Avanos Medical DEFA14A Additional proxy soliciting materials

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

(Amendment No. 1)

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Avanos Medical, Inc.

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Explanatory Note

This Amendment No. 1 is being filed to supplement and correct certain disclosures (as summarized below) in Avanos Medical, Inc.’s 2019 Proxy Statement on Schedule 14A, which was filed with the Securities and Exchange Commission on March 15, 2019 (the “2019 Proxy Statement”). Except as specifically discussed in this Explanatory Note, this Amendment No. 1 does not otherwise modify or update any other disclosures presented in the 2019 Proxy Statement. In addition, this Amendment No. 1 does not reflect events occurring after the date of the 2019 Proxy Statement or modify or update disclosures that may have been affected by subsequent events.

If you are a stockholder and you have already voted, you do not need to vote again unless you desire to change or revoke your prior vote on any proposal. If you are a stockholder of record and you desire to change or revoke your vote, please refer to the 2019 Proxy Statement for instructions on how to do so.

Summary of Corrections

There are three items in the 2019 Proxy Statement related to executive compensation that need to be corrected, as follows:

The stock option awards in 2018 described in the 2019 Proxy Statement were overstated for four of our Named Executive Officer (Messrs. Woody, Voskuil, Tushar and Wesley). As described on pages 32 - 33 of our 2019 Proxy Statement, the Compensation Committee approved a target grant value for these awards and awarded 60% of that target grant value in the form of Performance Restricted Share Units (“PRSUs”) and 40% of the target grant value in the form of stock options (“Options”). The Company incorrectly granted those four Named Executive Officers both PRSUs and Options equal to 60% of the target grant value. As a result, the Options disclosed in the 2019 Proxy Statement exceed the number of Options approved by the Compensation Committee. The Company is in the process of rescinding the excess options incorrectly issued to the Named Executive Officers in 2018.

The Stock Award and Option Award numbers in the Summary Compensation Table on page 39 of the 2019 Proxy Statement are reversed. The numbers under the Stock Award column should be under the Option Award column, and the numbers under the Option Award column should be under the Stock Award column. The numbers under the corrected Option Award column also need to be adjusted to reflect the correct number of options approved in 2018 as described above. The numbers under the Total column on the Summary Compensation Table also need to be corrected for the same issue.

Footnote 8 to the Grants of Plan-Based Awards in 2018 table on page 41 of the 2019 Proxy Statement incorrectly indicated that Mr. Woody received 155,150 time-vested stock options as a result of the successful closing of the sale of our S&IP business to Owens & Minor in 2018 (the “Closing Bonus Grant”). The actual number of time-vested stock options that Mr. Woody received for the Closing Bonus Grant was 25,566, with a grant date value of $350,000.

Correcting the matters referenced above also impacts the Grants of Plan-Based Awards in 2018 table (page 41), the Outstanding Equity Awards as of December 31, 2018 table (page 42), the Ratio of CEO Compensation to Median Employee Compensation table (page 50), and the Security Ownership table (page 55).

Amended Disclosures

The corrected tables and other corrected information for the 2019 Proxy Statement is set forth below. Footnotes have been excluded, except for footnote 8 to the Grants of Plan-Based Awards in 2018 table and footnote 5 of the Security Ownership table, because they continue to be correct as written in the 2019 Proxy Statement.

Corrections to Compensation Discussion and Analysis:

The table setting forth the annual long-term equity incentive awards granted in 2018 to our Named Executive Officers (page 33 of the 2019 Proxy Statement), is amended to reflect the correct number of Target Stock Options Awarded to Messrs. Woody, Voskuil, Tushar and Wesley, as follows:

NAME	TARGET GRANT VALUE OF AWARDS ($)		TARGET PRSUs AWARDED (#)		TARGET STOCK OPTIONS AWARDED (#)
Joseph F. Woody		3,540,000		43,436		103,433
Steven E. Voskuil		775,000		9,509		22,644
John R. Tushar		350,000		4,268		10,226
John W. Wesley		450,000		5,521		13,148

A new subsection to “Long-Term Equity Incentive Compensation” is added to page 34 of the 2019 Proxy Statement, immediately before “Benefits and Other Compensation”, as follows:

Special Bonus Grant to Mr. Woody

The Committee granted to Mr. Woody a special grant of 25,566 time-vested stock options with a grant day value of $350,000. This special award was made in recognition of the closing of a complicated and challenging divestiture of our S&IP business for a favorable price, as well as to incent Mr. Woody to achieve the on-going transformation of the Company to a pure-play medical device company.

