on such Awards and conditioning the vesting of, or the lapsing of any applicable vesting restrictions or other vesting conditions on, Awards upon continued service, (viii) amend any outstanding Award Agreement in any respect, including, without limitation, to accelerate the time or times at which the Award becomes vested, unrestricted or may be exercised (and, in connection with such acceleration, the Committee may provide that any Shares acquired pursuant to such Award will be restricted shares, which are subject to vesting, transfer, forfeiture or repayment provisions similar to those in the grantee’s underlying Award), accelerate the time or times at which Shares are delivered under the Award (and, without limitation on the Committee’s rights, in connection with such acceleration, the Committee may provide that any Shares delivered pursuant to such Award will be restricted shares, which are subject to vesting, transfer, forfeiture or repayment provisions similar to those in the grantee’s underlying Award), or to waive or amend any goals, restrictions, vesting provisions or conditions set forth in such Award Agreement or impose new goals, restrictions, vesting provisions and conditions, or reflect a change in the grantee’s circumstances, and (ix) determine at any time whether, to what extent and under what circumstances and method or methods (A) Awards may be (1) settled in cash, shares of Common Stock, other securities, other Awards or other property (in which event, the Committee may specify what other effects such settlement will have on the grantee’s Award, including the effect on any repayment provisions under the Plan or Award Agreement), (2) exercised or (3) canceled, forfeited or suspended (including, without limitation, canceling underwater Stock Options or stock appreciation rights without any payment to the grantee), (B) shares of Common Stock, other securities, other Awards or other property and other amounts payable with respect to an Award may be deferred either automatically or at the election of the grantee thereof or of the Committee and (C) Awards may be settled by the Company, any of its subsidiaries or affiliates or any of its or their designees. Other than as provided in Section 4.2, the Committee shall not be permitted to reduce the exercise price of a Stock Option or reduce the reference price of a stock appreciation right after such Award has been granted.
2.3 Actions. Actions of the Committee may be taken by the vote of a majority of its members present at a meeting (which may be held telephonically). Any action may be taken by a written instrument signed by a majority of the Committee members, and action so taken shall be fully as effective as if it had been taken by a vote at a meeting. The determination of the Committee on all matters relating to the Plan or any Award Agreement shall be final, binding and conclusive. The Committee may allocate among its members and delegate to any person who is not a member of the Committee any of its administrative responsibilities. In delegating its authority, the Committee will consider the extent to which any delegation may cause Awards to fail to meet the requirements of Rule 16(b)-3(d)(1) or Rule 16(b)-3(e) under the Exchange Act. Except as specifically provided to the contrary, references to the Committee include any administrative group, individual or individuals to whom the Committee has delegated its duties and powers.
2.4 Board Authority. Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards or administer the Plan. The Board shall have all of the authority and responsibility granted to the Committee herein.
2.5 No Liability. No member of the Board or the Committee or any employee of the Company or its subsidiaries or affiliates (each such person, a “Covered Person”) shall have any liability to any person (including any grantee) for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award, except as
expressly provided by statute. Each Covered Person shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement, in each case, in good faith and (ii) any and all amounts paid by such Covered Person, with the Company’s approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person, provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification shall not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person’s bad faith, fraud or willful criminal act or omission. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Company’s Certificate of Incorporation or By-laws, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such persons or hold them harmless.
3.ELIGIBILITY
All members of the Board who are not current employees of the Company or any of its subsidiaries (“Non-Employee Directors”) are eligible to participate in this Plan.
4.SHARESAVAILABLE
4.1 Number of Shares Available. Subject to adjustment pursuant to Section 4.2, the total number of shares of Common Stock which may be delivered pursuant to Awards granted under the Plan shall not exceed 150,000 shares plus the number of shares of Common Stock that remain available for issuance under the Prior Plan as of the effective date of this Plan. No further grants may be made under the Prior Plan after the effective date of this Plan. If any Award under this Plan (or any award granted under the Prior Plan) is forfeited or otherwise terminates or is canceled without the delivery of shares of Common Stock or shares of Common Stock are surrendered or withheld from any Award under this Plan (or any award granted under the Prior Plan) to satisfy a grantee’s income tax or other withholding obligations, or if shares of Common Stock owned by the grantee are tendered to pay for the exercise of a Stock Option under this Plan, then the shares covered by such expired, forfeited, terminated or canceled Award (or award under the Prior Plan) or which are equal to the number of shares surrendered or withheld in respect thereof shall again become available to be delivered pursuant to Awards granted or to be granted under this Plan. Shares of Common Stock which may be delivered pursuant to Awards may be authorized but unissued Common Stock or authorized and issued Common Stock held in the Company’s treasury or otherwise acquired for the purposes of the Plan.
4.2 Recapitalization Adjustment. In the event that any dividend or other distribution (whether in the form of cash, shares of Common Stock, other securities, or other property), recapitalization, forward or reverse stock split, reorganization, merger, consolidation, spin-off, split-up, combination, share reclassification, rights offering, separation, repurchase, share exchange, liquidation, dissolution, Change in Control or other similar corporate transaction or event affects the Common Stock or capitalization of the Company such that the failure to make an adjustment to an Award would not fairly protect the rights represented by the Award in accordance with the essential intent and principles thereof, then the Committee shall, in such manner as it may determine to be equitable in its sole discretion, adjust the number of Shares of Common Stock that may be delivered pursuant to Awards in Section 4.1 and any or all of the terms of an outstanding Award (including, without limitation, the number of shares of Common Stock covered by such outstanding Award, the type of property to which the Award is subject and the exercise or reference price of such Award). After any adjustment made pursuant to this Section 4.2, the number of shares of Common Stock subject to each outstanding Award shall be rounded up or down to the nearest whole number, as determined by the Committee and consistent with the requirements of applicable tax law. Notwithstanding anything in this Plan to the contrary, any adjustments, modifications or changes of any kind made pursuant to this Section 4.2 shall be made in a manner compliant with Section 409A of the Internal Revenue Code (“Section 409A”).
5.TYPES OF AWARDS
5.1 Stock Appreciation Rights.
(a) Grant. The Committee may grant stock appreciation rights in reference to shares of Common Stock, in such amounts and subject to such terms and conditions as the Committee may determine. The form, terms and conditions of each stock appreciation right shall be determined by the Committee and shall be set forth in an Award Agreement. Such terms
and conditions may include, without limitation, provisions relating to the vesting and exercisability of such stock appreciation rights as well as the conditions or circumstances upon which such stock appreciation rights may be accelerated, extended, forfeited or otherwise modified.
(b) Price. The price referenced by each stock appreciation right shall be fixed by the Committee at the time such Award is granted, but in no event shall it be less than the Fair Market Value of a share of Common Stock on the date on which the Award is granted, or, if the date the Award is granted is not a trading day, the trading day immediately prior to the date the Award is granted. Such exercise price shall thereafter be subject to adjustment pursuant to Section 4.2 hereof.
(c) Exercise. After receiving notice from the grantee of the exercise of a stock appreciation right for which payment will be made by the Company partly or entirely in shares of Common Stock, the Company shall, subject to the provisions of the Plan or any Award Agreement, deliver the shares of Common Stock.
(d) Duration. The duration of any stock appreciation right granted under this Plan shall be for a period fixed by the Committee but shall in no event be more than ten (10) years.
5.2 Restricted Stock Units. The Committee may grant Awards of restricted stock units in such amounts and subject to such terms and conditions as the Committee shall determine. A grantee of a restricted stock unit will have only the rights of a general unsecured creditor of the Company until delivery of shares of Common Stock, cash or other securities or property is made as specified in the applicable Award Agreement. On the delivery date, the grantee of each restricted stock unit not previously forfeited shall receive one share of Common Stock, or cash, securities or other property equal in value to a share of Common Stock or a combination thereof, as specified by the Committee.
5.3 Stock Options
(a) Grant. The Committee may grant Awards of nonstatutory stock options (“Stock Options”) in reference to shares of Common Stock, in such amounts and subject to such terms and conditions as the Committee may determine. The form, terms and conditions of each Stock Option shall be determined by the Committee and shall be set forth in an Award Agreement. Such terms and conditions may include, without limitation, provisions relating to the vesting and exercisability of such Stock Options as well as the conditions or circumstances upon which such Stock Options may be accelerated, extended, forfeited or otherwise modified. The Award Agreement pursuant to which any Stock Option is granted shall specify that the option granted thereby shall not be treated as an incentive stock option.
(b) Price. The price referenced by each Stock Option shall be fixed by the Committee at the time such Stock Option is granted, but in no event shall it be less than the Fair Market Value of a share of Common Stock on the date on which the Stock Option is granted. Such exercise price shall thereafter be subject to adjustment pursuant to Section 4.2 hereof.
(c) Exercise. After receiving notice from the grantee of the exercise of a Stock Option, the Company shall, subject to the provisions of the Plan or any Award Agreement, deliver the shares of Common Stock. The option price of each share as to which a Stock Option is exercised shall be paid in full at the time of such exercise. Such payment shall be made in cash, by tender of shares of Common Stock owned by the grantee valued at Fair Market Value as of the date of exercise, subject to such guidelines for the tender of Common Stock as the Committee may establish, in such other consideration as the Committee deems appropriate, or by a combination of cash, shares of Common Stock and such other consideration. The Committee, in its sole discretion, may grant to a grantee the right to transfer Common Stock acquired upon the exercise of a part of a Stock Option in payment of the exercise price payable upon immediate exercise of a further part of the Stock Option.
(d) Duration. The duration of any stock appreciation right granted under this Plan shall be for a period fixed by the Committee but shall in no event be more than ten (10) years.
5.4 Award Agreements. Each Award granted under the Plan shall be evidenced by an Award Agreement which shall contain such provisions and conditions as the Committee deems appropriate. By accepting an Award pursuant to the Plan, a grantee thereby agrees that the Award shall be subject to all of the terms and provisions of the Plan and the applicable Award Agreement.
5.5 Stockholder Consent Required: Unless otherwise approved by the Company’s stockholders, Stock Options and stock appreciation rights will not be (w) repriced (other than in accordance with the adjustment provisions of Section 4.2), (x) repurchased for cash or other consideration, (y) cancelled in conjunction with the grant of a new Stock Option or stock appreciation right with a lower exercise price, in each case on a date when the exercise price of such Stock Option or stock
appreciation right is equal to or exceeds the Fair Market Value a share of Common Stock or (z) subject to automatic reload provisions.
6. AWARD GRANTS
6.1 Annual Grants. In the Committee’s discretion, subject to Section 6.4, each individual elected, reelected or continuing as a Non-Employee Director shall receive a grant of Awards under this Plan in an amount and on terms determined by the Committee. In each case, such Awards shall vest no earlier than the first anniversary of such date (provided that such Awards may be subject to additional restrictions as contained in an Award Agreement).
6.2 Grants to Newly Appointed Non-Employee Directors. The Board may make other grants of Awards to Non-Employee Directors who are appointed to the Board outside of the context of an election at the Company’s Annual Meeting of Stockholders (grants under this Section 6.2 shall only be in connection with such appointment).
6.3 Other Grants. The Board may make other grants of cash or Awards from time to time to Non-Employee Directors as may be deemed appropriate by the Board.
6.4 Annual Limits. Notwithstanding anything to the contrary, the aggregate value of cash compensation and Awards (based on the Fair Market Value of stock-based Awards, in each case determined at the date of grant) granted to any one Non-Employee Director in respect of any calendar year, solely with respect to his or her service as a Non-Employee Director, may not exceed $400,000.
7. TERMINATION OF SERVICE
Upon termination of service as a Non-Employee Director, such grantee’s Awards of Stock Options or stock appreciation rights which are vested shall be exercisable at any time prior to the expiration date of the stock appreciation rights or within one year after the date of such termination, whichever is the shorter period. Upon termination of service as a Non-Employee Director, the shares of Common Stock underlying such grantee’s Awards of restricted stock units which are then vested shall be delivered to the grantee. Unless otherwise specified in an Award Agreement, any unvested Stock Options, stock appreciation rights or restricted stock units shall terminate upon the termination of a grantee’s service as a Non-Employee Director.
8. NO RIGHTS AS A STOCKHOLDER
No grantee of an Award (or other person having rights pursuant to an Award) shall have any of the rights of a stockholder of the Company with respect to shares of Common Stock subject to an Award until the delivery of such shares. Except as otherwise provided in Section 4.2, no adjustments shall be made for dividends or distributions (whether ordinary or extraordinary, and whether in cash, Common Stock, other securities or other property) on, or other events relating to, shares of Common Stock subject to an Award for which the record date is prior to the date such shares are delivered.
9. AMENDMENT OF THIS PLAN
The Board may from time to time suspend, discontinue, revise or amend the Plan in any respect whatsoever, provided, however, that, no amendment shall materially adversely affect a grantee without such person’s prior written consent.