Corrections to Compensation Tables:

The Summary Compensation Table on page 39 of the 2019 Proxy Statement is amended to correct the Stock Award, Option Award, and Total columns with respect to Messrs. Woody, Voskuil, Tushar and Wesley, as follows:

Summary Compensation Table

NAME AND PRINCIPAL POSITION	YEAR		SALARY ($)		BONUS ($)			STOCK AWARD ($)		OPTION AWARDS ($)		NON-EQUITYINCENTIVE PLAN COMPENSATION ($)		CHANGE IN PENSIONVALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS ($)		ALL OTHER COMPENSATION ($)		TOTAL ($)
Joseph F. Woody		2018		904,913					2,897,616		1,765,996		723,251				157,487		6,449,263
Chief Executive Officer		2017		442,500					3,135,706		1,416,004		884,124		—		284,761		6,163,095
Steven E. Voskuil		2018		459,659					634,345		309,996		223,624		—		58,956		1,686,580
Senior Vice President and		2017		449,544					602,653		320,003		522,940		—		79,422		1,974,562
Chief Financial Officer		2016		436,450					657,562		319,997		510,821		—		45,916		1,970,746
John R. Tushar
President, Global Franchises		2018		306,591		100,000	²		450,248		139,994		127,848		—		183,173		1,307,854
John W. Wesley		2018		393,750					368,306		179,996		164,194				47,354		1,153,600
Senior Vice President		2017		393,750					376,627		200,003		395,482		—		51,263		1,417,125
and General Counsel		2016		393,750					410,971		200,000		395,010		—		24,392		1,424,123

The Grants of Plan-Based Awards in 2018 table on page 41 of the 2019 Proxy Statement (including footnote 8 to such table) is amended to correct the actual number of time-vested stock options awarded Messrs. Woody, Voskuil, Tushar and Wesley, and the grant date fair value of such awards, as follows:

				PAYOUTS UNDER NOW-EQUITY INCENTIVE PLAN AWARDS⁽¹⁾			PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS⁽²⁾
NAME	GRANT TYPE	DATE COMMITTEE TOOK ACTION	GRANT DATE		TARGET ($)	MAXIMUM ($)		TARGET ($)	MAXIMUM ($)	AWARDS: NUMBER SHARES OF STOCK OR UNITS (#)	AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS (#)	EXERCISE OR BASE OF PRICE OF OPTION AWARDS ($/SH)	OF STOCK AND OPTION AWARDS ($)⁽⁵⁾
Joseph F. Woody	Performance-based RSUs⁽⁴⁾	2/21/2018	2/21/2018					43,436	86,872				2,897,616
	Time-vested stock option⁽⁸⁾	2/21/2018	2/21/2018								128,999	52.10	1,765,996
	Annual cash incentive award				1,048,283	2,096,565
Steven E. Voskuil	Performance-based RSUs⁽⁴⁾	2/21/2018	2/28/2018					9,509	19,018				634,345
	Time-vested stock option	2/21/2018	5/3/2018								22,644	52.10	309,996
	Annual cash incentive award				324,121	648,242
John R. Tushar	Performance-based RSUs⁽⁴⁾	3/12/2018	3/12/2018					4,268	8,536				275,243
	Time-vested stock option	3/12/2018	5/3/2018								10,226	52.10	139,994
	Annual cash incentive award				228,000	456,000
	Time-vested RSUs⁽⁶⁾	3/12/2018	3/12/2018							3,557			175,004
John W. Wesley	Performance-based RSUs⁽⁴⁾	02/21/2018	2/28/2018					5,521	11,042				368,306
	Time-vested stock option	02/21/2018	5/3/2018								13,148	52.10	179,996
	Annual cash incentive award				236,250	472,500

(8) Includes 25,566 time-vested stock options granted under the Equity Participation Plan to Mr. Woody on May 3, 2018 as a closing bonus related to successfully closing the sale of S&IP to Owens & Minors by April 30, 2018.