10. TAX WITHHOLDING
If the Company shall be required to withhold any amounts by reason of a federal, state or local tax laws, rules or regulations in respect of any Award, the Company shall be entitled to deduct or withhold such amounts from any payments (including, without limitation shares of Common Stock which would otherwise be issued to the grantee pursuant to the Award; provided that, to the extent desired for GAAP purposes, such withholding shall not exceed the statutory minimum amount required to be withheld) to be made to the grantee. Grantees will be solely responsible for any applicable taxes (including, without limitation, income and excise taxes) and penalties, and any interest that accrues thereon, that they incur in connection with the receipt, vesting or exercise of any Award.
11. REQUIRED CONSENTS AND LEGENDS
If the Committee shall at any time determine that any consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of any Award, the delivery of shares of Common Stock or the delivery of
any cash, securities or other property under the Plan, or the taking of any other action thereunder (each such action being hereinafter referred to as a “plan action”), then such plan action shall not be taken, in whole or in part, unless and until such consent shall have been effected or obtained to the full satisfaction of the Committee. The Committee may direct that any Certificate evidencing shares delivered pursuant to the Plan shall bear a legend setting forth such restrictions on transferability as the Committee may determine to be necessary or desirable, and may advise the transfer agent to place a stop order against any legended shares. The term “consent” as used herein with respect to any plan action includes (a) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state, or local law, or law, rule or regulation of a jurisdiction outside the United States, (b) any and all written agreements and representations by the grantee with respect to the disposition of shares, or with respect to any other matter, which the Committee may deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made, (c) any and all other consents, clearances and approvals in respect of a plan action by any governmental or other regulatory body or any stock exchange or self-regulatory agency, (d) any and all consents by the grantee to (i) the Company’s supplying to any third party recordkeeper of the Plan such personal information as the Committee deems advisable to administer the Plan, (ii) the Company, or its applicable subsidiary or affiliate, deducting amounts from the grantee’s wages, or another arrangement satisfactory to the Committee, to reimburse the Company, or its applicable subsidiary or affiliate, for advances made on the grantee’s behalf to satisfy certain withholding and other tax obligations in connection with an Award and (iii) the Company imposing lockup conditions, sales and transfer procedures and restrictions and hedging restrictions on shares of Common Stock delivered under the Plan and (e) any and all consents or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise required by the Committee. Nothing herein shall require the Company to list, register or qualify the shares of Common Stock on any securities exchange.
12. RIGHT OF OFFSET
The Company and its subsidiaries and affiliates shall have the right to offset against its obligation to deliver shares of Common Stock (or other property or cash) under the Plan or any Award Agreement any outstanding amounts the grantee then owes to the Company or its subsidiaries or affiliates. Notwithstanding the foregoing, if an Award provides for the deferral of compensation within the meaning of Section 409A of the Code, the Committee will have no right to offset against its obligation to deliver Shares (or other property or cash) under the Plan or any Award Agreement if such offset could subject the Grantee to the additional tax imposed under Section 409A of the Code in respect of an outstanding Award.
13. NONASSIGNABILITY
Except to the extent otherwise expressly provided in the applicable Award Agreement, no Award (or any rights and obligations thereunder) granted to any person under the Plan may be sold, exchanged, transferred, assigned, pledged, hypothecated, fractionalized, hedged or otherwise disposed of (including through the use of any cash-settled instrument), whether voluntarily or involuntarily, other than by will or by the laws of descent and distribution, and all such Awards (and any rights thereunder) shall be exercisable during the life of the grantee only by the grantee or the grantee’s legal representative. Notwithstanding the preceding sentence, the Committee may permit, under such terms and conditions that it deems appropriate in its sole discretion, a grantee to transfer any Award to any person or entity that the Committee so determines. Any sale, transfer, assignment, pledge, hypothecation, fractionalization, hedge or other disposition in violation of the provisions of this Section 13 shall be void and any Award which is hedged in any manner will immediately be forfeited. All of the terms and conditions of this Plan and the Award Agreements shall be binding upon any such permitted successors and assigns.
14. COMPLIANCE WITH SEC REGULATIONS
It is the Company’s intent that the Plan comply in all respects with Rule 16b-3 under the Exchange Act. If any provision of the Plan is later found not to be in compliance with such Rule, the provision shall be deemed null and void. All actions with respect to Awards under the Plan shall be executed in accordance with the requirements of Section 16 of the Act, as amended, and any regulations promulgated thereunder. To the extent that any of the provisions contained herein do not conform with Rule 16b-3 of the Exchange Act or any amendments thereto or any successor regulation, then the Committee may make such modifications so as to conform the Plan and any Awards granted thereunder to the Rule’s requirements.
15. CHANGE IN CONTROL
15.1 Unless otherwise provided in an Award Agreement or the Committee determines otherwise, in the event of a Change in Control, as hereinafter defined, (i) each Stock Option and stock appreciation right shall be deemed fully vested and exercisable, (ii) the restrictions applicable to all restricted stock units shall lapse and such restricted stock units shall be deemed fully vested, (iii) any performance conditions shall be deemed satisfied in full, and (iv) all Awards shall be paid in cash if so
specified by the Committee. The amount of any cash payment in respect of a restricted stock unit, Stock Option or stock appreciation right shall be equal to: (A) in the event the Change in Control is the result of a tender offer or exchange offer for Common Stock, the final offer price per share paid for the Common Stock or (B) in the event the Change in Control is the result of any other occurrence, the aggregate per share value of Common Stock as determined by the Committee at such time, and (C) in the case of Stock Options or stock appreciation rights, the difference, if any, between the amount in (A) or (B), as applicable, and the applicable exercise price or reference price of a Stock Option or stock appreciation right. The Committee may, in its discretion, include such further provisions and limitations in any agreement documenting such Awards as it may deem equitable and in the best interests of the Company.
15.2 A “Change in Control” shall mean the occurrence of any one of the following events: (i) any “person” (as such term is defined in Section 3(A)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”); provided, however, that the event described in this clause (i) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any of its subsidiaries, (B) by any employee benefit plan sponsored or maintained by the Company or any of its subsidiaries, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, or (D) pursuant to a Non-Control Transaction (as defined in clause (ii) below); (ii) the consummation of a merger, consolidation, share exchange or similar form of corporate reorganization of the Company (or any such type of transaction involving the Company or any of its subsidiaries that requires the approval of the Company’s stockholders, whether for the transaction or the issuance of securities in the transaction or otherwise) (a “Business Combination”), unless immediately following such Business Combination: (A) more than 60% of the total voting power of the corporation resulting from such Business Combination (including, without limitation, any corporation which directly or indirectly has beneficial ownership of 100% of the Company Voting Securities) eligible to elect directors of such corporation is represented by shares that were Company Voting Securities immediately prior to such Business Combination (either by remaining outstanding or being converted), and such voting power is in substantially the same proportion as the voting powers of such Company Voting Securities immediately prior to the Business Combination, (B) no person (other than any holding company resulting from such Business Combination, any employee benefit plan sponsored or maintained by the Company (or the corporation resulting from such Business Combination)) immediately following the consummation of the Business Combination becomes the beneficial owner, directly or indirectly, of 25% or more of the total voting power of the outstanding voting securities eligible to elect directors of the corporation resulting from such Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Board at the time of the approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies the conditions in clauses (A), (B) and (C) is referred to hereunder as a “Non-Control Transaction”); or (iii) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or the sale of all or substantially all of its assets. Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 25% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.