The Outstanding Equity Awards as of December 31, 2018 table on page 42 and 43 of the 2019 Proxy Statement is amended to correct the actual number of time-vested stock options granted to Messrs. Woody, Voskuil, Tushar and Wesley on May 3, 2018, as follows:

OPTION AWARDS⁽²⁾												STOCK AWARDS
NAME	GRANT DATE	NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE		NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE		OPTION EXERCISE PRICE ($)(3)		OPTION EXPIRATION DATE	NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)			MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($)(5)		EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#)			EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS, OR OTHER RIGHTS THAT HAVE NOT VESTED ($)(8)
Joseph F. Woody	5/3/2018				25,566		52.10	5/3/2028							—
	5/3/2018				103,433		52.10	5/3/2028							—
	2/27/2018														43,436
	6/26/2017		44,715		104,338		39.93	6/26/2027
	6/26/2017									16,696	⁽⁴⁾		747,814
	6/26/2017														53,193	⁽⁷⁾		2,456,453
Steven E. Voskuil	5/3/2018				22,644		52.10	5/3/2028
	2/27/2018														9,509			425,908
	5/3/2017		10,774		25,141		36.74	5/3/2027
	2/28/2017														12,289	⁽⁷⁾		550,424
	5/5/2016		24,934		16,624		29.48	5/5/2026
	3/1/2016														17,493	⁽⁶⁾		783,511
	5/5/2015		24,840				45.53	5/5/2025
	3/18/2015		238		475		47.62	3/5/2025
	3/5/2015		7,135		14,269		45.47	3/5/2025
	11/7/2014		14,135				26.04	5/2/2022
	11/7/2014		20,443				34.24	5/1/2023
	11/7/2014		31,671				37.50	6/19/2024
	11/7/2014		6,000				37.88	11/7/2024
John R Tushar	5/3/2018				10,226		52.10	5/3/2028
	3/12/2018									3,557	⁽¹⁰⁾		159,318
	3/12/2018														4,268	⁽¹⁰⁾		191,164
John W. Wesley	5/3/2018				13,148		52.10	5/3/2028
	2/27/2018														5,521			247,286
	5/3/2017		6,734		15,713		36.74	5/3/2027
	2/28/2017														7,680	⁽⁷⁾		343,987
	5/5/2016		15,584		10,390		29.48	5/5/2026
	3/1/2016														10,933	⁽⁶⁾		489,689
	5/5/2015		12,821				45.53	5/5/2025
	3/5/2015		3,806		7,610		45.47	3/5/2025
	11/7/2014		2,200				37.88	11/7/2024

The Ratio of CEO Compensation to Median Employee Compensation on page 50 of the 2019 Proxy Statement is amended to reflect the actual ratio after correcting Mr. Woody’s 2018 compensation to reflect the correct number of time-vested stock options he received in 2018, as follows:

CATEGORY	2018 TOTAL COMPENSATION AND RATIO ($)
Annual total compensation of Mr. Woody (A)		6,449,263
Median annual total compensation of all employees worldwide (excluding Mr. Woody) (B)		5,820
Ratio of A to B		1,108:1

The Security Ownership table on page 55 of the 2019 Proxy Statement (including footnote 5 to such table) is amended to reflect the corrected number of shares that could be acquired within 60 days of the date of the proxy statement by Messrs. Woody, Voskuil, Tushar and Wesley, after correcting for the number of options granted in 2018, as follows:

NAME	NUMBER OF SHARES^{(1)(2)(3)(4)(5)}		PERCENT OF CLASS
Gary D. Blackford		19,552		*
John P. Byrnes		19,580		*
Ronald W. Dollens		19,552		*
William A. Hawkins, III		18,928		*
Heidi Kunz		19,557		*
Patrick J. O’Leary		19,602		*
John R. Tushar		9,359		*
Maria Sainz		18,744		*
Arjun R. Sarker		8,241		*
Dr. Julie Shimer		19,552		*
Steven E. Voskuil		243,284		*
John W. Wesley		97,654		*
Joseph F. Woody		205,099		*
All directors, nominees and executive officers as a group (13 persons)		718,704		1.51	%

(5) Includes the following shares which could be acquired within 60 days of the date of this proxy statement:

NAME	NUMBER OF SHARES
Joseph F. Woody		38,699
Steve E. Voskuil		41,563
John R. Tushar		1,534
John W. Wesley		24,873
Arjun R. Sarker		984
All directors, nominees and executive officers as a group (12 persons)		107,654

Avanos Medical (AVNS) DEFA14AAdditional proxy soliciting materials