16. INTERNAL REVENUE CODE SECTION 409A
It is the Company’s intent that the Plan and Awards granted hereunder comply with or be exempt from the requirements of Section 409A and that this Plan and Awards Agreements be administered and interpreted accordingly. If and to the extent that any payment or benefit under this Plan is determined by the Company to constitute “non-qualified deferred compensation” subject to Section 409A and is payable to a Non-Employee Director by reason of the Non-Employee Director’s termination of service, then (a) such payment or benefit shall be made or provided to the Non-Employee Director only upon a “separation from service” as defined for purposes of Section 409A under applicable regulations and (b) if the Non-Employee Director is deemed to be a “specified employee” (within the meaning of Section 409A and as determined by the Company), such payment or benefit shall be made or provided on the date that is six months and one day after the date of the Non-Employee Director’s separation from service (or earlier death). Any amount not paid in respect of the six-month period specified in the preceding sentence will be paid to the Non-Employee Director in a lump sum on the date that is six months and one day after the Non-Employee Director’s separation from service (or earlier death). Each payment made under the Plan shall be deemed to be a separate payment for purposes of Section 409A. If and to the extent that any Award is determined by the Company to constitute “non-qualified deferred compensation” subject to Section 409A and such Award is payable to a Non-Employee Director upon a Change in Control, then no payment shall be made pursuant to such Award unless such Change in Control constitutes a “change in the ownership of the corporation”, “a change in effective control of the corporation”, or “a change in the ownership of a substantial portion of the assets of the corporation” within the meaning of Section 409A; provided that if such Change in Control does not constitute a “change in the ownership of
the corporation”, “a change in effective control of the corporation”, or “a change in the ownership of a substantial portion of the assets of the corporation” within the meaning of Section 409A, then the Award shall still fully vest upon such Change in Control, but shall be payable upon the original schedule contained in the Award. If the Award includes a “series of installment payments” (within the meaning of Section 1.409A-2(b)(2)(iii) of the Treasury Regulations), the grantee’s right to the series of installment payments will be treated as a right to a series of separate payments and not as a right to a single payment. Neither the Company nor its affiliates shall have any liability to any Non-Employee Director, Non-Employee Director’s spouse or other beneficiary of any Non-Employee Director’s spouse or other beneficiary of any Non-Employee Director or otherwise if the Plan or any amounts paid or payable hereunder are subject to the additional tax and penalties under Section 409A.
17. RIGHT OF DISCHARGE RESERVED
Neither the adoption of the Plan nor the grant of any Award (or any provision in the Plan or Award Agreement) will (1) confer upon any grantee the right to remain in the service of the Company or any of its subsidiaries as a Non-Employee Director, (2) affect any right which the Company or any of its subsidiaries may have to terminate or alter the terms and conditions of such service or (3) create any obligation on behalf of the Board to nominate any Non-Employee Director for re-election to the Board by the Company’s stockholders.
18. NATURE OF PAYMENTS
18.1 Any and all grants of Awards and deliveries of Common Stock, cash, securities or other property under the Plan will be in consideration of services performed or to be performed for the Company by the grantee. Awards under the Plan may, in the discretion of the Committee, be made in substitution in whole or in part for cash or other compensation otherwise payable to a grantee. Only whole Shares will be delivered under the Plan. Awards will, to the extent reasonably practicable, be aggregated in order to eliminate any fractional shares. Fractional shares may, in the discretion of the Committee, be forfeited or be settled in cash or otherwise as the Committee may determine.
18.2 All such grants and deliveries of Shares, cash, securities or other property under the Plan will constitute a special discretionary incentive payment to the grantee, will not entitle the grantee to the grant of any future Awards and will not be required to be taken into account in computing the amount of salary or compensation of the Grantee for the purpose of determining any contributions to or any benefits under any pension, retirement, profit-sharing, bonus, life insurance, severance or other benefit plan of the Company or under any agreement with the grantee, unless the Company specifically provides otherwise.
19. NON-UNIFORM DETERMINATIONS
19.1 The Committee’s determinations under the Plan and Award Agreements need not be uniform and any such determinations may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee will be entitled, among other things, to make non-uniform and selective determinations under Award Agreements, and to enter into non-uniform and selective Award Agreements, as to (a) the persons to receive Awards, (b) the terms and provisions of Awards and (c) whether a grantee’s directorship has been terminated for purposes of the Plan.
19.2 To the extent the Committee deems it necessary, appropriate or desirable to comply with foreign law or practices and to further the purposes of the Plan, the Committee may, in its sole discretion and without amending the Plan, establish special rules applicable to Awards to grantees who are foreign nationals and grant Awards (or amend existing Awards) in accordance with those rules.
20. NO THIRD PARTY BENEFICIARIES
Except as expressly provided in an Award Agreement, neither the Plan nor any Award Agreement shall confer on any person other than the Company and the grantee of the Award any rights or remedies thereunder; provided that the exculpation and indemnification provisions of Section 2.5 shall inure to the benefit of a Covered Person’s estate, beneficiaries and legatees.
21. SUCCESSORS AND ASSIGNS
The terms of this Plan shall be binding upon and inure to the benefit of the Company and its successors and assigns.
22. GOVERNING LAW
This Plan and all rights and obligations under this Plan shall be construed in accordance with and governed by the laws of the State of Delaware.
23. EFFECTIVE DATE
The Prior Plan became effective on May 25, 2016. This Plan will become subject to and effective upon stockholder approval of the Plan at the 2020 Annual Shareholder Meeting.
24. TERM
Unless sooner terminated by the Board, this Plan shall terminate on the day before the tenth anniversary of the date the Plan was approved by stockholders; provided that any Award granted prior to the date of such Plan termination shall continue pursuant to its terms and the terms of this Plan.
Exhibit E
CONMED CORPORATION
AMENDED AND RESTATED 2020 EMPLOYEE STOCK PURCHASE PLAN
1.Purpose.
a.The purpose of the CONMED Corporation Amended and Restated 2020 Employee Stock Purchase Plan (the “Plan”) is to provide eligible employees of CONMED Corporation (the “Company”) and its Subsidiaries and Affiliates with an opportunity to acquire an interest in the Company through the purchase of Common Stock of the Company, par value $.01 per share (the “Common Stock”) with accumulated payroll deductions.
b.The Company intends (but makes no undertaking or representation to maintain) the Plan to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), and provisions of the Plan shall be construed in a manner consistent with the requirements of Section 423 of the Code (a “Section 423 Offering”). In addition, the Plan authorizes the grant of purchase rights which do not qualify under Section 423 of the Code, pursuant to any rules, procedures, or sub-plans adopted by the Committee for such purpose (a “Non-Section 423 Offering”).
2.Definitions. Unless otherwise defined herein, capitalized terms in the Plan shall have the meanings ascribed to them under this Section 2.
a.“Affiliate” shall mean any entity that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under the common control with, the Company.
b.“Authorization Form” shall mean a form supplied by and delivered to the Company by a Participant authorizing payroll deductions as set forth in Section 5 hereof and such other terms and conditions as the Company from time to time may determine.
c.“Board” shall mean the Board of Directors of the Company.
d.“Committee” shall mean a committee of at least three members, which may consist of officers or employees of the Company designated to administer the Plan and to perform the functions set forth herein.
e.“Compensation” shall mean earnings from regular pay, overtime pay, commission, double overtime, retroactive pay, incentive pay, management bonus, adjustment to regular pay and short term disability pay payable to an Employee or, in the case of an Employee employed by Designated Companies as a fully commissioned sales person, an annual rate of compensation equal to the Employee’s total actual commissions paid for the preceding calendar year, to the extent in excess of $20,000, in each case determined prior to the Employee’s pre-tax contributions pursuant to Section 125 and Section 401(k) of the Code or similar pre-tax contributions made by Employees outside the United States, but excluding the value of equity awards granted by the Company to an Employee or non-taxable fringe benefits provided by the Company or a Subsidiary or Affiliate to an Employee. The Committee shall have discretion to determine the application of this definition to Employees outside the United States.
f.“Designated Companies” shall mean Subsidiaries or Affiliates, whether now existing or existing in the future, that have been designated by the Committee from time to time, in its sole discretion, as eligible to participate in the Plan. The Committee may designate Subsidiaries or Affiliates as Designated Companies in a Section 423 Offering or in a Non-Section 423 Offering. For purposes of a Section 423 Offering, only the Company and its Subsidiaries may be Designated Companies, provided, however that at any given time, a Subsidiary that is a Designated Company under a Section 423 Offering will not be a Designated Company under a Non-Section 423 Offering. The Committee may also determine which Subsidiaries, Affiliates or Eligible Employees may be excluded from participation in the Plan, to the extent consistent with Section 423 of the Code for Designated Companies participating in a Section 423 Offering, and determine which Designated Company or Companies will participate in separate Offerings (to the extent that the Company makes separate Offerings).
g.“Eligible Employee” shall mean any Employee of the Company or a Designated Company, excluding:
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(1) | any Employee who has not completed at least ninety (90) days of continuous full-time employment with the Company or a Designated Company prior to an Offering Date; |
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(2) | any Employee who customarily is employed for not more than five (5) months in a calendar year; or |
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(3) | any Employee who would own (immediately after the grant of an option under the Plan and applying the rules of Section 424(d) of the Code in determining stock ownership) shares, and/or hold outstanding options to purchase shares, possessing five percent (5%) or more of the total combined voting power or value of all classes of shares of the Company; |
provided, however, that if exclusion of an Employee pursuant to (1) or (2) above is in violation of applicable law, such Employee will be an Eligible Employee but may be required to participate in a Non-Section 423 Offering if participation in a Section 423 Offering is not in compliance with Section 423 of the Code.
h.“Employee” shall mean any person who is regularly employed by the Company or one of its Designated Companies. In the event any individual who is not an employee of the Company or a Designated Company is reclassified as an employee of the Company or a Designated Company for any purpose, including, without limitation, common law or statutory employees, by any action of any third party, including, without limitation, any government agency, or as a result of any private lawsuit, action or administrative proceeding, such individual shall, notwithstanding such reclassification, remain ineligible for participation in the Plan.
i.“Exercise Date” shall mean the last business day of each Offering Period in which payroll deductions are made under the Plan.
j.“Fair Market Value” per share as of a particular date shall mean the last reported sale price (on that date) of the Common Stock on the New York Stock Exchange or such other national market on which the Company’s Common Stock may be listed.
k.“Offering” shall mean an offer under the Plan of an option that may be exercised during an Offering Period as further described in Sections 4 and 6. For purposes of the Plan, the Committee may designate separate Offerings under the Plan (the terms of which need not be identical) in which Participants will participate (even if the dates of the applicable Offering Periods of each such Offering are identical) and the provisions of the Plan will separately apply to each Offering.
l.“Offering Date” shall mean the first business day of each Offering Period of each Plan Year.
m.“Offering Period” shall mean a period of three (3) months, or such other period of time as determined by the Committee. The next Offering Period shall commence on July 1, 2020.
n.“Participant” shall mean an Eligible Employee who participates in the Plan.
o.“Plan Year” shall mean the period beginning on July 1, 2020 and ending on December 31, 2020 and each calendar year thereafter.
p.“Subsidiary” shall mean any corporation, if any, having the relationship to the Company described in Section 424(f) of the Code.
3.Eligibility and Participation.
a. Any person who is an Eligible Employee on an Offering Date shall be eligible to become a Participant in the Plan beginning on that Offering Date and shall become a Participant as of that Offering Date by (i) completing an Authorization Form and filing it with the Company by the date required by the Company, (ii) properly completing enrollment over the telephone through the voice response system (“VRS”) or website maintained by the Plan’s administrator, (iii) speaking with a customer
service representative of the Plan’s administrator or (iv) complying with such other method as may be established by the Committee from time to time in its sole discretion. Such authorization will remain in effect for subsequent Offering Periods, until modified or terminated by the Participant.
b. Any person who first becomes an Eligible Employee during an Offering Period shall be eligible to become a Participant in the Plan as of the first day of the Offering Date occurring after the date on which that person became an Eligible Employee and shall become a Participant as of such date by (i) completing an Authorization Form and filing it with the Company by the date required by the Company, (ii) properly completing enrollment over the telephone through the VRS or website maintained by the Plan’s administrator (iii) speaking with a customer service representative of the Plan’s administrator or (iv) complying with such other method as may be established by the Committee from time to time in its sole discretion. Such authorization will remain in effect for subsequent Offering Periods, until modified or terminated by the Participant.
c. A person shall cease to be a Participant upon the earliest to occur of:
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(1) | the date the Participant ceases to be an Eligible Employee, for any reason; |
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(2) | the first day of the Offering Period beginning after the date on which the Participant ceases payroll deductions under the Plan; or |
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(3) | the date of a withdrawal from the Plan by the Participant as provided in Section 8 hereof. |
4.Grant of Option.
a.On each Offering Date, the Company shall grant each Participant an option to purchase shares of Common Stock, subject to the limitations set forth in Sections 4.c, 4.d and 9.a hereof.
b.The option price per share of the Common Stock subject to an Offering shall be equal to ninety percent (90%) of the Fair Market Value of a share of Common Stock on the Exercise Date; provided that, prior to the beginning of any Offering Period, the Committee may alternatively provide that the option price shall be any percentage in the range between eighty-five percent (85%) to one hundred percent (100%) of the Fair Market Value.
c.No Participant shall be granted an option which permits his or her rights to purchase Common Stock under the Plan and all other employee stock purchase plans of the Company to accrue at a rate which exceeds $25,000 of the Fair Market Value of the Common Stock (determined at the time the option is granted) for each calendar year in which such option is outstanding at any time; for purposes of this limitation, there shall be counted only options granted under a Section 423 Offering.
d.No Participant shall be granted an option to purchase more than 1,000 shares of Common Stock during an Offering Period, subject to necessary adjustment under Section 13.
5.Payroll Deductions/Other Contributions.
a.A Participant may, in accordance with rules adopted by the Committee, submit an Authorization Form (or provide authorization through such other means as may be permitted by the Committee from time to time in its sole discretion) that authorize payroll deductions of any whole number percentage from one percent (1%) to ten percent (10%) (or such other percentage as may be established by the Committee from time to time in its sole discretion) of such Participant’s Compensation on each pay date during the Offering Period, unless payroll deductions for purposes of the Plan are prohibited or otherwise problematic under applicable laws (as determined by the Committee in its sole discretion), in which case the Committee may require Participants to contribute to the Plan by such other means as determined by the Committee. Any reference to “payroll deductions” in this Section 5 (or in any other section of the Plan) will similarly cover contributions by other means made pursuant to this Section 5.
b.A Participant may increase or decrease his or her payroll deduction percentage (including a cessation of payroll deductions) effective as of each Offering Date provided the Participant files with the Company the Authorization Form
(or provides authorization through such other means as may be established by the Committee from time to time in its sole discretion) requesting such change by the date required by the Company. The Committee may, in advance of any Offering Period, establish rules permitting a Participant to increase, decrease or terminate his or her payroll deductions during an Offering Period.
c.All payroll deductions made by a Participant shall be credited to such Participant’s account under the Plan. A Participant may not make any additional payments into such account.
6.Exercise of Option.
a.Unless a Participant withdraws from the Plan as provided in Section 8 hereof, such Participant’s option to purchase shares will be exercised automatically on the Exercise Date, and the maximum number of full and fractional shares subject to such option will be purchased for such Participant at the applicable option price with the accumulated payroll deductions in such Participant’s account. During a Participant’s lifetime, his or her option to purchase shares hereunder is exercisable only by such Participant.
b.The shares of Common Stock purchased upon exercise of an option hereunder shall be credited to the Participant’s account under the Plan and shall be deemed to be transferred to the Participant on the Exercise Date and, except as otherwise provided herein, the Participant shall have all rights of a stockholder with respect to such shares.
7.Delivery of Common Stock. As promptly as practicable after receipt by the Plan’s administrator or brokerage firm of a written request or, if applicable, request via the VRS or website for withdrawal of Common Stock from any Participant's account, the Plan’s administrator or brokerage firm, as the case may be, shall arrange the delivery to such Participant of a stock certificate representing the shares of Common Stock which the Participant requests to withdraw. Withdrawals may be made no more frequently than twice each Plan Year unless approved by the Committee in its sole discretion.
8.Withdrawal; Termination of Employment.
a.A Participant may withdraw all, but not less than all, the payroll deductions credited to such Participant’s account under the Plan at any time by giving written notice to the Company received at least thirty (30) days prior to the Exercise Date (or such other notice period as may be established by the Committee from time to time in its sole discretion). All such payroll deductions credited to such Participant’s account will be paid to such Participant promptly after receipt of such Participant’s notice of withdrawal and such Participant’s option for the Offering Period in which the withdrawal occurs will be automatically terminated. No further payroll deductions for the purchase of shares of Common Stock will be made for such Participant during such Offering Period.
b.Upon termination of a Participant’s status as an Eligible Employee during the Offering Period for any reason, including voluntary termination, retirement or death, the payroll deductions remaining credited to such Participant’s account will be returned to such Participant or, in the case of such Participant’s death, his or her estate, and such Participant’s option will be automatically terminated. A Participant’s status as an Eligible Employee shall not be considered terminated in the case of a leave of absence agreed to in writing by the Company or a Designated Company, provided that such leave is for a period of not more than six (6) months or reemployment upon expiration of such leave is guaranteed by contract or statute, subject to any additional requirements under any applicable Company leave of absence policy.
c.A Participant whose employment transfers or whose employment terminates with an immediate rehire (with no break in service) by or between the Company or a Designated Company will not be treated as having terminated employment for purposes of participating in the Plan or an Offering; however, if a Participant transfers from a Section 423 Offering to a Non-Section 423 Offering, the exercise of the option will be qualified under the Section 423 Offering only to the extent that such exercise complies with Section 423 of the Code. If a Participant transfers from a Non-Section 423 Offering to a Section 423 Offering, the exercise of the option will remain non-qualified under the Non-Section 423 Offering.
d.A Participant’s withdrawal from an Offering will not have any effect upon such Participant’s eligibility to participate in a subsequent Offering Period.
9.Stock.
a.The maximum number of shares of Common Stock which shall be reserved for sale under the Plan shall be one million (1,000,000), subject to adjustment upon the occurrence of an event as provided in Section 13 hereof.Such shares may be authorized but unissued Common Stock or authorized and issued Common Stock held in the Company’s treasury or acquired by the Company for the purposes of the Plan. Shares subject to any lapsed or expired option shall again become available for transfer pursuant to options granted or to be granted under the Plan.If the total number of shares which would otherwise be subject to options granted under the Plan on an Offering Date exceeds the number of shares then available under the Plan (after deduction of all shares for which options have been exercised or are then outstanding), the Committee shall make a pro rata allocation of the shares remaining available for option grant in as uniform a manner as shall be practicable and as it shall determine to be equitable. In such event, the Committee shall give written notice to each Participant of such reduction of the number of option shares affected thereby and shall similarly reduce the rate of payroll deductions, if necessary.
b.Shares of Common Stock to be delivered to a Participant under the Plan will be registered in the name of the Participant or, at the election of Participant employed by the Company or a Designated Company in the United States, subject to Company approval, in the name of the Participant and another person as joint tenants with rights of survivorship.
10.Administration.
a. The Plan shall be administered by the Committee, and the Committee may select an administrator to whom its duties and responsibilities hereunder may be delegated. The Committee shall have full power and authority, subject to the provisions of the Plan, to promulgate such rules and regulations as it deems necessary for the proper administration of the Plan, to interpret the provisions and supervise the administration of the Plan, and to take all action in connection therewith or in relation thereto as it deems necessary or advisable. Notwithstanding any provision to the contrary in this Plan, the Committee may further adopt rules, procedures or sub-plans relating to the operation and administration of the Plan to accommodate the specific requirements or achieve desired tax objectives of local laws and regulations for jurisdictions outside of the United States. Without limiting the generality of the foregoing, the Committee specifically is authorized to adopt rules, procedures and sub-plans, which, for purposes of a Non-Section 423 Offering, may be outside the scope of Section 423 of the Code, regarding, without limitation, eligibility to participate, the definition of Compensation, handling of payroll deductions, making of contributions to the Plan (including, without limitation, in forms other than payroll deductions), establishment of bank or trust accounts to hold payroll deductions, payment of interest, conversion of local currency, obligations to pay payroll tax, determination of beneficiary-designation requirements, withholding procedures and handling of share issuances, which may vary according to local requirements.
b. Any decision reduced to writing and signed by a majority of the members of the Committee shall be fully effective as if it had been made at a meeting duly held. The determination of the Committee on any matters relating to the Plan shall be final, binding and conclusive. The Company will pay all expenses incurred in the administration of the Plan. No member of the Committee shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan, and all members of the Committee shall be fully indemnified by the Company with respect to any such action, determination or interpretation.
11.Transferability. Neither payroll deductions credited to a Participant’s account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will or the laws of descent and distribution) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds in accordance with Section 8 hereof.
12.Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions, unless otherwise required by applicable laws, nor shall any interest be paid on such payroll deductions, unless otherwise required by applicable laws.
13.Effect of Certain Changes. In the event of any increase, reduction, or change or exchange of shares of Common Stock for a different number or kind of shares or other securities of the Company by reason of a reclassification, recapitalization, merger, consolidation, reorganization, stock dividend, stock split or reverse stock split, combination or exchange of shares, repurchase of shares, change in corporate structure, distribution of an extraordinary dividend or otherwise, the Committee shall conclusively determine the appropriate equitable adjustments, if any, to be made under the Plan, including without limitation adjustments to the number of shares of Common Stock which have been authorized for issuance under the Plan but have not yet
been granted under options, as well as the price per share of Common Stock covered by each option under the Plan which has not yet been exercised.
14.Termination or Amendment. The Board may at any time terminate or amend the Plan. No such termination can adversely affect options previously granted and no amendment may make any change in any option theretofore granted which adversely affects the rights of any Participant. No amendment shall be effective unless approved by the stockholders of the Company if stockholder approval of such amendment is required to comply with any law, regulation or stock exchange rule.
15.Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof, including, if applicable, via the VRS or website.
16.No Employment Rights. Nothing in the Plan shall confer upon any Participant the right to continue in the employ of the Company, any Subsidiary or Affiliate, or affect any right which the Company, any Subsidiary or Affiliate may have to terminate such employment.
17.Governing Law; Regulations and other Approvals.
a.This Plan and the rights of all persons claiming hereunder shall be construed and determined in accordance with the laws of the State of Delaware, without giving effect to principles of conflict of laws.
b.The terms of any Offering or any options granted under the Plan shall be subject to and may be modified if required by applicable laws, rules and regulations, including applicable U.S. and non-U.S. federal, state and local securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Committee.
c.The Plan is intended to comply with Rule 16b-3 as promulgated under Section 16 of the U.S. Securities Exchange Act of 1934, as amended, and the Committee shall interpret and administer the provisions of the Plan in a manner consistent therewith. Any provisions inconsistent with such Rule shall be inoperative and shall not affect the validity of the Plan.
18.Withholding of Taxes.
a.Participation in the Plan is subject to any applicable U.S. and non-U.S. federal, state or local tax withholding requirements on income the Participant realizes in connection with the Plan. Each Participant agrees, by enrolling in the Plan, that the Company, any Subsidiary or Affiliate may withhold from a Participant’s wages, salary or other compensation at any time the amount necessary for the Company, any Subsidiary or Affiliate to meet applicable withholding obligations, including any withholding required to make available to the Company, any Subsidiary or Affiliate any tax deductions or benefits attributable to the sale or disposition of Common Stock by such Participant. The Company, any Subsidiary or Affiliate may use any method of withholding that the Company, any Subsidiary or Affiliate deems appropriate. The Company will not be required to issue any Common Stock under the Plan until such obligations are satisfied.
b.For a Participant participating in a Section 423 Offering, if the Participant makes a disposition, within the meaning of Section 424(c) of the Code and regulations promulgated thereunder, of any share or shares issued to such Participant pursuant to such Participant’s exercise of an option, and such disposition occurs within the two-year period commencing on the day after the Offering Date or within the one-year period commencing on the day after the Exercise Date, such Participant shall, within five (5) days of such disposition, notify the Company thereof and thereafter immediately deliver to the Company any amount of U.S. federal, state or local income taxes and other amounts which the Company informs the Participant the Company is required to withhold.
19.Code Section 409A. Any option granted under a Section 423 Offering is exempt from the application of Section 409A of the Code. In furtherance of the foregoing and notwithstanding any provision in the Plan to the contrary, if the Committee determines that an option granted under the Plan may be subject to Section 409A of the Code or that any provision in the Plan would cause an option under the Plan to be subject to Section 409A of the Code, the Committee may amend the terms of the Plan and/or of an outstanding option granted under the Plan, or take such other action the Committee determines is necessary or appropriate, in each case, without the Participant’s consent, to exempt any outstanding option or future option that may be granted
under the Plan from or to allow any such option to comply with Section 409A of the Code, but only to the extent any such amendments or action by the Committee would not violate Section 409A of the Code. Notwithstanding the foregoing, the Company will have no liability to a Participant or any other party if the option to purchase shares of Common Stock under the Plan that is intended to be exempt from or compliant with Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee with respect thereto. The Company makes no representation that the option to purchase shares of Common Stock under the Plan is compliant with Section 409A of the Code.
20.Effective Date; Approval of Stockholders. The Plan is effective as of [May 20, 2020]. The Plan shall be submitted to the stockholders of the Company for their approval within twelve (12) months after the date the Plan is adopted. The Plan is conditioned upon the approval of the stockholders of the Company, and failure to receive their approval shall render the Plan and all outstanding options issued thereunder void and of no effect.
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Daniel S. Jonas
525 French Road
Utica, New York 13502
11311 Concept Blvd.
Largo, FL 33773 Direct Dial (315) 624-3208
[April 10, 2020]
(727) 214-2974XXXXX ___, 2023
To: Owners of CONMED Stock Fund held in CONMED'sCONMED’s Retirement Savings Plan
As described in the attached materials, proxies are being solicited in connection with the proposals to be considered at the upcoming Annual Meeting of ShareholdersStockholders of CONMED Corporation (the “Company”). We hope you will take advantage of the opportunity to direct the manner in which shares of the CONMED Common Stock Fund owned by you in the Retirement Savings Plan (the “Shares”) will be voted.
Enclosed with this letter is a voting instruction ballot, which will permit you to vote the Shares.
The Proxy Statement and Annual Financials are available at www.investorvote.com/CNMD. After you have reviewed the Proxy Statement, we urge you to vote your Shares by marking, dating, signing and returning the enclosed voting instruction ballot, no later than [May 11, 2020],May __, 2023, to: |
| |
By Regular Mail: | | By Overnight Delivery |
c/o Computershare Investor Services Mediant CommunicationsP.O. Box 505000 Louisville, KY 40233-5000
8016Cary, NC 27512-9903 United States | | CONMED Corporation c/o Computershare Investor Services 462 South 4th Street, Suite 1600
Louisville, KY 40202
Mediant CommunicationsP.O. Box 8016 Cary, NC 27512-9903 United States |
ComputershareMediant Communications will certify the totals to Fidelity Investments (“Fidelity”) for the purpose of having those shares voted by Fidelity.
We urge each of you to vote, as a means of participating in the governance of the affairs of the Company. If your voting instructions for the Shares are not received, the Shares will not be voted. While I hope that you will vote in the manner recommended by the Board of Directors, the most important thing is that you vote in whatever manner you deem appropriate. Please take a moment to do so.
**Please note that the enclosed material relates only to those shares which you own under the
Retirement Savings Plan. You will receive separate voting material for shares related to other plans that are voted independently from this ballot.
/s/ Daniel S. Jonas
Daniel S. Jonas
Secretary
| | | | | | | | |
| | | | |
| | | | 2023 Proxy Statement | | | | 1 |
P.O. BOX 8016, CARY, NC 27512-9903
SecretaryYOUR VOTE IS IMPORTANT! PLEASE VOTE BY:
| | |
| | IN PERSON Attend in person at the offices of the Company at 11311 Concept Boulevard, Largo FL 33773 |
 | | INTERNET Go To: www.proxypush.com/CNMD • Cast your vote online • Have your Proxy Card ready • Follow the simple instructions to record your vote |
 | | PHONE Call 1-866-892-1568 • Use any touch-tone telephone • Have your Proxy Card ready • Follow the simple recorded instructions |
 | | MAIL • Mark, sign and date your Proxy Card • Fold and return your Proxy Card in the postage-paid envelope provided |
CONMED Corporation 
Annual Meeting of Stockholders
For Stockholders as of record on March 28, 2023
| TIME: | Wednesday, May 24, 2023 01:30 PM, Local Time |
| PLACE: | Annual Meeting to be held l at the Company’s offices |
| At 11311 Concept Boulevard, Largo FL 33773, and live via the internet |
Please visit www.proxydocs.com/CNMD for more details.
This proxy is being solicited on behalf of the Board of Directors
The undersigned hereby appoints Daniel S. Jonas as the true and lawful attorney of the undersigned, with full power of substitution and revocation, and authorizes him to vote all the shares of capital stock of CONMED Corporation which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In his discretion, the Named Proxy is authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof.
You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE), but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE
CONMED Corporation
Annual Meeting of Stockholders
Please make your marks like this: ☒ Use dark black pencil or pen only
THE BOARD OF DIRECTORS RECOMMENDS A VOTE:
FOR ON PROPOSALS 1, 2, 3, AND 5; and for PROPOSAL 4, the Board recommends an annual vote.
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| | | | | |
| | PROPOSAL | | | | YOUR VOTE | | | | BOARD OF DIRECTORS RECOMMENDS |
| | | | | |
| | 1. Election of Directors | | | | | | | |  |
| | | | FOR | | WITHHOLD | | |
| | 1.01 David Bronson | | ☐ | | ☐ | | | | FOR |
| | | | | |
| | 1.02 Brian P. Concannon | | ☐ | | ☐ | | | | FOR |
| | | | | |
| | 1.03 LaVerne Council | | ☐ | | ☐ | | | | FOR |
| | | | | |
| | 1.04 Charles M. Farkas | | ☐ | | ☐ | | | | FOR |
| | | | | |
| | 1.05 Martha Goldberg Aronson | | ☐ | | ☐ | | | | FOR |
| | | | | |
| | 1.06 Curt R. Hartman | | ☐ | | ☐ | | | | FOR |
| | | | | |
| | 1.07 Jerome J. Lande | | ☐ | | ☐ | | | | FOR |
| | | | | |
| | 1.08 Barbara J. Schwarzentraub | | ☐ | | ☐ | | | | FOR |
| | | | | |
| | 1.09 Dr. John L. Workman | | ☐ | | ☐ | | | | FOR |
| | | | | |
| | 2 Ratification of appointment of PricewaterhouseCoopers, LLP as the Company’s Independent registered accounting firm for the fiscal year ending December 31, 2023 | | FOR ☐ | | AGAINST ☐ | | ABSTAIN ☐ | | FOR |
| | | | | |
| | 3. Advisory Vote on Named Executive Officer Compensation | | ☐ | | ☐ | | ☐ | | FOR |
| | | | | |
| | 4. Advisory vote on frequency of advisory vote on Names Executive Officer Compensation; | | ☐ | | ☐ | | ☐ | | |
| | | | | |
| | 5. Amend Certificate of Incorporation to Reflect New Delaware Law Provision on Officer Exculpation | | ☐ | | ☐ | | ☐ | | FOR |
| | | | | |
| | 6. Transact such other business as may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting | | | | | | | | |
You must register to attend the meeting online and/or participate at www.proxydocs.com/CNMD
Authorized Signatures - Must be completed for your instructions to be executed.
Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form.
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| | Signature (and Title if applicable) | | Date | | | | | | Signature (if held jointly) | | Date | | |
